{"formats":[{"name":"JSON","format":"json","url":"\/downloads\/2025\/code-json\/56-249.6.json"},{"name":"Plain Text","format":"text","url":"\/downloads\/2025\/code-text\/56-249.6.txt"},{"name":"XML","format":"xml","url":"\/downloads\/2025\/code-xml\/56-249.6.xml"},{"name":"HTML","format":"html","url":"\/downloads\/2025\/code-html\/56-249.6.html"}],"law_id":55635,"edition_id":1,"section_id":55635,"structure_id":13254,"section_number":"56-249.6","catch_line":"Recovery of fuel and purchased power costs","history":"1978, c. 636; 1979, c. 492; 1980, c. 384; 1982, c. 584; 1984, cc. 716, 725; 1989, c. 666; 2004, c. 827; 2006, c. 939; 2007, cc. 888, 933; 2009, c. 244; 2020, c. 661.","full_text":"A\n\n1. Each electric utility that purchases fuel for the generation of electricity or purchases power and that was not, as of July 1, 1999, bound by a rate case settlement adopted by the Commission that extended in its application beyond January 1, 2002, shall submit to the Commission its estimate of fuel costs, including the cost of purchased power, for the 12-month period beginning on the date prescribed by the Commission. Upon investigation of such estimates and hearings in accordance with law, the Commission shall direct each company to place in effect tariff provisions designed to recover the fuel costs determined by the Commission to be appropriate for that period, adjusted for any over-recovery or under-recovery of fuel costs previously incurred.2\n\nThe Commission shall continuously review fuel costs and if it finds that any utility described in subdivision A 1 is in an over-recovery position by more than five percent, or likely to be so, it may reduce the fuel cost tariffs to correct the over-recovery.3\n\nBeginning July 1, 2009, for all utilities described in subdivision A 1 and subsection B, if the Commission approves any increase in fuel factor charges pursuant to this section that would increase the total rates of the residential class of customers of any such utility by more than 20 percent, the Commission, within six months following the effective date of such increase, shall review fuel costs, and if the Commission finds that the utility is, or is likely to be, in an over-recovery position with respect to fuel costs for the 12-month period for which the increase in fuel factor charges was approved by more than five percent, it may reduce the utility’s fuel cost tariffs to correct the over-recovery.B\n\nAll fuel costs recovery tariff provisions in effect on January 1, 2004, for any electric utility that purchases fuel for the generation of electricity and that was, as of July 1, 1999, bound by a rate case settlement adopted by the Commission that extended in its application beyond January 1, 2002, shall remain in effect until the later of (i) July 1, 2007 or (ii) the establishment of tariff provisions under subsection C. Any such utility shall continue to report to the Commission annually its actual fuel costs, including the cost of purchased power.C\n\nEach electric utility described in subsection B shall submit annually to the Commission its estimate of fuel costs, including the cost of purchased power, for successive 12-month periods beginning on July 1, 2007, and each July 1 thereafter. Upon investigation of such estimates and hearings in accordance with law, the Commission shall direct each such utility to place in effect tariff provisions designed to recover the fuel costs determined by the Commission to be appropriate for such periods, adjusted for any over-recovery or under-recovery of fuel costs previously incurred; however, (i) no such adjustment for any over-recovery or under-recovery of fuel costs previously incurred shall be made for any period prior to July 1, 2007, and (ii) the Commission shall order that the deferral portion, if any, of the total increase in fuel tariffs for all classes as determined by the Commission to be appropriate for the 12-month period beginning July 1, 2007, above the fuel tariffs previously existing, shall be deferred without interest and recovered from all classes of customers as follows: (i) in the 12-month period beginning July 1, 2008, that part of the deferral portion of the increase in fuel tariffs that the Commission determines would increase the total rates of the residential class of customers of the utility by four percent over the level of such total rates in existence on June 30, 2008, shall be recovered; (ii) in the 12-month period beginning July 1, 2009, that part of the balance of the deferral portion of the increase in fuel tariffs, if any, that the Commission determines would increase the total rates of the residential class of customers of the utility by four percent over the level of such total rates in existence on June 30, 2009, shall be recovered; and (iii) in the 12-month period beginning July 1, 2010, the entire balance of the deferral portion of the increase in fuel tariffs, if any, shall be recovered. The “deferral portion of the increase in fuel tariffs” means the portion of such increase in fuel tariffs that exceeds the amount of such increase in fuel tariffs that the Commission determines would increase the total rates of the residential class of customers of the utility by more than four percent over the level of such total rates in existence on June 30, 2007.D\n\nIn proceedings under subsections A and C:1\n\nEnergy revenues associated with off-system sales of power shall be credited against fuel factor expenses in an amount equal to the total incremental fuel factor costs incurred in the production and delivery of such sales. In addition, 75 percent of the total annual margins from off-system sales shall be credited against fuel factor expenses; however, the Commission, upon application and