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Developed and maintained by the Division of Legislative Automated Systems.
2007 SESSION
070279428Be it enacted by the General Assembly of Virginia:
1. That §§ 56-231.24, 56-234.3, 56-235.2, 56-235.6, 56-238, 56-249.6, 56-576, 56-580, 56-585, and 56-594 of the Code of Virginia are amended and reenacted as follows:
§ 56-231.24. Power to dispose of property.
No cooperative may sell, lease or dispose of all or
substantially all of its property (other than property which, in the judgment
of the board, is neither necessary nor useful in operating and maintaining the
cooperative's system and which in any one year shall not exceed fifty percent
in value of the value of all the property of the cooperative, or merchandise),
unless authorized to do so by the votes of at least a two-thirds majority of
its members; however, a cooperative (i) may mortgage, finance (including,
without limitation, pursuant to a sale and leaseback or lease and leaseback
transaction), or otherwise encumber its assets by a vote of at least two-thirds
of its board of directors; (ii) may sell or transfer its assets to another
cooperative upon the vote of a majority of its members at any regular or
special meeting if the notice of such meeting contains a copy of the terms of
the proposed sale or transfer; or (iii) may sell or transfer
distribution system facilities to a city or town at any time following the
annexation of additional territory pursuant to § 56-265.4:2 by a vote of at
least two-thirds of its board of directors; or (iv) may sell, lease or
dispose of its property to an affiliate pursuant to a plan approved by the
Commission in accordance with subsection B of § 56-590 by a vote of at least
two-thirds of the members of the Board.
§ 56-234.3. Approval of expenditures for and monitoring of new generation facilities and projected operation programs of electric utilities.
Prior to construction or financial commitments therefor, any electric utility subject to the jurisdiction of the State Corporation Commission intending to construct any new generation facility capable of producing 100 megawatts or more of electric energy shall submit to the State Corporation Commission a petition setting forth the nature of the proposed construction and the necessity therefor in relation to its projected forecast of programs of operation. Such petition shall include (i) the utility's preliminary construction plans, (ii) the methods by which the work will be contracted, by competitive bid or otherwise, (iii) the names and addresses of the contractors and subcontractors, when known, proposed to do such work, and (iv) the plan by which the public utility will monitor such construction to ensure that the work will be done in a proper, expeditious and efficient manner. The Commission, upon receipt of the petition, shall order that a public hearing be held to assist it in accumulating as much relevant data as possible in reaching its determination for the necessity of the proposed generation facility. The Commission shall review the petition, consider the testimony given at the public hearing, and determine whether the proposed improvements are necessary to enable the public utility to furnish reasonably adequate service and facilities at reasonable and just rates. After making its determination, the Commission shall enter an order within nine months after the filing of such petition either approving or disapproving the proposed expenditure. Upon approval, the Commission shall set forth in its order terms and conditions it deems necessary for the efficient and proper construction of the generation facility.
Every electric utility capable of producing 100 megawatts or more of electric energy shall file with the Commission a projected forecast of its programs of operation, on such terms and for such time periods as directed by the Commission. Such a forecast shall include, but not be limited to, the anticipated required capacity to fulfill the requirements of the forecast, how the utility will achieve such capacity, the financial requirements for the period covered, the anticipated sources of those financial requirements, the research and development procedures, where appropriate, of new energy sources, and the budget for the research and development program.
In addition, the Commission shall investigate and monitor the major construction projects of any public utility to assure that such projects are being conducted in an economical, expeditious, and efficient manner.
Whenever uneconomical, inefficient or wasteful practices, procedures, designs or planning are found to exist, the Commission shall have the authority to employ, at the sole expense of the utility, qualified persons, answerable solely to the Commission, who shall audit and investigate such practices, procedures, designs or planning and recommend to the Commission measures necessary to correct or eliminate such practices, procedures, designs or planning.
Consistent with § 56-235.3, any public utility, electric or otherwise, seeking to pass through the cost of any capital project to its customers, shall have the burden of proving that such cost was or will be incurred through reasonable, proper and efficient practices, and to the extent that such public utility fails to bear such burden of proof, such costs shall not be passed on to its customers in its rate base or by any other recovery mechanism. If the Commission finds that the public utility meets such burden of proof, the Commission shall provide for recovery of such costs through the public utility's rate base or through rate surcharges, adders, or other recovery mechanisms as the Commission finds are in the public interest.
The Commission shall have the authority to approve, disapprove, or alter the utility's program in a manner consistent with the best interest of the citizens of the Commonwealth. The petitioning or filing public utility may appeal the decision of the Commission to the Supreme Court of Virginia.
