PPL Rate Case Settlement Delivers Cost Relief for Ratepayers - While Providing Compensation Certainty for Customer-Generators and their Investors.

On June 4, 2026, the Pennsylvania Public Utility Commission (PUC) approved the settlement filed earlier in the year by the vast majority of the active parties participating in PPL’s electric base rate case that, among other things, sought to establish a clear and durable compensation framework for solar (“customer-generator”) projects. The settlement lowers costs for ratepayers while delivering the long-term revenue certainty required for bank underwriting for solar projects. The settlement is supported by leading consumer groups, including the Office of Consumer Advocate, the Office of Small Business Advocate, and the Coalition for Affordable Utility Services and Energy Efficiency in Pennsylvania.

Specifically, the settlement provides for a compensation methodology that balances competing interests by more appropriately reflecting solar generation’s full value to the grid - including energy, capacity, and avoided line losses - while providing the revenue clarity needed to enable efficient access to capital and support for project financing. On April 17, 2026, the two presiding PUC administrative law judges issued a Recommended Decision urging the full five-member Commission to approve the settlement without modification. The Commission did so, with modifications, in its Opinion and Order at the June 4, 2026 Public Meeting, denying the exceptions that the opposing Customer-Generator Coalition had filed against the settlement’s customer-generator provisions. The PUC’s approval provides much-needed regulatory stability and rate certainty that benefits consumers, solar developers, PPL, and other interested stakeholders.

Grandfathering Creates 10-Year Revenue Certainty

Under the settlement, eligible customer-generator projects will continue to receive compensation based on the current default service rate (Price to Compare, or PTC) through December 31, 2036.

From a financing perspective, this is highly significant. It effectively transforms what would otherwise be an uncertain and variable revenue stream into a stable, predictable cash flow profile during the most critical years of debt repayment.

To qualify, projects must meet two key milestones:

Submit an interconnection application by September 30, 2025 – which is the date on which PPL filed its rate case with the PUC; and
Achieve Permission to Operate or provide a Certificate of Completion by the earlier to occur of (i) December 31, 2026, or (ii) the program-wide 140 MW-AC ceiling is reached.

Projects that meet these thresholds are protected from future rate design changes for ten years through the end of 2036, insulating revenues from regulatory risk and providing the level of certainty that banks require to underwrite long-term debt.

Clear Revenue Differentiation Drives Bankability

The settlement creates a meaningful distinction between grandfathered and non-grandfathered projects:

Grandfathered Projects:

Receive the PTC, currently estimated at approximately $0.126/kWh
Non-Grandfathered Projects:

Transition to Rate GSC-2, with a current downside cash-out rate of approximately $0.096/kWh, which varies based on the location of the project.

This approximately 25% differential is central to credit underwriting, but projects should still be economically viable even at the lower rate.

For lenders, grandfathered projects offer:

Higher and more predictable revenues
Stronger debt service coverage ratios (DSCR)
Reduced exposure to regulatory and market variability

How the Framework Delivers Ratepayer Savings

The same structure that enhances bankability also ensures that ratepayers benefit.

The settlement transitions most future projects to compensation under Rate GSC-2 ($0.096/kWh) - a level that is meaningfully below the retail Price to Compare and more closely aligned with the actual cost of supplying electricity.

This results in three key sources of savings:

Lower Compensation Costs:

Ratepayers are no longer paying full retail rates for exported generation; instead, compensation reflects a lower, more cost-based structure.
Avoided Infrastructure Investment:

Distributed solar reduces the need for new transmission and distribution upgrades, lowers peak demand pressures, and minimizes line losses - avoiding costs that would otherwise be passed on to customers.
Downward Pressure on Future Electricity Prices:

By increasing local supply and reducing reliance on higher-cost wholesale energy, the framework helps moderate long-term increases in default service rates. More local generation supply helps address electric reliability and resource adequacy concerns at a time of increasing demands on the distribution and transmission grids.

The grandfathering provision is limited to a defined set of near-term projects, ensuring that long-term system costs trend downward, even as near-term investment is accelerated.