after notice and opportunity for hearing, may require that a smaller percentage of such margins be so credited if it finds by clear and convincing evidence that such requirement is in the public interest. The remaining margins from off-system sales shall not be considered in the biennial reviews of electric utilities conducted pursuant to § 56-585.1. In the event such margins result in a net loss to the electric utility, (i) no charges shall be applied to fuel factor expenses and (ii) any such net losses shall not be considered in the biennial reviews of electric utilities conducted pursuant to § 56-585.1. For purposes of this subsection, “margins from off-system sales” shall mean the total revenues received from off-system sales transactions less the total incremental costs incurred; and2\n\nThe Commission shall disallow recovery of any fuel costs that it finds without just cause to be the result of failure of the utility to make every reasonable effort to minimize fuel costs or any decision of the utility resulting in unreasonable fuel costs, giving due regard to reliability of service and the need to maintain reliable sources of supply, economical generation mix, generating experience of comparable facilities, and minimization of the total cost of providing service.\n\t\t\t\tIn any proceeding for the recovery of fuel costs under this subdivision in which the costs a utility seeks to recover include costs incurred under a natural gas capacity contract for a term of more than 10 years that procures more than 250,000 dekatherms per day that has not previously been subject to a review under this subdivision, the Commission shall require the utility to prove by a preponderance of the evidence that the utility has (i) determined that the utility cannot meet its service obligations, giving due regard, in the Commission’s sole discretion, to reliability of service and the need to maintain reliable sources of supply, without an additional fuel resource; (ii) reasonably identified and determined the date and amount of the new fuel resource it needs; (iii) objectively studied available alternative fuel resource options, as verified by the Commission, including options other than a new natural gas capacity contract or contracts to meet the identified and determined need; and (iv) determined that the natural gas capacity contract or contracts are the lowest-cost available option, taking into consideration fixed and variable costs and a reasonable projection of utilization. Absent the Commission’s finding that the utility has proven by a preponderance of the evidence that the utility had complied with the requirements of clauses (i), (ii), (iii), and (iv), the Commission shall deny the utility’s recovery of such costs. Nothing in this subdivision shall limit the Commission’s discretion to review and make a determination as to the reasonableness of the recovery by a utility of costs, including costs incurred under a natural gas capacity contract, that were previously subject to a review under this subdivision.E\n\nThe Commission is authorized to promulgate, in accordance with the provisions of this section, all rules and regulations necessary to allow the recovery by electric utilities of all of their prudently incurred fuel costs under subsections A and C, including the cost of purchased power, as precisely and promptly as possible, with no over-recovery or under-recovery, except as provided in subsection C, in a manner that will tend to assure public confidence and minimize abrupt changes in charges to consumers.","order_by":null,"text":{"0":{"id":203942,"text":"1. Each electric utility that purchases fuel for the generation of electricity or purchases power and that was not, as of July 1, 1999, bound by a rate case settlement adopted by the Commission that extended in its application beyond January 1, 2002, shall submit to the Commission its estimate of fuel costs, including the cost of purchased power, for the 12-month period beginning on the date prescribed by the Commission. Upon investigation of such estimates and hearings in accordance with law, the Commission shall direct each company to place in effect tariff provisions designed to recover the fuel costs determined by the Commission to be appropriate for that period, adjusted for any over-recovery or under-recovery of fuel costs previously incurred.","type":"section","prefixes":["A"],"prefix":"A","entire_prefix":"A","prefix_anchor":"A","level":1,"next_prefix":"A2"},"1":{"id":203943,"text":"The Commission shall continuously review fuel costs and if it finds that any utility described in subdivision A 1 is in an over-recovery position by more than five percent, or likely to be so, it may reduce the fuel cost tariffs to correct the over-recovery.","type":"section","prefixes":["A","2"],"prefix":"2","entire_prefix":"A2","prefix_anchor":"A2","level":2,"prior_prefix":"A","next_prefix":"A3"},"2":{"id":203944,"text":"Beginning July 1, 2009, for all utilities described in subdivision A 1 and subsection B, if the Commission approves any increase in fuel factor charges pursuant to this section that would increase the total rates of the residential class of customers of any such utility by more than 20 percent, the Commission, within six months following the effective date of such increase, shall review fuel costs, and if the Commission finds that the utility is, or is likely to be, in an over-recovery position with respect to fuel costs for the 12-month period for which the increase in fuel factor charges was approved by more than five percent, it may reduce the utility’s fuel cost tariffs to correct the over-recovery.","type":"section","prefixes":["A","3"],"prefix":"3","entire_prefix":"A3","prefix_anchor":"A3","level":2,"prior_prefix":"A2","next_prefix":"B"},"3":{"id":203945,"text":"All