{"formats":[{"name":"JSON","format":"json","url":"\/downloads\/2025\/code-json\/56-585.8.json"},{"name":"Plain Text","format":"text","url":"\/downloads\/2025\/code-text\/56-585.8.txt"},{"name":"XML","format":"xml","url":"\/downloads\/2025\/code-xml\/56-585.8.xml"},{"name":"HTML","format":"html","url":"\/downloads\/2025\/code-html\/56-585.8.html"}],"law_id":84206,"edition_id":1,"section_id":84206,"structure_id":13084,"section_number":"56-585.8","catch_line":"Biennial rate reviews","history":"2023, cc. 749, 776; 2025, cc. 497, 597.","full_text":"A\n\nFor the purposes of this section:\n\t\t\t“Phase I Utility” has the same meaning as provided in subdivision A 1 of § 56-585.1.\n\t\t\t“Utility” means a Phase I Utility.B\n\nWith the first review commencing on March 31, 2024, and on May 31 biennially thereafter, the Commission shall conduct rate reviews of the rates, terms, and conditions for the provision of generation and distribution services by a Phase I Utility that participated in triennial review proceedings in 2020 and 2023, and such Phase I Utility shall no longer be subject to triennial review proceedings pursuant to § 56-585.1.C\n\nIn each biennial review, the Commission shall conduct a proceeding to review all rates, terms, and conditions for generation and distribution services with such proceeding utilizing the two successive 12-month test periods ending December 31 immediately preceding the year in which such proceeding is conducted. Such biennial review shall be conducted in a single, combined proceeding, except for review of the following costs, which the utility shall continue to recover and the Commission shall continue to review separately, pursuant to the applicable statutory provisions: costs that are recovered pursuant to (i) § 56-249.6, (ii) subdivisions A 4, 5, and 6 of § 56-585.1, and (iii) § 56-585.6.D\n\nBeginning in 2026, each biennial rate review proceeding shall commence on May 31 of the biennial review year with the filing of a petition by each Phase I Utility subject to the provisions of this section. The Commission, after providing notice and an opportunity for hearing, shall grant a final order on such petition no later than January 15 of the subsequent year, with any revisions in rates ordered by the Commission pursuant to the rate review taking effect no earlier than March 1.E\n\nIn each biennial review proceeding, the Commission shall set the fair rate of return on common equity applicable to the generation and distribution services of the utility for the two such services combined and for any rate adjustment clauses approved under subdivision A 5 or 6 of § 56-585.1. The Commission may use any methodology it finds consistent with the public interest to determine the Phase I Utility’s fair rate of return on common equity. The Commission may increase or decrease the combined rate of return for generation and distribution services by up to 50 basis points based on factors that may include reliability, generating plant performance, customer service, and operating efficiency of a utility. Any such adjustment to the combined rate of return for generation and distribution services shall include consideration of nationally recognized standards determined by the Commission to be appropriate for such purposes.F\n\nIn any biennial review for a Phase I Utility, if the Commission determines in its sole discretion that the utility’s existing rates for generation and distribution services will, on a going-forward basis, either produce (i) revenues in excess of the utility’s authorized rate of return or (ii) revenues below the utility’s authorized rate of return, then the Commission shall order any reductions or increases, as applicable and necessary, to such rates for generation and distribution services that it deems appropriate to ensure the resulting rates for generation and distribution services (a) are just and reasonable and (b) provide the utility an opportunity to recover its costs of providing services over the rate period ending on December 31 of the year of the utility’s succeeding review and earn a fair rate of return authorized pursuant to this section. Such determination shall be limited to the Phase I Utility’s rates for generation and distribution services and shall not consider the costs or revenues recovered in any rate adjustment clause authorized pursuant to this chapter.G\n\nIn any biennial review of rates for generation and distribution services, if the combined rate of return on common equity earned is no more than 100 basis points above or below the fair combined rate of return, as determined by the Commission, for the test period under review, then such combined return shall not be considered either excessive or insufficient, respectively.1\n\nIf in any biennial review, the Commission finds that, during the test period under review, considered as a whole, the utility has earned more than 100 basis points above the authorized fair combined rate of return on its generation or distribution services, the Commission shall direct that 100 percent of the amount of such earnings that were more than 100 basis points above such fair combined rate of return for the test period under review, considered as a whole, be credited to customers’ bills. Any such credits shall be applied to customers’ bills, as determined at the discretion of the Commission, following the effective date of the Commission’s order, and shall be allocated among customer classes such that the relationship between the specific customer class rates of return to the overall target rate of return will have the same relationship as the last approved allocation of revenues used to design base rates; or2\n\nThe Commission shall authorize deferred recovery for reasonable (i) actual costs associated with severe weather events and (ii) actual costs associated with natural disasters, not currently in rates, and the Commission shall allow the utility to amortize and recover such deferred costs over future periods as determined by the Commission. The amount of any such deferral shall not exceed an amount that would, together with the utility’s other costs, revenues, and investments recovered through rates for generation and distribution services for the test period under review, cause the utility’s earned return on its generation and distribution services to exceed 100 basis points above the fair combined rate of return applicable to the test period under review. For the purposes of determining any amount of costs that are associated with severe weather events, the Commission shall consider nationally recognized standards such as those published by the Institute of Electrical and Electronics Engineers (IEEE).\n\t\t\t\tAny amount of a utility’s earnings directed by the Commission to be credited to customers’ bills pursuant to this subsection shall not be considered for the purpose of determining the utility’s earnings in any subsequent biennial review.H\n\nIn any proceeding under this title, including each biennial review, to determine the prior two years’ excess or deficiency for the purposes of subsection F, the Commission shall use an average rate base using the actual starting and end-of-test period capital structure of the utility, excluding any debt associated with any securitized bonds and without regard to the cost of capital, capital structure, or investments of any other entities with which the utility is affiliated. To determine a revenue requirement in any proceeding under this title, the Commission shall use the utility’s actual end-of-test period capital structure and cost of capital without regard to the cost of capital, capital structure, or investments of any other entities with which the utility is affiliated, including debt associated with any securitized bonds, unless the Commission makes a finding, based on evidence in the record, that the debt to equity ratio of the actual end-of-test period capital structure of such utility is unreasonable, in which case the Commission may utilize a debt to equity ratio that it finds to be reasonable.