§ 56-235.2. All rates, tolls, etc., to be just and reasonable to jurisdictional customers; findings and conclusions to be set forth; alternative forms of regulation for electric companies.
A. Any rate, toll, charge or schedule of any public utility
operating in this Commonwealth shall be considered to be just and reasonable
only if: (1) the public utility has demonstrated that such rates, tolls,
charges or schedules in the aggregate provide revenues not in excess of the
aggregate actual costs incurred by the public utility in serving customers
within the jurisdiction of the Commission, subject to such normalization for
nonrecurring costs and adjustments for known future increases in costs
as the Commission may deem reasonable, and a fair return on the public
utility's rate base used to serve those jurisdictional customers; (1a) the
investor-owned public electric utility has demonstrated that no part of such
rates, tolls, charges or schedules includes costs for advertisement, except for
advertisements either required by law or rule or regulation, or for
advertisements which solely promote the public interest, conservation or more
efficient use of energy; and (2) the public utility has demonstrated that such
rates, tolls, charges or schedules contain reasonable classifications of
customers. Notwithstanding § 56-234, the Commission may approve, either in the
context of or apart from a rate proceeding after notice to all affected parties
and hearing, special rates, contracts or incentives to individual customers or
classes of customers where it finds such measures are in the public interest.
Such special charges shall not be limited by the provisions of § 56-235.4. In
determining costs of service, the Commission may use the test year method of
estimating revenue needs, but shall not consider any adjustments or expenses
that are speculative or cannot be predicted with reasonable certainty. In
any Commission order establishing a fair and reasonable rate of return for an
investor-owned gas, telephone or electric public utility, the Commission shall
set forth the findings of fact and conclusions of law upon which such order is
based.
B. Upon application of any public service company furnishing electric service or on the Commission's own motion, the Commission may approve after notice to all affected parties and hearing, an alternative form of regulation. Alternatives may include, but are not limited to, the use of price regulation, ranges of authorized returns, categories of services, price indexing or other alternative forms of regulation.
C. The Commission shall, before approving special rates, contracts, incentives or other alternative regulatory plans under subsections A and B, ensure that such action (i) protects the public interest, (ii) will not unreasonably prejudice or disadvantage any customer or class of customers, and (iii) will not jeopardize the continuation of reliable electric service.
D. After notice and public hearing, the Commission shall issue guidelines for special rates adopted pursuant to subsection A that will ensure that other customers are not caused to bear increased rates as a result of such special rates.
§ 56-235.6. Optional performance-based regulation of utilities.
A. Notwithstanding any provision of law to the contrary, the Commission may approve a performance-based ratemaking methodology for any public utility engaged in the business of furnishing gas service (for the purposes of this section a "gas utility") or electricity service (for the purposes of this section an "electric utility"), either upon application of the gas utility or electric utility or upon its own motion, and after such notice and opportunity for hearing as the Commission may prescribe. For the purposes of this section, "performance-based ratemaking methodology" shall mean a method of establishing rates and charges that are in the public interest, and that departs in whole or in part from the cost-of-service methodology set forth in § 56-235.2.
B. The Commission shall approve such performance-based
ratemaking methodology if it finds that it: (i) preserves adequate service to
all classes of customers, (including transportation-only customers
if for a gas utility); (ii) does not unreasonably prejudice or disadvantage
any class of gas utility or electric utility customers; (iii) provides
incentives for improved performance by the gas utility or electric utility in
the conduct of its public duties; (iv) results in rates that are not excessive;
and (v) is in the public interest. Performance-based forms of regulation may
include, but not be limited to, fixed or capped base rates, the use of revenue
indexing, price indexing, ranges of authorized return, gas cost indexing for
gas utilities, and innovative utilization of utility-related assets and
activities (such as a gas utility's off-system sales of excess gas
supplies, and release of upstream pipeline capacity, performance
of billing services for other gas or electricity suppliers, and
reduction or elimination of regulatory requirements) in ways that benefit both
the gas utility and its customers and may include a mechanism for
automatic annual adjustments to revenues or prices to reflect changes in any
index adopted for the implementation of such performance-based form of
regulation. In making the findings required by this subsection, the Commission
shall include, but not be limited to, in its considerations: (i) any proposed
measures, including investments in infrastructure, that are reasonably
estimated to preserve or improve system reliability, safety, supply diversity,
and gas utility transportation options; and (ii) other customer benefits
that are reasonably estimated to accrue from the gas or electric utility's
proposal.
C. Each gas utility or electric utility shall have the
option to apply for implementation of a performance-based form of regulation.
