56-603 - Definitions.
§ 56-603. Definitions.
As used in this chapter:
"Commission" means the State Corporation Commission.
"Eligible infrastructure replacement" means natural gas utility facilityreplacement projects that: (i) enhance safety or reliability by reducingsystem integrity risks associated with customer outages, corrosion, equipmentfailures, material failures, or natural forces; (ii) do not increase revenuesby directly connecting the infrastructure replacement to new customers; (iii)reduce or have the potential to reduce greenhouse gas emissions; (iv) arecommenced on or after January 1, 2010; and (v) are not included in thenatural gas utility's rate base in its most recent rate case using the costof service methodology set forth in § 56-235.2, or the natural gas utility'srate base included in the rate base schedules filed with a performance-basedregulation plan authorized by § 56-235.6, if the plan did not include therate base.
"Eligible infrastructure replacement costs" includes the following:
1. Return on the investment. In calculating the return on the investment, theCommission shall use the natural gas utility's regulatory capital structureas calculated utilizing the weighted average cost of capital, including thecost of debt and the cost of equity used in determining the natural gasutility's base rates in effect during the construction period of the eligibleinfrastructure replacement project. If the natural gas utility's cost ofcapital underlying the base rates in effect at the time its proposed SAVEplan is filed has not been changed by order of the Commission within thepreceding five years, the Commission may require the natural gas utility tofile an updated weighted average cost of capital, and the natural gas utilitymay propose an updated weighted average cost of capital. The natural gasutility may recover the external costs associated with establishing itsupdated weighted average cost of capital through the SAVE rider. Suchexternal costs shall include legal costs and consultant costs;
2. A revenue conversion factor, including income taxes and an allowance forbad debt expense, shall be applied to the required operating income resultingfrom the eligible infrastructure replacement costs;
3. Depreciation. In calculating depreciation, the Commission shall use thenatural gas utility's current depreciation rates;
4. Property taxes; and
5. Carrying costs on the over- or under-recovery of the eligibleinfrastructure replacement costs. In calculating the carrying costs, theCommission shall use the natural gas utility's regulatory capital structureas determined in subdivision 1 of the definition of eligible infrastructurereplacement costs.
"Investment" means costs incurred on eligible infrastructure replacementprojects including planning, development, and construction costs; costs ofinfrastructure associated therewith; and an allowance for funds used duringconstruction. In calculating the allowance for funds used duringconstruction, the Commission shall use the natural gas utility's actualregulatory capital structure as determined in subdivision 1 of the definitionof eligible infrastructure replacement costs.
"Natural gas utility" means any investor-owned public service companyengaged in the business of furnishing natural gas service to the public.
"Natural gas utility facility replacement project" means the replacement ofstorage, peak shaving, transmission or distribution facilities used in thedelivery of natural gas, or supplemental or substitute forms of gas sourcesby a natural gas utility.
"SAVE" means Steps to Advance Virginia's Energy Plan.
"SAVE plan" means a plan filed by a natural gas utility that identifiesproposed eligible infrastructure replacement projects and a SAVE rider.
"SAVE rider" means a recovery mechanism that will allow for recovery of theeligible infrastructure replacement costs, through a separate mechanism fromthe customer rates established in a rate case using the cost of servicemethodology set forth in § 56-235.2, or a performance-based regulation planauthorized by § 56-235.6.
(2010, cc. 142, 514.)