{"formats":[{"name":"JSON","format":"json","url":"\/downloads\/2025\/code-json\/56-235.6.json"},{"name":"Plain Text","format":"text","url":"\/downloads\/2025\/code-text\/56-235.6.txt"},{"name":"XML","format":"xml","url":"\/downloads\/2025\/code-xml\/56-235.6.xml"},{"name":"HTML","format":"html","url":"\/downloads\/2025\/code-html\/56-235.6.html"}],"law_id":71641,"edition_id":1,"section_id":71641,"structure_id":14465,"section_number":"56-235.6","catch_line":"Optional performance-based regulation of certain utilities","history":"1996, c. 350; 2006, c. 574; 2007, cc. 888, 933.","full_text":"A\n\nNotwithstanding any provision of law to the contrary, the Commission may approve a performance-based ratemaking methodology for any public utility engaged in the business of furnishing gas service (for the purposes of this section a “gas utility”) or electricity service (for the purposes of this section an “electric utility”), upon application of the gas utility or electric utility, and after such notice and opportunity for hearing as the Commission may prescribe. For the purposes of this section, “performance-based ratemaking methodology” shall mean a method of establishing rates and charges that are in the public interest, and that departs in whole or in part from the cost-of-service methodology set forth in § 56-235.2.B\n\nThe Commission shall approve such performance-based ratemaking methodology if it finds that it: (i) preserves adequate service to all classes of customers (including transportation-only customers if for a gas utility); (ii) does not unreasonably prejudice or disadvantage any class of gas utility or electric utility customers; (iii) provides incentives for improved performance by the gas utility or electric utility in the conduct of its public duties; (iv) results in rates that are not excessive; and (v) is in the public interest. Performance-based forms of regulation may include, but not be limited to, fixed or capped base rates, the use of revenue indexing, price indexing, ranges of authorized return, gas cost indexing for gas utilities, and innovative utilization of utility-related assets and activities (such as a gas utility’s off-system sales of excess gas supplies and release of upstream pipeline capacity, performance of billing services for other gas or electricity suppliers, and reduction or elimination of regulatory requirements) in ways that benefit both the utility and its customers and may include a mechanism for automatic annual adjustments to revenues or prices to reflect changes in any index adopted for the implementation of such performance-based form of regulation. In making the findings required by this subsection, the Commission shall include, but not be limited to, in its considerations: (i) any proposed measures, including investments in infrastructure, that are reasonably estimated to preserve or improve system reliability, safety, supply diversity, and gas utility transportation options; and (ii) other customer benefits that are reasonably estimated to accrue from the gas or electric utility’s proposal.C\n\nEach gas utility or electric utility shall have the option to apply for implementation of a performance-based form of regulation. If the Commission approves the application with modifications, the gas utility or electric utility may, at its option, withdraw its application and continue to be regulated under the form of regulation that existed immediately prior to the filing of the application. The Commission may, after notice and opportunity for hearing, alter, amend or revoke, or authorize a gas utility or electric utility to discontinue, a performance-based form of regulation previously implemented under this section if it finds that (i) service to one or more classes of customers has deteriorated, or will deteriorate, to the point that the public interest will not be served by continuation of the performance-based form of regulation; (ii) any class of gas utility customer or electric utility customer is being unreasonably prejudiced or disadvantaged by the performance-based form of regulation; (iii) the performance-based form of regulation does not, or will not, provide reasonable incentives for improved performance by a gas utility or electric utility in the conduct of its public duties (which determination may include, but not be limited to, consideration of whether rates are inadequate to recover a gas utility’s or electric utility’s cost of service); (iv) the performance-based form of regulation is resulting in rates that are excessive compared to a gas utility’s or electric utility’s cost of