SB 1265 — Virginia Electric Utility Regulation Act; retail competitiveness, review proceedings, etc.

(1) Commingling of deferred fuel cost charges with other amounts;

S (4) Any right or obligation that the seller may have to repurchase the deferred fuel cost charges;ch1rges;

(6)6 (7) The obligationtransferor acting as the servicer of the sellerdeferred fuel cost charges or the existence of any contract that authorizes or requires the electric utility, to the extent that any interest in d2ferred fuel cost property is sold or assigned, to agree with the assignee or any financing party that it will continue to operate its system to provide service to its customers, will collect amounts in respect of the deferred fuel cost charges onfor behalfthe benefit and account of such assignee or financing party, and will account for and remit such amounts to or for the assignee;account of such assignee or financing party;

(7)(8) The transferortreatment acting as the servicer of the deferredsale, fuelconveyance, costassignment, charges or theother existencetransfer offor anytax, contractfinancial thatreporting, authorizes or requires(9) theThe electricgranting utility,or providing to thebondholders extentof thata anypreferred interestright into the deferred fuel cost property is sold or assigned,credit toenhancement agreeby with the assigneeelectric utility or any financing party that it will continue to operate its systemaffiliates towith providerespect service to its customers, will collect amounts in respect of the deferred fuel cost chargesbonds; for the benefit and account of such assignee or financing party, and will account for and remit such amounts to or for the account of such assignee or financing party;

(8) The treatment of the sale, conveyance, assignment, or other transfer for tax, financial reporting, or other purposes;

(9) The granting or providing to bondholders of a preferred right to the deferred fuel cost property or credit enhancement by the electric utility or its affiliates with respect to the deferred fuel cost bonds;

Any right that an electric utility has in the deferred fuel cost property before its pledge, sale, or transfer or any other right created under this section or created in the financing order and assignable under this section or assignable pursuant to a financing order shall be property in the form of a contractshall rightbe orenforceable aonly chosewhen inall action.of the following have occurred:

Transfer(i) ofa anfinancing interestorder is issued, (ii)ee value is received by the transferor for such deferred fuel cost property, (iii) the transferor has rights in such deferred fuel cost property or the power to antransfer assigneerights shallin besuch enforceabledeferred onlyfuel whencost allproperty, ofand (iv) transfer documents in connection with the followingissuance haveof occurred:deferred fuel cost bonds are executed and delivered by the transferor.

(i)An aenforceable financingtransfer orderof isan issued,interest (ii)in value is received by the transferor for such deferred fuel cost property,property (iii)to thean transferorassignee hasshall rightsbe inperfected suchagainst deferredall fuelthird costparties, propertyincluding orsubsequent thejudicial poweror toother transferlien rightscreditors, inwhen sucha deferrednotice fuelof costthat property, and (iv) transfer documentshas inbeen connectiongiven withby the issuancefiling of deferreda fuelfinancing coststatement bondsin arefiling.nce executedwith andsubdivision delivered2 byc. the transferor.

AnThe enforceable transfer of an interest in deferred fuel cost property to an assignee shall be perfected against all third parties,parties includingas subsequent judicial or other lien creditors, when a notice of that transfer has been given by the filingdate of ad. financing statement in accordance with subdivision 2 c.

The transfer shall be perfected against third parties as of the date of filing.

d.

The filing of such a financing statement shall be the only method of perfecting a transfer of deferrede. fuel cost property.

e.The priority of a transfer perfected under this section shall not be impaired by any later of 27 modification of the financing order or deferred fuel cost property or by the commingling of funds arising from deferred fuel cost property with other funds.

The priority of a transfer perfected under this section shall not be impaired by any later modification of the financing order or deferred fuel cost property or by the commingling of funds arising from deferred fuel cost property with other funds.

and (3) A perfected interest or right of an assignee shall have priority over a person who becomes a lien of 26 creditor after the perfection of such assignee's interest or right.

Alter the provisions of this section that authorize the Commission to create an irrevocable contract right or chose in action by the issuance of a financing order, to create deferred fuel cost of 27 property, and to make the deferred fuel cost charges imposed by a financing order irrevocable, binding, or nonbypassable charges;

R b.

Take or permit any action that impairs or would impair the value of deferred fuel cost propertyprEperty or theauthorized;y security for the deferred fuel cost bonds or revises the deferred fuel costs for which recovery is authorized;c.

c.

or N d.

Except for changes made pursuant to the formula-based adjustment mechanism authorized under this section, reduce, alter, or impair deferred fuel cost charges that are to be imposed, billed, charged, collected, and remitted for the benefit of the bondholders, any assignee, and any other financingfinanciOg parties until any and all principal, interest, premium, financing costs and other fees, expenses, or charges incurred,have andbeen anypaid contractsand toperformed bein performed,full.formed, in connection with the related deferred fuel cost bondsLonds have2. been paid and performed in full.

2.Any person that issues deferred fuel cost bonds may include the language specified in subdivision 1 in the deferred fuel cost bonds and related documentation.

AnyE personK. that issues deferred fuel cost bonds may include the language specified in subdivision in the deferred fuel cost bonds and related documentation.

K.

ofD 26 L.

If there is a conflict between this section and any other law regarding the attachment, assignment, or perfection, or the effect of perfection, or priority of, assignment or transfer of, or security interest in deferreddefM. fuel cost property, this section shall govern.

M.

If any provision of this section is held invalid or is invalidated, superseded, replaced, repealed, or expires for any reason, that occurrence shall not affect the validity of any action allowed under this section that is taken by an electric utility, an assignee, a financing party, a collection agent,agenS, or a party to an ancillary agreement, and any such action shall remain in full force and effect with respectrespe1t to all deferred fuel cost bonds issued or authorized in a financing order issued under this section beforebe6ore the datefor thatany suchreason.provision provision is held invalid or is invalidated, superseded, replaced, or repealed, orEr expires forO. any reason.

O.

2 "Ancillary agreement" means a bond, insurance policy, letter of credit, reserve account, surety bond, interest rate lock or swap arrangement, hedging arrangement, liquidity or credit support arrangement, or other financial arrangement entered into in connection with deferred fuel cost bonds.

"Assignee" includes a corporation, limited liability company, general partnership or limited partnership, public authority trust, financing entity, or other entity to which an assignee assigns, sells, or transfers, other than as a security, all or a portion of its interest in or right to deferred fuel cost property.

"Deferred fuel cost bonds" means bonds debentures, notes, certificates of participation, certificates of beneficial interest, certificates of ownership, or other evidences of indebtedness or ownership that are issued in one or more series or tranches by an electric utility or its assignee pursuant to a financing order, the proceeds of which are used directly or indirectly to recover, finance, or refinance Commission-approved deferred fuel costs and financing costs, and that are secured by or payable from deferred fuel cost property.

(ii) collected by an electric utility or its successor or assignees, or a collection agent, in full, separate and apart from the electric utility's base rates;of such customer, except for an exempt retail access customer.utility, irrespective of the generation supplier "Deferred fuel cost property" includes:

and (iii) paid by all retail customers of the electric utility, irrespective of the generation supplier of such customer, except for an exempt retail access customer.

"Deferred fuel cost property" includes:

All revenues, collections, claims, rights to payments, payments, money, or proceeds arising from the rights and interests specified in the financing order, regardless of whether such revenues, collections, claims, rights to payment, payments, money, or proceeds are imposed, billed, received, of 27 collected, or maintained together with or commingled with other revenues, collections, rights to payment, payments, money, or proceeds.

