Bill Text: VA HB1288 | 2025 | Regular Session | Prefiled
Bill Title: Public utilities; classification of customers.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced) 2024-02-01 - Continued to 2025 in Labor and Commerce by voice vote [HB1288 Detail]
Download: Virginia-2025-HB1288-Prefiled.html
Be it enacted by the General Assembly of Virginia:
1. That §56-235.2 of the Code of Virginia is amended and reenacted as follows:
§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)
(i) 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, including such normalization for
nonrecurring costs and annualized adjustments for future costs as the
Commission finds reasonably can be predicted to occur during the rate year, and
a fair return on the public utility's rate base used to serve those
jurisdictional customers, which return shall be calculated in accordance with §
56-585.1 or 56-585.8 for utilities
subject to such section sections;
(1a) (ii)
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) (iii) the public utility has
demonstrated that such rates, tolls, charges or schedules contain reasonable
classifications of customers, which,
for a public electric utility or a public utility
authorized to furnish water or water and sewer service,
shall include a separate classification for data centers as
defined in §58.1-3506.
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. 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.
For ratemaking purposes, the Commission shall determine the
federal and state income tax costs for investor-owned water, gas, or electric
utility that is part of a publicly-traded, consolidated group as follows: (i)
(a) such utility's apportioned state income tax costs shall
be calculated according to the applicable statutory rate, as if the utility had
not filed a consolidated return with its affiliates, and
(ii) (b)
such utility's federal income tax costs shall be calculated according to the
applicable federal income tax rate and shall exclude any consolidated tax
liability or benefit adjustments originating from any taxable income or loss of
its affiliates.
In any ratemaking proceeding for an investor-owned utility authorized to furnish water or water and sewer service initiated after January 1, 2022, the Commission shall evaluate such utility on a stand-alone basis and, for purposes of establishing any revenue requirement and rates, utilize such utility's actual end-of-test period capital structure and cost of capital without regard to the cost of capital, capital structure, or investments of any other entities with which such utility may be affiliated, unless the Commission finds based on evidence in the record that the debt to equity ratio of the actual end-of-test period capital structure of such utility is unreasonable, in which case the Commission may utilize a debt to equity ratio that it finds to be reasonable. In all proceedings initiated after January 1, 2022, in which the Commission reviews the rates and associated earnings of an investor-owned utility authorized to furnish water or water and sewer service, the Commission shall conduct such review utilizing the same cost of capital and capital structure adopted in the utility's most recent rate case in which such rates were set, without regard to any later changes in the cost of capital or capital structure.
B. The Commission shall, before approving special rates, contracts, incentives or other alternative regulatory plans under subsection A, 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.
C. 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.
