HB1288: Public utilities; rate review by the State Corporation Commission.
HOUSE BILL NO. 1288
Be it enacted by the General Assembly of Virginia:
1. That §§ 56-234.2, 56-235, 56-235.2, and 56-581 of the Code of Virginia are amended and reenacted as follows:
§ 56-234.2. Review of rates.
The Commission shall review the rates of any public utility on an annual basis when, in the opinion of the Commission, such annual review is in the public interest, provided that the rates of a public utility subject to § 56-585.1 shall be reviewed in accordance with subsection A of that section. If the Commission finds that the rates of a public utility subject to § 56-585.1 are not just and reasonable pursuant to § 56-235.2, the Commission may take any corrective action authorized in § 56-235.
§ 56-235. When Commission may fix rates, schedules, etc.; conformance with chapter.
If upon investigation the rates, tolls, charges, schedules, or
joint rates of any public utility operating in this the Commonwealth, including any public utility subject to §
56-585.1, shall be found to be unjust, unreasonable,
insufficient, or
unjustly discriminatory or to be preferential or otherwise in violation of any
of the provisions of law, the State Corporation Commission shall have power to
fix and order substituted therefor such rate or rates, tolls, charges, or schedules as shall be just
and reasonable. The Commission may
conduct such investigation on its own initiative or upon application by an
affected party. All rates, tolls, charges, or schedules set by the
Commission shall be valid only if they are in full conformance with the
provisions of this chapter. Nothing in subsection C of §
56-585.1 shall limit the Commission's authority under this section to ensure
that rates are just and reasonable pursuant to § 56-235.2 for any public
utility subject to § 56-585.1.
§ 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 the Commonwealth, including any public utility subject to §
56-585.1, 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 for utilities subject to such section; (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 that 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. 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
public 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 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.
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.
§ 56-581. Regulation of rates subject to Commission's jurisdiction.
A. After the expiration or termination of capped rates except as provided in § 56-585.1, the Commission shall regulate the rates of investor-owned incumbent electric utilities for the transmission of electric energy, to the extent not prohibited by federal law, and for the generation of electric energy and the distribution of electric energy to retail customers pursuant to § 56-585.1. However, if the Commission finds that the rates of a public utility subject to § 56-585.1 are not just and reasonable pursuant to § 56-235.2, the Commission may take any corrective action authorized in § 56-235.
B. Beginning July 1, 1999, and thereafter, no cooperative that was a member of a power supply cooperative on January 1, 1999, shall be obligated to file any rate rider as a consequence of an increase or decrease in the rates, other than fuel costs, of its wholesale supplier, nor must any adjustment be made to such cooperative's rates as a consequence thereof.
C. Except for the provision of default services under § 56-585 or emergency services in § 56-586, nothing in this chapter shall authorize the Commission to regulate the rates or charges for electric service to the Commonwealth and its municipalities.