2025 SESSION
INTRODUCED
25100737D
HOUSE BILL NO. 2422
Offered January 8, 2025
Prefiled January 8, 2025
A BILL to amend and reenact 56-235.2 of the Code of Virginia, relating to public utilities; classification of customers.
PatronWebert
Committee Referral Pending
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 the 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 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, 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.