{"formats":[{"name":"JSON","format":"json","url":"\/downloads\/2025\/code-json\/56-264.3.json"},{"name":"Plain Text","format":"text","url":"\/downloads\/2025\/code-text\/56-264.3.txt"},{"name":"XML","format":"xml","url":"\/downloads\/2025\/code-xml\/56-264.3.xml"},{"name":"HTML","format":"html","url":"\/downloads\/2025\/code-html\/56-264.3.html"}],"law_id":81743,"edition_id":1,"section_id":81743,"structure_id":13239,"section_number":"56-264.3","catch_line":"Cost allocation and rate design","history":"2019, c. 715.","full_text":"A\n\nThe provisions of this section shall apply in any proceeding in which the Commission is required to determine, pursuant to § 56-234, if (i) rates charged by water and sewerage companies with fewer than 10,000 customer accounts, inclusive of their subsidiaries, are reasonable and just and (ii) customers using water and sewerage services under like conditions are being charged uniformly for such services.B\n\nAny rate application or proposal submitted to the Commission that would allocate the revenue requirement of a water or sewerage company with fewer than 10,000 customer accounts, inclusive of their subsidiaries, among more than one class of customers shall be supported by a class cost-of-service study that is designed to allocate revenues on the basis of cost causation and to assign credit for contributions in aid of construction, not previously addressed in a utility acquisition transaction or the most recent approved rate case application, to the customer class that made the contributions.C\n\nIn setting rates, the Commission shall not find that any allocation of the revenue requirement to a particular class of customers that is greater than the portion of the revenue requirement that can be attributed to that class on the basis of a cost-of-service study of the type described in subsection B is just and reasonable unless the allocation is otherwise supported by substantial evidence.D\n\nIn any proceeding pursuant to § 56-234 regarding the rates charged by water and sewerage companies, the revenues to be produced by rates as designed for any particular class of customers shall not provide an anticipated return on equity more than 25 percent greater or less than the return on equity used to set rates for the company as a whole, unless otherwise supported by clear and convincing evidence. The effect of this provision on class rate design shall not be considered in establishing the return on equity used to set rates for the company as a whole.","order_by":null,"text":{"0":{"id":292823,"text":"The provisions of this section shall apply in any proceeding in which the Commission is required to determine, pursuant to § 56-234, if (i) rates charged by water and sewerage companies with fewer than 10,000 customer accounts, inclusive of their subsidiaries, are reasonable and just and (ii) customers using water and sewerage services under like conditions are being charged uniformly for such services.","type":"section","prefixes":["A"],"prefix":"A","entire_prefix":"A","prefix_anchor":"A","level":1,"next_prefix":"B"},"1":{"id":292824,"text":"Any rate application or proposal submitted to the Commission that would allocate the revenue requirement of a water or sewerage company with fewer than 10,000 customer accounts, inclusive of their subsidiaries, among more than one class of customers shall be supported by a class cost-of-service study that is designed to allocate revenues on the basis of cost causation and to assign credit for contributions in aid of construction, not previously addressed in a utility acquisition transaction or the most recent approved rate case application, to the customer class that made the contributions.","type":"section","prefixes":["B"],"prefix":"B","entire_prefix":"B","prefix_anchor":"B","level":1,"prior_prefix":"A","next_prefix":"C"},"2":{"id":292825,"text":"In setting rates, the Commission shall not find that any allocation of the revenue requirement to a particular class of customers that is greater than the portion of the revenue requirement that can be attributed to that class