Bill Text: WV HB2660 | 2019 | Regular Session | Introduced
Bill Title: Relating to the manner in which actual investment of capital and costs and a natural gas utility’s expedited cost recovery are calculated
Spectrum: Moderate Partisan Bill (Republican 9-2)
Status: (Introduced - Dead) 2019-01-24 - To House Energy [HB2660 Detail]
Download: West_Virginia-2019-HB2660-Introduced.html
WEST virginia legislature
2019 regular session
Introduced
House Bill 2660
By Delegates Anderson, Azinger, Howell, Kelly, J., Westfall, Pethtel, Storch, Kelly, D., Swartzmiller, Nelson and harshbarger
[Introduced January 24, 2019; Referred
to the Committee on Energy.]
A BILL to amend and reenact §24-2-1k of the Code of West Virginia, 1931, as amended, relating to the Public Service Commission; natural gas infrastructure; actual investment of capital and costs; and how utility’s expedited cost recovery are calculated and determined.
Be it enacted by the Legislature of West Virginia:
ARTICLE 2. POWERS AND DUTIES OF PUBLIC SERVICE COMMISSION.
§24-2-1k. Natural gas infrastructure expansion, development, improvement and job creation; findings; expedited process; requirements; rulemaking.
(a) The Legislature hereby finds that:
(1) West Virginia is rich in energy resources, which provide many advantages to the state, its economy and its citizens;
(2) West Virginia is experiencing significant growth in the natural gas industry with the development of the Marcellus and Utica shale;
(3) West Virginia's abundant natural gas reserves have created, and will continue to create, many benefits to the state and its citizens;
(4) Growth in the natural gas industry and its accompanying benefits require West Virginia to be proactive and increase the focus on the natural gas infrastructure in this state in order for those benefits to flow to the state and its citizens, including those citizens in areas unserved or underserved by natural gas utilities;
(5) A comprehensive program of replacing, upgrading and expanding infrastructure by natural gas utilities at reasonable cost to ratepayers will benefit the customers of the natural gas utilities, the public in West Virginia and the economy of the state, as a whole;
(6) A natural gas utility infrastructure program will create jobs, provide for continued and enhanced safety and reliability of aging natural gas infrastructure, provide for more economic natural gas utility service, and provide natural gas utility service to new customers in areas of the state that are unserved or underserved; and
(7) Natural gas utility infrastructure programs involve
the investment of capital and the incurrence of associated incremental
costs. Accordingly, in order for the natural gas utility undertaking those
infrastructure programs to attract the necessary capital, the natural gas
utility should be permitted to recover the incremental rate of return,
related income taxes, depreciation and property taxes associated with the
infrastructure programs commencing with the implementation of an infrastructure
program approved by the commission without waiting for, or otherwise being
subject to a commission requirement for, a full base rate tariff filing as
more fully described in §24-2-1k(f) of this code.
(b) Natural gas utilities may file with the commission an application for a multi-year comprehensive plan for infrastructure replacements, upgrades and extensions. Subject to commission review and approval, a plan may be amended and updated by the natural gas utility as circumstances warrant. The recovery of costs in support of the plans and applications made under this section shall be allowed in the manner set forth in this section if the proposed plans have been found to be prudent and useful.
(c) The Applications is made under this
section are in lieu of a proceeding pursuant to section eleven of this
article and shall contain the following:
(1) A description of the infrastructure program, in such detail as the commission prescribes, and the projected annual amount (in approximate line sizes and feet), general location, type, and projected installation timing of the facilities that the applicant proposes to replace, construct and/or improve;
(2) The actual and projected net capital
investments and its cost, on an annual basis, of the replacement,
construction or improvements;
(3) The projected starting date for the infrastructure program;
(4) The projected numbers of potential new customers, if any, that may be served by the infrastructure program and the projected annual load of the customers;
(5) The projected cost of debt for the infrastructure program funding and the projected capital structure for infrastructure program funding;
(6) Testimony, exhibits or other evidence that demonstrates the need for the replacement, construction or improvement of facilities in order to provide and maintain adequate, efficient, safe, reliable and reasonable natural gas service;
(7) A proposed cost recovery mechanism for actual and projected capital investments under the infrastructure program consistent with this section; and
(8) Other information the applicant considers relevant or the commission requires.
(d) Upon filing of the applications under this
section, the applicant shall publish, in the form the commission directs,
which form shall include, but not be limited to, the anticipated rates and, if
any, rate increase under the proposal, by average percentage and dollar amount
for customers within a class of service, as a Class I legal advertisement in
compliance with the provisions of §59-3-1 et seq. of this code,
the publication area to be each county in which service is provided by the
natural gas utility, a notice of the filing of the application and that the
commission shall hold a hearing on the application within 90 days of the
notice; unless no opposition to the rate change is received by the Public
Service Commission within one week of the proposed hearing date, in which case
the hearing can be waived, and issue a final order within 150 days of the
application filing date. However, if the proposed infrastructure
program an application made under this section includes a request
for extension of infrastructure into an unserved area and another natural gas
utility files to extend service to the same area, the commission may move that
extension request of each natural gas utility into separate proceedings to be considered
concurrently and extend the time period for issuing a final order on that
portion of the proposed programs beyond the 150 days.
