PPL Electric Utilities (“PPL”) recently filed a request to increase distribution base rates (under docket no. R-2025-3057164).[1] In the proposed service tariff, the net metering tariff and Generation Supply Charge (“GSC”) classes are revised so that customer-generators will be classified under the GSC-2 rider and receive a Price to Compare (PTC) which is primarily based on the PJM hourly LMP of the PPL aggregate node. The tool used to move customer-generators from the GSC-1 class to GSC-2 by PPL is similar to the reclassification instrument used by UGI Utilities (“UGI”) and Wellsboro Electric Company (“Wellsboro”)/Citizens’ Electric Company of Lewisburg (“Citizens”), redefining peak demand as “Maximum Registered Peak Load”. See our article Pennsylvania Net Metering Update – Utilities Angle for Hommrich Workaround for background on the customer classification and rate mechanism changes by utilities.
In PPL’s case, the Maximum Registered Peak Load is defined as “A customer’s net demand contribution impact to the Company’s default service procurement activity, as determined upon the net power flow from or into the Company’s distribution or transmission system… As related to customer-generators, this estimate shall also be inclusive of the nameplate capacity of the generation system”.[2] As a result, any PPL customer or customer-generator that imports or exports over 100 kW during its previous 12 months will be moved to the GSC-2 rate.
Excess Energy Price-to-Compare (PTC) Value
The full PTC incorporating the GSC-2 is materially lower than the PTC using GSC-1 which is a more standard retail rate established by PPL on a semi-annual basis (currently 12.114¢/kWh for GS3 customers and 15.324¢/kWh for LP4 customers, inclusive of the Transmission Service Charge).[3] The exact future PTC value for customer-generators under the proposed tariff is dependent on a couple factors. This includes whether PPL rewards customer-generators for all components of the PTC (energy, capacity, transmission) and how PPL applies the rate calculation for each charge. For example, the determination and application of peak load capacity obligation (capacity) and the contribution of a customer class to the 5 coincident peaks used by PJM (transmission) will be important to calculating the credit value. Ultimately, the exact value at which PPL will compensate customer-generators under the new tariff will be confirmed through the investigation and discovery process of the rate case proceeding.
Figure 1. Historical PPL GSC-1 and PPL Aggregate Node LMP Comparison, Jan 2020-September 2025 ($/MWh)
Notes:
A reasonable interpretation of PPL’s proposed tariff is that the PTC will include all components of the PTC and not just the hourly LMP for energy. Under this interpretation, the resulting PTC package would be a combination of:
If the full value of capacity, administrative and transmission service charges are credited to customer-generators, the new PTC could remain a competitive price for small commercial solar systems. If tactics are used such as minimizing the capacity charge value using the customer-generators peak demand for the capacity obligation, the full PTC could become primarily the hourly LMP and effectively a wholesale rate for excess electricity.
Both scenarios are plausible. Wellsboro and Citizens structured their tariff in their rate increase filings so that customer-generators would only receive the hourly LMP (wholesale energy price) for the time at which excess energy is delivered to the grid.[4] The exact language to enable this compensation structure is not clear as it was only publicly identified through testimonies and exhibits in the discovery process.
UGI, who set off this wave of reclassification tariff changes, had originally proposed to only compensate customer-generators for the hourly LMP. During the proceeding, UGI agreed to revise the generation supply rate - 2 (GSR-2) formula to credit customer-generators for their capacity and transmission offsets.[5] Such credits would be calculated using the assigned Peak Load Capacity (PLC) and Network Service Peak Load (NSPL) assigned to the customer. Yet the tariff states that customer-generators may have PLC and NSPL negative values at which rates will be assessed.[6] As such, there is precedent for a utility compensating net metering customers for the full PTC package with capacity and transmission potentially minimized by the rate calculation and another utility proposing to only credit customers for the hourly LMP charge.
Interplay Across Key Timelines
There are several timelines to consider with respect to utility reclassification and the net metering PTC credit value: the PPL rate case proceeding, Citizens/Wellsboro proceeding, Penn Renewables LLC/UGI court case.
Figure 2. Pennsylvania NetMetering Important Timelines
The reclassification of GSC classes in the PPL rate case marks the first large utility in Pennsylvania to modify its classification for customer-generators. Given that the change lays inside a significant base rate case proposing to increase distribution charges by 6.98%, the proceeding and PUC order will be a lengthy process. There will be many intervenors on different fronts, including net metering stakeholders. Separate from the GSC reclassification, PPL has also proposed that customer-generators must pay non-refundable deposits for upgrades to PPL’s distribution system to interconnect the generating facility. PPL would be able to require deposits at amounts fully within their discretion and unspent portions will be returned to the customer after actual costs of system upgrades are determined.[7]
Based on historical timelines for distribution base rate and default service plan cases, PUC approval would likely be 7 to 10 months following PPL’s September 30, 2025, filing for a general rate increase. PPL expects the new tariff to be in effect starting July 2026. Utility rate filings normally have difficulty meeting the planned effective dates. Without significant delays, one could expect an effective date for PPL’s new tariff in late summer to early fall 2026.
Citizens/Wellsboro filed their rate increases in May 2025 and a Joint Petition for a Non-Unanimous Settlement for PUC approval at the end of September.[8] Solar industry intervenors remained in opposition to the tariff changes impacting customer-generators in the settlement. A PUC decision will likely come by the end of this year or early 2026. It is to be seen whether the active group of solar industry players would challenge a PUC decision approving Citizens/Wellsboro’s proposed tariff in the court system.