fuel costs recovery tariff provisions in effect on January 1, 2004, for any electric utility that purchases fuel for the generation of electricity and that was, as of July 1, 1999, bound by a rate case settlement adopted by the Commission that extended in its application beyond January 1, 2002, shall remain in effect until the later of (i) July 1, 2007 or (ii) the establishment of tariff provisions under subsection C. Any such utility shall continue to report to the Commission annually its actual fuel costs, including the cost of purchased power.","type":"section","prefixes":["B"],"prefix":"B","entire_prefix":"B","prefix_anchor":"B","level":1,"prior_prefix":"A3","next_prefix":"C"},"4":{"id":203946,"text":"Each electric utility described in subsection B shall submit annually to the Commission its estimate of fuel costs, including the cost of purchased power, for successive 12-month periods beginning on July 1, 2007, and each July 1 thereafter. Upon investigation of such estimates and hearings in accordance with law, the Commission shall direct each such utility to place in effect tariff provisions designed to recover the fuel costs determined by the Commission to be appropriate for such periods, adjusted for any over-recovery or under-recovery of fuel costs previously incurred; however, (i) no such adjustment for any over-recovery or under-recovery of fuel costs previously incurred shall be made for any period prior to July 1, 2007, and (ii) the Commission shall order that the deferral portion, if any, of the total increase in fuel tariffs for all classes as determined by the Commission to be appropriate for the 12-month period beginning July 1, 2007, above the fuel tariffs previously existing, shall be deferred without interest and recovered from all classes of customers as follows: (i) in the 12-month period beginning July 1, 2008, that part of the deferral portion of the increase in fuel tariffs that the Commission determines would increase the total rates of the residential class of customers of the utility by four percent over the level of such total rates in existence on June 30, 2008, shall be recovered; (ii) in the 12-month period beginning July 1, 2009, that part of the balance of the deferral portion of the increase in fuel tariffs, if any, that the Commission determines would increase the total rates of the residential class of customers of the utility by four percent over the level of such total rates in existence on June 30, 2009, shall be recovered; and (iii) in the 12-month period beginning July 1, 2010, the entire balance of the deferral portion of the increase in fuel tariffs, if any, shall be recovered. The “deferral portion of the increase in fuel tariffs” means the portion of such increase in fuel tariffs that exceeds the amount of such increase in fuel tariffs that the Commission determines would increase the total rates of the residential class of customers of the utility by more than four percent over the level of such total rates in existence on June 30, 2007.","type":"section","prefixes":["C"],"prefix":"C","entire_prefix":"C","prefix_anchor":"C","level":1,"prior_prefix":"B","next_prefix":"D"},"5":{"id":203947,"text":"In proceedings under subsections A and C:","type":"section","prefixes":["D"],"prefix":"D","entire_prefix":"D","prefix_anchor":"D","level":1,"prior_prefix":"C","next_prefix":"D1"},"6":{"id":203948,"text":"Energy revenues associated with off-system sales of power shall be credited against fuel factor expenses in an amount equal to the total incremental fuel factor costs incurred in the production and delivery of such sales. In addition, 75 percent of the total annual margins from off-system sales shall be credited against fuel factor expenses; however, the Commission, upon application and after notice and opportunity for hearing, may require that a smaller percentage of such margins be so credited if it finds by clear and convincing evidence that such requirement is in the public interest. The remaining margins from off-system sales shall not be considered in the biennial reviews of electric utilities conducted pursuant to § 56-585.1. In the event such margins result in a net loss to the electric utility, (i) no charges shall be applied to fuel factor expenses and (ii) any such net losses shall not be considered in the biennial reviews of electric utilities conducted pursuant to § 56-585.1. For purposes of this subsection, “margins from off-system sales” shall mean the total revenues received from off-system sales transactions less the total incremental costs incurred; and","type":"section","prefixes":["D","1"],"prefix":"1","entire_prefix":"D1","prefix_anchor":"D1","level":2,"prior_prefix":"D","next_prefix":"D2"},"7":{"id":203949,"text":"The Commission shall disallow recovery of any fuel costs that it finds without just cause to be the result of failure of the utility to make every reasonable effort to minimize fuel costs or any decision of the utility resulting in unreasonable fuel costs, giving due regard to reliability of service and the need to maintain reliable sources of supply, economical generation mix, generating experience of comparable facilities, and minimization of the total cost of providing service.