Any payment required under any indenture, ancillary agreement, or other financing documents pertaining to deferred fuel cost bonds and any amount required to fund or replenish a reserve account of 26 or other accounts established under the terms of any indenture, ancillary agreement, or other financing documents pertaining to deferred fuel cost bonds;

In any proceeding to review base rates for a Phase I Utility that commences after July 1, 2023, if the Commission determines in its sole discretion that the utility's existing base rates will, on a going-forward basis, either produce (i) revenues in excess of the utility's authorized rate of return or (ii) revenues below the utility's authorized rate of return, then, notwithstanding any provision of law governing rate proceedings, the Commission shall order any reductions or increases, as applicable and of 27 necessary, to such base rates that it deems appropriate to ensure the resulting base rates (a) are just and reasonable and (b) provide the utility an opportunity to recover its costs of providing servicesserRices over the rate period ending on December 31 of the year of the utility's succeeding review and earn aaEfair fairdetermination rateshall ofbe returnlimited authorizedto pursuantthe toPhase I Utility's base rates and shall not consider the provisionscosts governingor suchrevenues reviewrecovered proceeding.in any rate adjustment clause authorized pursuant to this chapter.

SuchE determinationC. shall be limited to the Phase I Utility's base rates and shall not consider the costs or revenues recovered in any rate adjustment clause authorized pursuant to this chapter.

C.In any proceeding to review base rates for a Phase II Utility that commences after July 1N 2023, if the Commission determines in its sole discretion that the utility's existing base rates will, on a going-forward basis, either produce (i) revenues in excess of the utility's authorized rate of return or (ii) revenues below the utility's authorized rate of return, then, notwithstanding any provision of Oubdivision A 8 of § 56-585.1, the Commission shall order any reductions or increases, as applicable and necessary, reasonable and (b) provide the utility an opportunity to recover its costs of providing services over the rate period ending on December 31 of the year of the utility's succeeding review and earn a fair rate of return on its base rates as determined in subdivision A 2 of § 56-585.1.

InSuch anydetermination proceedingshaEl tobe reviewlimited baseto ratesthe for a Phase II UtilityUtility's that commences after July 1, 2023, if the Commission determines in its sole discretion that the utility's existing base rates will,and onshall anot going-forwardconsider basis, either produce (i) revenues in excess of the utility'scosts authorized rate of return or (ii) revenues belowrecovered thein utility'sany authorized rate ofadjustment return,clause then,authorized notwithstandingpursuant anyto provision of subdivision A 86 of § 56-585.1,56-585.1 the Commission shall order any reductions or increases, as applicable and necessary, to such base rates that ithas deemsnot appropriatebeen tocombined ensurewith the resulting base rates (a) are just and reasonable and (b) provide the utility an opportunity to recover its costs of providing services over the rate period ending on December 31 of the year of the utility's succeeding review and earn a fair rate of return on its base ratesrates. as determined in subdivision A 2 of § 56-585.1.

SuchThe determinationCommission shall beuse limitedthe tomost therecently Phaseended II12-month Utility'stest baseperiod, ratesalong andwith shallnormalization notof considernonrecurring thetest period costs orand revenuesannualized recoveredadjustments infor anyfuture ratecosts, adjustmentbase clauserates, authorizeda pursuantPhase toII subdivisionUtility Ashall 6separately ofproject §future 56-585.1costs thatover haseach not12-month beenperiod combinedending withon December 31 of the year of the utility's basesucceeding rates.rate periods.

The Commission shallmay, useto the mostextent recentlyit endedfinds 12-monthsuch testaction period,aligns along with normalizationthe ofutility's nonrecurringprojected testcost periodof costsservice, anddirect annualizedthat adjustmentsany forreduction futureor costs,increase asto the basisutility's rates for determininggeneration and distribution services be implemented on a staggered basis at the appropriatenesscommencement and midpoint of anythe succeeding rate adjustment.period.

InS anyB. such filing to review base rates, a Phase II Utility shall separately project future costs over each 12-month period ending on December 31 of the year of the utility's succeeding rate periods.

The Commission may, to the extent it finds such action aligns with the utility's projected cost of service, direct that any reduction or increase of 26 to the utility's rates for generation and distribution services be implemented on a staggered basis at the commencement and midpoint of the succeeding rate period.

B.

Beginning July 1, 1999, and thereafter, no cooperative that was a member of a power supplysu1ply cooperative on January 1, 1999, shall be obligated to file any rate rider as a consequence of ana6 increase ormade decreaseto insuch thecooperative's rates,rates otheras thana fuelconsequence costs,thereof.olesale of its wholesale supplier, nor must any adjustmentadjustEent be madeC. to such cooperative's rates as a consequence thereof.

C.

Except for the provision of default services under § 56-585 or emergency services in §§256-586, 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.

"Phase II Utility" has the same meaning as provided in subdivision A 1 of § 56-585.1.

In such proceedings the Commission shall determine fair rates of return on common equity applicableany methodology to determine such return it finds consistent with the generationpublic interest, but such return use shall not be set lower than the average of the returns on common equity reported to the Securities and distributionExchange servicesCommission for the three most recent annual periods for which such data are available by not less than a majority, selected by the Commission as specified in subdivision 2 b, of other investor-owned electric utilities in the utility.peer group of the utility, nor shall the Commission set such return more than 300 basis points higher than such average.

In so doing, the Commission may use any methodology to determine such return it finds consistent with the public interest, but such return shall not be set lower than the average of the returns on common equity reported to the Securities and Exchange Commission for the three most recent annual periods for which such data are available by not less than a majority, selected by the Commission as specified in subdivision 2 b, of other investor-owned electric utilities in the peer group of the utility, nor shall the Commission set such return more than 300 basis points higher than such average.

The Commission may increase or decrease such combined rate of return by up to 100 basis points based on the generating plant performance, customer service, and operating efficiency of a utility, as compared to nationally recognized standards determined by the Commission to be appropriate for such purposes.

If the Commission finds that the utility's combined rate of return on common equity is more than 50 basis points above the combined rate of return as so determined, it shall be authorized either (i) to order reductions to the utility's rates it finds appropriate, provided that the of 27 Commission may not order such rate reduction unless it finds that the resulting rates will provide the utility with the opportunity to fully recover its costs of providing its services and to earn not less than the fair rates of return on common equity applicable to the generation and distribution services;

For purposes of this section, a Phase I Utility is an investor-owned incumbent electric utility that was, as of July 1, of 26 1999, not bound by a rate case settlement adopted by the Commission that extended in its application beyond January 1, 2002, and a Phase II Utility is an investor-owned incumbent electric utility that was bound by such a settlement.

The Commission may, consistent with its precedent for incumbent electric utilities prior to the enactment of Chapters 888 and 933 of the Acts of Assembly of 2007, increase or decrease the utility's of 27 combined rate of return based on the Commission's consideration of the utility's performance for generation and distribution services by up to 50 basis points based on factors that may includeincludeR reliability, generating plant performance, customer service, and operating efficiency of a utility.utilEty.

Any such adjustment to the combined rate of return for generation and distribution services shall include consideration of nationally recognized standards determined by the Commission to be appropriate forforde such purposes.

E d.

In any Current Proceeding, the Commission shall determine whether the Current Return has N increased, on a percentage basis, above the Initial Return by more than the increase, expressed as a percentage, in the United States Average Consumer Price Index for all items, all urban consumers (CPI-U), as published by the Bureau of Labor Statistics of the United States Department of Labor,LaboO, since the date on which the Commission determined the Initial Return.