Following the PUC’s approval of UGI’s default service plan that included the rate reclassification placing customer-generators into its hourly LMP GSR-2, Penn Renewables LLC (“Penn Renewables”), a renewable energy developer, filed an appeal in the Pennsylvania court system in March 2025.[9] The legal case is active and carries the most uncertainty in timeline. The ruling by the PA Supreme Court system in this case will decide whether UGI, Citizens/Wellsboro, PPL and other utilities are permitted to reclassify customer-generators using the tools described.
A Big Question… Grandfathering
One more important discussion is the possibility of grandfathering provisions. In this situation, grandfathering provisions by utilities would permit customer-generators who have signed interconnection agreements and achieved commercial operation to continue operating under the existing GSC-1, or similar, rate class for an agreed upon number of years even after the new service tariffs, including the rate reclassifications, are approved and effective. This would grant revenue certainty of the PTC that was expected when developers and investors made their investment decisions in net metering facilities.
Because of the structure of net metering in Pennsylvania regulated under Chapter 75 of Pa. Code Title 52 Subchapter B Net Metering and authorized by Alternative Energy Portfolio Standards (AEPS) Act of 2004, there is no tangible contract that a customer-generator and utility sign ensuring a price or term for purchasing excess energy.[10][11], The customer-generator operates fully under the effective service tariff of the utility. In utility ratemaking, it is within utilities’ legal right to modify rate class eligibility terms without grandfathering to its customers and within the regulatory body’s (e.g., the PA PUC) authority to approve such changes. For this reason, Pennsylvania utilities and the PUC will likely not grant grandfathering provisions to customer-generators who are fully in-service under the GSC-1 or similar rate.
There is a plethora of legal arguments as to why customer-generators should or should not be given grandfathering provisions, which is beyond the scope of this article. There is precedent from the 2015-2016 NV Energy distributed solar net metering case in which significant intervening and public opposition led to a settlement agreement in which 32,000 existing net metering residential solar customers were grandfathered under an existing retail rate for 20 years, following changes to regulations and the NV Energy tariff.[12] In other examples, state legislation has mandated utility regulators to revise net metering regulations to include grandfathering provisions, but there is a small likelihood that the Pennsylvania legislature would take such action.
The solar industry in Pennsylvania has already voiced its opposition to the utility rate reclassifications in PUC proceedings and through legal appeals. Creating pressure to incorporate grandfathering provisions may be another route to rescue the formerly expected PTC for customer-generators that have achieved or are close to commercial operation.
Sources:
1 PPL Electric Utilities Corporation, Docket No. R-2025-3057164, “PPL Electric Utilities Corporation filed Original Tariff No. 202 which is a general rate increase effective December 1, 2025.”, 2025, August 29. https://www.puc.pa.gov/docket/R-2025-3057164
2 PPL Electric Utilities Corporation, “Volume XII – Retail Tariff and List of Retail Tariff Changes (PPL Electric Exhibits GEO-1 and GEO-2),” 2025, September 30. https://pplelectric.com/site/-/media/ppl-jss-app/assets/Home/Landing-Pages/Public-Utility-Commission/PDFs/PPL--2025-Rate-Case--Volume-XII-PPL-Electric-Exhibits-GEO1-and-GEO2.ashx
3 Power Advisory Calculation based on PPL Electric Utilities Corporation, Price to Compare June 1, 2025 through November 30, 2025. https://www.pplelectric.com/site/-/media/PPLElectric/At-Your-Service/Docs/General-Supplier-Reference-Information/2025/PTC-June-1-2025--November-30-2025.ashx
4 PA PUC, Docket Nos. R-2025-3054392, R-2025-3054393, R-2025-2054394, Index to Exhibits Solar Projects’ Statement No. 1. https://www.puc.pa.gov/pcdocs/1895247.pdf
5 UGI Utilities, Inc., PA PUC, Docket Nos. P-2024-3049343 and G-2024-3049351, Main Brief of UGI Utilities, Inc., 2024, October 15. https://www.puc.pa.gov/pcdocs/1852884.pdf
6 UGI Utilities, Inc. Electric Service Tariff No. 6, 2025, September 19. https://ugi.outsystemsenterprise.com/UGITariff_FO/Tariffs?Division=Electric
7 Id. at 2
8 PA PUC, Docket Nos. R-2025-3054392, R-2025-3054393, R-2025-2054394, Non-Unanimous Joint Petition for Settlement, 2026, September 26. https://www.puc.pa.gov/pcdocs/1896786.pdf
9 Commonwealth Court of Pennsylvania at Docket No. 337 CD 2025
10 52 Pa. Code § 75.11 to 75.17 Subchapter B. Net Metering.https://www.pacodeandbulletin.gov/Display/pacode?file=/secure/pacode/data/052/chapter75/subchapBtoc.html&d=reduce
11 Act of Nov. 30, 2004, P.L. 1672, No. 213
12 Utility Dive, “Updated: Nevada regulators approve NV Energy, SolarCity grandfathering proposal”, 2016, September 16. https://www.utilitydive.com/news/updated-nevada-regulators-approve-nv-energy-solarcity-grandfathering-prop/426480/