HARRISBURG, PA — Pennsylvania lawmakers unanimously approved legislation Monday that would change how utility profits are calculated, a move supporters contend could reduce monthly energy bills for households and businesses facing steadily rising costs.
House Bill 2224, known as the Return on Equity bill, passed the Pennsylvania House and now moves to the Senate for consideration.
The measure, sponsored by state Reps. Elizabeth Fiedler, D-Philadelphia, and Danilo Burgos, D-Philadelphia, would establish a market-based default return on equity, or ROE, used in utility rate cases. Return on equity represents the profit utility companies are permitted to earn for shareholders through rates approved by regulators.
Supporters argue Pennsylvania utilities currently receive some of the highest authorized returns on equity in the nation despite operating as regulated monopolies within designated service territories.
Under the proposal, utilities would receive a default “safe harbor” return intended to reflect the lower risk associated with monopoly utility operations, plus an additional 2%.
If utilities believe the default return is insufficient, the legislation would allow them to pursue a competitive auction process designed to establish a market-based cost of equity.
“When you look at your energy bill every month, all the dollars on that bill are not for safe and reliable service or even for the energy itself — some of those dollars are going straight to wealthy shareholders,” Fiedler stated. She argued the measure could save consumers “potentially hundreds of dollars a year.”
The legislation comes as utility costs continue to rise across the state. According to the bill’s sponsors, Pennsylvania households have experienced an average 60% increase in utility bills over the past five years.
Supporters also cited data showing electricity shutoffs increased 21.3% between 2024 and 2025, with more than 414,000 Pennsylvania residents experiencing service terminations last year.
“Our goal here is simple: while utility companies should earn a fair return for keeping the lights on and the water running, that shouldn’t come at the expense of Pennsylvanians who are already struggling to make ends meet,” Burgos stated.
Backers of the bill maintain that lowering authorized shareholder returns would not affect utility investments in infrastructure because costs associated with system upgrades, materials and labor are generally recovered separately through rate-setting proceedings.
Supporters also contend lower utility costs could improve Pennsylvania’s business climate by reducing operating expenses for employers.
The legislation is part of a broader House Democratic energy affordability agenda and now awaits action in the Pennsylvania Senate.
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