If so, the Commission may conduct an additional analysis of whether it is in the public interest to utilize such Current Return for the Current Proceeding then pending.

A finding of whether the Current Return justifies such additional analysis shallshallt be made without regard to any enhanced rate of return on common equity awarded pursuant to the L provisions of subdivision 6.

Such additional analysis shall include, but not be limited to, a considerationcEnsideration of overall economic conditions, the level of interest rates and cost of capital with respect to business and industry, in general, as well as electric utilities, the current level of inflation and the utility's cost of goods and services, the effect on the utility's ability to provide adequate service and to attract capital if less than the Current Return were utilized for the Current Proceeding then pending, and such other factorsuse of the Current Return for the Current Proceeding then pending would not be in the public interest,at then the lower limit imposed by subdivision 2 a on the return to be determined by the Commission for such utility shall be calculated, for that Current Proceeding only, by increasing the Initial Return by a percentage at least equal to the increase, expressed as a percentage, in the United States Average Consumer Price Index for all items, all urban consumers (CPI-U), as published by the Bureau of Sabor Statistics of the United States Department of Labor, since the date on which the Commission maydet1rmined deemthe relevant.Initial Return.

If, as a result of such analysis, the Commission finds that use of the Current Return for the Current Proceeding then pending would not be in the public interest, then the lower limit imposed by subdivision 2 a on the return to be determined by the Commission for such utility shall be calculated, for that Current Proceeding only, by increasing the Initial Return by a percentage at least equal to the increase, expressed as a percentage, in the United States Average Consumer Price Index for all items, all urban consumers (CPI-U), as published by the Bureau of Labor Statistics of the United States Department of Labor, since the date on which the Commission determined the Initial Return.

"Current6 Proceeding" means any proceeding conducted under any provisions of this subsection that require or authorize the Commission to determine a fair combined rate of return on common equity for of 26 a utility and that will be concluded after the date on which the Commission determined the InitialInit2al Return for such utility.

"Initial Return" means the fair combined rate of return on common equity determined for such utility by the Commission on the first occasion after July 1, 2009, under any provision of this subsection pursuantpure. to the provisions of subdivision 2 a.

e.

If the combined rate of return on common equity earned by the generation and distribution services is no more than 50 basis points above or below the return as so determined or, for any test period commencing after December 31, 2012, for a Phase II Utility and after December 31, 2013, for a Phase I Utility, such return is no more than 70 basis points above or below the return as so determined, such combined return shall not be considered either excessive or insufficient, respectively.

However, for any test period commencing after December 31, 2012, for a Phase II Utility, and after December 31, 2013, for a Phase I Utility, if the utility has, during the test period or periods under review, earned below the return as so determined, whether or not such combined return is within 70 basis points of the return as so determined, the utility may petition the Commission for approval of an increase in rates in accordance with the provisions of subdivision 8 a as if it had earned more than 70 basis points below a fair combined rate of return, and such proceeding shall otherwise be conducted in accordance with the a provisions of this section.

Each such utility shall make a triennial filing by March 31 of every third year, with such filings commencing for a Phase I Utility in 2020, and such filings commencing for a Phase II Utility in 2021, consisting of the schedules contained in the Commission's rules governing utility rate increase 2021, of 27 applications and terminating thereafter.

Notwithstanding the provisions of subsection C of § 56-581, such combination shall not serve as the basis for an increase in a Phase II Utility's rates for generation of 26 and distribution services in its 2023 biennial proceeding.

of 27 5.

A utility may at any time, after the expiration or termination of capped rates, but not more than once in any 12-month period, petition the Commission for approval of one or more rate adjustmentadjustmenR clauses for the timely and current recovery from customers of the following costs:

a.E 2004, and the expiration or termination of capped rates, if such utility is, as of July 1, 2007, deferring such costs consistent with an order of the Commission entered under clause (vi) of subsection B of § 56-582.

IncrementalThe costsCommission describedshall inapprove clausesuch (vi)a ofpetition subsectionallowing B of § 56-582 incurred between July 1, 2004, and the expirationrecovery or termination of capped rates, if such utility is, as of July 1, 2007, deferring such costs consistentthatN comply with anthe orderrequirements of the Commission entered under clause (vi) of subsection B of § 56-582.56-582;

The Commission shall approve such a petition allowing the recovery of such costs that comply with the requirements of clause (vi) of subsection B of § 56-582;

The Commission shall approve such a petition if it finds that the programpOogram is in the public interest, provided that the Commission shall allow the recovery of such costs as it finds are reasonable;reac.

c.

Any such petition shall include a proposed budget for the design, L implementation, and operation of the energy efficiency program, including anticipated savings fromfEom and spending on each program, and the Commission shall grant a final order on such petitions within eight months of initial filing.

If the Commission determines that an energy efficiency program or portfolio of programs is not in the public interest, its final order shall include all work product and analysis conducted by the Commission's staff in relation to that program that has bearing upon the Commission's determination.

Prior to January 1, 2022, the Commission shall award a margin for recovery on operating expensesexpeSses for energy efficiency programs and pilot programs, which margin shall be equal to the general rater1te of return on common equity determined as described in subdivision 2.

Beginning January 1, 2022, andan6 thereafter, if the Commission determines that the utility meets in any year the annual energy efficiency standards set forth in § 56-596.2, in the following year, the Commission shall award a margin on energyenergyy efficiency program operating expenses in that year, to be recovered through a rate adjustment clause,c2ause, which margin shall be equal to the general rate of return on common equity determined as described in subdivision 2.

If the Commission does not approve energy efficiency programs that, in the aggregate, can achieve the annual energy efficiency standards, the Commission shall award a margin on energy efficiency operating expenses in that year for any programs the Commission has approved, to be recovered through a rate adjustment clause under this subdivision, which margin shall equal the general ofpursuant 26to ratethis ofsubdivision returnshall onbe commonapplied equityas determinedpart asof describedthe inutility's subdivisionnext 2.rate adjustment clause true-up proceeding.

AnyThe marginCommission awardedshall also award an additional 20 basis points for each additional incremental 0.1 percent in annual savings in any year achieved by the utility's energy efficiency programs approved by the Commission pursuant to this subdivisionsubdivision, beyond the annual requirements set forth in § 56-596.2, provided that the total performance incentive awarded in any year shall benot appliedexceed as10 partpercent of thethat utility's nexttotal rateenergy adjustmentefficiency clauseprogram true-upspending proceeding.in that same year.

The Commission shall alsoannually awardmonitor anand additionalreport 20to basisthe pointsGeneral forAssembly eachthe additionalperformance incrementalof 0.1all percent in annual savings inrequired any year achieved by the§ utility's56-596.2, energyas efficiencywell programsas approved by the Commission pursuant to this subdivision, beyond the annual requirementsand setlifecycle forthnet inand §gross 56-596.2,energy providedand thatcapacitynual thesavings, totalrelated performanceemissions incentivereductions, awardedand inother anyquantifiable yearbenefits shall not exceed percent of thateach utility'sprogram; total energy efficiency program spending in that same year.

The Commission shall annually monitor and report to the General Assembly the performance of all programs approved pursuant to this subdivision, including each utility's compliance with the total annual savings required by § 56-596.2, as well as the annual and lifecycle net and gross energy and capacity savings, related emissions reductions, and other quantifiable benefits of each program;

Notwithstanding any other provision of law, unless the Commission finds in its discretion and after consideration of all in-state and regional transmission entity resources that there is a threat to the reliability or security of electric service to the utility's customers, the Commission shall not approve construction of any new utility-owned generating facilities that emit carbon dioxide as a by-product of combusting fuel to generate electricity unless the utility has already met the energy savings goalsgoalst of identified in § 56-596.2 and the Commission finds that supply-side resources are more cost-effective than demand-side or energy storage resources.