\n\t\t\tIn a rate review for a Phase I Utility that is part of a publicly traded, consolidated group, the Commission shall determine federal and state income tax costs as follows: (i) the utility’s apportioned state income tax costs shall be calculated according to the applicable statutory rate, as if the utility had not filed a consolidated return with its affiliates, and (ii) the utility’s federal income tax costs shall be calculated according to the applicable federal income tax rate and shall exclude any consolidated tax liability or benefit adjustments originating from any taxable income or loss of its affiliates.I\n\nThe Commission is authorized to determine during any biennial review the reasonableness or prudence of any cost subject to the rate review incurred or projected to be incurred by the utility, and a Phase I Utility shall recover such costs that the Commission finds to be reasonable and prudent.J\n\nIn any biennial review conducted pursuant to this section, a Phase I Utility or any other party may propose changes to its terms and conditions and the Commission may approve, reject, or amend any changes and may propose any special rates, contracts, or incentives pursuant to § 56-235.2.K\n\nNothing in this section shall alter a Phase I Utility’s obligations pursuant to §§ 56-585.5 and 56-596.2.L\n\nTo the extent that the provisions of this section are inconsistent with the provisions of § 56-585.1, the provisions of this section shall control.","order_by":null,"text":{"0":{"id":301817,"text":"For the purposes of this section:\n\t\t\t“Phase I Utility” has the same meaning as provided in subdivision A 1 of § 56-585.1.\n\t\t\t“Utility” means a Phase I Utility.","type":"section","prefixes":["A"],"prefix":"A","entire_prefix":"A","prefix_anchor":"A","level":1,"next_prefix":"B"},"1":{"id":301818,"text":"With the first review commencing on March 31, 2024, and on May 31 biennially thereafter, the Commission shall conduct rate reviews of the rates, terms, and conditions for the provision of generation and distribution services by a Phase I Utility that participated in triennial review proceedings in 2020 and 2023, and such Phase I Utility shall no longer be subject to triennial review proceedings pursuant to § 56-585.1.","type":"section","prefixes":["B"],"prefix":"B","entire_prefix":"B","prefix_anchor":"B","level":1,"prior_prefix":"A","next_prefix":"C"},"2":{"id":301819,"text":"In each biennial review, the Commission shall conduct a proceeding to review all rates, terms, and conditions for generation and distribution services with such proceeding utilizing the two successive 12-month test periods ending December 31 immediately preceding the year in which such proceeding is conducted. Such biennial review shall be conducted in a single, combined proceeding, except for review of the following costs, which the utility shall continue to recover and the Commission shall continue to review separately, pursuant to the applicable statutory provisions: costs that are recovered pursuant to (i) § 56-249.6, (ii) subdivisions A 4, 5, and 6 of § 56-585.1, and (iii) § 56-585.6.","type":"section","prefixes":["C"],"prefix":"C","entire_prefix":"C","prefix_anchor":"C","level":1,"prior_prefix":"B","next_prefix":"D"},"3":{"id":301820,"text":"Beginning in 2026, each biennial rate review proceeding shall commence on May 31 of the biennial review year with the filing of a petition by each Phase I Utility subject to the provisions of this section. The Commission, after providing notice and an opportunity for hearing, shall grant a final order on such petition no later than January 15 of the subsequent year, with any revisions in rates ordered by the Commission pursuant to the rate review taking effect no earlier than March 1.","type":"section","prefixes":["D"],"prefix":"D","entire_prefix":"D","prefix_anchor":"D","level":1,"prior_prefix":"C","next_prefix":"E"},"4":{"id":301821,"text":"In each biennial review proceeding, the Commission shall set the fair rate of return on common equity applicable to the generation and distribution services of the utility for the two such services combined and for any rate adjustment clauses approved under subdivision A 5 or 6 of § 56-585.1. The Commission may use any methodology it finds consistent with the public interest to determine the Phase I Utility’s fair rate of return on common equity. The Commission may increase or decrease the combined rate of return for generation and distribution services by up to 50 basis points based on factors that may include reliability, generating plant performance, customer service, and operating efficiency of a utility. Any such adjustment to the combined rate of return for generation and distribution services shall include consideration of nationally recognized standards determined by the Commission to be appropriate for such purposes.","type":"section","prefixes":["E"],"prefix":"E","entire_prefix":"E","prefix_anchor":"E","level":1,"prior_prefix":"D","next_prefix":"F"},"5":{"id":301822,"text":"In any biennial review for a Phase I Utility, if the Commission determines in its sole discretion that the utility’s existing rates for generation and distribution services will, on a going-forward basis, either produce (i) revenues in excess of the utility’s authorized rate of return or (ii) revenues below the utility’s authorized rate of return, then the Commission shall order any reductions or increases, as applicable and necessary, to such rates for generation and distribution services that it deems appropriate to ensure the resulting rates for generation and distribution services (a) are just and reasonable and (b) provide the utility an opportunity to recover its costs of providing services over the rate period ending on December 31 of the year of the utility’s succeeding review and earn a fair rate of return authorized pursuant to this section. Such determination shall be limited to the Phase I Utility’s rates for generation and distribution services and shall not consider the costs or revenues recovered in any rate adjustment clause authorized pursuant to this chapter.","type":"section","prefixes":["F"],"prefix":"F","entire_prefix":"F","prefix_anchor":"F","level":1,"prior_prefix":"E","next_prefix":"G"},"6":{"id":301823,"text":"In any biennial review of rates for generation and distribution services, if the combined rate of return on common equity earned is no more than 100 basis points above or below the fair combined rate of return, as determined by the Commission, for the test period under review, then such combined return shall not be considered either excessive or insufficient, respectively.","type":"section","prefixes":["G"],"prefix":"G","entire_prefix":"G","prefix_anchor":"G","level":1,"prior_prefix":"F","next_prefix":"G1"},"7":{"id":301824,"text":"If in any biennial review, the Commission finds that, during the test period under review, considered as a whole, the utility has earned more than 100 basis points above the authorized fair combined rate of return on its generation or distribution services, the Commission shall direct that 100 percent of the amount of such earnings that were more than 100 basis points above such fair combined rate of return for the test period under review, considered as a whole, be credited to customers’ bills. Any such credits shall be applied to customers’ bills, as determined at the discretion of the Commission, following the effective date of the Commission’s order, and shall be allocated among customer classes such that the relationship between the specific customer class rates of return to the overall target rate of return will have the same relationship as the last approved allocation of revenues used to design base rates; or","type":"section","prefixes":["G","1"],"prefix":"1","entire_prefix":"G1","prefix_anchor":"G1","level":2,"prior_prefix":"G","next_prefix":"G2"},"8":{"id":301825,"text":"The Commission shall authorize deferred recovery for reasonable (i) actual costs associated with severe weather events and (ii) actual costs associated with natural disasters, not currently in rates, and the Commission shall allow the utility to amortize and recover such deferred costs over future periods as determined by the Commission. The amount of any such deferral shall not exceed an amount that would, together with the utility’s other costs, revenues, and investments recovered through rates for generation and distribution services for the test period under review, cause the utility’s earned return on its generation and distribution services to exceed 100 basis points above the fair combined rate of return applicable to the test period under review. For the purposes of determining any amount of costs that are associated with severe weather events, the Commission shall consider nationally recognized standards such as those published by the Institute of Electrical and Electronics Engineers (IEEE).