service and any benefits that accrue from the performance-based plan; (v) the terms ordered by the Commission in connection with approval of a gas utility’s or electric utility’s implementation of a performance-based form of regulation have been violated; or (vi) the performance-based form of regulation is no longer in the public interest. Any request by a gas utility or electric utility to discontinue its implementation of a performance-based form of regulation may include application pursuant to this chapter for approval of new rates under the standards of § 56-235.2 for a gas utility or pursuant to § 56-585.1 for an investor-owned incumbent electric utility.D\n\nThe Commission shall use the annual review process established in § 56-234.2 to monitor each performance-based form of regulation approved under this section and to make any annual prospective adjustments to revenues or prices necessary to reflect increases or decreases in any index adopted for the implementation of such performance-based form of regulation.","order_by":null,"text":{"0":{"id":258165,"text":"Notwithstanding any provision of law to the contrary, the Commission may approve a performance-based ratemaking methodology for any public utility engaged in the business of furnishing gas service (for the purposes of this section a “gas utility”) or electricity service (for the purposes of this section an “electric utility”), upon application of the gas utility or electric utility, and after such notice and opportunity for hearing as the Commission may prescribe. For the purposes of this section, “performance-based ratemaking methodology” shall mean a method of establishing rates and charges that are in the public interest, and that departs in whole or in part from the cost-of-service methodology set forth in § 56-235.2.","type":"section","prefixes":["A"],"prefix":"A","entire_prefix":"A","prefix_anchor":"A","level":1,"next_prefix":"B"},"1":{"id":258166,"text":"The Commission shall approve such performance-based ratemaking methodology if it finds that it: (i) preserves adequate service to all classes of customers (including transportation-only customers if for a gas utility); (ii) does not unreasonably prejudice or disadvantage any class of gas utility or electric utility customers; (iii) provides incentives for improved performance by the gas utility or electric utility in the conduct of its public duties; (iv) results in rates that are not excessive; and (v) is in the public interest. Performance-based forms of regulation may include, but not be limited to, fixed or capped base rates, the use of revenue indexing, price indexing, ranges of authorized return, gas cost indexing for gas utilities, and innovative utilization of utility-related assets and activities (such as a gas utility’s off-system sales of excess gas supplies and release of upstream pipeline capacity, performance of billing services for other gas or electricity suppliers, and reduction or elimination of regulatory requirements) in ways that benefit both the utility and its customers and may include a mechanism for automatic annual adjustments to revenues or prices to reflect changes in any index adopted for the implementation of such performance-based form of regulation. In making the findings required by this subsection, the Commission shall include, but not be limited to, in its considerations: (i) any proposed measures, including investments in infrastructure, that are reasonably estimated to preserve or improve system reliability, safety, supply diversity, and gas utility transportation options; and (ii) other customer benefits that are reasonably estimated to accrue from the gas or electric utility’s proposal.","type":"section","prefixes":["B"],"prefix":"B","entire_prefix":"B","prefix_anchor":"B","level":1,"prior_prefix":"A","next_prefix":"C"},"2":{"id":258167,"text":"Each gas utility or electric utility shall have the option to apply for implementation of a performance-based form of regulation. If the Commission approves the application with modifications, the gas utility or electric utility may, at its option, withdraw its application and continue to be regulated under the form of regulation that existed immediately prior to the filing of the application. The Commission may, after notice and opportunity for hearing, alter, amend or revoke, or authorize a gas utility or electric utility to discontinue, a performance-based form of regulation previously implemented under this section if it finds that (i) service to one or more classes of customers has deteriorated, or will deteriorate, to the point that