Bill Text: VA SB955 | 2018 | Regular Session | Comm Sub
Bill Title: Electric utility regulation; suspension of reviews of earnings, Transitional Rate Period.
Spectrum: Bipartisan Bill
Status: (Introduced - Dead) 2018-02-05 - Passed by indefinitely in Commerce and Labor (8-Y 5-N) [SB955 Detail]
Download: Virginia-2018-SB955-Comm_Sub.html
Be 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.
3. That the State Corporation Commission shall (i) direct that any credits ordered to customers pursuant to subsection A of §56-585.1:1 of the Code of Virginia as amended by this act be credited to customers' bills immediately and (ii) shall not divert any portion of the amount of such credits to any alternative use or program.