\n\t\t\t\tAny amount of a utility’s earnings directed by the Commission to be credited to customers’ bills pursuant to this subsection shall not be considered for the purpose of determining the utility’s earnings in any subsequent biennial review.","type":"section","prefixes":["G","2"],"prefix":"2","entire_prefix":"G2","prefix_anchor":"G2","level":2,"prior_prefix":"G1","next_prefix":"H"},"9":{"id":301826,"text":"In any proceeding under this title, including each biennial review, to determine the prior two years’ excess or deficiency for the purposes of subsection F, the Commission shall use an average rate base using the actual starting and end-of-test period capital structure of the utility, excluding any debt associated with any securitized bonds and without regard to the cost of capital, capital structure, or investments of any other entities with which the utility is affiliated. To determine a revenue requirement in any proceeding under this title, the Commission shall use the utility’s actual end-of-test period capital structure and cost of capital without regard to the cost of capital, capital structure, or investments of any other entities with which the utility is affiliated, including debt associated with any securitized bonds, unless the Commission makes a finding, based on evidence in the record, that the debt to equity ratio of the actual end-of-test period capital structure of such utility is unreasonable, in which case the Commission may utilize a debt to equity ratio that it finds to be reasonable.\n\t\t\tIn a rate review for a Phase I Utility that is part of a publicly traded, consolidated group, the Commission shall determine federal and state income tax costs as follows: (i) the utility’s apportioned state income tax costs shall be calculated according to the applicable statutory rate, as if the utility had not filed a consolidated return with its affiliates, and (ii) the utility’s federal income tax costs shall be calculated according to the applicable federal income tax rate and shall exclude any consolidated tax liability or benefit adjustments originating from any taxable income or loss of its affiliates.","type":"section","prefixes":["H"],"prefix":"H","entire_prefix":"H","prefix_anchor":"H","level":1,"prior_prefix":"G2","next_prefix":"I"},"10":{"id":301827,"text":"The Commission is authorized to determine during any biennial review the reasonableness or prudence of any cost subject to the rate review incurred or projected to be incurred by the utility, and a Phase I Utility shall recover such costs that the Commission finds to be reasonable and prudent.","type":"section","prefixes":["I"],"prefix":"I","entire_prefix":"I","prefix_anchor":"I","level":1,"prior_prefix":"H","next_prefix":"J"},"11":{"id":301828,"text":"In any biennial review conducted pursuant to this section, a Phase I Utility or any other party may propose changes to its terms and conditions and the Commission may approve, reject, or amend any changes and may propose any special rates, contracts, or incentives pursuant to § 56-235.2.","type":"section","prefixes":["J"],"prefix":"J","entire_prefix":"J","prefix_anchor":"J","level":1,"prior_prefix":"I","next_prefix":"K"},"12":{"id":301829,"text":"Nothing in this section shall alter a Phase I Utility’s obligations pursuant to §§ 56-585.5 and 56-596.2.","type":"section","prefixes":["K"],"prefix":"K","entire_prefix":"K","prefix_anchor":"K","level":1,"prior_prefix":"J","next_prefix":"L"},"13":{"id":301830,"text":"To the extent that the provisions of this section are inconsistent with the provisions of § 56-585.1, the provisions of this section shall control.","type":"section","prefixes":["L"],"prefix":"L","entire_prefix":"L","prefix_anchor":"L","level":1,"prior_prefix":"K"}},"ancestry":[{"id":13084,"edition_id":1,"name":"Virginia Electric Utility Regulation 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aggregation","url":"\/56-589\/","token":"56\/23\/56-589","metadata":false},{"id":59256,"structure_id":13084,"section_number":"56-589.1","catch_line":"Energy generation by public school buildings and facilities","url":"\/56-589.1\/","token":"56\/23\/56-589.1","metadata":false},{"id":86105,"structure_id":13084,"section_number":"56-590","catch_line":"Divestiture, functional separation and other corporate relationships","url":"\/56-590\/","token":"56\/23\/56-590","metadata":false},{"id":67461,"structure_id":13084,"section_number":"56-591","catch_line":"Application of antitrust laws","url":"\/56-591\/","token":"56\/23\/56-591","metadata":false},{"id":85339,"structure_id":13084,"section_number":"56-592","catch_line":"Consumer education and marketing practices","url":"\/56-592\/","token":"56\/23\/56-592","metadata":false},{"id":75703,"structure_id":13084,"section_number":"56-592.1","catch_line":"Consumer education program; scope and funding","url":"\/56-592.1\/","token":"56\/23\/56-592.1","metadata":false},{"id":77066,"structure_id":13084,"section_number":"56-593","catch_line":"Retail customers' private right of action; marketing practices","url":"\/56-593\/","token":"56\/23\/56-593","metadata":false},{"id":76060,"structure_id":13084,"section_number":"56-594","catch_line":"Net energy metering provisions","url":"\/56-594\/","token":"56\/23\/56-594","metadata":false},{"id":74615,"structure_id":13084,"section_number":"56-594.01","catch_line":"Net energy metering provisions for electric cooperative service territories","url":"\/56-594.01\/","token":"56\/23\/56-594.01","metadata":false},{"id":56626,"structure_id":13084,"section_number":"56-594.01:1","catch_line":"Local facilities usage charges; electric cooperatives","url":"\/56-594.01_1\/","token":"56\/23\/56-594.01_1","metadata":false},{"id":66346,"structure_id":13084,"section_number":"56-594.02","catch_line":"Solar-powered or wind-powered electricity generation; power purchase agreements; pilot programs","url":"\/56-594.02\/","token":"56\/23\/56-594.02","metadata":false},{"id":82596,"structure_id":13084,"section_number":"56-594.1","catch_line":"Interconnection by farms","url":"\/56-594.1\/","token":"56\/23\/56-594.1","metadata":false},{"id":78424,"structure_id":13084,"section_number":"56-594.2","catch_line":"Small agricultural generators","url":"\/56-594.2\/","token":"56\/23\/56-594.2","metadata":false},{"id":54132,"structure_id":13084,"section_number":"56-594.3","catch_line":"Shared solar programs; Phase II Utility","url":"\/56-594.3\/","token":"56\/23\/56-594.3","metadata":false},{"id":80234,"structure_id":13084,"section_number":"56-594.4","catch_line":"Shared solar programs; Phase I Utility","url":"\/56-594.4\/","token":"56\/23\/56-594.4","metadata":false},{"id":77419,"structure_id":13084,"section_number":"56-595","catch_line":"Repealed","url":"\/56-595\/","token":"56\/23\/56-595","metadata":false},{"id":69517,"structure_id":13084,"section_number":"56-596","catch_line":"Consideration of economic development; report","url":"\/56-596\/","token":"56\/23\/56-596","metadata":false},{"id":82462,"structure_id":13084,"section_number":"56-596.1","catch_line":"New generating facilities utilizing energy derived from sunlight and from wind; report","url":"\/56-596.1\/","token":"56\/23\/56-596.1","metadata":false},{"id":57383,"structure_id":13084,"section_number":"56-596.2","catch_line":"Energy efficiency policy and programs; financial assistance for low-income customers","url":"\/56-596.2\/","token":"56\/23\/56-596.2","metadata":false},{"id":80361,"structure_id":13084,"section_number":"56-596.2:1","catch_line":"Incentives for energy conservation measures and solar energy equipment","url":"\/56-596.2_1\/","token":"56\/23\/56-596.2_1","metadata":false},{"id":70146,"structure_id":13084,"section_number":"56-596.2:2","catch_line":"(Expires January 1, 2031) Energy efficiency savings targets for certain customers","url":"\/56-596.2_2\/","token":"56\/23\/56-596.2_2","metadata":false},{"id":71672,"structure_id":13084,"section_number":"56-596.3","catch_line":"Electric generation, transmission, and distribution; report","url":"\/56-596.3\/","token":"56\/23\/56-596.3","metadata":false},{"id":54473,"structure_id":13084,"section_number":"56-596.4","catch_line":"Electric utilities; local reliability data","url":"\/56-596.4\/","token":"56\/23\/56-596.4","metadata":false},{"id":75595,"structure_id":13084,"section_number":"56-596.5","catch_line":"Rate increases in certain months prohibited; Phase I Utility","url":"\/56-596.5\/","token":"56\/23\/56-596.5","metadata":false},{"id":80765,"structure_id":13084,"section_number":"56-596.6","catch_line":"Distribution cost sharing program","url":"\/56-596.6\/","token":"56\/23\/56-596.6","metadata":false}],"previous_section":{"id":63065,"structure_id":13084,"section_number":"56-585.7","catch_line":"On-bill tariff program; electric cooperatives","url":"\/56-585.7\/","token":"56\/23\/56-585.7","metadata":false},"next_section":{"id":78391,"structure_id":13084,"section_number":"56-586","catch_line":"Emergency service provider","url":"\/56-586\/","token":"56\/23\/56-586","metadata":false},"metadata":false,"official_url":"https:\/\/law.lis.virginia.gov\/vacode\/56-585.8\/","history_text":"

