56-582 - Rate caps.
§ 56-582. Rate caps.
A. The Commission shall establish capped rates, effective January 1, 2001,for each service territory of every incumbent utility as follows:
1. Capped rates shall be established for customers purchasing bundledelectric transmission, distribution and generation services from an incumbentelectric utility.
2. Capped rates for electric generation services, only, shall also beestablished for the purpose of effecting customer choice for those retailcustomers authorized under this chapter to purchase generation services froma supplier other than the incumbent utility during this period.
3. The capped rates established under this section shall be the rates ineffect for each incumbent utility as of the effective date of this chapter,or rates subsequently placed into effect pursuant to a rate application filedby an incumbent electric utility with the Commission prior to January 1,2001, and subsequently approved by the Commission, and made by an incumbentelectric utility that is not currently bound by a rate case settlementadopted by the Commission that extends in its application beyond January 1,2002. If such rate application is filed, the rates proposed therein shall gointo effect on January 1, 2001, but such rates shall be interim in nature andsubject to refund until such time as the Commission has completed itsinvestigation of such application. Any amount of the rates found excessive bythe Commission shall be subject to refund with interest, as may be ordered bythe Commission. The Commission shall act upon such applications prior toJanuary 1, 2002. Such rate application and the Commission's approval shallgive due consideration, on a forward-looking basis, to the justness andreasonableness of rates to be effective for a period of time ending as lateas July 1, 2007. The capped rates established under this section, whichinclude rates, tariffs, electric service contracts, and rate programs(including experimental rates, regardless of whether they otherwise wouldexpire), shall be such rates, tariffs, contracts, and programs of eachincumbent electric utility, provided that experimental rates and rateprograms may be closed to new customers upon application to the Commission.Such capped rates shall also include rates for new services where, subsequentto January 1, 2001, rate applications for any such rates are filed byincumbent electric utilities with the Commission and are thereafter approvedby the Commission. In establishing such rates for new services, theCommission may use any rate method that promotes the public interest and thatis fairly compensatory to any utilities requesting such rates.
B. The Commission may adjust such capped rates in connection with thefollowing: (i) utilities' recovery of fuel and purchased power costs pursuantto § 56-249.6, and, if applicable, in accordance with the terms of anyCommission order approving the divestiture of generation assets pursuant to §56-590, (ii) any changes in the taxation by the Commonwealth of incumbentelectric utility revenues, (iii) any financial distress of the utility beyondits control, (iv) with respect to cooperatives that were not members of apower supply cooperative on January 1, 1999, and as long as they do notbecome members, their cost of purchased wholesale power and discounts fromcapped rates to match the cost of providing distribution services, (v) withrespect to cooperatives that were members of a power supply cooperative onJanuary 1, 1999, their recovery of fuel costs, through the wholesale powercost adjustment clauses of their tariffs pursuant to § 56-231.33, and (vi)with respect to incumbent electric utilities that were not, as of theeffective date of this chapter, bound by a rate case settlement adopted bythe Commission that extended in its application beyond January 1, 2002, theCommission shall adjust such utilities' capped rates, not more than once inany 12-month period, for the timely recovery of their incremental costs fortransmission or distribution system reliability and compliance with state orfederal environmental laws or regulations to the extent such costs areprudently incurred on and after July 1, 2004. Any adjustments pursuant to §56-249.6 and clause (i) of this subsection by an incumbent electric utilitythat transferred all of its generation assets to an affiliate with theapproval of the Commission pursuant to § 56-590 prior to January 1, 2002,shall be effective only on and after July 1, 2007. Notwithstanding theprovisions of § 56-249.6, the Commission may authorize tariffs that includeincentives designed to encourage an incumbent electric utility to reduce itsfuel costs by permitting retention of a portion of cost savings resultingfrom fuel cost reductions or by other methods determined by the Commission tobe fair and reasonable to the utility and its customers.
C. A utility may petition the Commission to terminate the capped rates to allcustomers any time after January 1, 2004, and such capped rates may beterminated upon the Commission finding of an effectively competitive marketfor generation services within the service territory of that utility. If itscapped rates, as established and adjusted from time to time pursuant tosubsections A and B, are continued after January 1, 2004, an incumbentelectric utility that is not, as of the effective date of this chapter, boundby a rate case settlement adopted by the Commission that extends in itsapplication beyond January 1, 2002, may petition the Commission, during theperiod January 1, 2004, through June 30, 2007, for approval of a one-timechange in its rates, and if the capped rates are continued after July 1,2007, such incumbent electric utility may at any time after July 1, 2007,petition the Commission for approval of a one-time change in its rates. Anychange in rates pursuant to this subsection by an incumbent electric utilitythat divested its generation assets with approval of the Commission pursuantto § 56-590 prior to January 1, 2002, shall be in accordance with the termsof any Commission order approving such divestiture. Any petition for changesto capped rates filed pursuant to this subsection shall be governed by theprovisions of Chapter 10 (§ 56-232 et seq.) of this title.
D. Until the expiration or termination of capped rates as provided in thissection, the incumbent electric utility, consistent with the functionalseparation plan implemented under § 56-590, shall make electric serviceavailable at capped rates established under this section to any customer inthe incumbent electric utility's service territory, including any customerthat, until the expiration or termination of capped rates, requests suchservice after a period of utilizing service from another supplier.
E. During the period when capped rates are in effect for an incumbentelectric utility, such utility may file with the Commission a plan describingthe method used by such utility to assure full funding of its nucleardecommissioning obligation and specifying the amount of the revenuescollected under either the capped rates, as provided in this section, or thewires charges, as provided in former § 56-583, that are dedicated to fundingsuch nuclear decommissioning obligation under the plan. The Commission shallapprove the plan upon a finding that the plan is not contrary to the publicinterest.
F. The capped rates established pursuant to this section shall expire onDecember 31, 2008, unless sooner terminated by the Commission pursuant to theprovisions of subsection C; however, rates after the expiration ortermination of capped rates shall equal capped rates until such rates arechanged pursuant to other provisions of this title.
(1999, c. 411; 2000, cc. 942, 991; 2001, c. 748; 2004, c. 827; 2007, cc. 888,933; 2008, c. 883.)