2020 Special Session I

Budget Amendments - HB5005 (Member Request)

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Chief Patron: Jones J.C.
SCC - Review Earnings of Investor-Owned Utilities and Credit Customers (language only)

Item 4-14 #3h

Item 4-14 #3h

Effective Date
Effective Date


Page 241, after line 20, insert:

"c. Notwithstanding any other provision of law, the State Corporation Commission (the Commission) shall direct each Phase II Utility, as that term is defined in § 56-585.1 of the Code of Virginia, to provide emergency customer bill credits in the amount of $366.8 million, which amount corresponds to the aggregate amount of overearnings the Commission found, for calendar years 2017 through 2019, to be above 70 basis points (0.7%) above the utility's authorized rate of return on common equity in its August 18, 2020, Status Report on the Implementation of the Virginia Electric Utility Regulation Act. The Commission shall administer such emergency credits as follows: (i) 70 percent of such amounts shall be credited to customers' bills as a one-time bill credit, (ii) 30 percent shall offset, on a dollar-for-dollar basis, any of the utility's outstanding aged accounts receivable balances as of August 31, 2020, and (iii) the Commission shall establish an account for any amounts left over from the 30 percent, which the Department of Housing and Community Development shall administer to provide future bill relief to residential customers who are eligible for state or federal unemployment or disability benefits or any utility-sponsored, federally-funded, or state-sponsored income-based or age qualifying energy assistance program, in a manner determined by the Commission. The Commission may adopt regulations and eligibility criteria that are consistent with the purpose of this act and necessary to accomplish such emergency credits and relief. The Commission shall ensure that such emergency credits are made effective as soon as practicable after the effective date of this act.

Nothing in this act shall prohibit the Commission from ordering additional bill credits if the Commission finds in the utility's next triennial review that such bill credits are appropriate. To ensure that customers receive the full amount of appropriate bill credits in the utility's next triennial review, in any triennial review commencing in 2021 pursuant to § 56-585.1, the following shall apply: (i) the Commission shall direct that 100 percent of any overearnings that are more than 70 basis points above the utility's authorized rate of return on common equity not otherwise administered as emergency credits authorized by this act shall be credited to customers' bills, which the Commission shall amortize, in its sole discretion, over a period of 6 to 12 months; (ii) the provisions of subdivision 8 d of § 56-585.1 shall not apply; (iii), the Commission shall determine the amortization period for the recovery of any appropriate costs of early retirement for automated meter reading electric distribution service meters, costs associated with projects necessary to comply with state or federal environmental laws, regulations, or judicial or administrative orders relating to coal combustion by-product management that the utility does not petition to recover through a rate adjustment clause pursuant to subdivision 5 e of § 56-585.1, costs associated with severe weather events, and costs associated with natural disasters, and the Commission shall allow for the recovery of any carrying costs that the Commission deems appropriate; and (iv) there shall be no limit on the Commission's authority to order appropriate rate reductions except that the resulting rates must provide the utility with the opportunity 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.

Any emergency bill credits ordered pursuant to this act shall not be considered as revenue reductions in any future earnings tests. Any bill credits ordered in connection with the utility's 2021 triennial review shall be calculated net of any emergency bill credits ordered pursuant to this act. The Commission shall not authorize increases to the utility's rates for generation and distribution services prior to 2023 unless the Commission determines that such rate increases are necessary to allow the utility to recover its costs of service, including a fair rate of return. In the utility's next triennial review, the Commission may take any actions it deems necessary and appropriate if the emergency bill credits ordered pursuant to an emergency investigation exceed the bill credits due to customers in the normal course of the utility's triennial review."


(This amendment directs the State Corporation Commission to conduct an emergency investigation of the earnings of investor-owned electric utilities and to order credits to customers' bills for earnings above 70 basis points above the utility’s authorized rate of return for calendar years 2017 through 2019. It also provides that in any triennial earnings review conducted for a utility in 2021 the Commission shall order bill credits for any earnings above 70 basis points above the utility’s authorized rate of return and that the Commission shall have the discretion to amortize certain categories of costs incurred by utilities.)