This law was first created in 2023. The record of its establishment is cataloged in chapters 749<\/a> and 776<\/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 1 time. 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. That modification is as follows: in 2025, chapters 497<\/a> and 597<\/a>.<\/p>","references":[{"id":55267,"section_number":"56-249.8","catch_line":"Financing for certain securitized asset costs; Phase I Utility","order_by":null,"url":"\/56-249.8\/"},{"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":66532,"section_number":"56-597","catch_line":"(Effective January 1, 2026) Definitions","order_by":null,"url":"\/56-597\/"}],"refers_to":[{"id":55635,"section_number":"56-249.6","catch_line":"Recovery of fuel and purchased power costs","order_by":null,"url":"\/56-249.6\/"},{"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":81665,"section_number":"56-585.5","catch_line":"Generation of electricity from renewable and zero carbon sources","order_by":null,"url":"\/56-585.5\/"}],"permalink":{"id":250739,"object_type":"law","relational_id":84206,"identifier":"56-585.8","token":"56\/23\/56-585.8","url":"\/56-585.8\/","edition_id":1,"permalink":0,"preferred":1},"url":"\/56-585.8\/","token":"56\/23\/56-585.8","dublin_core":{"Title":"Biennial rate reviews","Type":"Text","Format":"text\/html","Identifier":"\u00a7 56-585.8","Relation":"Code of Virginia"},"html":"\n\t\t\t\t\t\t

