AN ACT TO AMEND CHAPTER 78, VOLUME 85 OF THE LAWS OF DELAWARE ENTITLED “AN ACT TO AMEND TITLE 26 OF THE DELAWARE CODE RELATING TO PUBLIC UTILITIES AND UTILITY RATES.”

Plain English Breakdown

The bill summary does not provide specific details on how the change might impact utility rates or public utilities in Delaware beyond stating that it applies retroactively for a certain period.

Changing Rules for Public Utility Rates

This bill changes how the Public Service Commission decides on rates for public utilities in Delaware by switching from a 'business judgment rule' to a 'prudence standard'.

What This Bill Does

• Changes the way the Public Service Commission sets rules for public utility rates.
• Switches from using the 'business judgment rule' to the 'prudence standard'.
• Applies the new 'prudence standard' retroactively to rate cases filed between July 16, 2025, and December 31, 2025.

Who It Names or Affects

• Public utilities in Delaware
• The Public Service Commission

Terms To Know

Business judgment rule

A standard that allows companies to make decisions based on what they think is best for the company.

Prudence standard

A stricter standard that requires careful consideration and good reasons before making a decision.

Limits and Unknowns

• The bill does not apply to rate cases filed by public utilities before July 16, 2025.
• It is unclear how the change will affect utility rates in Delaware.

Official Summary Text

AN ACT TO AMEND CHAPTER 78, VOLUME 85 OF THE LAWS OF DELAWARE ENTITLED “AN ACT TO AMEND TITLE 26 OF THE DELAWARE CODE RELATING TO PUBLIC UTILITIES AND UTILITY RATES.”
Senate Bill No. 59 (Chapter 78, Volume 85 of the Laws of Delaware) was passed by the General Assembly on June 26, 2025, and signed by the Governor on July 16, 2025. Senate Bill No. 59 changed the standard applied by the Public Service Commission ("Commission") when deciding public utility rate cases. The standard applied before the enactment of Senate Bill No. 59 was the “business judgment rule” standard. Senate Bill No. 59 changed the standard applied by the Commission to the “prudence” standard. Forty-eight states in the United States apply the “prudence” standard when setting public utility rates, not the "business judgement rule" standard that has been applied in Delaware. Although Section 3 of Senate Bill No. 59 stated that the Act takes effect on January 1, 2026, following its enactment into law, it was the intent of the General Assembly that the Commission must apply the “prudence" standard retroactively in rate case decisions, where the public utility filed the rate case proceeding with the Commission during the period from the date of enactment of the legislation on July 16, 2025, through December 31, 2025. The “prudence” standard does not apply to any rate case proceeding filed by a public utility with the Commission before July 16, 2025.

Current Bill Text

Legislation Document

SPONSOR:

Sen. Hansen & Rep. Heffernan & Rep. Morrison & Sen. Townsend & Rep. Griffith

Sens. Buckson, Hoffner, Huxtable, Poore, Seigfried, Sokola, Walsh; Reps. Burns, Neal, Snyder-Hall, K. Williams

DELAWARE STATE SENATE

153rd GENERAL ASSEMBLY

SENATE BILL NO. 242

AN ACT TO AMEND CHAPTER 78, VOLUME 85 OF THE LAWS OF DELAWARE ENTITLED “AN ACT TO AMEND TITLE 26 OF THE DELAWARE CODE RELATING TO PUBLIC UTILITIES AND UTILITY RATES.”

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:

Section 1. Amend Section 3, Chapter 78, Volume 85 of the Laws of Delaware by making deletions as shown by strike through and insertions as shown by underline as follows:

Section 3. This Act takes effect on January 1, 2026, following its enactment into law.

This Act applies prospectively to any rate case proceeding filed by a public utility with the Public Service Commission on or after this Act’s effective date, January 1, 2026, and applies retroactively to any rate case proceeding filed by a public utility with the Public Service Commission during the period from July 16, 2025, through December 31, 2025.

SYNOPSIS

Senate Bill No. 59 (Chapter 78, Volume 85 of the Laws of Delaware) was passed by the General Assembly on June 26, 2025, and signed by the Governor on July 16, 2025. Senate Bill No. 59 changed the standard applied by the Public Service Commission ("Commission") when deciding public utility rate cases. The standard applied before the enactment of Senate Bill No. 59 was the “business judgment rule” standard. Senate Bill No. 59 changed the standard applied by the Commission to the “prudence” standard. Forty-eight states in the United States apply the “prudence” standard when setting public utility rates, not the "business judgement rule" standard that has been applied in Delaware. Although Section 3 of Senate Bill No. 59 stated that the Act takes effect on January 1, 2026, following its enactment into law, it was the intent of the General Assembly that the Commission must apply the “prudence" standard retroactively in rate case decisions, where the public utility filed the rate case proceeding with the Commission during the period from the date of enactment of the legislation on July 16, 2025, through December 31, 2025. The “prudence” standard does not apply to any rate case proceeding filed by a public utility with the Commission before July 16, 2025.

Author: Senator Hansen