the public interest will not be served by continuation of the performance-based form of regulation; (ii) any class of gas utility customer or electric utility customer is being unreasonably prejudiced or disadvantaged by the performance-based form of regulation; (iii) the performance-based form of regulation does not, or will not, provide reasonable incentives for improved performance by a gas utility or electric utility in the conduct of its public duties (which determination may include, but not be limited to, consideration of whether rates are inadequate to recover a gas utility’s or electric utility’s cost of service); (iv) the performance-based form of regulation is resulting in rates that are excessive compared to a gas utility’s or electric utility’s cost of service and any benefits that accrue from the performance-based plan; (v) the terms ordered by the Commission in connection with approval of a gas utility’s or electric utility’s implementation of a performance-based form of regulation have been violated; or (vi) the performance-based form of regulation is no longer in the public interest. Any request by a gas utility or electric utility to discontinue its implementation of a performance-based form of regulation may include application pursuant to this chapter for approval of new rates under the standards of § 56-235.2 for a gas utility or pursuant to § 56-585.1 for an investor-owned incumbent electric utility.","type":"section","prefixes":["C"],"prefix":"C","entire_prefix":"C","prefix_anchor":"C","level":1,"prior_prefix":"B","next_prefix":"D"},"3":{"id":258168,"text":"The Commission shall use the annual review process established in § 56-234.2 to monitor each performance-based form of regulation approved under this section and to make any annual prospective adjustments to revenues or prices necessary to reflect increases or decreases in any index adopted for the implementation of such performance-based form of regulation.","type":"section","prefixes":["D"],"prefix":"D","entire_prefix":"D","prefix_anchor":"D","level":1,"prior_prefix":"C"}},"ancestry":[{"id":14465,"edition_id":1,"name":"Services, Rates, Charges, Etc","identifier":"2","label":"article","depth":3,"order_by":1,"parent_id":13238,"metadata":{},"date_created":"2026-06-26 03:48:13","date_modified":"2026-06-26 03:48:13","permalink":{"id":248755,"object_type":"structure","relational_id":14465,"identifier":"2","token":"56\/10\/2","url":"\/56\/10\/2\/","edition_id":1,"permalink":0,"preferred":1}},{"id":13238,"edition_id":1,"name":"Heat, Light, Power, Water and Other Utility Companies Generally","identifier":"10","label":"chapter","depth":2,"order_by":1,"parent_id":12881,"metadata":{},"date_created":"2026-06-26 03:44:30","date_modified":"2026-06-26 03:44:30","permalink":{"id":248721,"object_type":"structure","relational_id":13238,"identifier":"10","token":"56\/10","url":"\/56\/10\/","edition_id":1,"permalink":0,"preferred":1}},{"id":12881,"edition_id":1,"name":"Public Service Companies","identifier":"56","label":"title","depth":1,"order_by":1,"parent_id":null,"metadata":{},"date_created":"2026-06-26 03:43:58","date_modified":"2026-06-26 03:43:58","permalink":{"id":248473,"object_type":"structure","relational_id":12881,"identifier":"56","token":"56","url":"\/56\/","edition_id":1,"permalink":0,"preferred":1}}],"structure_contents":[{"id":87361,"structure_id":14465,"section_number":"56-234","catch_line":"Duty to furnish adequate service at reasonable and uniform rates","url":"\/56-234\/","token":"56\/10\/2\/56-234","metadata":false},{"id":74382,"structure_id":14465,"section_number":"56-234.1","catch_line":"Liability to customer for violation of duty to determine and charge lowest rate applicable","url":"\/56-234.1\/","token":"56\/10\/2\/56-234.1","metadata":false},{"id":56457,"structure_id":14465,"section_number":"56-234.2","catch_line":"Review of rates","url":"\/56-234.2\/","token":"56\/10\/2\/56-234.2","metadata":false},{"id":78493,"structure_id":14465,"section_number":"56-234.3","catch_line":"Approval of expenditures for and monitoring of new generation facilities and projected operation programs of electric utilities","url":"\/56-234.3\/","token":"56\/10\/2\/56-234.3","metadata":false},{"id":72152,"structure_id":14465,"section_number":"56-234.4","catch_line":"Authority to investigate utility operations to determine efficiency","url":"\/56-234.4\/","token":"56\/10\/2\/56-234.4","metadata":false},{"id":84236,"structure_id":14465,"section_number":"56-234.5","catch_line":"Required disclosure by certain officers and directors of certain