If the Commission approves the application with modifications, the gas utility or
electric utility may, at its option, withdraw its application and continue
to be regulated under the form of regulation that existed immediately prior to
the filing of the application. The Commission may, after notice and opportunity
for hearing, alter, amend or revoke, or authorize a gas utility or electric
utility to discontinue, a performance-based form of regulation previously
implemented under this section if it finds that (i) gas service to one
or more classes of customers has deteriorated, or will deteriorate, to the
point that the public interest will not be served by continuation of the
performance-based form of regulation; (ii) any class of gas utility customer or
electric utility customer is being unreasonably prejudiced or disadvantaged
by the performance-based form of regulation; (iii) the performance-based form
of regulation does not, or will not, provide reasonable incentives for improved
performance by a gas utility or electric utility in the conduct of its
public duties (which determination may include, but not be limited to,
consideration of whether rates are inadequate to recover a gas
utility utility's or electric utility's cost of service); (iv) the
performance-based form of regulation is resulting in rates that are excessive
compared to a gas utility's or electric utility's cost of service and
any benefits that accrue from the performance-based plan; (v) the terms ordered
by the Commission in connection with approval of a gas utility's or electric
utility's implementation of a performance-based form of regulation have
been violated; or (vi) the performance-based form of regulation is no longer in
the public interest. Any request by a gas utility or electric utility to
discontinue its implementation of a performance-based form of regulation may
include application pursuant to this chapter for approval of new rates under
the standards of § 56-235.2.
D. The Commission shall use the annual review process established in § 56-234.2 to monitor each performance-based form of regulation approved under this section and to make any annual prospective adjustments to revenues or prices necessary to reflect increases or decreases in any index adopted for the implementation of such performance-based form of regulation.
§ 56-238. Suspension of proposed rates, etc.; investigation; effectiveness of rates pending investigation and subject to bond; fixing reasonable rates, etc.
The Commission, either upon complaint or on its own motion,
may suspend the enforcement of any or all of the proposed rates, tolls,
charges, rules or regulations, for a period not exceeding 150 45
days from the date of filing a complete application, during which time
it shall investigate the reasonableness or justice of the proposed rates,
tolls, charges, rules and regulations and thereupon fix and order substituted
therefor such rates, tolls, charges, rules and regulations as shall be just and
reasonable. Notice of the suspension of any proposed rate, toll, charge, rule
or regulation shall be given by the Commission to the public utility, prior to
the expiration of the thirty days' notice to the Commission and the public
heretofore provided for. If the proceeding has not been concluded and an order
made at the expiration of the suspension period, after notice to the Commission
by the public utility making the filing, the proposed rates, tolls, charges,
rules or regulations shall go into effect. Where increased rates, tolls or
charges are thus made effective, the Commission shall, by order, require the
public utility to furnish a bond, to be approved by the Commission, to refund
any amounts ordered by the Commission, to keep accurate accounts in detail of
all amounts received by reason of such increase, and upon completion of the
hearing and decision, to order such public utility to refund, with interest at
a rate set by the Commission, the portion of such increased rates, tolls or
charges by its decision found not justified. The Commission shall prescribe all
necessary rules and regulations to effectuate the purposes of this section on
or before September 1, 1980.
§ 56-249.6. Recovery of fuel and purchased power costs.
A. 1. Each electric utility that purchases fuel for the
generation of electricity or purchases power and that was not, as of July 1,
1999, bound by a rate case settlement adopted by the Commission that extended
in its application beyond January 1, 2002, shall submit to the Commission
its estimate of fuel costs, including the cost of purchased power, for the
12-month period beginning on the date prescribed by the Commission. Upon
investigation of such estimates and hearings in accordance with law, the
Commission shall direct each company to place in effect tariff provisions
designed to recover the fuel costs determined by the Commission to be
appropriate for that period, adjusted for any over-recovery or under-recovery
of fuel costs previously incurred.
2. The Commission shall continuously review fuel costs
and if it finds that any utility described in subdivision A 1 this
subsection is in an over-recovery position by more than five percent, or
likely to be so, it may reduce the fuel cost tariffs to correct the
over-recovery.
B. All fuel costs recovery tariff provisions in effect on
January 1, 2004, for any electric utility that purchases fuel for the
generation of electricity and that was, as of July 1, 1999, bound by a rate
case settlement adopted by the Commission that extended in its application
beyond January 1, 2002, shall remain in effect until the earlier of (i) July 1,
2007; (ii) the termination of capped rates pursuant to the provisions of
subsection C of § 56-582; or (iii ii) the establishment of
tariff provisions under subsection C. Any such utility shall continue to report
to the Commission annually its actual fuel costs, including the cost of
purchased power until July 1, 2007. For periods after January 1,
2008, the Commission shall place in effect tariff provisions designed to
recover the fuel costs as provided in subsection A.