on the basis of a cost-of-service study of the type described in subsection B is just and reasonable unless the allocation is otherwise supported by substantial evidence.","type":"section","prefixes":["C"],"prefix":"C","entire_prefix":"C","prefix_anchor":"C","level":1,"prior_prefix":"B","next_prefix":"D"},"3":{"id":292826,"text":"In any proceeding pursuant to § 56-234 regarding the rates charged by water and sewerage companies, the revenues to be produced by rates as designed for any particular class of customers shall not provide an anticipated return on equity more than 25 percent greater or less than the return on equity used to set rates for the company as a whole, unless otherwise supported by clear and convincing evidence. The effect of this provision on class rate design shall not be considered in establishing the return on equity used to set rates for the company as a whole.","type":"section","prefixes":["D"],"prefix":"D","entire_prefix":"D","prefix_anchor":"D","level":1,"prior_prefix":"C"}},"ancestry":[{"id":13239,"edition_id":1,"name":"Water and Sewerage Companies","identifier":"6","label":"article","depth":3,"order_by":1,"parent_id":13238,"metadata":{},"date_created":"2026-06-26 03:44:30","date_modified":"2026-06-26 03:44:30","permalink":{"id":249085,"object_type":"structure","relational_id":13239,"identifier":"6","token":"56\/10\/6","url":"\/56\/10\/6\/","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":67034,"structure_id":13239,"section_number":"56-261","catch_line":"Duties of companies furnishing water or sewerage facilities","url":"\/56-261\/","token":"56\/10\/6\/56-261","metadata":false},{"id":82251,"structure_id":13239,"section_number":"56-261.1","catch_line":"Duties of water and sewerage companies in certain counties","url":"\/56-261.1\/","token":"56\/10\/6\/56-261.1","metadata":false},{"id":58928,"structure_id":13239,"section_number":"56-261.2","catch_line":"Hydrant connections and water supply for fire protection in certain counties","url":"\/56-261.2\/","token":"56\/10\/6\/56-261.2","metadata":false},{"id":71914,"structure_id":13239,"section_number":"56-262","catch_line":"Proceeding upon failure of public service corporation to perform duties","url":"\/56-262\/","token":"56\/10\/6\/56-262","metadata":false},{"id":54242,"structure_id":13239,"section_number":"56-263","catch_line":"Commission may order increase in service","url":"\/56-263\/","token":"56\/10\/6\/56-263","metadata":false},{"id":61830,"structure_id":13239,"section_number":"56-264","catch_line":"Quo warranto in case of failure to comply with order of Commission","url":"\/56-264\/","token":"56\/10\/6\/56-264","metadata":false},{"id":54615,"structure_id":13239,"section_number":"56-264.1","catch_line":"Collection of rates, fees and charges","url":"\/56-264.1\/","token":"56\/10\/6\/56-264.1","metadata":false},{"id":54297,"structure_id":13239,"section_number":"56-264.2","catch_line":"Governing board of multistate entities operating certain sewage treatment facilities; arbitration of issues; condemnation of facilities","url":"\/56-264.2\/","token":"56\/10\/6\/56-264.2","metadata":false},{"id":81743,"structure_id":13239,"section_number":"56-264.3","catch_line":"Cost allocation and rate design","url":"\/56-264.3\/","token":"56\/10\/6\/56-264.3","metadata":false},{"id":61263,"structure_id":13239,"section_number":"56-265","catch_line":"Certain sections not to limit Commission's powers","url":"\/56-265\/","token":"56\/10\/6\/56-265","metadata":false}],"previous_section":{"id":54297,"structure_id":13239,"section_number":"56-264.2","catch_line":"Governing board of multistate entities operating certain sewage treatment facilities; arbitration of issues; condemnation of facilities","url":"\/56-264.2\/","token":"56\/10\/6\/56-264.2","metadata":false},"next_section":{"id":61263,"structure_id":13239,"section_number":"56-265","catch_line":"Certain sections not to limit Commission's powers","url":"\/56-265\/","token":"56\/10\/6\/56-265","metadata":false},"metadata":false,"official_url":"https:\/\/law.lis.virginia.gov\/vacode\/56-264.3\/","history_text":"