A.<\/span> For the purposes of this section:\n\t\t\t“Phase I Utility<\/span>” has the same meaning as provided in subdivision A 1 of § 56-585.1<\/a>.\n\t\t\t“Utility” means a Phase I Utility<\/span>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

B.<\/span> With the first review commencing on March 31, 2024, and on May 31 biennially thereafter, the Commission<\/span> shall conduct rate<\/span> reviews of the rates<\/span>, terms, and conditions for the provision of generation and distribution services by a Phase I Utility<\/span> that participated in triennial review proceedings in 2020 and 2023, and such Phase I Utility<\/span> shall no longer be subject to triennial review proceedings pursuant to § 56-585.1<\/a>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

C.<\/span> In each biennial review, the Commission<\/span> shall conduct a proceeding to review all rates<\/span>, terms, and conditions for generation and distribution services with such proceeding utilizing the two successive 12-month test periods ending December 31 immediately preceding the year in which such proceeding is conducted. Such biennial review shall be conducted in a single, combined proceeding, except for review of the following costs, which the utility shall continue to recover and the Commission<\/span> shall continue to review separately, pursuant to the applicable statutory provisions: costs that are recovered pursuant to (i) § 56-249.6<\/a>, (ii) subdivisions A 4, 5, and 6 of § 56-585.1<\/a>, and (iii) § 56-585.6<\/a>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