\n\t\t\t\tIn any proceeding for the recovery of fuel costs under this subdivision in which the costs a utility seeks to recover include costs incurred under a natural gas capacity contract for a term of more than 10 years that procures more than 250,000 dekatherms per day that has not previously been subject to a review under this subdivision, the Commission shall require the utility to prove by a preponderance of the evidence that the utility has (i) determined that the utility cannot meet its service obligations, giving due regard, in the Commission’s sole discretion, to reliability of service and the need to maintain reliable sources of supply, without an additional fuel resource; (ii) reasonably identified and determined the date and amount of the new fuel resource it needs; (iii) objectively studied available alternative fuel resource options, as verified by the Commission, including options other than a new natural gas capacity contract or contracts to meet the identified and determined need; and (iv) determined that the natural gas capacity contract or contracts are the lowest-cost available option, taking into consideration fixed and variable costs and a reasonable projection of utilization. Absent the Commission’s finding that the utility has proven by a preponderance of the evidence that the utility had complied with the requirements of clauses (i), (ii), (iii), and (iv), the Commission shall deny the utility’s recovery of such costs. Nothing in this subdivision shall limit the Commission’s discretion to review and make a determination as to the reasonableness of the recovery by a utility of costs, including costs incurred under a natural gas capacity contract, that were previously subject to a review under this subdivision.","type":"section","prefixes":["D","2"],"prefix":"2","entire_prefix":"D2","prefix_anchor":"D2","level":2,"prior_prefix":"D1","next_prefix":"E"},"8":{"id":203950,"text":"The Commission is authorized to promulgate, in accordance with the provisions of this section, all rules and regulations necessary to allow the recovery by electric utilities of all of their prudently incurred fuel costs under subsections A and C, including the cost of purchased power, as precisely and promptly as possible, with no over-recovery or under-recovery, except as provided in subsection C, in a manner that will tend to assure public confidence and minimize abrupt changes in charges to consumers.","type":"section","prefixes":["E"],"prefix":"E","entire_prefix":"E","prefix_anchor":"E","level":1,"prior_prefix":"D2"}},"ancestry":[{"id":13254,"edition_id":1,"name":"Powers of Commission in Relation to Service","identifier":"3","label":"article","depth":3,"order_by":1,"parent_id":13238,"metadata":{},"date_created":"2026-06-26 03:44:31","date_modified":"2026-06-26 03:44:31","permalink":{"id":248939,"object_type":"structure","relational_id":13254,"identifier":"3","token":"56\/10\/3","url":"\/56\/10\/3\/","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":54253,"structure_id":13254,"section_number":"56-246","catch_line":"Tests and equipment therefor","url":"\/56-246\/","token":"56\/10\/3\/56-246","metadata":false},{"id":86344,"structure_id":13254,"section_number":"56-247","catch_line":"Commission may change regulations, measurements, practices, services, or acts","url":"\/56-247\/","token":"56\/10\/3\/56-247","metadata":false},{"id":70288,"structure_id":13254,"section_number":"56-247.1","catch_line":"Commission to require public utilities to follow certain procedures","url":"\/56-247.1\/","token":"56\/10\/3\/56-247.1","metadata":false},{"id":62920,"structure_id":13254,"section_number":"56-248","catch_line":"Commission to prescribe standard units of products or service","url":"\/56-248\/","token":"56\/10\/3\/56-248","metadata":false},{"id":81961,"structure_id":13254,"section_number":"56-248.1","catch_line":"Commission to monitor fuel prices and utility fuel purchases; fuel price index","url":"\/56-248.1\/","token":"56\/10\/3\/56-248.1","metadata":false},{"id":69021,"structure_id":13254,"section_number":"56-249","catch_line":"Reports by utilities","url":"\/56-249\/","token":"56\/10\/3\/56-249","metadata":false},{"id":80480,"structure_id":13254,"section_number":"56-249.1","catch_line":"Commission may require transfer of gas, water or electricity by one utility to another; compensation","url":"\/56-249.1\/","token":"56\/10\/3\/56-249.1","metadata":false},{"id":61474,"structure_id":13254,"section_number":"56-249.2","catch_line":"Certain records to be maintained","url":"\/56-249.2\/","token":"56\/10\/3\/56-249.2","metadata":false},{"id":74508,"structure_id":13254,"section_number":"56-249.3","catch_line":"Certain electric utilities to file reports in relation to fuel transactions, fuel purchases, fuel adjustment clauses, etc","url":"\/56-249.3\/","token":"56\/10\/3\/56-249.3","metadata":false},{"id":87031,"structure_id":13254,"section_number":"56-249.4","catch_line":"How reports shall be filed; reports open to public; rules and regulations","url":"\/56-249.4\/","token":"56\/10\/3\/56-249.4","metadata":false},{"id":74048,"structure_id":13254,"section_number":"56-249.5","catch_line":"Repealed","url":"\/56-249.5\/","token":"56\/10\/3\/56-249.5","metadata":false},{"id":55635,"structure_id":13254,"section_number":"56-249.6","catch_line":"Recovery of fuel and purchased power costs","url":"\/56-249.6\/","token":"56\/10\/3\/56-249.6","metadata":false},{"id":55979,"structure_id":13254,"section_number":"56-249.6:1","catch_line":"Financing for certain deferred fuel costs; Phase I Utilities.","url":"\/56-249.6_1\/","token":"56\/10\/3\/56-249.6_1","metadata":false},{"id":74921,"structure_id":13254,"section_number":"56-249.6:2","catch_line":"Financing for certain deferred fuel costs; Phase II Utilities","url":"\/56-249.6_2\/","token":"56\/10\/3\/56-249.6_2","metadata":false},{"id":82532,"structure_id":13254,"section_number":"56-249.7","catch_line":"Certain directors and officers of utility to file shareholder information","url":"\/56-249.7\/","token":"56\/10\/3\/56-249.7","metadata":false},{"id":55267,"structure_id":13254,"section_number":"56-249.8","catch_line":"Financing for certain securitized asset costs; Phase I