This law was first created in 2019. The record of its establishment is cataloged in chapter 715<\/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.<\/p>","references":false,"refers_to":[{"id":87361,"section_number":"56-234","catch_line":"Duty to furnish adequate service at reasonable and uniform rates","order_by":null,"url":"\/56-234\/"}],"permalink":{"id":249119,"object_type":"law","relational_id":81743,"identifier":"56-264.3","token":"56\/10\/6\/56-264.3","url":"\/56-264.3\/","edition_id":1,"permalink":0,"preferred":1},"url":"\/56-264.3\/","token":"56\/10\/6\/56-264.3","dublin_core":{"Title":"Cost allocation and rate design","Type":"Text","Format":"text\/html","Identifier":"\u00a7 56-264.3","Relation":"Code of Virginia"},"html":"\n\t\t\t\t\t\t

A.<\/span> The provisions of this section shall apply in any proceeding in which the Commission<\/span> is required to determine, pursuant to § 56-234<\/a>, if (i) rates<\/span> charged by water and sewerage companies with fewer than 10,000 customer accounts, inclusive of their subsidiaries, are reasonable and just and (ii) customers using water and sewerage services under like conditions are being charged uniformly for such services. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

B.<\/span> Any rate<\/span> application or proposal submitted to the Commission<\/span> that would allocate the revenue requirement of a water or sewerage company<\/span> with fewer than 10,000 customer accounts, inclusive of their subsidiaries, among more than one class of customers shall be supported by a class cost-of-service study that is designed to allocate revenues on the basis of cost causation and to assign credit for contributions in aid of construction, not previously addressed in a utility acquisition transaction or the most recent approved rate<\/span> case application, to the customer class that made the contributions. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

C.<\/span> In setting rates<\/span>, the Commission<\/span> shall not find that any allocation of the revenue requirement to a particular class of customers that is greater than the portion of the revenue requirement that can be attributed to that class on the basis of a cost-of-service study of the type described in subsection B is just and reasonable unless the allocation is otherwise supported by substantial evidence<\/span>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

D.<\/span> In any proceeding pursuant to § 56-234<\/a> regarding the rates<\/span> charged by water and sewerage companies, the revenues to be produced by rates<\/span> as designed for any particular class of customers shall not provide an anticipated return on equity<\/span> more than 25 percent greater or less than the return on equity<\/span> used to set rates<\/span> for the company<\/span> as a whole, unless otherwise supported by clear and convincing evidence<\/span>. The effect of this provision on class rate<\/span> design shall not be considered in establishing the return on equity<\/span> used to set rates<\/span> for the company<\/span> as a whole. <\/i><\/a><\/p><\/section>","plain_text":" CODE OF VIRGINIA\n\nCOST ALLOCATION AND RATE DESIGN (\u00a7 56-264.3)\n\nA. The provisions of this section shall apply in any proceeding in which the\nCommission is required to determine, pursuant to § 56-234, if (i) rates\ncharged by water and sewerage companies with fewer than 10,000 customer\naccounts, inclusive of their subsidiaries, are reasonable and just and (ii)\ncustomers using water and sewerage services under like conditions are being\ncharged uniformly for such services.\n\nB. Any rate application or proposal submitted to the Commission that would\nallocate the revenue requirement of a water or sewerage company with fewer than\n10,000 customer accounts, inclusive of their subsidiaries, among more than one\nclass of customers shall be supported by a class cost-of-service study that is\ndesigned to allocate revenues on the basis of cost causation and to assign\ncredit for contributions in aid of construction, not previously addressed in a\nutility acquisition transaction or the most recent approved rate case\napplication, to the customer class that made the contributions.\n\nC. In setting rates, the Commission shall not find that any allocation of the\nrevenue requirement to a particular class of customers that is greater than the\nportion of the revenue requirement that can be attributed to that class on the\nbasis of a cost-of-service study of the type described in subsection B is just\nand reasonable unless the allocation is otherwise supported by substantial\nevidence.\n\nD. In any proceeding pursuant to § 56-234 regarding the rates charged by\nwater and sewerage companies, the revenues to be produced by rates as designed\nfor any particular class of customers shall not provide an anticipated return on\nequity more than 25 percent greater or less than the return on equity used to\nset rates for the company as a whole, unless otherwise supported by clear and\nconvincing evidence. The effect of this provision on class rate design shall not\nbe considered in establishing the return on equity used to set rates for the\ncompany as a whole.\n\nHISTORY: 2019, c. 715.","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}}