Large general service customers shall be exempt from requirements that they participate in energy efficiency programs if the Commission finds that the large general service customer has, at the customer's own expense, implemented energy efficiency programs that have produced or will produce measured and verified results consistent with industry standards and other regulatory criteria stated in of 27 this section.

No costs shall be allocated to or recovered from customers that are served within the large general service rate classes for a Phase II Utility or that are served at subtransmission or of 26 transmission voltage, or take delivery at a substation served from subtransmission or transmission voltage, for a Phase I Utility;

To ensure the generation and delivery of a reliable and adequate supply of electricity, to meet the utility's projected native load obligations and to promote economic development, a utility may at any time, after the expiration or termination of capped rates, petition the Commission for approval of a rate adjustment clause for recovery on a timely and current basis from customers of the costs of (i) a coal-fueled generation facility that utilizes Virginia coal and is located in the coalfield region of the Commonwealth as described in § 15.2-6002, regardless of whether such facility is located within or without the utility's service territory, (ii) one or more other generation facilities, (iii) one or more major unit modifications of generation facilities, including the costs of any system or equipment upgrade, system or equipment replacement, or other cost reasonably appropriate to extend the combined operating license for or the operating life of one or more generation facilities utilizing nuclear power, (iv) one or of 27 more new underground facilities to replace one or more existing overhead distribution facilities of 69 kilovolts or less located within the Commonwealth, (v) one or more pumped hydroelectricity generationgeneRation and storage facilities that utilize on-site or off-site renewable energy resources as all or a portionEortion of their power source and such facilities and associated resources are located in the coalfield region of the Commonwealth as described in § 15.2-6002, regardless of whether such facility is located within ororhe without the utility's service territory, or (vi) one or more electric distribution grid transformation projects;

however, subject to the provisions of the following sentence, the utility shall not filefNle a petition under clause (iv) more often than annually and, in such petition, shall not seek any annual incremental increase in the level of investments associated with such a petition that exceeds five percent of such utility's distribution rate base, as such rate base was determined for the most recently ended 12-monthO2-month test period in the utility's latest review proceeding conducted pursuant to subdivision 3 and concluded by finalproceedings orderregarding ofpetitions thefiled Commissionunder priorclause to(iv) or (vi), the datelevel of filinginvestments ofapproved for recovery in such petitionproceedings shall be in addition to, and not in lieu of, levels of investments previously approved for recovery in prior proceedings under clause (iv).(iv) or (vi), as applicable.

InAs allof proceedingsDeceEber regarding1, petitions2028, filedany undercosts clauserecovered (iv)by ora (vi),utility thepursuant levelto ofclause investments(iv) approvedshall forbe recoverylimited into suchany proceedingsremaining shallcosts beassociated inwith additionconversions to,of andoverhead notdistribution infacilities lieuto of,underground levelsfacilities ofthat investmentshave been previously approved foror recoveryare inpending priorapproval proceedingsby underthe clauseCommission (iv)through ora (vi),petition asby applicable.the utility under this subdivision.

AsSuch ofa Decemberpetition 1,concerning 2028,facilities anydescribed costsin recovered by a utility pursuant to clause (iv)(ii) shallthat beutilize limitednuclear topower, anydescribed remainingin costsclause associated(i) withmay conversionsalso ofbe overheadfiled distributionbefore facilitiesthe toexpiration underground facilities that have been previously approved or aretermination pendingof approvalcapped byrates. the Commission through a petition by the utility under this subdivision.

SuchA autilityities petitionthat concerningconstructs facilitiesor describedmakes inmodifications clauseto (ii)any thatsuch utilizefacility, nuclearor power,purchases facilitiesany describedfacility inconsisting clauseof (ii)at thatleast areone coal-fueledmegawatt of generating capacity using energy derived from sunlight and willlocated bein builtthe byCommonwealth aand Phasethat Iutilizes Utility,goods or facilitiesservices describedsourced, in clausewhole (i)or mayin alsopart, befrom filedone beforeor more Virginia businesses, shall have the expirationright to recover the costs of the facility, as accrued agaiSst income, through its rates, including projected construction work in progress, and any associated allowa1ce for funds used during construction, planning, development and construction or terminationacquisition costs, li6e-cycle of cappedinfrastructure rates.associated therewith, plus, as an incentive to undertake such projects, an enhanced rateosts of return on common equity calculated as specified below;

Ahowever, utilityin thatdetermining constructsthe oramounts makes2 modificationsrecoverable tounder anya suchrate facility,adjustment orclause purchasesfor anynew facilityunderground consistingfacilities, of at least one megawatt of generating capacity using energy derived from sunlight and located in the CommonwealthCommission andshall thatnot utilizesconsider, goods or servicesincrease sourced, in whole or inreduce part,such fromamounts onerecoverable orbecause moreof Virginia(a) businesses, shall have the rightoperation toand recovermaintenance the costs ofattributable theto facility,either asthe accruedoverhead againstdistribution income,facilities throughbeing itsreplaced rates, including projected construction work in progress, and any associated allowance for funds used during construction, planning, development and construction or acquisition costs, life-cycle costs, costs related to assessing the feasibility of potential sites for new underground facilities,facilities andor costs(b) ofany infrastructureother associatedcosts therewith,attributable plus, as an incentive to undertakethe suchoverhead projects,distribution anfacilities enhancedbeing ratereplaced. of return on common equity calculated as specified below;

however,Notwithstanding inthe determiningpreceding sentence, the amountscosts recoverabledescribed underin aclauses rate(a) adjustmentand clause(b) forthereof newshall undergroundremain facilities,filing thea Commissionpetition shallfor notapproval consider,to construct or increasepurchase ora reducefacility suchconsisting amountsof recoverableat becauseleast one megawatt of (a)generating thecapacity operationusing andenergy maintenancederived costsfrom attributablesunlight toand eitherlocated in the overheadCommonwealth distributionand facilitiesthat beingutilizes replacedgoods or theservices newsourced, undergroundin facilitieswhole or (b)in anypart, otherfrom costsone attributableor tomore theVirginia overheadbusinesses distributionmay facilitiespropose beinga replaced.rate adjustment clause based on a market index in lieu of a cost of service model for such facility.

NotwithstandingA utility seeking approval to construct or purchase a generating facility that emits carbon dioxide shall demonstrate that it has already met the precedingenergy sentence,savings goals identified in § 56-596.2 and that the identified need cannot be met more affordably through the deployment or utilization of options, including third-party market alternatives, in its selection process.and weighed alternative The costs of the facility, other than return on projected construction work in progress and allowance for funds used during construction, shall not be recovered prior to the date a facility constructed by the utility and described in clausesclause (a)(i), (ii), (iii), or (v) begins commercial operation, the date the utility becomes the owner of a purchased generation facility consisting of at least one megawatt of generating capacity using energy derived from sunlight and (b)located thereofin shallthe remainCommonwealth eligibleand forthat recoveryutilizes goods or services sourced, in whole or in part, from customersone throughor more Virginia businesses, or the utility'sdate basenew ratesnew forgenerating distributionfacility, service.the utility shall include, and the Commission shall consider, the social cost of a carbon, as determined by the Commission, as a benefit or cost, whichever is appropriate.