Utility","url":"\/56-249.8\/","token":"56\/10\/3\/56-249.8","metadata":false},{"id":83780,"structure_id":13254,"section_number":"56-250","catch_line":"Commission may authorize action by public utility in time of emergency or shortage; plans","url":"\/56-250\/","token":"56\/10\/3\/56-250","metadata":false},{"id":71285,"structure_id":13254,"section_number":"56-251","catch_line":"Repealed","url":"\/56-251\/","token":"56\/10\/3\/56-251","metadata":false},{"id":63602,"structure_id":13254,"section_number":"56-253","catch_line":"Existing remedies retained","url":"\/56-253\/","token":"56\/10\/3\/56-253","metadata":false}],"previous_section":{"id":74048,"structure_id":13254,"section_number":"56-249.5","catch_line":"Repealed","url":"\/56-249.5\/","token":"56\/10\/3\/56-249.5","metadata":false},"next_section":{"id":55979,"structure_id":13254,"section_number":"56-249.6:1","catch_line":"Financing for certain deferred fuel costs; Phase I Utilities.","url":"\/56-249.6_1\/","token":"56\/10\/3\/56-249.6_1","metadata":false},"metadata":false,"official_url":"https:\/\/law.lis.virginia.gov\/vacode\/56-249.6\/","history_text":"

This law was first created in 1978. The record of its establishment is cataloged in chapter 636 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. Unfortunately, the 1978 \u201cActs\u201d aren\u2019t available online. It has been modified 10 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 1979, chapter 492; in 1980, chapter 384; in 1982, chapter 584; in 1984, chapters 716 and 725; in 1989, chapter 666; in 2004, chapter 827<\/a>; in 2006, chapter 939<\/a>; in 2007, chapters 888<\/a> and 933<\/a>; in 2009, chapter 244<\/a>; in 2020, chapter 661<\/a>.<\/p>","references":[{"id":59376,"section_number":"10.1-1197.6","catch_line":"Permit by rule for small renewable energy projects","order_by":null,"url":"\/10.1-1197.6\/"},{"id":77460,"section_number":"56-231.50","catch_line":"Regulation by State Corporation Commission","order_by":null,"url":"\/56-231.50\/"},{"id":63163,"section_number":"56-235.4","catch_line":"Prohibition of multiple rate increases within any twelve-month period; exception","order_by":null,"url":"\/56-235.4\/"},{"id":80068,"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","order_by":null,"url":"\/56-238\/"},{"id":55979,"section_number":"56-249.6:1","catch_line":"Financing for certain deferred fuel costs; Phase I Utilities.","order_by":null,"url":"\/56-249.6_1\/"},{"id":74921,"section_number":"56-249.6:2","catch_line":"Financing for certain deferred fuel costs; Phase II Utilities","order_by":null,"url":"\/56-249.6_2\/"},{"id":75586,"section_number":"56-582","catch_line":"Rate caps","order_by":null,"url":"\/56-582\/"},{"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\/"},{"id":75688,"section_number":"56-585.1:1","catch_line":"Transitional Rate Period: review of rates, terms and conditions for utility generation facilities","order_by":null,"url":"\/56-585.1_1\/"},{"id":68837,"section_number":"56-585.1:2","catch_line":"Pilot program for energy assistance and weatherization","order_by":null,"url":"\/56-585.1_2\/"},{"id":78934,"section_number":"56-585.1:3","catch_line":"Pilot programs for community solar development","order_by":null,"url":"\/56-585.1_3\/"},{"id":81665,"section_number":"56-585.5","catch_line":"Generation of electricity from renewable and zero carbon sources","order_by":null,"url":"\/56-585.5\/"},{"id":84206,"section_number":"56-585.8","catch_line":"Biennial rate reviews","order_by":null,"url":"\/56-585.8\/"},{"id":54132,"section_number":"56-594.3","catch_line":"Shared solar programs; Phase II Utility","order_by":null,"url":"\/56-594.3\/"},{"id":80234,"section_number":"56-594.4","catch_line":"Shared solar programs; Phase I Utility","order_by":null,"url":"\/56-594.4\/"}],"refers_to":[{"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":248985,"object_type":"law","relational_id":55635,"identifier":"56-249.6","token":"56\/10\/3\/56-249.6","url":"\/56-249.6\/","edition_id":1,"permalink":0,"preferred":1},"url":"\/56-249.6\/","token":"56\/10\/3\/56-249.6","dublin_core":{"Title":"Recovery of fuel and purchased power costs","Type":"Text","Format":"text\/html","Identifier":"\u00a7 56-249.6","Relation":"Code of Virginia"},"html":"\n\t\t\t\t\t\t

A.<\/span> 1. Each electric utility that purchases fuel for the generation of electricity or purchases power and that was not, as of July 1, 1999, bound by a rate<\/span> case settlement<\/span> adopted by the Commission<\/span> that extended in its application beyond January 1, 2002, shall submit to the Commission<\/span> its estimate of fuel costs, including the cost of purchased power, for the 12-month period beginning on the date prescribed by the Commission<\/span>. Upon investigation of such estimates and hearings<\/span> in accordance with law<\/span>, the Commission<\/span> shall direct each company<\/span> to place in effect tariff provisions designed to recover the fuel costs determined by the Commission<\/span> to be appropriate for that period, adjusted for any over-recovery or under-recovery of fuel costs previously incurred. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> The Commission<\/span> shall continuously review fuel costs and if it finds that any utility described in subdivision A 1 is in an over-recovery position by more than five percent, or likely to be so, it may reduce the fuel cost tariffs to correct the over-recovery. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