D.<\/span> Beginning in 2026, each biennial rate<\/span> review proceeding shall commence on May 31 of the biennial review year with the filing of a petition<\/span> by each Phase I Utility<\/span> subject to the provisions of this section. The Commission<\/span>, after providing notice and an opportunity for hearing<\/span>, shall grant a final order<\/span> on such petition<\/span> no later than January 15 of the subsequent year, with any revisions in rates<\/span> ordered by the Commission<\/span> pursuant to the rate<\/span> review taking effect no earlier than March 1. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

E.<\/span> In each biennial review proceeding, the Commission<\/span> shall set the fair rate<\/span> of return on common equity<\/span> applicable to the generation and distribution services of the utility for the two such services combined and for any rate<\/span> adjustment clauses approved under subdivision A 5 or 6 of § 56-585.1<\/a>. The Commission<\/span> may use any methodology it finds consistent with the public interest to determine the Phase I Utility<\/span>’s fair rate<\/span> of return on common equity<\/span>. The Commission<\/span> may increase or decrease the combined rate<\/span> of return for generation and distribution services by up to 50 basis points based on factors that may include reliability, generating plant performance, customer service, and operating efficiency of a utility. Any such adjustment to the combined rate<\/span> of return for generation and distribution services shall include consideration of nationally recognized standards determined by the Commission<\/span> to be appropriate for such purposes. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

F.<\/span> In any biennial review for a Phase I Utility<\/span>, if the Commission<\/span> determines in its sole discretion that the utility’s existing rates<\/span> for generation and distribution services will, on a going-forward basis, either produce (i) revenues in excess of the utility’s authorized rate<\/span> of return or (ii) revenues below the utility’s authorized rate<\/span> of return, then the Commission<\/span> shall order any reductions or increases, as applicable and necessary, to such rates<\/span> for generation and distribution services that it deems appropriate to ensure the resulting rates<\/span> for generation and distribution services (a) are just and reasonable and (b) provide the utility an opportunity to recover its costs of providing services over the rate<\/span> period ending on December 31 of the year of the utility’s succeeding review and earn a fair rate<\/span> of return authorized pursuant to this section. Such determination shall be limited to the Phase I Utility<\/span>’s rates<\/span> for generation and distribution services and shall not consider the costs or revenues recovered in any rate<\/span> adjustment clause authorized pursuant to this chapter. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

G.<\/span> In any biennial review of rates<\/span> for generation and distribution services, if the combined rate<\/span> of return on common equity<\/span> earned is no more than 100 basis points above or below the fair combined rate<\/span> of return, as determined by the Commission<\/span>, for the test period under review, then such combined return shall not be considered either excessive or insufficient, respectively. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