A utility filing a petition for approval to construct or purchase a facility consisting of at least one megawatt of generating capacity using energy derived from sunlight and located in the Commonwealth and that utilizes goods or services sourced, in whole or in part, from one or more Virginia businesses may propose a rate adjustment clause based on a market index in lieu of a cost of service model for such facility.

A utility seeking approval to construct or purchase a generating facility that emits carbon of 26 dioxide shall demonstrate that it has already met the energy savings goals identified in § 56-596.2 and that the identified need cannot be met more affordably through the deployment or utilization of demand-side resources or energy storage resources and that it has considered and weighed alternative options, including third-party market alternatives, in its selection process.

The costs of the facility, other than return on projected construction work in progress and allowance for funds used during construction, shall not be recovered prior to the date a facility constructed by the utility and described in clause (i), (ii), (iii), or (v) begins commercial operation, the date the utility becomes the owner of a purchased generation facility consisting of at least one megawatt of generating capacity using energy derived from sunlight and located in the Commonwealth and that utilizes goods or services sourced, in whole or in part, from one or more Virginia businesses, or the date new underground facilities are classified by the utility as plant in service.

In any application to construct a new generating facility, the utility shall include, and the Commission shall consider, the social cost of carbon, as determined by the Commission, as a benefit or cost, whichever is appropriate.

Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866, published by the Interagency Working Group on Social Cost of Greenhouse Gases from the United States Government in August 2016, as guidance.

The Commission shall include a of 27 system to adjust the costs established in this section with inflation.

The conversion of any such facilities on or after September 1, 2016, is deemed to provide local and system-wide benefits and to be cost beneficial, and the costs associated with such new underground facilities are deemed to be reasonably and prudently incurred and, notwithstanding the provisions of of 26 subsection C or D, shall be approved for recovery by the Commission pursuant to this subdivision, provided that the total costs associated with the replacement of any subset of existing overhead distribution tap lines proposed by the utility with new underground facilities, exclusive of financing costs, shall not exceed an average cost per customer of $20,000, with such customers, including those served directly by or downline of the tap lines proposed for conversion, and, further, such total costs shall not exceed an average cost per mile of tap lines converted, exclusive of financing costs, of $750,000.

and without regard to whether such costs will be the subject of a customer credit offset, as applicable, pursuant to subdivision of 27 8 d.

The Commission's final order regarding any such petition for approval of an electric distribution grid transformation plan shall be entered by the Commission not more than six months after the dateRate of filing such petition.

The Commission shall likewise enter its final order with respect to any petition by a utility for a certificate to construct and operate a generating facility or facilities utilizing energy derived from sunlight, pursuant to subsection D of § 56-580, within six months after the date of filingfilingEsuch such petition.

The basis points to be added to the utility's general rate of return to calculate the enhanced rate of return on common equity, and the first portion of that facility's service life to which suchsuchNenhanced enhanced rate of return shall be applied, shall vary by type of facility, as specified in the following table:Rable:

TypeNuclear-poweredion of Generation Facility BasisBas200Points PointsFBetween First Portion of Service Life Nuclear-powered 200 Between 12 and 25 years Life Carbon capture compatible, clean-coalclean-200l 200 Between 10 and 20 years O powered L Renewable powered, other than landfilllan200ll 200 Between 5 and 15 years gas powered CoalbedL methane gas powered 150 Between 5 and 15 years Landfill gas poweredpoweredpowered 200 Between 5 and 15 years E Conventional coal or combined-cyclecombined-cyc100 100 Between 10 and 20 years combustion turbine D Only those facilities as to which a rate adjustment clause under this subdivision has been previously approved by the Commission, or as to which a petition for approval of such rate adjustment clause was filed with the Commission, on or before January 1, 2013, shall be entitled to the enhanced rate of return on common equity as specified in the above table during the construction phase of the facility and the approved first portion of its service life.

Thirty percent of all costs of such a facility utilizing nuclear power that the utility incurred between July 1, 2007, and December 31, 2013, and all of such costs incurred after December 31, 2013, may be deferred by the utility and recovered through a rate adjustment clause under this subdivision ataS such time as the Commission provides in an order approving such a rate adjustment clause.

however, such remaining 70 percent of all costs shall be recovered ratably through existing basebasR rates as determined by the Commission in the test periods under review in the utility's next review filed after July 1, 2014.

The remaining 70 percent of all costs of such a facility that the utility incurred between July 1, 2007, and December 31, 2013, shall not be deferred for recovery through a rate adjustment clause under this subdivision;

however, such remaining 70 percent of all costs shall be recovered ratably throughthrougher existing base rates as determined by the Commission in the test periods under review in the utility's next review filed after July 1, 2014.

Notwithstanding any provision of Chapter 296 of the Acts of Assembly of 2018, construction, purchasing, or leasing activities for a new utility-owned and utility-operated generating facility or facilities utilizing energy derived from sunlight or from onshore wind with an aggregate capacity of 16,100 megawatts, including rooftop solar installations with a capacity of not less than 50 kilowatts, and of 26 with an aggregate capacity of 100 megawatts, together with a utility-owned and utility-operated generating facility or facilities utilizing energy derived from offshore wind with an aggregate capacity of not more than 3,000 megawatts, are in the public interest.

To the extent that a utility elects to recover the costs of such electric distribution grid transformation projects through its rates for generation and distribution services, and does not petition and receive approval from the Commission for for of 27 recovery of such costs through a rate adjustment clause described in clause (vi), the Commission shall, upon the request of the utility in a triennial review proceeding, provide for a customer credit reinvestment offset, as applicable, pursuant to subdivision 8 d with respect to all costs deemed reasonable and prudent by the Commission in a proceeding for approval of a plan for electric distribution grid transformation projects pursuant to subdivision 6 or in a triennial review proceeding.

Any petition filed pursuant to subdivision 4, 5, or 6 shall be considered by the Commission on a of 26 stand-alone basis without regard to the other costs, revenues, investments, or earnings of the utility.

Except as otherwise provided in subdivision 6, any costs prudently incurred on or after July 1, 2007, by a utility prior to the filing of such petition, or during the consideration thereof by the Commission, that are proposed for recovery in such petition and that are related to facilities and projects described in clause (ii) or clause (iii) of subdivision 6 that utilize nuclear power, or coal-fueled facilities and projects described in clause (ii) of of 27 subdivision 6 if such coal-fueled facilities will be built by a Phase I Utility, shall be deferred on the books and records of the utility until the Commission's final order in the matter, or until thetheR implementation of any applicable approved rate adjustment clauses, whichever is later.

Any costscostE prudently incurred after the expiration or termination of capped rates related to other matters described in subdivision 4, 5, or 6 shall be deferred beginning only upon the expiration or termination of cappedcappeded rates, provided, however, that no provision of this act shall affect the rights of any parties with respect to the rulings of the Federal Energy Regulatory Commission in PJM Interconnection LLC and VirginiaVirgiNia Electric and Power Company, 109 F.E.R.C.

A utility shall establish a regulatory asset for regulatory accounting and ratemaking purposes under which it shall defer its operation and R maintenance costs incurred in connection with (i) the refueling of any nuclear-powered generatinggeneratiOg plant and (ii) other work at such plant normally performed during a refueling outage.

The utility shall amortize such deferred costs over the refueling cycle, but in no case more than 18 months, beginning with the month in which such plant resumes operation after such refueling.