3.<\/span> Beginning July 1, 2009, for all utilities described in subdivision A 1 and subsection B, if the Commission<\/span> approves any increase in fuel factor charges pursuant to this section that would increase the total rates<\/span> of the residential class of customers of any such utility by more than 20 percent, the Commission<\/span>, within six months following the effective date of such increase, shall review fuel costs, and if the Commission<\/span> finds that the utility is, or is likely to be, in an over-recovery position with respect to fuel costs for the 12-month period for which the increase in fuel factor charges was approved by more than five percent, it may reduce the utility’s fuel cost tariffs to correct the over-recovery. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

B.<\/span> All fuel costs recovery tariff provisions in effect on January 1, 2004, for any electric utility that purchases fuel for the generation of electricity and that was, as of July 1, 1999, bound by a rate<\/span> case settlement<\/span> adopted by the Commission<\/span> that extended in its application beyond January 1, 2002, shall remain in effect until the later of (i) July 1, 2007 or (ii) the establishment of tariff provisions under subsection C. Any such utility shall continue to report to the Commission<\/span> annually its actual fuel costs, including the cost of purchased power. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

C.<\/span> Each electric utility described in subsection B shall submit annually to the Commission<\/span> its estimate of fuel costs, including the cost of purchased power, for successive 12-month periods beginning on July 1, 2007, and each July 1 thereafter. Upon investigation of such estimates and hearings<\/span> in accordance with law<\/span>, the Commission<\/span> shall direct each such utility to place in effect tariff provisions designed to recover the fuel costs determined by the Commission<\/span> to be appropriate for such periods, adjusted for any over-recovery or under-recovery of fuel costs previously incurred; however, (i) no such adjustment for any over-recovery or under-recovery of fuel costs previously incurred shall be made for any period prior to July 1, 2007, and (ii) the Commission<\/span> shall order<\/span> that the deferral portion, if any, of the total increase in fuel tariffs for all classes as determined by the Commission<\/span> to be appropriate for the 12-month period beginning July 1, 2007, above the fuel tariffs previously existing, shall be deferred without interest and recovered from all classes of customers as follows: (i) in the 12-month period beginning July 1, 2008, that part of the deferral portion of the increase in fuel tariffs<\/span> that the Commission<\/span> determines would increase the total rates<\/span> of the residential class of customers of the utility by four percent over the level of such total rates<\/span> in existence on June 30, 2008, shall be recovered; (ii) in the 12-month period beginning July 1, 2009, that part of the balance of the deferral portion of the increase in fuel tariffs<\/span>, if any, that the Commission<\/span> determines would increase the total rates<\/span> of the residential class of customers of the utility by four percent over the level of such total rates<\/span> in existence on June 30, 2009, shall be recovered; and (iii) in the 12-month period beginning July 1, 2010, the entire balance of the deferral portion of the increase in fuel tariffs<\/span>, if any, shall be recovered. The “deferral portion of the increase in fuel tariffs<\/span>” means the portion of such increase in fuel tariffs that exceeds the amount of such increase in fuel tariffs that the Commission<\/span> determines would increase the total rates<\/span> of the residential class of customers of the utility by more than four percent over the level of such total rates<\/span> in existence on June 30, 2007. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

D.<\/span> In proceedings under subsections A and C: <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

1.<\/span> Energy revenues associated with off-system sales of power shall be credited against fuel factor expenses in an amount equal to the total incremental fuel factor costs incurred in the production and delivery of such sales. In addition, 75 percent of the total annual margins from off-system sales<\/span> shall be credited against fuel factor expenses; however, the Commission<\/span>, upon application and after notice and opportunity for hearing<\/span>, may require that a smaller percentage of such margins be so credited if it finds by clear and convincing evidence<\/span> that such requirement is in the public interest. The remaining margins from off-system sales<\/span> shall not be considered in the biennial reviews of electric utilities conducted pursuant to § 56-585.1<\/a>. In the event such margins result in a net loss to the electric utility, (i) no charges shall be applied to fuel factor expenses and (ii) any such net losses shall not be considered in the biennial reviews of electric utilities conducted pursuant to § 56-585.1<\/a>. For purposes of this subsection, “margins from off-system sales<\/span>” shall mean the total revenues received from off-system sales transactions less the total incremental costs incurred; and <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> The Commission<\/span> shall disallow recovery of any fuel costs that it finds without just cause to be the result of failure of the utility to make every reasonable effort to minimize fuel costs or any decision of the utility resulting in unreasonable fuel costs, giving due regard to reliability of service and the need to maintain reliable sources of supply, economical generation mix, generating experience of comparable facilities, and minimization of the total cost of providing service.