utilities","url":"\/56-234.5\/","token":"56\/10\/2\/56-234.5","metadata":false},{"id":77453,"structure_id":14465,"section_number":"56-235","catch_line":"When Commission may fix rates, schedules, etc.; conformance with chapter","url":"\/56-235\/","token":"56\/10\/2\/56-235","metadata":false},{"id":85095,"structure_id":14465,"section_number":"56-235.1","catch_line":"Conservation of energy and capital resources","url":"\/56-235.1\/","token":"56\/10\/2\/56-235.1","metadata":false},{"id":57116,"structure_id":14465,"section_number":"56-235.10","catch_line":"Recovery of eligible safety activity costs; administration; procedure","url":"\/56-235.10\/","token":"56\/10\/2\/56-235.10","metadata":false},{"id":68057,"structure_id":14465,"section_number":"56-235.11","catch_line":"Retail rates of affiliated water utilities","url":"\/56-235.11\/","token":"56\/10\/2\/56-235.11","metadata":false},{"id":69890,"structure_id":14465,"section_number":"56-235.12","catch_line":"Economic development programs","url":"\/56-235.12\/","token":"56\/10\/2\/56-235.12","metadata":false},{"id":80899,"structure_id":14465,"section_number":"56-235.1:1","catch_line":"Rates for stand-by electric service at renewable cogeneration facilities","url":"\/56-235.1_1\/","token":"56\/10\/2\/56-235.1_1","metadata":false},{"id":80993,"structure_id":14465,"section_number":"56-235.1:2","catch_line":"Costs of using small, women-owned, or minority-owned businesses","url":"\/56-235.1_2\/","token":"56\/10\/2\/56-235.1_2","metadata":false},{"id":62621,"structure_id":14465,"section_number":"56-235.2","catch_line":"All rates, tolls, etc., to be just and reasonable to jurisdictional customers; findings and conclusions to be set forth; alternative forms of regulation for electric companies","url":"\/56-235.2\/","token":"56\/10\/2\/56-235.2","metadata":false},{"id":66652,"structure_id":14465,"section_number":"56-235.3","catch_line":"Procedures for investigation of rate applications","url":"\/56-235.3\/","token":"56\/10\/2\/56-235.3","metadata":false},{"id":63163,"structure_id":14465,"section_number":"56-235.4","catch_line":"Prohibition of multiple rate increases within any twelve-month period; exception","url":"\/56-235.4\/","token":"56\/10\/2\/56-235.4","metadata":false},{"id":55844,"structure_id":14465,"section_number":"56-235.5","catch_line":"Telephone regulatory alternatives","url":"\/56-235.5\/","token":"56\/10\/2\/56-235.5","metadata":false},{"id":87078,"structure_id":14465,"section_number":"56-235.5:1","catch_line":"Local exchange telephone service competition policy","url":"\/56-235.5_1\/","token":"56\/10\/2\/56-235.5_1","metadata":false},{"id":71641,"structure_id":14465,"section_number":"56-235.6","catch_line":"Optional performance-based regulation of certain utilities","url":"\/56-235.6\/","token":"56\/10\/2\/56-235.6","metadata":false},{"id":77670,"structure_id":14465,"section_number":"56-235.7","catch_line":"Jurisdiction of Commission when federal governmental facility ceases to be retail customer of electric utility","url":"\/56-235.7\/","token":"56\/10\/2\/56-235.7","metadata":false},{"id":78685,"structure_id":14465,"section_number":"56-235.8","catch_line":"Retail supply choice for natural gas customers","url":"\/56-235.8\/","token":"56\/10\/2\/56-235.8","metadata":false},{"id":62516,"structure_id":14465,"section_number":"56-235.9","catch_line":"Recovery of funds used for capital projects prior to a rate case for strategic natural gas facilities","url":"\/56-235.9\/","token":"56\/10\/2\/56-235.9","metadata":false},{"id":59697,"structure_id":14465,"section_number":"56-236","catch_line":"Public utilities required to file schedules of rates and charges; rules and regulations; when detariffing of telephone services to be permitted","url":"\/56-236\/","token":"56\/10\/2\/56-236","metadata":false},{"id":85571,"structure_id":14465,"section_number":"56-236.1","catch_line":"Rates to be charged churches","url":"\/56-236.1\/","token":"56\/10\/2\/56-236.1","metadata":false},{"id":74562,"structure_id":14465,"section_number":"56-236.2","catch_line":"Suspension of service to sewerage system","url":"\/56-236.2\/","token":"56\/10\/2\/56-236.2","metadata":false},{"id":57569,"structure_id":14465,"section_number":"56-237","catch_line":"How changes in rates effected; notice required; changes to be indicated on schedules","url":"\/56-237\/","token":"56\/10\/2\/56-237","metadata":false},{"id":64233,"structure_id":14465,"section_number":"56-237.1","catch_line":"Notification of intent to seek rate change in schedules required to be filed under \u00a7 56-236","url":"\/56-237.1\/","token":"56\/10\/2\/56-237.1","metadata":false},{"id":67487,"structure_id":14465,"section_number":"56-237.2","catch_line":"Public