C. Until the capped rates for such utility expire or are
terminated pursuant to the provisions of § 56-582, each Each
electric utility described in subsection B shall submit annually to the
Commission its estimate of fuel costs, including the cost of purchased power,
for the successive 12-month periods beginning on July 1, 2007, 2008, and
2009, and the six-month period beginning July 1, 2010 2007.
Upon investigation of such estimates and hearings in accordance with law, the
Commission shall direct each such utility to place in effect tariff provisions
designed to recover the fuel costs determined by the Commission to be
appropriate for such periods, adjusted for any over-recovery or under-recovery
of fuel costs previously incurred; however, (i) no such adjustment for any
over-recovery or under-recovery of fuel costs previously incurred shall be made
for any period prior to July 1, 2007, and (ii) the Commission may order that up
to 40% of any increase in fuel tariffs determined by the Commission to be
appropriate for the 12-month 6-month period beginning July 1,
2007, above the fuel tariffs previously existing, shall be deferred and
recovered during the period from July 1, 2008, through December 31, 2010.
D. 1. In proceedings under subsections A and C, the Commission may, to the extent deemed appropriate, offset against fuel costs and purchased power costs to be recovered the revenues attributable to sales of power pursuant to interconnection agreements with neighboring electric utilities.
2. In proceedings under subsections A and C, the Commission shall disallow recovery of any fuel costs that it finds without just cause to be the result of failure of the utility to make every reasonable effort to minimize fuel costs or any decision of the utility resulting in unreasonable fuel costs, giving due regard to reliability of service and the need to maintain reliable sources of supply, economical generation mix, generating experience of comparable facilities, and minimization of the total cost of providing service.
3. The Commission is authorized to promulgate, in accordance with the provisions of this section, all rules and regulations necessary to allow the recovery by electric utilities of all of their prudently incurred fuel costs under subsections A and C, including the cost of purchased power, as precisely and promptly as possible, with no over-recovery or under-recovery, except as provided in subsection C, in a manner that will tend to assure public confidence and minimize abrupt changes in charges to consumers.
E. The Commission may, however, dispense with
the procedures set forth above for any electric utility if it finds, after
notice and hearing, that the electric utility's fuel costs can be reasonably
recovered through the rates and charges investigated and established in
accordance with other sections of this chapter.
§ 56-576. Definitions.
As used in this chapter:
"Affiliate" means any person that controls, is
controlled by, or is under common control with an electric utility.
"Aggregator" means a person that, as an agent or
intermediary, (i) offers to purchase, or purchases, electric energy or (ii)
offers to arrange for, or arranges for, the purchase of electric energy, for
sale to, or on behalf of, two or more retail customers not controlled by or
under common control with such person. The following activities shall not, in
and of themselves, make a person an aggregator under this chapter: (i)
furnishing legal services to two or more retail customers, suppliers or
aggregators; (ii) furnishing educational, informational, or analytical services
to two or more retail customers, unless direct or indirect compensation for
such services is paid by an aggregator or supplier of electric energy; (iii)
furnishing educational, informational, or analytical services to two or more
suppliers or aggregators; (iv) providing default service under § 56-585; (v)
engaging in activities of a retail electric energy supplier, licensed pursuant
to § 56-587, which are authorized by such supplier's license; and (vi) engaging
in actions of a retail customer, in common with one or more other such retail
customers, to issue a request for proposal or to negotiate a purchase of
electric energy for consumption by such retail customers.
"Billing services" means services related to
billing customers for competitive electric services or billing customers on a
consolidated basis for both competitive and regulated electric services.
"Commission" means the State Corporation Commission.
"Cooperative" means a utility formed under or
subject to Chapter 9.1 (§ 56-231.15 et seq.) of this title.
"Covered entity" means a provider in the Commonwealth
of an electric service not subject to competition but shall not include default
service providers.
"Covered transaction" means an acquisition,
merger, or consolidation of, or other transaction involving stock, securities,
voting interests or assets by which one or more persons obtains control of a
covered entity.
"Customer choice" means the opportunity for a
retail customer in the Commonwealth to purchase electric energy from any
supplier licensed and seeking to sell electric energy to that customer.
"Distribute," "distributing" or
"distribution of" electric energy means the transfer of electric
energy through a retail distribution system to a retail customer.
"Distributor" means a person owning, controlling, or operating a retail distribution system to provide electric energy directly to retail customers.