\n\t\t\t\tIn any proceeding for the recovery of fuel costs under this subdivision in which the costs a utility seeks to recover include costs incurred under a natural gas capacity contract<\/span> for a term of more than 10 years that procures more than 250,000 dekatherms per day that has not previously been subject to a review under this subdivision, the Commission<\/span> shall require the utility to prove by a preponderance of the evidence<\/span> that the utility has (i) determined that the utility cannot meet its service obligations, giving due regard, in the Commission<\/span>’s sole discretion, to reliability of service and the need to maintain reliable sources of supply, without an additional fuel resource; (ii) reasonably identified and determined the date and amount of the new fuel resource it needs; (iii) objectively studied available alternative fuel resource options, as verified by the Commission<\/span>, including options other than a new natural gas capacity contract<\/span> or contracts<\/span> to meet the identified and determined need; and (iv) determined that the natural gas capacity contract<\/span> or contracts<\/span> are the lowest-cost available option, taking into consideration fixed and variable costs and a reasonable projection of utilization. Absent the Commission<\/span>’s finding<\/span> that the utility has proven by a preponderance of the evidence<\/span> that the utility had complied with the requirements of clauses (i), (ii), (iii), and (iv), the Commission<\/span> shall deny the utility’s recovery of such costs. Nothing in this subdivision shall limit the Commission<\/span>’s discretion to review and make a determination as to the reasonableness of the recovery by a utility of costs, including costs incurred under a natural gas capacity contract<\/span>, that were previously subject to a review under this subdivision. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

E.<\/span> The Commission<\/span> is authorized to promulgate, in accordance with the provisions of this section, all rules and regulations necessary to allow the recovery by electric utilities of all of their prudently incurred fuel costs under subsections A and C, including the cost of purchased power, as precisely and promptly as possible, with no over-recovery or under-recovery, except as provided in subsection C, in a manner that will tend to assure public confidence and minimize abrupt changes in charges to consumers. <\/i><\/a><\/p><\/section>","plain_text":" CODE OF VIRGINIA\n\nRECOVERY OF FUEL AND PURCHASED POWER COSTS (\u00a7 56-249.6)\n\nA. 1. Each electric utility that purchases fuel for the generation of\nelectricity or purchases power and that was not, as of July 1, 1999, bound by a\nrate case settlement adopted by the Commission that extended in its application\nbeyond January 1, 2002, shall submit to the Commission its estimate of fuel\ncosts, including the cost of purchased power, for the 12-month period beginning\non the date prescribed by the Commission. Upon investigation of such estimates\nand hearings in accordance with law, the Commission shall direct each company to\nplace in effect tariff provisions designed to recover the fuel costs determined\nby the Commission to be appropriate for that period, adjusted for any\nover-recovery or under-recovery of fuel costs previously incurred.\n\n 2. The Commission shall continuously review fuel costs and if it finds that\n any utility described in subdivision A 1 is in an over-recovery position by\n more than five percent, or likely to be so, it may reduce the fuel cost\n tariffs to correct the over-recovery.\n\n 3. Beginning July 1, 2009, for all utilities described in subdivision A 1 and\n subsection B, if the Commission approves any increase in fuel factor charges\n pursuant to this section that would increase the total rates of the\n residential class of customers of any such utility by more than 20 percent,\n the Commission, within six months following the effective date of such\n increase, shall review fuel costs, and if the Commission finds that the\n utility is, or is likely to be, in an over-recovery position with respect to\n fuel costs for the 12-month period for which the increase in fuel factor\n charges was approved by more than five percent, it may reduce the\n utility’s fuel cost tariffs to correct the over-recovery.\n\nB. All fuel costs recovery tariff provisions in effect on January 1, 2004, for\nany electric utility that purchases fuel for the generation of electricity and\nthat was, as of July 1, 1999, bound by a rate case settlement adopted by the\nCommission that extended in its application beyond January 1, 2002, shall remain\nin effect until the later of (i) July 1, 2007 or (ii) the establishment of\ntariff provisions under subsection C. Any such utility shall continue to report\nto the Commission annually its actual fuel costs, including the cost of\npurchased power.\n\nC. Each electric utility described in subsection B shall submit annually to the\nCommission its estimate of fuel costs, including the cost of purchased power,\nfor successive 12-month periods beginning on July 1, 2007, and each July 1\nthereafter. Upon investigation of such estimates and hearings in accordance with\nlaw, the Commission shall direct each such utility to place in effect tariff\nprovisions designed to recover the fuel costs determined by the Commission to be\nappropriate for such periods, adjusted for any over-recovery or under-recovery\nof fuel costs previously incurred; however, (i) no such adjustment for any\nover-recovery or under-recovery of fuel costs previously incurred shall be made\nfor any period prior to July 1, 2007, and (ii) the Commission shall order that\nthe deferral portion, if any, of the total increase in fuel tariffs for all\nclasses as determined by the Commission to be appropriate for the 