hearings on protests or objections to rate changes","url":"\/56-237.2\/","token":"56\/10\/2\/56-237.2","metadata":false},{"id":80068,"structure_id":14465,"section_number":"56-238","catch_line":"Suspension of proposed rates, etc.; investigation; effectiveness of rates pending investigation and subject to bond; fixing reasonable rates, etc","url":"\/56-238\/","token":"56\/10\/2\/56-238","metadata":false},{"id":78378,"structure_id":14465,"section_number":"56-239","catch_line":"Appeal from action of Commission","url":"\/56-239\/","token":"56\/10\/2\/56-239","metadata":false},{"id":64527,"structure_id":14465,"section_number":"56-240","catch_line":"Proposed rates, etc., or changes thereof, not suspended effective subject to later change by Commission; refund or credit; appeal; investor-owned public utilities required to show increase complies with \u00a7 56-235.2","url":"\/56-240\/","token":"56\/10\/2\/56-240","metadata":false},{"id":57241,"structure_id":14465,"section_number":"56-241","catch_line":"Rates of telephone companies","url":"\/56-241\/","token":"56\/10\/2\/56-241","metadata":false},{"id":83712,"structure_id":14465,"section_number":"56-241.1","catch_line":"Flat and measured telephone rates; certain rates prohibited","url":"\/56-241.1\/","token":"56\/10\/2\/56-241.1","metadata":false},{"id":74999,"structure_id":14465,"section_number":"56-241.2","catch_line":"Approval of rates for resale of telephone service","url":"\/56-241.2\/","token":"56\/10\/2\/56-241.2","metadata":false},{"id":72101,"structure_id":14465,"section_number":"56-242","catch_line":"Temporary reduction of rates","url":"\/56-242\/","token":"56\/10\/2\/56-242","metadata":false},{"id":79154,"structure_id":14465,"section_number":"56-243","catch_line":"Duration of such temporary reduction","url":"\/56-243\/","token":"56\/10\/2\/56-243","metadata":false},{"id":84025,"structure_id":14465,"section_number":"56-244","catch_line":"Increase to make up for losses due to excessive temporary reduction","url":"\/56-244\/","token":"56\/10\/2\/56-244","metadata":false},{"id":67793,"structure_id":14465,"section_number":"56-245","catch_line":"Temporary increase in rates","url":"\/56-245\/","token":"56\/10\/2\/56-245","metadata":false},{"id":75868,"structure_id":14465,"section_number":"56-245.1","catch_line":"Meters to be kept in good working condition; defective meters","url":"\/56-245.1\/","token":"56\/10\/2\/56-245.1","metadata":false},{"id":80955,"structure_id":14465,"section_number":"56-245.1:1","catch_line":"Customers to be notified about nuclear emergency evacuation plans","url":"\/56-245.1_1\/","token":"56\/10\/2\/56-245.1_1","metadata":false},{"id":61620,"structure_id":14465,"section_number":"56-245.1:2","catch_line":"Customers to be notified of renewable power options","url":"\/56-245.1_2\/","token":"56\/10\/2\/56-245.1_2","metadata":false},{"id":70183,"structure_id":14465,"section_number":"56-245.1:3","catch_line":"Disconnection suspension for utilities","url":"\/56-245.1_3\/","token":"56\/10\/2\/56-245.1_3","metadata":false},{"id":86241,"structure_id":14465,"section_number":"56-245.1:4","catch_line":"Notice procedures for nonpayment; disconnecting utility service","url":"\/56-245.1_4\/","token":"56\/10\/2\/56-245.1_4","metadata":false}],"previous_section":{"id":87078,"structure_id":14465,"section_number":"56-235.5:1","catch_line":"Local exchange telephone service competition policy","url":"\/56-235.5_1\/","token":"56\/10\/2\/56-235.5_1","metadata":false},"next_section":{"id":77670,"structure_id":14465,"section_number":"56-235.7","catch_line":"Jurisdiction of Commission when federal governmental facility ceases to be retail customer of electric utility","url":"\/56-235.7\/","token":"56\/10\/2\/56-235.7","metadata":false},"metadata":false,"official_url":"https:\/\/law.lis.virginia.gov\/vacode\/56-235.6\/","history_text":"

This law was first created in 1996. The record of its establishment is cataloged in chapter 350<\/a> of that year\u2019s edition of \u201cActs of Assembly,\u201d the annual state publication listing all changes made to the Code of Virginia in that year. It has been modified 2 times. Those modifications are cataloged by \u201cThe Acts of Assembly,\u201d a state publication, by year and chapter. Those modifications that can be read on the General Assembly\u2019s website will be linked accordingly. Those modifications are as follows: in 2006, chapter 574<\/a>; in 2007, chapters 888<\/a> and 933<\/a>.