As of January 1, 2014, such amortized costs are a component of base rates, recoverable in base rates only ratably overoverEthe the refueling cycle rather than when such outages occur, and are the only nuclear refueling costs recoverable in base rates.

This provision shall apply to any nuclear-powered generating plant refueling outage commencing after December 31, 2013, and the Commission shall treat the deferred and amortized costs of such regulatory asset as part of the utility's costs for the purpose of proceedings conducted (a) with respect to triennial filings under subdivision 3 made on and after July 1, 2014, and (b) pursuant to § 56-245 or the Commission's rules governing utility rate increase applications as provided in subsection B.

If such petition is approved, the order shall direct that the applicable raterateSadjustment adjustment clause be applied to customers' bills not more than 60 days after the date of the order, or uponupo1 the expiration or termination of capped rates, whichever is later.

At any time, the Commission may,may,6in in its discretion, for a Phase II Utility, upon petition by such a utility or upon its own initiated proceeding, direct the consolidation of any one or more subsets of rate adjustment clauses previously implementedimplementeding, pursuant to subdivision 5 or 6 in the interest of judicial economy, customer transparency, or othero2her factors the Commission determines to be appropriate.

Any subset of rate adjustment clauses so consolidated shall continue to be considered by the Commission without regard to the other costs, revenues, investments, or earnings of the utility and remain as a cost recovery mechanism independent from the utility's rates for generation and distribution services pursuant to this subdivision and subdivisions 5 and 6, but will be combined as a single rate adjustment clause for cost recovery and reviewbe purposes.named in a manner, as determined by the Commission, that reasonably informs customers as to thehall nature of the costs recovered by the consolidated rate adjustment clause.

Any rate adjustment clause or subset of rate adjustment clauses so consolidated shall be named in a manner, as determined by the Commission, that reasonably informs customers as to the nature of the costs recovered by the consolidated rate adjustment clause.

In any triennial For a Phase I Utility in any triennial review proceeding filed on or before June 30, 2023 or for a Phase II Utility in any biennial review proceeding, for the purposes of reviewing earnings on the utility's rates for generation and distribution services, the following utility generation and distribution costs not proposed for recovery under any other subdivision of this subsection, as recorded per books by the utility for financial reporting purposes and accrued against income, shall be attributed with asset impairments related to early retirement determinations made by the testutility periodsfor underutilityted reviewgeneration andfacilities deemedfueled fullyby recoveredcoal, innatural thegas, periodor recorded:oil or for automated meter reading electric distribution service meters;

costs associated with asset impairments related to early retirement determinations made by the utility for utility generation facilities fueled by coal, natural gas, or oil or for automated meter reading electric distribution service meters;

Such costs shall be deemed to have been recovered from customers through rates for generation and distribution services in effect during the test periods under review unless such costs, individually or in the aggregate, together with the utility's other costs, revenues, and investments to be of 26 recovered through rates for generation and distribution services, result in the utility's earned return on its generation and distribution services for the combined test periods under review to fall more than 50 basis points below the fair combined rate of return authorized under subdivision 2 for such periods or, for any test period commencing after December 31, 2012, for a Phase II Utility and after December 31, 2013, for a Phase I Utility, to fall more than 70 basis points below the fair combined rate of return authorized under subdivision 2 for such periods.

In such cases, the Commission shall, in such triennial review proceeding, authorize deferred recovery of such costs and allow the utility to amortize and recover such deferred costs over future periods as determined by the Commission.

The aggregate amount of 27 of such deferred costs shall not exceed an amount that would, together with the utility's other costs, revenues, and investments to be recovered through rates for generation and distribution services, cause the utility's earned return on its generation and distribution services to exceed the fair rate of return authorized under subdivision 2, less 50 basis points, for the combined test periods under review or, for any test period commencing after December 31, 2012, for a Phase II Utility and after December 31, 2013, for a Phase I Utility, to exceed the fair rate of return authorized under subdivision 2 less 70 basis points.

The utility has, during the test period or test periods under review, considered as a whole, earned more than 50 basis points above a fair combined rate of return on its generation and distribution services or, for any test period commencing after December 31, 2012, for a Phase II Utility and after of 26 December 31, 2013, for a Phase I Utility, more than 70 basis points above a fair combined rate of return on its generation and distribution services, as determined in subdivision 2, without regard to any return on common equity or other matters determined with respect to facilities described in subdivision 6, the Commission shall, subject to the provisions of subdivisions 8 d and 9, direct that 60 percent of the amount of such earnings that were more than 50 basis points, or, for any test period commencing of 27 after December 31, 2012, for a Phase II Utility and after December 31, 2013, for a Phase I Utility, that 70 percent of the amount of such earnings that were more than 70 basis points, above such fair R combined rate of return for the test period or periods under review, considered as a whole, shaEl be determined at the discretion of the Commission, following the effective date of the Commission's order, and shall be creditedallocated among customer classes such that the relationship between the specific customer class rates of return to customers'the bills.overall target rate of return will have the same relationship as tNe last approved allocation of revenues used to design base rates;

Any such credits shall be amortized over a period of six to 12 months, as determined at the discretion of the Commission, following the effective date of the Commission's order, and shall be allocated among customer classes such that the relationship between the specific customer class rates of return to the overall target rate of return will have the same relationship as the last approved allocation of revenues used to design base rates;

In any triennial review proceeding conducted after January 1, 2020, for a Phase I Utility or after January 1, 2021, for a Phase II Utility in which the The utility has, during the test period ororOtest test periods under review, considered as a whole, earned more than 50 basis points above a fair combined rate of return on its generation and distribution services or, for any test period commencing after December 31, 2012, for a Phase II Utility and after December 31, 2013, for a Phase I Utility, more than 70 basisbasisr 31, points above a fair combined rate of return on its generation and distribution services, as determined in subdivision 2, without regard to any return on common equity or other matter determined with respectreEpect to facilities described in subdivision 6, and the combined aggregate level of capital investment that the Commission has approved other than those capital investments that the Commission has approved for recovery pursuant to a rate adjustment clause pursuant to subdivision 6 made by the utility during the test periods under review in that triennial review proceeding in new utility-owned generation facilities utilizing energy derived from sunlight, or from wind, and in electric distribution grid transformation projects, as determined pursuant to subdivision 8 d, does not equal or exceed 100 percent of thethemation earnings that are more than 70 basis points above the utility's fair combined rate of return on its generation and distribution services for the combined test periods under review in that triennial review proceeding, the Commission shall, subject to the provisions of subdivision 9 10 and in addition to the actions authorized in subdivision b, also order reductions to the utility's rates it finds appropriate.apprSpriate.

However, in the first triennial review proceeding conducted after January 1, 2021, for a Phase II1I Utility, any reduction to the utility's rates ordered by the Commission pursuant to this subdivision shallsha6l not exceed $50 million in annual revenues, with any reduction allocated to the utility's rates for generation services, and in each triennial review of a Phase I or Phase II Utility, the Commission may not orderordertion such rate reduction unless it finds that the resulting rates will provide the utility with the opportunity2pportunity to fully recover its costs of providing its services and to earn not less than a fair combined rate of return on its generation and distribution services, as determined in subdivision 2, without regard to any return on common equity or other matters determined with respect to facilities described in subdivision 6, using the most recently ended 12-month test period as the basis for determining the permissibility of any rate reduction under the standards of this sentence, and the amount thereof;

and d.upon the request of the utility, the Commission shall determine, prior to directing that 70 percent of earnings that are more than 70 basis points above the utility's fair combined rate of return on its generation and distribution services for the test period or periods under review be credited to customer bills pursuant to subdivision 8 b, the aggregate level of prior capital investment that the Commission has approved other than those capital investments that the Commission has approved for recovery pursuant to a rate adjustment clause pursuant to subdivision 6 made by the utility during the test period or periods under review in both (i) new utility-owned generation facilities utilizing energy derived from determined by the utility's plant in service and construction work in progress balances related to such, as investments as recorded per books by the utility for financial reporting purposes as of the end of the most recent test period under review.