12-month\nperiod beginning July 1, 2007, above the fuel tariffs previously existing, shall\nbe deferred without interest and recovered from all classes of customers as\nfollows: (i) in the 12-month period beginning July 1, 2008, that part of the\ndeferral portion of the increase in fuel tariffs that the Commission determines\nwould increase the total rates of the residential class of customers of the\nutility by four percent over the level of such total rates in existence on June\n30, 2008, shall be recovered; (ii) in the 12-month period beginning July 1,\n2009, that part of the balance of the deferral portion of the increase in fuel\ntariffs, if any, that the Commission determines would increase the total rates\nof the residential class of customers of the utility by four percent over the\nlevel of such total rates in existence on June 30, 2009, shall be recovered; and\n(iii) in the 12-month period beginning July 1, 2010, the entire balance of the\ndeferral portion of the increase in fuel tariffs, if any, shall be recovered.\nThe “deferral portion of the increase in fuel tariffs” means the\nportion of such increase in fuel tariffs that exceeds the amount of such\nincrease in fuel tariffs that the Commission determines would increase the total\nrates of the residential class of customers of the utility by more than four\npercent over the level of such total rates in existence on June 30, 2007.\n\nD. In proceedings under subsections A and C:\n\n 1. Energy revenues associated with off-system sales of power shall be credited\n against fuel factor expenses in an amount equal to the total incremental fuel\n factor costs incurred in the production and delivery of such sales. In\n addition, 75 percent of the total annual margins from off-system sales shall\n be credited against fuel factor expenses; however, the Commission, upon\n application and after notice and opportunity for hearing, may require that a\n smaller percentage of such margins be so credited if it finds by clear and\n convincing evidence that such requirement is in the public interest. The\n remaining margins from off-system sales shall not be considered in the\n biennial reviews of electric utilities conducted pursuant to § 56-585.1.\n In the event such margins result in a net loss to the electric utility, (i) no\n charges shall be applied to fuel factor expenses and (ii) any such net losses\n shall not be considered in the biennial reviews of electric utilities\n conducted pursuant to § 56-585.1. For purposes of this subsection,\n “margins from off-system sales” shall mean the total revenues\n received from off-system sales transactions less the total incremental costs\n incurred; and\n\n 2. The Commission shall disallow recovery of any fuel costs that it finds\n without just cause to be the result of failure of the utility to make every\n reasonable effort to minimize fuel costs or any decision of the utility\n resulting in unreasonable fuel costs, giving due regard to reliability of\n service and the need to maintain reliable sources of supply, economical\n generation mix, generating experience of comparable facilities, and\n minimization of the total cost of providing service.\n \t\t\t\tIn any proceeding for the recovery of fuel costs under this subdivision in\n which the costs a utility seeks to recover include costs incurred under a\n natural gas capacity contract for a term of more than 10 years that procures\n more than 250,000 dekatherms per day that has not previously been subject to a\n review under this subdivision, the Commission shall require the utility to\n prove by a preponderance of the evidence that the utility has (i) determined\n that the utility cannot meet its service obligations, giving due regard, in\n the Commission’s sole discretion, to reliability of service and the need\n to maintain reliable sources of supply, without an additional fuel resource;\n (ii) reasonably identified and determined the date and amount of the new fuel\n resource it needs; (iii) objectively studied available alternative fuel\n resource options, as verified by the Commission, including options other than\n a new natural gas capacity contract or contracts to meet the identified and\n determined need; and (iv) determined that the natural gas capacity contract or\n contracts are the lowest-cost available option, taking into consideration\n fixed and variable costs and a reasonable projection of utilization. Absent\n the Commission’s finding that the utility has proven by a preponderance\n of the evidence that the utility had complied with the requirements of clauses\n (i), (ii), (iii), and (iv), the Commission shall deny the utility’s\n recovery of such costs. Nothing in this subdivision shall limit the\n Commission’s discretion to review and make a determination as to the\n reasonableness of the recovery by a utility of costs, including costs incurred\n under a natural gas capacity contract, that were previously subject to a\n review under this subdivision.\n\nE. The Commission is authorized to promulgate, in accordance with the provisions\nof this section, all rules and regulations necessary to allow the recovery by\nelectric utilities of all of their prudently incurred fuel costs under\nsubsections A and C, including the cost of purchased power, as precisely and\npromptly as possible, with no over-recovery or under-recovery, except as\nprovided in subsection C, in a manner that will tend to assure public confidence\nand minimize abrupt changes in charges to consumers.\n\nHISTORY: 1978, c. 636; 1979, c. 492; 1980, c. 384; 1982, c. 584; 1984, cc. 716,\n725; 1989, c. 666; 2004, c. 827; 2006, c. 939; 2007, cc. 888, 933; 2009, c. 244;\n2020, c. 661.","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}}