<\/p>","references":[{"id":57116,"section_number":"56-235.10","catch_line":"Recovery of eligible safety activity costs; administration; procedure","order_by":null,"url":"\/56-235.10\/"},{"id":78685,"section_number":"56-235.8","catch_line":"Retail supply choice for natural gas customers","order_by":null,"url":"\/56-235.8\/"},{"id":62516,"section_number":"56-235.9","catch_line":"Recovery of funds used for capital projects prior to a rate case for strategic natural gas facilities","order_by":null,"url":"\/56-235.9\/"},{"id":76005,"section_number":"56-600","catch_line":"Definitions","order_by":null,"url":"\/56-600\/"},{"id":59830,"section_number":"56-601","catch_line":"Natural gas conservation and ratemaking efficiency","order_by":null,"url":"\/56-601\/"},{"id":77174,"section_number":"56-602","catch_line":"Conservation and ratemaking efficiency plans","order_by":null,"url":"\/56-602\/"},{"id":60555,"section_number":"56-603","catch_line":"Definitions","order_by":null,"url":"\/56-603\/"},{"id":86694,"section_number":"56-605","catch_line":"Definitions","order_by":null,"url":"\/56-605\/"},{"id":70852,"section_number":"56-607","catch_line":"Application and administration","order_by":null,"url":"\/56-607\/"},{"id":86601,"section_number":"56-609","catch_line":"Upstream natural gas supply infrastructure projects","order_by":null,"url":"\/56-609\/"},{"id":63713,"section_number":"56-610","catch_line":"Definitions","order_by":null,"url":"\/56-610\/"},{"id":81639,"section_number":"56-611","catch_line":"Petition to establish or amend expansion plan; cost recovery; procedures","order_by":null,"url":"\/56-611\/"},{"id":60501,"section_number":"56-625","catch_line":"Biogas supply infrastructure projects","order_by":null,"url":"\/56-625\/"}],"refers_to":[{"id":56457,"section_number":"56-234.2","catch_line":"Review of rates","order_by":null,"url":"\/56-234.2\/"},{"id":62621,"section_number":"56-235.2","catch_line":"All rates, tolls, etc., to be just and reasonable to jurisdictional customers; findings and conclusions to be set forth; alternative forms of regulation for electric companies","order_by":null,"url":"\/56-235.2\/"},{"id":67687,"section_number":"56-585.1","catch_line":"Generation, distribution, and transmission rates after capped rates terminate or expire","order_by":null,"url":"\/56-585.1\/"}],"permalink":{"id":248829,"object_type":"law","relational_id":71641,"identifier":"56-235.6","token":"56\/10\/2\/56-235.6","url":"\/56-235.6\/","edition_id":1,"permalink":0,"preferred":1},"url":"\/56-235.6\/","token":"56\/10\/2\/56-235.6","dublin_core":{"Title":"Optional performance-based regulation of certain utilities","Type":"Text","Format":"text\/html","Identifier":"\u00a7 56-235.6","Relation":"Code of Virginia"},"html":"\n\t\t\t\t\t\t

A.<\/span> Notwithstanding any provision of law<\/span> to the contrary, the Commission<\/span> may approve a performance-based ratemaking methodology<\/span> for any public utility engaged in the business of furnishing gas service (for the purposes of this section a “gas utility<\/span>”) or electricity service (for the purposes of this section an “electric utility<\/span>”), upon application of the gas utility<\/span> or electric utility<\/span>, and after such notice and opportunity for hearing<\/span> as the Commission<\/span> may prescribe. For the purposes of this section, “performance-based ratemaking methodology<\/span>” shall mean a method of establishing rates<\/span> and charges that are in the public interest, and that departs in whole or in part from the cost-of-service methodology set forth in § 56-235.2<\/a>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

B.<\/span> The Commission<\/span> shall approve such performance-based ratemaking methodology<\/span> if it finds that it: (i) preserves adequate service to all classes of customers (including transportation-only customers if for a gas utility<\/span>); (ii) does not unreasonably prejudice or disadvantage any class of gas utility<\/span> or electric utility<\/span> customers; (iii) provides incentives for improved performance by the gas utility<\/span> or electric utility<\/span> in the conduct of its public duties; (iv) results in rates<\/span> that are not excessive; and (v) is in the public interest. Performance-based forms of regulation may include, but not be limited to, fixed or capped base rates<\/span>, the use of revenue indexing, price indexing, ranges of authorized return, gas cost indexing for gas utilities, and innovative utilization of utility-related assets<\/span> and activities (such as a gas utility<\/span>’s off-system sales of excess gas supplies and release of upstream pipeline capacity, performance of billing services for other gas or