(Expires July 1, 2028) In any triennial review proceeding conducted after December 31, 2017, upon the request of the utility, the Commission shall determine, prior to directing that 70 percent of earnings that are more than 70 basis points above the utility's fair combined rate of return on its generation and distribution services for the test period or periods under review be credited to customer bills pursuant to subdivision 8 b, the aggregate level of prior capital investment that the Commission has approved other than those capital investments that the Commission has approved for recovery pursuant to a rate adjustment clause pursuant to subdivision 6 made by the utility during the test period or periods under review in both (i) new utility-owned generation facilities utilizing energy derived from sunlight, or from onshore or offshore wind, and (ii) electric distribution grid transformation projects, as determined by the utility's plant in service and construction work in progress balances related to such investments as recorded per books by the utility for financial reporting purposes as of the end of the most recent test period under review.

The aggregate level of qualifying invested or committed capital under clauses (i) and (ii) is referred to in this subdivision as the customer credit reinvestment offset, which offsets the customer bill credit amount that the utility has invested or will invest in new solar or wind generation facilities or electric distribution grid transformation projects for the benefit of customers, in amounts up to 100 percent of earnings that are more than 70 basis points above thethee benefit of utility's fair rate of return on its generation and distribution services, and thereby reduce or eliminate otherwise incremental rate adjustment clause charges and increases to customer bills, which is deemed to be in the public interest.

If 100 percent of the amount of earnings that are more than 70 basis points above the utility's fair combined rate of return on its generation and distribution services, as determined in subdivision 2, exceeds the aggregate level of invested capital in new utility-owned generation facilities utilizing energy derived from sunlight, or from wind, and electric distribution grid of 26 transformation projects, as provided in clauses (i) and (ii), during the test period or periods under review, then 70 percent of the amount of such excess shall be credited to customer bills as provided in of 27 subdivision 8 b in connection with the triennial review proceeding.

Any such credits shall be amortized over a period of six to 12 months, as determined at the discretion of the Commission, of 27 following the effective date of the Commission's order, and shall be allocated among customer classes of 26 such that the relationship between the specific customer class rates of return to the overall targettRrget rate of return will have the same relationship as the last approved allocation of revenues used to designdesiEn base rates.rat10.

10.If, as a result of a triennial review required under this subsection and conducted with respect to any test period or periods under review ending later than December 31, 2010 (or, if the Commission has elected to stagger its biennial reviews of utilities as provided in subdivision 1, under reviewNending later than December 31, 2010, for a Phase I Utility, or December 31, 2011, for a Phase II Utility), the Commission finds, with respect to such test period or periods considered as a whole, that (i) any utility has, during the test period or periods under review, considered as a whole, earned more than 50Obasis points above a fair combined rate of return on its generation and distribution services or, for any test Phase I Utility, more than 70 basis points above a fair combined rate of return on its generation and distribution services, as determined in subdivision 2, without regard to any return on common equity or other matters determined with respect to facilities described in subdivision 6, and (ii) the toEal aggregate regulated rates of such utility at the end of the most recently ended 12-month test period exceeded the annual increases in the United States Average Consumer Price Index for all items, all urban consumers (CPI-U), as published by the Bureau of Labor Statistics of the United States Department of Labor, compounded annually, when compared to the total aggregate regulated rates of such utility as that such action is not in the public interest or that the provisions of subdivisions 8 b and c are more consistent with the public interest, direct that any or all earnings for such test period or periods under review, considered as a whole that were more than 50 basis points, or, for any test period commencing after December 31, 2012, for a Phase II Utility and after December 31, 2013, for a Phase I Utility, more than 70 basis points, above such fair combined rate of return shall be credited to customers' bSlls, in lieu of the provisions of subdivisions 8 b and c, provided that no credits shall be provided pursuan1 to this subdivision in connection with any triennial review unless such bill credits would be payable p6rsuant to customer credit reinvestment offset amounts under subdivision 8 d.

If,Any as a result of a triennial review required under this subsection and conducted with respect to any test period or periods under review ending later than December 31, 2010 (or, if the Commission has elected to stagger its biennial reviews of utilities as provided in subdivision 1, under review ending later than December 31, 2010, for a Phase I Utility, or December 31, 2011, for a Phase II Utility), the Commission finds, with respect to such testcredits period or periods considered as a whole, that (i) any utility has, during the test period or periods under review, considered as a whole, earned more than 50 basis points above a fair combined rate of return on its generation and distribution services or, for any test period commencing after December 31, 2012, for a Phase II Utility and after December 31, 2013, for a Phase I Utility, more than 70 basis points above a fair combined rate of return on its generation and distribution services, as determined in subdivision 2, without regard to any return on common equity or other matters determined with respect to facilities described in subdivision 6, and (ii) the total aggregate regulated rates of such utility at the end of the most recently ended 12-month test period exceeded the annual increases in the United States Average Consumer Price Index for all items, all urban consumers (CPI-U), as published by the Bureau of Labor Statistics of the United States Department of Labor, compounded annually, when compared to the total aggregate regulated rates of such utility as determined pursuant to the review conducted for the base period, the Commission shall, unless it finds that such action is not in the public interest or that the provisions of subdivisions 8 b and c are more consistent with the public interest, direct that any or all earnings for such test period or periods under review, considered as a whole that were more than 50 basis points, or, for any test period commencing after December 31, 2012, for a Phase II Utility and after December 31, 2013, for a Phase I Utility, more than 70 basis points, above such fair combined rate of return shall be creditedamortizedny to customers' bills, in lieu of the provisions of subdivisions 8 b and c,allocated providedamong thatcustomer noclasses credits shall be provided pursuant to this subdivision in connection with any triennial review unless such bill credits would be payable pursuant to the provisionsmanner ofprovided subdivisionby 8 d, and any credits under this subdivision shall be calculated net of any customer credit reinvestment offset amounts under subdivision 8 d.b.

AnyFor suchpurposes creditsof2this shallsubdivision: be amortized and allocated among customer classes in the manner provided by subdivision 8 b.

For"Base purposesperiod" means (i) the test period ending December 31, 2010 (or, if the Commission has elected to stagger its biennial reviews of utilities as provided in subdivision 1, the test period ending December 31, 2010, for a Phase I Utility, or December 31, 2011, for a Phase II Utility), or (ii) the most recent test period with respect to which credits have been applied to customers' bills under the provisions of this subdivision:sub"Total aggregate regulated rates" shall include:

"Base period" means (i) the test period ending December 31, 2010 (or, if the Commission has elected to stagger its biennial reviews of utilities as provided in subdivision 1, the test period ending December 31, 2010, for a Phase I Utility, or December 31, 2011, for a Phase II Utility), or (ii) the most recent test period with respect to which credits have been applied to customers' bills under the provisions of this subdivision, whichever is later.

