Senate passes cap on Delmarva capital spending and narrows utility cost recoveries; prudence standard debated

The Delaware State Senate on March 20 passed legislation that restricts what regulated utilities can pass on to customers and caps Delmarva Power’s annual capital expense recovery for a limited period.

Senators approved Senate Bill 60 as amended, which (1) bars recovery from ratepayers of certain indirect costs such as lobbying, political contributions and specified advertising and public relations activities (with a narrow exception for technical membership dues not used for lobbying), and (2) creates a $125,000,000 per-year cap on Delmarva Power’s capital expenditures recoverable from ratepayers for 2026 through 2028, subject to emergency exceptions and prior authorization rules.

The measure follows an extended floor discussion that began with Senate Bill 59, a companion bill that would change the legal standard the Public Service Commission uses to review utility expense recovery from Delaware’s current business-judgment rule to the prudence standard used in most other states. Senator Hansen, the sponsor, framed the two bills as complementary: “Senate bill 60 and senate bill 59 that we just did are really bookends of the same process,” she said, adding that SB59 would require expenses to be reviewed for whether they were “prudently incurred.”

Why it matters: Delmarva Power customers have reported unexpectedly large electric and gas bills in recent months. Supporters said the bills are intended to give regulators and lawmakers stronger tools to protect captive ratepayers and to reduce the chance that politically driven or unnecessary indirect costs are embedded in utility rates.

Key provisions and floor changes

- Excluded costs: The bill bars passing certain indirect costs to customers, specifically lobbying activities, political contributions, membership dues and charitable contributions and certain advertising/public-relations spending. The floor amendment clarified that membership dues used for technical training and similar non-lobbying activities may still be recoverable if they are not used for lobbying or similar activities.

- Capital cap: SB60 creates a $125,000,000-per-year cap on Delmarva Power’s capital expenses that the Public Service Commission can allow for recovery from ratepayers in 2026–2028, with an emergency/extraordinary-circumstances exception that requires Delmarva to file an application for recovery within six months after incurring the first related cost.

- Relation to SB59: Senator Hansen said SB59 addresses how expenses are judged after they are incurred—moving Delaware toward the prudence rule that evaluates whether an expense was objectively reasonable at the time it was incurred—while SB60 defines costs that should not be eligible for recovery and sets the capital cap.

Statements from the floor

Senator Hansen (sponsor) said Delmarva customers have faced steep bills and that Delaware is one of only two states still using the business-judgment rule; she said the prudence standard is less deferential to utilities and is already used in other states where the same regulated utilities operate. “Other states made this switch because they recognized that regulated utilities are generally monopolies that serve a particular area and the customers are captive,” she said.

Senator Buxton described the bills as a bipartisan response to high costs and urged unity on solutions for Delaware ratepayers. Senator Sikola added that, while choice for customers is limited, the work is ongoing to increase supply within the regional PJM network.

Delmarva Power and others

Senator Hansen said Delmarva Power is not opposing the bill and that sponsors had worked with the company on language. The transcript records that the director of the Public Service Commission and the director of the Sustainable Energy Utility were present to answer technical questions, though the floor discussion and votes described were led by senators.

Votes and amendments

- Senate Amendment 2 to SB60 (which clarified membership-dues treatment and the six-month filing window for emergency recovery requests) was called up and passed by roll call (19 yes, 2 absent). The amendment was incorporated into SB60.

- Senate Bill 60 as amended was declared passed by the Senate after roll call (19 yes, 2 absent).

Status of SB59

Senate Bill 59 was discussed extensively on the floor and described as the companion change to the prudence standard, but the transcript does not record a final roll-call passage of SB59 on this date. The record shows floor debate and sponsor remarks but no formal "declared passed" entry for SB59 in the provided transcript.

What changed in the bill compared with committee testimony

An amendment adopted on the floor narrowed the reach of the membership-dues exclusion so that dues used for non-lobbying technical or training purposes are not categorically disallowed from recovery. The amendment also spelled out the six-month filing window for Delmarva to seek recovery after emergency spending.

Next steps

SB60 will proceed to the usual enrollment and transmittal steps after the Senate passage recorded on March 20. The transcript does not show further action on SB59 on that day.