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2018 SESSION
18104916DBe it enacted by the General Assembly of Virginia:
1. That § 56-585.1:1 of the Code of Virginia is amended and reenacted as follows:
§ 56-585.1:1. Transitional Rate Period: review of rates, terms and conditions for utility generation facilities.
Notwithstanding the
provisions of §§ 56-249.6 and 56-585.1:
A. No biennial reviews of the rates, terms, and conditions for
any service of a Phase I Utility, as defined in § 56-585.1, shall be conducted
at any time by the State Corporation
Commission for during
the four successive 12-month test periods beginning January
1, 2014 2015,
and ending December 31, 2017. No biennial reviews of the rates, terms, and
conditions for any service of a Phase II Utility, as defined in § 56-585.1,
shall be conducted at any time by the State Corporation
Commission for during
the five successive 12-month test periods beginning January
1, 2015 2016,
and ending December 31, 2019 2018. Such test Test periods beginning January
1, 2014, and ending December 31, 2017, for a Phase I Utility, and beginning
January 1, 2015, and ending December 31, 2019 2018, for a Phase II Utility,
are collectively referred to herein as the "Transitional Rate
Period." Review of recovery of fuel and purchase power costs shall
continue during the Transitional Rate Period in accordance with § 56-249.6. Any
biennial review of the rates, terms, and conditions for any service of a Phase
II Utility occurring in 2015 during the Transitional Rate Period shall be
solely a review of the utility's earnings on its rates for generation and
distribution services for the two 12-month test periods ending December 31,
2014, and a determination of whether any credits to customers are due for such
test periods pursuant to subdivision A 8 b of § 56-585.1. After the conclusion
of the Transitional Rate Period, biennial reviews shall resume for a Phase I
Utility in 2020, with the first such
proceeding utilizing the two successive 12-month test periods beginning January
1, 2018, and ending December 31, 2019 2018. A Phase I
Utility's filing in such proceeding shall be made on or before September 30,
2018. After the conclusion of the Transitional Rate Period,
biennial reviews shall resume for a Phase II Utility, as defined
in § 56-585.1, in 2022, with the
first such proceeding utilizing the two successive 12-month test periods
beginning January 1, 2020, and ending December 31, 2021 2019.
Consistent with this provision, (i) no biennial review filings shall be made by
an investor-owned incumbent electric utility in the years 2016 through 2019, inclusive, and 2017 and (ii) no
adjustment to an investor-owned incumbent electric utility's existing tariff
rates, including any rates adopted pursuant to § 56-235.2, shall be made between the beginning of the Transitional Rate Period and the conclusion of the first biennial review after the
conclusion of the Transitional Rate Period, except as may be provided
pursuant to § 56-245 or 56-249.6 or subdivisions subdivision A 4, 5, or 6 of §
56-585.1. Following the first biennial
reviews after the conclusion of the Transitional Rate Period, subsequent
biennial review proceedings shall utilize the two successive 12-month test
periods ending December 31 immediately preceding the year in which such biennial
proceeding is conducted. During the
first biennial reviews after the conclusion of the Transitional Rate Period,
the Commission shall review the earnings during the Transitional Rate Period of
a Phase I Utility or a Phase II Utility, as applicable, and if warranted by the
Commission's determination of the
utility's earnings during such period, shall order credits to customers based
on such earnings during such period and, further, if
warranted by such determination of earnings, shall order adjustments to rates pursuant to
the provisions of subdivisions A 8 a, b, and c of § 56-585.1.
B. During the Transitional Rate Period, pursuant to § 56-36, the Commission shall have the right at all times to inspect the books, papers and documents of any investor-owned incumbent electric utility and to require from such companies, from time to time, special reports and statements, under oath, concerning their business.
C. 1. Commencing in In 2016 and
concluding in 2018, the State
Corporation Commission, after notice and opportunity for a
hearing, shall conduct a proceeding every two years
to determine the fair rate of return on common equity to be used by a Phase I
Utility as the general rate of return applicable to rate adjustment clauses
under subdivisions subdivision A 5 or A 6 of § 56-585.1. A Phase I
Utility's filing in such proceedings proceeding shall be made on or
before March 31 of 2016, and 2018.
2. Commencing in In 2017 and
concluding in 2019, the State
Corporation Commission, after notice and opportunity for a
hearing, shall conduct a proceeding every two years
to determine the fair rate of return on common equity to be used by a Phase II
Utility as the general rate of return applicable to rate adjustment clauses
under subdivisions subdivision A 5 or A 6 of § 56-585.1. A Phase II
utility's filing in such proceedings proceeding shall be made on or
before March 31 of 2017 and 2019.
3. Such fair rate of return shall be calculated pursuant to the
methodology set forth in subdivisions A 2 a and b of § 56-585.1 and shall
utilize the utility's actual end-of-test-period capital structure and cost of
capital, as well as a 12-month test period ending December 31 immediately
preceding the year in which the proceeding is conducted. The Commission's final
order in such a proceeding shall be entered no later than eight months after
the date of filing, with any adjustment to the fair rate of return for
applicable rate adjustment clauses under subdivisions A 5 and 6 of § 56-585.1
taking effect on the date of the Commission's final order in the proceeding,
utilizing rate adjustment clause true-up protocols as the Commission may in its
discretion determine. Such proceeding shall concern only the issue of the determination
of such fair rate of return to be used for rate adjustment clauses under
subdivisions A 5 and 6 of § 56-585.1, and such determination shall have no
effect on rates other than those applicable to such rate adjustment clauses;
however, after the final such proceeding for
a utility has been concluded, the fair combined rate of return on common equity
so determined therein shall also be deemed equal to the fair combined rate of
return on common equity to be used in such utility's first biennial review
proceeding conducted after the end of the utility's Transitional Rate Period to
review such utility's earnings on its rates for generation and distribution
services for the historic test periods.