1.<\/span> If in any biennial review, the Commission<\/span> finds that, during the test period under review, considered as a whole, the utility has earned more than 100 basis points above the authorized fair combined rate<\/span> of return on its generation or distribution services, the Commission<\/span> shall direct that 100 percent of the amount of such earnings that were more than 100 basis points above such fair combined rate<\/span> of return for the test period under review, considered as a whole, be credited to customers’ bills. Any such credits shall be applied to customers’ bills, as determined at the discretion of the Commission<\/span>, following the effective date of the Commission<\/span>’s order, and shall be allocated among customer classes such that the relationship between the specific customer class rates<\/span> of return to the overall target rate<\/span> of return will have the same relationship as the last approved allocation of revenues used to design base rates<\/span>; or <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

2.<\/span> The Commission<\/span> shall authorize deferred recovery for reasonable (i) actual costs associated with severe weather events and (ii) actual costs associated with natural disasters, not currently in rates<\/span>, and the Commission<\/span> shall allow the utility to amortize and recover such deferred costs over future periods as determined by the Commission<\/span>. The amount of any such deferral shall not exceed an amount that would, together with the utility’s other costs, revenues, and investments recovered through rates<\/span> for generation and distribution services for the test period under review, cause the utility’s earned return on its generation and distribution services to exceed 100 basis points above the fair combined rate<\/span> of return applicable to the test period under review. For the purposes of determining any amount of costs that are associated with severe weather events, the Commission<\/span> shall consider nationally recognized standards such as those published by the Institute of Electrical and Electronics Engineers (IEEE).\n\t\t\t\tAny amount of a utility’s earnings directed by the Commission<\/span> to be credited to customers’ bills pursuant to this subsection shall not be considered for the purpose of determining the utility’s earnings in any subsequent biennial review. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

H.<\/span> In any proceeding under this title, including each biennial review, to determine the prior two years’ excess or deficiency for the purposes of subsection F, the Commission<\/span> shall use an average rate<\/span> base using the actual starting and end-of-test period capital structure of the utility, excluding any debt associated with any securitized bonds<\/span> and without regard to the cost of capital, capital structure, or investments of any other entities with which the utility is affiliated. To determine a revenue requirement in any proceeding under this title, the Commission<\/span> shall use the utility’s actual end-of-test period capital structure and cost of capital without regard to the cost of capital, capital structure, or investments of any other entities with which the utility is affiliated, including debt associated with any securitized bonds<\/span>, unless the Commission<\/span> makes a finding<\/span>, based on evidence<\/span> in the record, that the debt to equity<\/span> ratio of the actual end-of-test period capital structure of such utility is unreasonable, in which case the Commission<\/span> may utilize a debt to equity<\/span> ratio that it finds to be reasonable.\n\t\t\tIn a rate<\/span> review for a Phase I Utility<\/span> that is part of a publicly traded, consolidated group, the Commission<\/span> shall determine federal and state income tax costs as follows: (i) the utility’s apportioned state income tax costs shall be calculated according to the applicable statutory rate<\/span>, as if the utility had not filed a consolidated return with its affiliates<\/span>, and (ii) the utility’s federal income tax costs shall be calculated according to the applicable federal income tax rate<\/span> and shall exclude any consolidated tax liability or benefit adjustments originating from any taxable income or loss of its affiliates<\/span>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

I.<\/span> The Commission<\/span> is authorized to determine during any biennial review the reasonableness or prudence of any cost subject to the rate<\/span> review incurred or projected to be incurred by the utility, and a Phase I Utility<\/span> shall recover such costs that the Commission<\/span> finds to be reasonable and prudent. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

J.<\/span> In any biennial review conducted pursuant to this section, a Phase I Utility<\/span> or any other party<\/span> may propose changes to its terms and conditions and the Commission<\/span> may approve, reject, or amend<\/span> any changes and may propose any special rates<\/span>, contracts<\/span>, or incentives pursuant to § 56-235.2<\/a>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

K.<\/span> Nothing in this section shall alter a Phase I Utility<\/span>’s obligations pursuant to §§ 56-585.5<\/a> and 56-596.2<\/a>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