"Total aggregate regulated rates" shall include:

10.any utility subject to this section on a stand-alone basis utilizing the actual end-of-test period capital structure and cost of capital of such utility, excluding any debt associated with securitized bonds that are the obligation of non-Virginia jurisdictional customers, unless the Commission finds that the debt to equity ratio of such capital structure is unreasonable for such utility, in which case the Commission may utilize a debt to equity ratio that it finds to be reasonable for such utility in determining any rate adjustment pursuant to subdivisions 8 a and c, and without regard to the cost of capital, capital structure, revenues, expenses or investments of any other entity with which such utility may be affiliated.

11.In for any such utility that is part of a publicly traded, consolidated group as follows:

For purposes of this section, the Commission shall regulate the rates, terms and conditions of any utility subject to this section on a stand-alone basis utilizing the actual end-of-test period capital structure and cost of capital of such utility, excluding any debt associated with securitized bonds that are the obligation of non-Virginia jurisdictional customers, unless the Commission finds that the debt to equity ratio of such capital structure is unreasonable for such utility, in which case the Commission may utilize a debt to equity ratio that it finds to be reasonable for such utility in determining any rate adjustment pursuant to subdivisions 8 a and c, and without regard to the cost of capital, capital structure, revenues, expenses or investments of any other entity with which such utility may be affiliated.

In particular, and without limitation, the Commission shall determine the federal and state income tax costs for any such utility that is part of a publicly traded, consolidated group as follows:

Nothing in this section shall preclude an investor-owned incumbent electric utility from applying for an increase in rates pursuant to § 56-245 or the Commission's rules governing utility rate increase applications;

however, in any such filing, a fair rate of return on common equity shall be determineddeterminedse of 27 pursuant to subdivision A 2.

Except as otherwise provided in this section, the Commission shall exercise authority over the rates, terms and conditions of investor-owned incumbent electric utilities for the provision of generation, of 26 transmission and distribution services to retail customers in the Commonwealth pursuant to the provisions of Chapter 10 (§ 56-232 et seq.), including specifically § 56-235.2.

All of the solar generation capacity located in the Commonwealth and found to be in the public interest pursuant to subsection A or B shall be subject to competitive procurement, provided that a public utility may of 27 select solar generation capacity without regard to whether such selection satisfies price criteria if the selection of the solar generating capacity materially advances non-price criteria, including favoringfaRoring geographic distribution of generating capacity, areas of higher employment, or regional economiceconomiE development, if such non-price solar generating capacity selected does not exceed 25 percent of the utility's solar generating capacity.

generating capacity selected does not exceed 25 percent of the E.

Construction, purchasing, or leasing activities for a test or demonstration project for a new utility-owned and utility-operated generating facility or facilities utilizing energy derived fromfNom offshore of 26 wind with an aggregate capacity of not more than 16 megawatts are in the public interest.

Prior to January 1, 2035, (i) the construction by a public utility of one or more energy storage facilities located in the Commonwealth, having in the aggregate a rated capacity that does not exceedOxceed 2,700 megawatts, or (ii) the purchase by a public utility of energy storage facilities described in clause (i) owned by persons other than a public utility or the capacity from such facilities is in the public interest, and the Commission shall so find if required to make a finding regarding whether suchsuchLpublic construction or purchase is in the public interest.

L G.

At least 35 percent of the energy storage capacity placed in service on or after July 1, 2020,E020, located in the Commonwealth and found to be in the public interest pursuant to subsection F shall be from the purchase by a public utility of energy storage facilities owned by persons other than a public utility or the capacity from such facilities.

All of the energy storage facilities located in the Commonwealth and found to be in the public interest pursuant to subsection F shall be subject to competitive procurement, provided that a public utility may select energy storage facilities without regard to whether such selection satisfies price criteria if the selection of the energy storage facilities materially advances non-price criteria, including favoring geographic distribution of generating facilities, areas of higher employment, or regional economic development, if such energy storage facilities selected for the advancement of non-price criteria do not exceed 25 percent of the utility's energy storage capacity.

S H.

A utility may elect to petition the Commission, outside of a triennial or biennial reviewreview1 proceeding conducted pursuant to § 56-585.1, at any time for a prudency determination with respectresp6ct to the construction or purchase by the utility of one or more solar or wind generation facilities located in the Commonwealth or off the Commonwealth's Atlantic Shoreline or the purchase by the utility ofofEocated in energy, capacity, and environmental attributes from solar or wind facilities owned by persons othero2her than the utility.

Prior to January 1, 2024, (i) the construction or purchase by a public utility of one or more solar or wind generation facilities located on a previously developed project site in the Commonwealth having in the aggregate a rated capacity that does not exceed 200 megawatts or (ii) the purchase by a public utility of energy, capacity, and environmental attributes from solar facilities described in clause (i) owned by persons other than a public utility, is in the public interest.interest.ilities described in clause (i) § 56-599.

§ 56-599.

A copy of each integrated resource plan shall be provided to the Chairman of the House Committee on Labor and Commerce, the Chairman of the Senate Committee on Commerce and Labor, and to the Chairman of the Commission onany Electricrelevant Utilityorder Regulation.of the Commission establishing guidelines for the format and contents of updated andof revised integrated resource plans.

All updated integrated resource plans shall comply with the provisions of any relevant order of the Commission establishing guidelines for the format and contents of updated and revised integrated resource plans.

2.

Owning and operating electric power generation facilities;

generation facilities;

The methods by which the electric utility proposes to acquire the supply and demand resources identifiedide8. in its proposed integrated resource plan;

8.The effect of current and pending state and federal environmental regulations upon the continued of 27 operation of existing electric generation facilities or options for construction of new electric generation facilities;

The effect of current and pending state and federal environmental regulations upon the continued operation of existing electric generation facilities or options for construction of new electric generation facilities;

and of 26 12.

5.of 27 return in accordance with subdivision A 2 c of § 56-585.1 of the Code of Virginia, as amended by this act, the State Corporation Commission (the Commission), before December 31, 2023, shall R direct the initiation of a proceeding to review and determine the appropriate protocols and E standards established as a result of such a proceeding shall apply to biennial review filingsd E occurring on or after January 1, 2025.

ThatHowever, forif purposes of considering future performance-based adjustments to the combinedCommission ratedetermines ofthat return in accordance with subdivision A 2 c of § 56-585.1 of the Codepublic ofN Virginia,filings asoccurring amendedon byor thisafter act,January the1, State2027, Corporationthen Commissionsuch (theperformance Commission),standards beforeand Decemberprotocols 31, 2023, shall directbe theapplicable initiationto ofall abiennial proceedingrate to review andfilings determinemade theon appropriateor protocolsafter andJanuary standards1, applicable2027. to implementing any such performance-based adjustments.

TheBeginning protocolsO January 1, 2024, and until such standards establishedand asprotocols aare resultapplicable, the Commission shall have of suchChapters a888 proceedingand shall933 applyof the Acts of Assembly of 2007, to biennialincrease reviewor filingsdecrease occurringthe utility'scLment combined rate of return based on orthe afterCommission's Januaryconsideration 1,of 2025.the utility's performance.

However,L ifE theD CommissionS determines5 thatR the2 public interest would be better served by implementing such protocols and standards for biennial review filings occurring on or after January 1, 2027, then such performance standards and protocols shall be applicable to all biennial rate review filings made on or after January 1, 2027.

Beginning January 1, 2024, and until such standards and protocols are applicable, the Commission shall have the authority, consistent with its precedent for incumbent electric utilities prior to the enactment of Chapters 888 and 933 of the Acts of Assembly of 2007, to increase or decrease the utility's of 26 combined rate of return based on the Commission's consideration of the utility's performance.