DE HB277

Replaces the "waste, bad faith or abuse of discretion" standard with a "prudent person" standard for determining whether public utility costs are allowable in rate base or operating expenses.

Defines prudence as the "objective reasonableness" of costs based on what the utility knew or reasonably should have known at the time the expense was incurred.

Allows the Public Service Commission to determine that costs are only partially prudent and adjust rate base, operating expenses, or fuel costs accordingly.

Applies the prudence standard to water utilities, requiring recovery of only those costs "prudently incurred" in constructing facilities to serve existing or reasonably anticipated customers within 3 years.

Supersedes Delaware Supreme Court precedent and aligns Delaware with the majority of U.S. jurisdictions that use prudence standards for utility cost recovery in monopolistic markets.