A House committee approved legislation Tuesday changing how utilities charge rates in hopes of reducing electric bills.

The Consumer Protection, Technology and Utilities Committee voted 17-9 for House Bill 2224 sponsored by Rep. Elizabeth Fiedler, D-Philadelphia, limiting rates of return for utilities.

The committee delayed a scheduled vote on House Bill 2184 sponsored by Rep. Danielle Friel Otten, D-Chester, requiring state utility regulators to consider the public interest in rate cases.

HB2224 is among a number of energy bills moving in the Democratic-controlled House.

Their future in the Republican-controlled Senate is uncertain.

HB2224 sets a standard for the state Public Utility Commission (PUC) to determine rates of return for utilities in rate cases. It ties the rate of return to the demonstrated cost of capital spending.

State law provides that utility rates be fair to consumers while allowing utilities to recover costs and earn reasonable returns on system upgrades.

Fiedler said utilities have been allowed to earn returns far above their actual financing costs.

“Excessive rates of return have been the root of every major issue in the utility industry,” she said in a cosponsor memo.

Rep. Craig Williams, R-Delaware, was one of three Republicans voting for the bill. But Williams said he did so to move the bill out of committee.

Williams said he plans to offer floor amendments tying the rate of return to performance-based measures.

HB2224 limits a rate of return to 6%, thus damaging a utility’s credit rating and driving off investors, said Williams.

Committee Minority Chair Carl Walker Metgar, R-Somerset, said a better approach than HB2224 is addressing actions by PJM, the regional operator of the electric grid.

He cited the recent House passage of House Resolution 361 directing the Joint State Government Commission to study whether Pennsylvania should remain with PJM.

Shapiro weighs in

Gov. Josh Shapiro has called for changes in considering utility electric rate cases.

Shapiro wants utilities to look for low-cost sources of capital such as U.S Treasury loans, explain transparently why new investments are needed and provide “transparent, justifiable equity returns.”

Customers should understand that a majority of their bill involves costs that utilities don’t control, namely the cost of generating electricity under Pennsylvania’s deregulated system, said Andy Tubbs, president of the Energy Association of Pennsylvania, a trade group.

The tabled HB2184 provides a legal definition of public interest for the state Public Utility Commission (PUC) to consider in all its proceedings and decisions. It would require the PUC to demonstrate how its decisions align with the public interest.

Under current law, the PUC has a directive to balance the needs of consumers and utilities.