"Electric utility" means any person that generates, transmits, or distributes electric energy for use by retail customers in the Commonwealth, including any investor-owned electric utility, cooperative electric utility, or electric utility owned or operated by a municipality.
"Generate," "generating," or "generation of" electric energy means the production of electric energy.
"Generator" means a person owning, controlling, or operating a facility that produces electric energy for sale.
"Incumbent electric utility" means each electric
utility in the Commonwealth that, prior to July 1, 1999, supplied electric
energy to retail customers located in an exclusive service territory
established by the Commission.
"Independent system operator" means a person that
may receive or has received, by transfer pursuant to this chapter, any
ownership or control of, or any responsibility to operate, all or part of the
transmission systems in the Commonwealth.
"Market power" means the ability to impose on
customers a significant and nontransitory price increase on a product or
service in a market above the price level which would prevail in a competitive
market.
"Metering services" means the ownership,
installation, maintenance, or reading of electric meters and includes meter
data management services.
"Municipality" means a city, county, town,
authority or other political subdivision of the Commonwealth.
"Period of transition to customer choice" means
the period beginning on January 1, 2002, and ending on January 1, 2004, unless
otherwise extended by the Commission pursuant to this chapter, during which the
Commission and all electric utilities authorized to do business in the
Commonwealth shall implement customer choice for retail customers in the
Commonwealth.
"Person" means any individual, corporation,
partnership, association, company, business, trust, joint venture, or other
private legal entity, and the Commonwealth or any municipality.
"Renewable energy" means energy derived from sunlight, wind, falling water, sustainable biomass, energy from waste, wave motion, tides, and geothermal power, and does not include energy derived from coal, oil, natural gas or nuclear power.
"Retail customer" means any person that purchases
retail electric energy for its own consumption at one or more metering points
or nonmetered points of delivery located in the Commonwealth.
"Retail electric energy" means electric energy
sold for ultimate consumption to a retail customer.
"Supplier" means any generator, distributor,
aggregator, broker, marketer, or other person who offers to sell or sells
electric energy to retail customers and is licensed by the Commission to do so,
but it does not mean a generator that produces electric energy exclusively for
its own consumption or the consumption of an affiliate.
"Supply" or "supplying" electric energy
means the sale of or the offer to sell electric energy to a retail customer.
"Transmission of," "transmit," or "transmitting" electric energy means the transfer of electric energy through the Commonwealth's interconnected transmission grid from a generator to either a distributor or a retail customer.
"Transmission system" means those facilities and
equipment that are required to provide for the transmission of electric energy.
§ 56-580. Electrical generating facilities.
A. The Commission shall continue to regulate pursuant to
this title the distribution of retail electric energy to retail customers in
the Commonwealth and, to the extent not prohibited by federal law, the
transmission of electric energy in the Commonwealth.
B. The Commission shall continue to regulate, to the extent
not prohibited by federal law, the reliability, quality and maintenance by
transmitters and distributors of their transmission and retail distribution
systems.
C. The Commission shall develop codes of conduct governing
the conduct of incumbent electric utilities and affiliates thereof when any
such affiliates provide, or control any entity that provides, generation,
distribution, transmission or any services made competitive pursuant to §
56-581.1, to the extent necessary to prevent impairment of competition.
D. The Commission shall permit the construction and
operation of electrical generating facilities upon a finding that such
generating facility and associated facilities (i) will have no material adverse
effect upon reliability of electric service provided by any regulated public
utility and (ii) are not otherwise contrary to the public interest. In review
of a petition for a certificate to construct and operate a generating facility
described in this subsection, the Commission shall give consideration to the
effect of the facility and associated facilities on the environment and
establish such conditions as may be desirable or necessary to minimize adverse
environmental impact as provided in § 56-46.1. In order to avoid duplication of
governmental activities, any valid permit or approval required for an electric
generating plant and associated facilities issued or granted by a federal,
state or local governmental entity charged by law with responsibility for
issuing permits or approvals regulating environmental impact and mitigation of
adverse environmental impact or for other specific public interest issues such
as building codes, transportation plans, and public safety, whether such permit
or approval is prior to or after the Commission's decision, shall be deemed to
satisfy the requirements of this section with respect to all matters that (i)
are governed by the permit or approval or (ii) are within the authority of, and
were considered by, the governmental entity in issuing such permit or approval,
and the Commission shall impose no additional conditions with respect to such
matters. Nothing in this section shall affect the ability of the Commission to
keep the record of a case open. Nothing in this section shall affect any right
to appeal such permits or approvals in accordance with applicable law. In the
case of a proposed facility located in a region that was designated as of July
1, 2001, as serious nonattainment for the one-hour ozone standard as set forth
in the federal Clean Air Act, the Commission shall not issue a decision
approving such proposed facility that is conditioned upon issuance of any environmental
permit or approval.