(e) Upon notice and hearing, if required by the
commission, the commission shall approve the infrastructure program and
applications made under this section and allow expedited recovery of costs
related to the expenditures actual and projected capital investments
as provided in subsection (f) of this section if the commission finds that the expenditures
and the associated rate requirements actual and projected capital
investments are just, reasonable, not contrary to the public interest and
will allow for the provision and maintenance of adequate, efficient, safe, and
reliable and reasonably priced natural gas service: Provided,
That the utility’s expedited cost recovery of the costs calculated as provided
in §24-2-1k(f) of this code shall not be made subject to: (i) Any caps,
limitations or restrictions however derived on actual or projected capital investments,
the costs related to the actual and projected capital investments as provided
in subsection (f) of this section, or the rates calculated to recover such
costs; or (ii) a requirement to file or to refrain from filing a full base rate
tariff filing.
(f) Upon commission approval, natural gas utilities will
be authorized to implement the infrastructure programs and applications made
under this section and to recover related incremental costs related
to actual and projected capital investments, net of contributions to
recovery of return and depreciation and property tax expenses directly
attributable to the infrastructure program provided by new customers served by
the infrastructure program investments, if any, as provided in the following:
(1) An allowance for return shall be calculated by
applying a rate of return to the average planned net incremental increase to
rate base attributable to cumulative actual rate base as well as
projected rate base under the infrastructure program for the coming
year, considering the projected amount and timing of expenditures under the
infrastructure program plus any expenditures in previous years of the
infrastructure program. The rate of return shall be determined by utilizing
the rate of return on equity authorized by the commission in the natural gas
utility's most recent rate case proceeding or in the case of a settled rate
case, a rate of return on equity set forth in such settlement or, if none is
set forth in such settlement, as determined by the commission, and the
projected cost of the natural gas utility's debt during the period of the
infrastructure program to determine the weighted cost of capital based upon the
natural gas utility's capital structure.
(2) Income taxes applicable to the return allowed on the infrastructure program shall be calculated for inclusion in rates.
(3) Incremental Depreciation and property tax
expenses directly attributable to the infrastructure program shall be estimated
for the upcoming year.
(4) Following commission approval of its infrastructure
program and its applications made under this section, a natural gas
utility shall place into effect rates that include an increment that
recover the allowance for return, related income taxes, depreciation and
property tax expenses associated with the natural gas utility's estimated
actual and projected capital investments under the infrastructure
program investments for the upcoming year, net of contributions to
recovery of those incremental costs provided by new customers served by
the infrastructure program investments, if any, ("incremental cost
recovery increment"). In each year subsequent to the order approving the
infrastructure program and an incremental a cost recovery increment
rate, the natural gas utility shall file a petition an
application with the commission setting forth a new proposed incremental
cost recovery increment rate based on projected capital investments
to be made in the subsequent year, plus any under-recovery or minus any
over-recovery of actual incremental costs for the preceding year attributable
to the infrastructure program program’s actual investments,
for the preceding year.
(5) In calculating the cost recovery of the allowance for return, related income taxes, depreciation and property tax expenses associated with the actual and projected total capital investments under the infrastructure program, there shall be no requirement imposed on the gas utility to reduce actual or projected total capital investments under the infrastructure program or infrastructure program rate base: (i) For any amount of, or any amount representative of, return, income taxes, depreciation expense, property tax expense or any other item embedded in the gas utility’s current base rates; or (ii) for any amount of, or any amount representative of, revenues or costs associated with actual or projected capital investments by the gas utility where the costs associated with such capital investments are not the subject of the gas utility’s applications under this section.
(g) The natural gas utility may make any accounting
accruals necessary to establish a regulatory asset or liability through which
actual incremental costs incurred and costs recovered through the rate
mechanism are tracked.
(h) Natural gas utilities may defer incremental
operation and maintenance expenditures attributable to regulatory and
compliance-related requirements introduced after the natural gas utility's last
rate case proceeding and not included in the natural gas utility's current base
rates. In a future rate case, the commission may shall allow
recovery of the deferred costs amortized over a reasonable period of time to be
determined by the commission provided the commission finds that the costs were
reasonable and prudently incurred and were not reflected in rates in prior rate
cases.
NOTE: The purpose of this bill is to amend the manner in which actual investment of capital and costs and a natural gas utility’s expedited cost recovery are calculated and determined by the Public Service Commission.
Strike-throughs indicate language that would be stricken from a heading or the present law and underscoring indicates new language that would be added.