A Balanced Outcome: Bankability and Savings

The settlement strikes a deliberate balance between enabling private investment and protecting ratepayers:

It provides revenue certainty where it matters most - in the early years of a project’s life - to unlock financing.
While establishing a sustainable, cost-reflective compensation structure for the broader market over time.

This approach avoids overcompensation while still ensuring that projects can be financed and built at scale.

The PPL settlement does more than set compensation rates - it creates a bankable and sustainable market structure that has been absent from the solar industry in Pennsylvania.

By aligning predictable cash flows with lender requirements, the PPL settlement provides precedent for future rate case settlements and policy decisions at the PUC and legislative levels. By transitioning to lower, cost-reflective compensation for future projects, the settlement’s framework ensures that the economic benefits of distributed generation are shared with ratepayers. This will unlock private capital and accelerate deployment of new electric generation at a time when Pennsylvania ratepayers urgently need cost relief.

PPL Rate Case Settlement Delivers Cost Relief for Ratepayers - While Providing Compensation Certainty for Customer-Generators and their Investors.

Grandfathering Creates 10-Year Revenue Certainty

Under the settlement, eligible customer-generator projects will continue to receive compensation based on the current default service rate (Price to Compare, or PTC) through December 31, 2036.

From a financing perspective, this is highly significant. It effectively transforms what would otherwise be an uncertain and variable revenue stream into a stable, predictable cash flow profile during the most critical years of debt repayment.

To qualify, projects must meet two key milestones:

Submit an interconnection application by September 30, 2025 – which is the date on which PPL filed its rate case with the PUC; and

Achieve Permission to Operate or provide a Certificate of Completion by the earlier to occur of (i) December 31, 2026, or (ii) the program-wide 140 MW-AC ceiling is reached.

Projects that meet these thresholds are protected from future rate design changes for ten years through the end of 2036, insulating revenues from regulatory risk and providing the level of certainty that banks require to underwrite long-term debt.

Clear Revenue Differentiation Drives Bankability

The settlement creates a meaningful distinction between grandfathered and non-grandfathered projects:

Grandfathered Projects:

Receive the PTC, currently estimated at approximately $0.126/kWh

Non-Grandfathered Projects:

Transition to Rate GSC-2, with a current downside cash-out rate of approximately $0.096/kWh, which varies based on the location of the project.

This approximately 25% differential is central to credit underwriting, but projects should still be economically viable even at the lower rate.

For lenders, grandfathered projects offer:

Higher and more predictable revenues

Stronger debt service coverage ratios (DSCR)

Reduced exposure to regulatory and market variability

How the Framework Delivers Ratepayer Savings

The same structure that enhances bankability also ensures that ratepayers benefit.

The settlement transitions most future projects to compensation under Rate GSC-2 ($0.096/kWh) - a level that is meaningfully below the retail Price to Compare and more closely aligned with the actual cost of supplying electricity.

This results in three key sources of savings:

Lower Compensation Costs:

Ratepayers are no longer paying full retail rates for exported generation; instead, compensation reflects a lower, more cost-based structure.

Avoided Infrastructure Investment:

Distributed solar reduces the need for new transmission and distribution upgrades, lowers peak demand pressures, and minimizes line losses - avoiding costs that would otherwise be passed on to customers.

Downward Pressure on Future Electricity Prices:

The grandfathering provision is limited to a defined set of near-term projects, ensuring that long-term system costs trend downward, even as near-term investment is accelerated.

A Balanced Outcome: Bankability and Savings

The settlement strikes a deliberate balance between enabling private investment and protecting ratepayers:

It provides revenue certainty where it matters most - in the early years of a project’s life - to unlock financing.

While establishing a sustainable, cost-reflective compensation structure for the broader market over time.

This approach avoids overcompensation while still ensuring that projects can be financed and built at scale.

The PPL settlement does more than set compensation rates - it creates a bankable and sustainable market structure that has been absent from the solar industry in Pennsylvania.