E. Nothing in this section shall impair the distribution
service territorial rights of incumbent electric utilities, and incumbent
electric utilities shall continue to provide distribution services within their
exclusive service territories as established by the Commission. Nothing in this
chapter shall impair the Commission's existing authority over the provision of
electric distribution services to retail customers in the Commonwealth
including, but not limited to, the authority contained in Chapters 10 (§ 56-232
et seq.) and 10.1 (§ 56-265.1 et seq.) of this title.
F. Nothing in this chapter shall impair the exclusive
territorial rights of an electric utility owned or operated by a municipality
as of July 1, 1999, or by an authority created by a governmental unit exempt
from the referendum requirement of § 15.2-5403. Nor shall any provision of this
chapter apply to any such electric utility unless (i) that municipality or that
authority created by a governmental unit exempt from the referendum requirement
of § 15.2-5403 elects to have this chapter apply to that utility or (ii) that
utility, directly or indirectly, sells, offers to sell or seeks to sell
electric energy to any retail customer outside the geographic area that was
served by such municipality as of July 1, 1999, except (a) any area within the
municipality that was served by an incumbent public utility as of that date but
was thereafter served by an electric utility owned or operated by a
municipality or by an authority created by a governmental unit exempt from the
referendum requirement of § 15.2-5403 pursuant to the terms of a franchise
agreement between the municipality and the incumbent public utility, or (b)
where the geographic area served by an electric utility owned or operated by a
municipality is changed pursuant to mutual agreement between the municipality
and the affected incumbent public utility in accordance with § 56-265.4:1. If
an electric utility owned or operated by a municipality as of July 1, 1999, or
by an authority created by a governmental unit exempt from the referendum
requirement of § 15.2-5403 is made subject to the provisions of this chapter
pursuant to clause (i) or (ii) of this subsection, then in such event the
provisions of this chapter applicable to incumbent electric utilities shall
also apply to any such utility, mutatis mutandis.
G. The applicability of this chapter to any investor-owned
incumbent electric utility supplying electric service to retail customers on
January 1, 2003, whose service territory assigned to it by the Commission is
located entirely within Dickenson, Lee, Russell, Scott, and Wise Counties shall
be suspended effective July 1, 2003, so long as such utility does not provide
retail electric services in any other service territory in any jurisdiction to
customers who have the right to receive retail electric energy from another
supplier. During any such suspension period, the utility's rates shall be (i)
its capped rates established pursuant to § 56-582 for the duration of the
capped rate period established thereunder, and (ii) determined thereafter by
the Commission on the basis of such utility's prudently incurred costs pursuant
to Chapter 10 (§ 56-232 et seq.) of this title.
H.B. The expiration date of any certificates
granted by the Commission pursuant to subsection DA, for which
applications were filed with the Commission prior to July 1, 2002, shall be
extended for an additional two years from the expiration date that otherwise
would apply.
§ 56-585. Generation facilities.
A. The Commission shall, after notice and opportunity for
hearing, (i) determine the components of default service and (ii) establish one
or more programs making such services available to retail customers requiring
them commencing with the availability throughout the Commonwealth of customer
choice for all retail customers as established pursuant to § 56-577. For
purposes of this chapter, "default service" means service made
available under this section to retail customers who (i) do not affirmatively
select a supplier, (ii) are unable to obtain service from an alternative
supplier, or (iii) have contracted with an alternative supplier who fails to
perform.
B. From time to time, the Commission shall designate one or
more providers of default service. In doing so, the Commission:
1. Shall take into account the characteristics and
qualifications of prospective providers, including proposed rates, experience,
safety, reliability, corporate structure, access to electric energy resources
necessary to serve customers requiring such services, and other factors deemed
necessary to ensure the reliable provision of such services, to prevent the
inefficient use of such services, and to protect the public interest;
2. May periodically, as necessary, conduct competitive
bidding processes under procedures established by the Commission and, upon a
finding that the public interest will be served, designate one or more willing
and suitable providers to provide one or more components of such services, in one
or more regions of the Commonwealth, to one or more classes of customers;
3. To the extent that default service is not provided
pursuant to a designation under subdivision 2, may require a distributor to
provide, in a safe and reliable manner, one or more components of such
services, or to form an affiliate to do so, in one or more regions of the
Commonwealth, at rates determined pursuant to subsection C and for periods
specified by the Commission; however, the Commission may not require a
distributor, or affiliate thereof, to provide any such services outside the
territory in which such distributor provides service; and
4. Notwithstanding imposition on a distributor by the
Commission of the requirement provided in subdivision 3, the Commission may
thereafter, upon a finding that the public interest will be served, designate
through the competitive bidding process established in subdivision 2 one or
more willing and suitable providers to provide one or more components of such
services, in one or more regions of the Commonwealth, to one or more classes of
customers.