electricity suppliers, and reduction or elimination of regulatory requirements) in ways that benefit both the utility and its customers and may include a mechanism for automatic annual adjustments to revenues or prices to reflect changes in any index adopted for the implementation of such performance-based form of regulation. In making the findings<\/span> required by this subsection, the Commission<\/span> shall include, but not be limited to, in its considerations: (i) any proposed measures, including investments in infrastructure, that are reasonably estimated to preserve or improve system reliability, safety, supply diversity, and gas utility<\/span> transportation options; and (ii) other customer benefits that are reasonably estimated to accrue from the gas or electric utility<\/span>’s proposal. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

C.<\/span> Each gas utility<\/span> or electric utility<\/span> shall have the option to apply for implementation of a performance-based form of regulation. If the Commission<\/span> approves the application with modifications, the gas utility<\/span> or electric utility<\/span> may, at its option, withdraw its application and continue to be regulated under the form of regulation that existed immediately prior to the filing of the application. The Commission<\/span> may, after notice and opportunity for hearing<\/span>, alter, amend<\/span> or revoke, or authorize a gas utility<\/span> or electric utility<\/span> to discontinue, a performance-based form of regulation previously implemented under this section if it finds that (i) service to one or more classes of customers has deteriorated, or will deteriorate, to the point that the public interest will not be served by continuation of the performance-based form of regulation; (ii) any class of gas utility<\/span> customer or electric utility<\/span> customer is being unreasonably prejudiced or disadvantaged by the performance-based form of regulation; (iii) the performance-based form of regulation does not, or will not, provide reasonable incentives for improved performance by a gas utility<\/span> or electric utility<\/span> in the conduct of its public duties (which determination may include, but not be limited to, consideration of whether rates<\/span> are inadequate to recover a gas utility<\/span>’s or electric utility<\/span>’s cost of service); (iv) the performance-based form of regulation is resulting in rates<\/span> that are excessive compared to a gas utility<\/span>’s or electric utility<\/span>’s cost of service and any benefits that accrue from the performance-based plan; (v) the terms ordered by the Commission<\/span> in connection with approval of a gas utility<\/span>’s or electric utility<\/span>’s implementation of a performance-based form of regulation have been violated; or (vi) the performance-based form of regulation is no longer in the public interest. Any request by a gas utility<\/span> or electric utility<\/span> to discontinue its implementation of a performance-based form of regulation may include application pursuant to this chapter for approval of new rates<\/span> under the standards of § 56-235.2<\/a> for a gas utility<\/span> or pursuant to § 56-585.1<\/a> for an investor-owned incumbent electric utility<\/span>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

D.<\/span> The Commission<\/span> shall use the annual review process established in § 56-234.2<\/a> to monitor each performance-based form of regulation approved under this section and to make any annual prospective adjustments to revenues or prices necessary to reflect increases or decreases in any index adopted for the implementation of such performance-based form of regulation. <\/i><\/a><\/p><\/section>","plain_text":" CODE OF VIRGINIA\n\nOPTIONAL PERFORMANCE-BASED REGULATION OF CERTAIN UTILITIES (\u00a7 56-235.6)\n\nA. Notwithstanding any provision of law to the contrary, the Commission may\napprove a performance-based ratemaking methodology for any public utility\nengaged in the business of furnishing gas service (for the purposes of this\nsection a “gas utility”) or electricity service (for the purposes of\nthis section an “electric utility”), upon application of the gas\nutility or electric utility, and after such notice and opportunity for hearing\nas the Commission may prescribe. For the purposes of this section,\n“performance-based ratemaking methodology” shall mean a method of\nestablishing rates and charges that are in the public interest, and that departs\nin whole or in part from the cost-of-service methodology set forth in §\n56-235.2.