D. In furtherance of rate stability during the Transitional
Rate Period, any Phase II Utility carrying a prior period deferred fuel expense
recovery balance on its books and records as of December 31, 2014, shall not
recover from customers 50 percent of any such balance outstanding as of
December 31, 2014, and the State Corporation
Commission shall implement as soon as practicable reductions in the fuel factor
rate of any such Phase II Utility to reflect the nonrecovery of any such fuel
expense as well as any reduction in the fuel factor associated with the Phase
II Utility's current period forecasted fuel expense over recovery for the
2014-2015 fuel year and projected fuel expense for the 2015-2016 fuel year.
E. Except for early retirement plans identified by the utility
in an integrated resource plan filed with the State
Corporation Commission by September 1, 2014, for utility
generation plants, an investor-owned incumbent electric utility shall not
permanently retire an electric power generation facility from service during
the Transitional Rate Period without first obtaining the approval of the State Corporation Commission,
upon petition from such investor-owned incumbent electric utility, and a
finding by the State Corporation Commission
that the retirement determination is reasonable and prudent. During the Transitional
Rate Period, an investor-owned incumbent electric utility shall recover the
following costs, as recorded per books by the utility for financial reporting
purposes and accrued against income, only through its existing tariff rates for
generation or distribution services, except such costs as may be recovered
pursuant to § 56-245, § or 56-249.6 or subdivisions subdivision A 4, A 5, or A
6 of § 56-585.1: (i) costs associated with asset impairments related to early
retirement determinations for utility generation facilities resulting from the
implementation of carbon emission guidelines for existing electric power
generation facilities that the U.S. Environmental Protection Agency has issued
pursuant to § 111(d) of the Clean Air Act; (ii) costs associated with severe
weather events; and (iii) costs associated with natural disasters.
F. During the Transitional Rate Period:
1. The State Corporation
Commission shall submit a report and make recommendations to the Governor and
the General Assembly annually on or before December 1 of each year assessing
the updated integrated resource plan of any investor-owned incumbent electric
utility. The report shall include an analysis of, among other matters, the
amount, reliability, and type of generation facilities needed to serve Virginia
native load compared to what is then available to serve such load and what may
be available to serve such load in the future in view of market conditions and
current and pending state and federal environmental regulations. As a part of
such report, the State Corporation Commission
shall update its estimate of the impact upon electric rates in Virginia of the
implementation of carbon emission guidelines for existing electric power
generation facilities that the U.S. Environmental Protection Agency has issued
pursuant to § 111(d) of the federal Clean Air Act. The State
Corporation Commission shall submit copies of such annual
reports to the Chairmen of the House and Senate Committees on Commerce and
Labor and the Chairman of the Commission on Electric Utility Regulation; and
2. The Department of Environmental Quality shall submit a report and make recommendations to the Governor and the General Assembly annually on or before December 1 of each year concerning the implementation of carbon emission guidelines for existing electric power generation facilities that the U.S. Environmental Protection Agency has issued pursuant to § 111(d) of the federal Clean Air Act. The report shall include an analysis of, among other matters, the impact of such federal regulations on the operation of any investor-owned incumbent electric utility's electric power generation facilities and any changes, interdiction, or suspension of such regulations. The Department of Environmental Quality shall submit copies of such annual reports to the Chairmen of the House and Senate Committees on Commerce and Labor and the Chairman of the Commission on Electric Utility Regulation.
G. The construction or purchase by an investor-owned incumbent utility of one or more generation facilities with at least one megawatt of generating capacity, and with an aggregate rated capacity that does not exceed 500 megawatts, that use energy derived from sunlight and are located in the Commonwealth, regardless of whether any of such facilities are located within or without such utility's service territory, is in the public interest, and in determining whether to approve such facility, the Commission shall liberally construe the provisions of this section. Such utility shall utilize goods or services sourced, in whole or in part, from one or more Virginia businesses. The utility may propose a rate adjustment clause based on a market index in lieu of a cost of service model for such facility. An investor-owned incumbent utility may enter into short-term or long-term power purchase contracts for the power derived from sunlight generated by such generation facility prior to purchasing the generation facility.
H. To the extent the provisions of this section are inconsistent with the provisions of §§ 56-249.6 and 56-585.1, the provisions of this section shall control.
2. That the State Corporation Commission (the Commission) shall be authorized to notify every customer of an investor-owned electric utility to which § 56-585.1:1 of the Code of Virginia, as amended by this act, applies that (i) the General Assembly has authorized the Commission to conduct biennial reviews of the rates, terms, and conditions for any service of the utility during 2018 or 2019, as applicable, and (ii) pursuant to a biennial review proceeding, the customer may be entitled to a credit on the customer's bill if the Commission finds that such a credit is required pursuant to the provisions of subdivision A 8 b of § 56-585.1 of the Code of Virginia. The Commission may direct that the notice be provided through a utility billing insert approved by the Commission.