C. If a distributor is required to provide default services
pursuant to subdivision B 3, after notice and opportunity for hearing, the
Commission shall periodically, for each distributor, determine the rates, terms
and conditions for default services, taking into account the characteristics
and qualifications set forth in subdivision B 1, as follows:
1. Until the expiration or termination of capped rates, the
rates for default service provided by a distributor shall equal the capped
rates established pursuant to subdivision A 2 of § 56-582. After the expiration
or termination of such capped rates, the rates for default services shall be
based upon competitive market prices for electric generation services.
2. The Commission shall, after notice and opportunity for
hearing, determine the rates, terms and conditions for default service by such
distributor on the basis of the provisions of Chapter 10 (§ 56-232 et seq.) of
this title, except that the generation-related components of such rates shall
be (i) based upon a plan approved by the Commission as set forth in subdivision
3 or (ii) in the absence of an approved plan, based upon prices for generation
capacity and energy in competitive regional electricity markets, except as
provided in subsection G.
3. Prior to a distributor's provision of default service,
and upon request of such distributor, the Commission shall review any plan
filed by the distributor to procure electric generation services for default
service. The Commission shall approve such plan if the Commission determines
that the procurement of electric generation capacity and energy under such plan
is adequately based upon prices of capacity and energy in competitive regional
electricity markets. If the Commission determines that the plan does not
adequately meet such criteria, then the Commission shall modify the plan, with
the concurrence of the distributor, or reject the plan.
4. a. For purposes of this subsection, in determining whether
regional electricity markets are competitive and rates for default service, the
Commission shall consider (i) the liquidity and price transparency of such
markets, (ii) whether competition is an effective regulator of prices in such
markets, (iii) the wholesale or retail nature of such markets, as appropriate,
(iv) the reasonable accessibility of such markets to the regional transmission
entity to which the distributor belongs, and (v) such other factors it finds
relevant. As used in this subsection, the term "competitive regional
electricity market" means a market in which competition, and not statutory
or regulatory price constraints, effectively regulates the price of
electricity.
b. If, in establishing a distributor's default service
generation rates, the Commission is unable to identify regional electricity
markets where competition is an effective regulator of rates, then the
Commission shall establish such distributor's default service generation rates
by setting rates that would approximate those likely to be produced in a
competitive regional electricity market. Such proxy generation rates shall take
into account: (i) the factors set forth in subdivision C 4 a, and (ii) such
additional factors as the Commission deems necessary to produce such proxy
generation rates.
D. In implementing this section, the Commission shall take
into consideration the need of default service customers for rate stability and
for protection from unreasonable rate fluctuations.
E. On or before July 1, 2004, and annually thereafter, the
Commission shall determine, after notice and opportunity for hearing, whether
there is a sufficient degree of competition such that the elimination of
default service for particular customers, particular classes of customers or
particular geographic areas of the Commonwealth will not be contrary to the
public interest. The Commission shall report its findings and recommendations
concerning modification or termination of default service to the General
Assembly and to the Commission on Electric Utility Restructuring, not later
than December 1, 2004, and annually thereafter.
F. A distribution electric cooperative, or one or more
affiliates thereof, shall have the obligation and right to be the supplier of
default services in its certificated service territory. A distribution electric
cooperative's rates for such default services shall be the capped rate for the
duration of the capped rate period and shall be based upon the distribution
electric cooperative's prudently incurred cost thereafter. Subsections B and C
shall not apply to a distribution electric cooperative or its rates. Such
default services, for the purposes of this subsection, shall include the supply
of electric energy and all services made competitive pursuant to § 56-581.1. If
a distribution electric cooperative, or one or more affiliates thereof, elects
or seeks to be a default supplier of another electric utility, then the
Commission shall designate the default supplier for that distribution electric
cooperative, or any affiliate thereof, pursuant to subsection B.
