Honorable Craig Eiland, Chair, House Committee on Pensions & Investments
FROM:
John S. O'Brien, Deputy Director, Legislative Budget Board
IN RE:
SB1447 by Averitt (Relating to including pension and other postemployment benefits in the computation of rates for electric utilities.), Committee Report 2nd House, Substituted
CSHB 2943 would allow an electric utility to establish one or more reserve accounts for pension and other post employment benefit expenses. Amounts recorded to such accounts will be the difference between the annual amount of pension and other post employment benefits counted as an operating expense in the prior general rate proceeding and the annual amount determined to be chargeable to the utility’s operating expense. The accounts will be recorded as either a surplus or shortage based on a determination of the amounts available to fund such pension and other post employment benefits. The regulatory authority shall review the reserve accounts and shall make additions or subtractions to the utility’s base rate if either a recorded surplus or shortage exists in the reserve accounts.
The proposal would allow for pension and other post employment benefit expenses to be funded in part through utility rates charged by the regulatory authority. In the case of a shortage in the established reserve accounts, the proposal could generate funding for pension and other post employment benefits.
The bill, if enacted, will have no material actuarial effect because it does not propose to change the obligations of any public retirement system.