PPL Rate Case Settlement Delivers Cost Relief for Pennsylvania Ratepayers - While Improving Certainty for Long-Term Capital Investment in Solar Projects

June 14, 2026 - The Pennsylvania Public Utility Commission (PUC) entered an order approving, with modifications, the settlement filed earlier in the year by the majority of active parties participating in PPL’s electric base rate case. Among other things, the settlement establishes a clear and durable compensation framework for solar 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 formulates a compensation methodology that balances competing interests by 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. The PUC's Opinion and Order at the June 4, 2026 Public Meeting 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 solar ("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 significant: it locks in a stable, predictable cash flow profile for ten years - the most critical years of debt repayment and beyond the typical tax equity investment period.

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 clear these thresholds are shielded from future rate-design changes for the full ten year term, insulating revenues from regulatory risk and giving investors the certainty they need to commit capital over a medium- to long-term horizon.

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 $0.1275/kWh.
Projects that are not grandfathered 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 many projects will 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); and
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 balance between attracting private investment and protecting ratepayers. It provides the revenue certainty needed during the early years of a project’s life to support financing, while transitioning over time to a sustainable, cost-reflect compensation framework for the broader market.

This structure avoids overcompensation while ensuring that solar projects can be financed and deployed at scale. By aligning predictable cash flows with investor requirements, the PPL settlement established a durable framework that can inform future rate-case settlements, regulatory decisions and legislative policy. At the same time, its transition to lower, cost-reflective compensation for new projects helps ensure that the economic benefits of distributed generation are shared with ratepayers.

By providing both regulatory certainty and a financeable compensation methodology, the PPL settlement is positioned to unlock private capital and accelerate the deployment of new electric generation at a time when Pennsylvania ratepayers urgently need additional supply and cost relief.

PPL Rate Case Settlement Delivers Cost Relief for Pennsylvania Ratepayers - While Improving Certainty for Long-Term Capital Investment in Solar Projects

Grandfathering Creates 10-Year Revenue Certainty

Under the settlement, eligible solar ("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 significant: it locks in a stable, predictable cash flow profile for ten years - the most critical years of debt repayment and beyond the typical tax equity investment period.

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 clear these thresholds are shielded from future rate-design changes for the full ten year term, insulating revenues from regulatory risk and giving investors the certainty they need to commit capital over a medium- to long-term horizon.

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 $0.1275/kWh.

Projects that are not grandfathered 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 many projects will 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); and

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

By providing both regulatory certainty and a financeable compensation methodology, the PPL settlement is positioned to unlock private capital and accelerate the deployment of new electric generation at a time when Pennsylvania ratepayers urgently need additional supply and cost relief.