G. To ensure a reliable and adequate supply of
electricity, and to promote economic development, an investor-owned a
distributor that has been designated a default service provider under this
section may petition the Commission for approval to construct, or cause to
be constructed, a coal-fired generation facility that utilizes Virginia coal
and is located in the coalfield region of the Commonwealth, as described in §
15.2-6002, to meet its native load and default service obligations,
regardless of whether such facility is located within or without the
distributor's service territory. The Commission shall consider any petition
filed under this subsection in accordance with its competitive bidding rules
promulgated pursuant to § 56-234.3, and in accordance with the provisions of
this chapter. Notwithstanding the provisions of subdivision C 3 related
to the price of default service, a A distributor that constructs, or
causes to be constructed, such facility shall have the right to recover the
costs of the facility, including allowance for funds used during construction,
or for construction work in progress, life-cycle costs, and costs of
infrastructure associated therewith, plus a fair rate of return, through its
rates for default service. A distributor filing a petition for the
construction of a facility under the provisions of this subsection
section shall file with its application a plan, or a revision to a plan
previously filed, as described in subdivision C 3, that proposes default
service rates to ensure such cost recovery and fair rate of return. The
construction of such facility that utilizes energy resources located within the
Commonwealth is in the public interest, and in determining whether to approve
such facility, the Commission shall liberally construe the provisions of this
title.
§ 56-594. Net energy metering provisions.
A. The Commission shall establish by regulation a program, to
begin no later than July 1, 2000, which affords eligible customer-generators the
opportunity to participate in net energy metering. The regulations may include,
but need not be limited to, requirements for (i) retail sellers; (ii) owners
and/or operators of distribution or transmission facilities; (iii) providers of
default electric service; (iv) eligible customer-generators; or (v)
any combination of the foregoing, as the Commission determines will facilitate
the provision of net energy metering, provided that the Commission determines
that such requirements do not adversely affect the public interest.
B. For the purpose of this section:
"Eligible customer-generator" means a customer that
owns and operates, or contracts with other persons to own, operate, or both, an
electrical generating facility that (i) has a capacity of not more than 10
kilowatts for residential customers and 500 kilowatts for nonresidential
customers; (ii) uses as its total source of fuel renewable energy, as defined
in § 56-576; (iii) is located on the customer's premises and is connected to
the customer's wiring on the customer's side of its interconnection with the
distributor; (iv) is interconnected and operated in parallel with an electric company's
utility's transmission and distribution facilities; and (v) is
intended primarily to offset all or part of the customer's own electricity
requirements.
"Net energy metering" means measuring the difference, over the net metering period, between (i) electricity supplied to an eligible customer-generator from the electric grid and (ii) the electricity generated and fed back to the electric grid by the eligible customer-generator.
"Net metering period" means the 12-month period following the date of final interconnection of the eligible customer-generator's system with an electric service provider, and each 12-month period thereafter.
C. The Commission's regulations shall ensure that the metering equipment installed for net metering shall be capable of measuring the flow of electricity in two directions, and shall allocate fairly the cost of such equipment and any necessary interconnection. An eligible customer-generator's electrical generating system shall meet all applicable safety and performance standards established by the National Electrical Code, the Institute of Electrical and Electronics Engineers, and accredited testing laboratories such as Underwriters Laboratories. Beyond the requirements set forth in this section, an eligible customer-generator whose electrical generating system meets those standards and rules shall bear the reasonable cost, if any, as determined by the Commission, to (i) install additional controls, (ii) perform or pay for additional tests, or (iii) purchase additional liability insurance.
D. The Commission shall establish minimum requirements for contracts to be entered into by the parties to net metering arrangements. Such requirements shall protect the customer-generator against discrimination by virtue of its status as a customer-generator. Where electricity generated by the customer-generator over the net metering period exceeds the electricity consumed by the customer-generator, the customer-generator shall not be compensated for the excess electricity unless the entity contracting to receive such electric energy and the customer-generator enter into a power purchase agreement for such excess electricity. The net metering standard contract or tariff shall be available to eligible customer-generators on a first-come, first-served basis in each electric distribution company's Virginia service area until the rated generating capacity owned and operated by eligible customer-generators in the state reaches 0.1 percent of each electric distribution company's adjusted Virginia peak-load forecast for the previous year.
2. That §§ 56-577, 56-578, 56-579, 56-581 through 56-584, 56-586, 56-587 through 56-593, and 56-596 of the Code of Virginia are repealed.
3. That nothing in this act shall be deemed to modify or impair the terms, unless otherwise modified by an order of the State Corporation Commission, of any order of the State Corporation Commission approving the divestiture of generation assets that was entered pursuant to repealed § 56-590.
4. That the State Corporation Commission shall adopt such rules, regulations, orders or procedures as may be necessary to carry out the provisions of this act.
5. That the provisions of this act shall become effective on January 1, 2008.