\n\nB. The Commission shall approve such performance-based ratemaking methodology if\nit finds that it: (i) preserves adequate service to all classes of customers\n(including transportation-only customers if for a gas utility); (ii) does not\nunreasonably prejudice or disadvantage any class of gas utility or electric\nutility customers; (iii) provides incentives for improved performance by the gas\nutility or electric utility in the conduct of its public duties; (iv) results in\nrates that are not excessive; and (v) is in the public interest.\nPerformance-based forms of regulation may include, but not be limited to, fixed\nor capped base rates, the use of revenue indexing, price indexing, ranges of\nauthorized return, gas cost indexing for gas utilities, and innovative\nutilization of utility-related assets and activities (such as a gas\nutility’s off-system sales of excess gas supplies and release of upstream\npipeline capacity, performance of billing services for other gas or electricity\nsuppliers, and reduction or elimination of regulatory requirements) in ways that\nbenefit both the utility and its customers and may include a mechanism for\nautomatic annual adjustments to revenues or prices to reflect changes in any\nindex adopted for the implementation of such performance-based form of\nregulation. In making the findings required by this subsection, the Commission\nshall include, but not be limited to, in its considerations: (i) any proposed\nmeasures, including investments in infrastructure, that are reasonably estimated\nto preserve or improve system reliability, safety, supply diversity, and gas\nutility transportation options; and (ii) other customer benefits that are\nreasonably estimated to accrue from the gas or electric utility’s\nproposal.\n\nC. Each gas utility or electric utility shall have the option to apply for\nimplementation of a performance-based form of regulation. If the Commission\napproves the application with modifications, the gas utility or electric utility\nmay, at its option, withdraw its application and continue to be regulated under\nthe form of regulation that existed immediately prior to the filing of the\napplication. The Commission may, after notice and opportunity for hearing,\nalter, amend or revoke, or authorize a gas utility or electric utility to\ndiscontinue, a performance-based form of regulation previously implemented under\nthis section if it finds that (i) service to one or more classes of customers\nhas deteriorated, or will deteriorate, to the point that the public interest\nwill not be served by continuation of the performance-based form of regulation;\n(ii) any class of gas utility customer or electric utility customer is being\nunreasonably prejudiced or disadvantaged by the performance-based form of\nregulation; (iii) the performance-based form of regulation does not, or will\nnot, provide reasonable incentives for improved performance by a gas utility or\nelectric utility in the conduct of its public duties (which determination may\ninclude, but not be limited to, consideration of whether rates are inadequate to\nrecover a gas utility’s or electric utility’s cost of service); (iv)\nthe performance-based form of regulation is resulting in rates that are\nexcessive compared to a gas utility’s or electric utility’s cost of\nservice and any benefits that accrue from the performance-based plan; (v) the\nterms ordered by the Commission in connection with approval of a gas\nutility’s or electric utility’s implementation of a\nperformance-based form of regulation have been violated; or (vi) the\nperformance-based form of regulation is no longer in the public interest. Any\nrequest by a gas utility or electric utility to discontinue its implementation\nof a performance-based form of regulation may include application pursuant to\nthis chapter for approval of new rates under the standards of § 56-235.2\nfor a gas utility or pursuant to § 56-585.1 for an investor-owned incumbent\nelectric utility.\n\nD. The Commission shall use the annual review process established in §\n56-234.2 to monitor each performance-based form of regulation approved under\nthis section and to make any annual prospective adjustments to revenues or\nprices necessary to reflect increases or decreases in any index adopted for the\nimplementation of such performance-based form of regulation.\n\nHISTORY: 1996, c. 350; 2006, c. 574; 2007, cc. 888, 933.","edition":{"id":1,"name":"2025","slug":"2025","date_created":"2026-06-21 22:39:22","date_modified":"2026-06-21 22:39:22","current":1,"order_by":1,"last_import":null}}