L.<\/span> To the extent that the provisions of this section are inconsistent with the provisions of § 56-585.1<\/a>, the provisions of this section shall control. <\/i><\/a><\/p><\/section>","plain_text":" CODE OF VIRGINIA\n\nBIENNIAL RATE REVIEWS (\u00a7 56-585.8)\n\nA. For the purposes of this section:\n\t\t\t“Phase I Utility” has the same meaning as provided in subdivision\nA 1 of § 56-585.1.\n\t\t\t“Utility” means a Phase I Utility.\n\nB. With the first review commencing on March 31, 2024, and on May 31 biennially\nthereafter, the Commission shall conduct rate reviews of the rates, terms, and\nconditions for the provision of generation and distribution services by a Phase\nI Utility that participated in triennial review proceedings in 2020 and 2023,\nand such Phase I Utility shall no longer be subject to triennial review\nproceedings pursuant to § 56-585.1.\n\nC. In each biennial review, the Commission shall conduct a proceeding to review\nall rates, terms, and conditions for generation and distribution services with\nsuch proceeding utilizing the two successive 12-month test periods ending\nDecember 31 immediately preceding the year in which such proceeding is\nconducted. Such biennial review shall be conducted in a single, combined\nproceeding, except for review of the following costs, which the utility shall\ncontinue to recover and the Commission shall continue to review separately,\npursuant to the applicable statutory provisions: costs that are recovered\npursuant to (i) § 56-249.6, (ii) subdivisions A 4, 5, and 6 of §\n56-585.1, and (iii) § 56-585.6.\n\nD. Beginning in 2026, each biennial rate review proceeding shall commence on May\n31 of the biennial review year with the filing of a petition by each Phase I\nUtility subject to the provisions of this section. The Commission, after\nproviding notice and an opportunity for hearing, shall grant a final order on\nsuch petition no later than January 15 of the subsequent year, with any\nrevisions in rates ordered by the Commission pursuant to the rate review taking\neffect no earlier than March 1.\n\nE. In each biennial review proceeding, the Commission shall set the fair rate of\nreturn on common equity applicable to the generation and distribution services\nof the utility for the two such services combined and for any rate adjustment\nclauses approved under subdivision A 5 or 6 of § 56-585.1. The Commission\nmay use any methodology it finds consistent with the public interest to\ndetermine the Phase I Utility’s fair rate of return on common equity. The\nCommission may increase or decrease the combined rate of return for generation\nand distribution services by up to 50 basis points based on factors that may\ninclude reliability, generating plant performance, customer service, and\noperating efficiency of a utility. Any such adjustment to the combined rate of\nreturn for generation and distribution services shall include consideration of\nnationally recognized standards determined by the Commission to be appropriate\nfor such purposes.\n\nF. In any biennial review for a Phase I Utility, if the Commission determines in\nits sole discretion that the utility’s existing rates for generation and\ndistribution services will, on a going-forward basis, either produce (i)\nrevenues in excess of the utility’s authorized rate of return or (ii)\nrevenues below the utility’s authorized rate of return, then the\nCommission shall order any reductions or increases, as applicable and necessary,\nto such rates for generation and distribution services that it deems appropriate\nto ensure the resulting rates for generation and distribution services (a) are\njust and reasonable and (b) provide the utility an opportunity to recover its\ncosts of providing services over the rate period ending on December 31 of the\nyear of the utility’s succeeding review and earn a fair rate of return\nauthorized pursuant to this section. Such determination shall be limited to the\nPhase I Utility’s rates for generation and distribution services and shall\nnot consider the costs or revenues recovered in any rate adjustment clause\nauthorized pursuant to this chapter.\n\nG. In any biennial review of rates for generation and distribution services, if\nthe combined rate of return on common equity earned is no more than 100 basis\npoints above or below the fair combined rate of return, as determined by the\nCommission, for the test period under review, then such combined return shall\nnot be considered either excessive or insufficient, respectively.\n\n 1. If in any biennial review, the Commission finds that, during the test\n period under review, considered as a whole, the utility has earned more than\n 100 basis points above the authorized fair combined rate of return on its\n generation or distribution services, the Commission shall direct that 100\n percent of the amount of such earnings that were more than 100 basis points\n above such fair combined rate of return for the test period under review,\n considered as a whole, be credited to customers’ bills. Any such credits\n shall be applied to customers’ bills, as determined at the discretion of\n the Commission, following the effective date of the Commission’s order,\n and shall be allocated among customer classes such that the relationship\n between the specific customer class rates of return to the overall target rate\n of return will have the same relationship as the last approved allocation of\n revenues used to design base rates; or\n\n 2. The Commission shall authorize deferred recovery for reasonable (i) actual\n costs associated with severe weather events and (ii) actual costs associated\n with natural disasters, not currently in rates, and the Commission shall allow\n the utility to amortize and recover such deferred costs over future periods as\n determined by the Commission. The amount of any such deferral shall not exceed\n an amount that would, together with the utility’s other costs, revenues,\n and investments recovered through rates for generation and distribution\n services for the test period under review, cause the utility’s earned\n return on its generation and distribution services to exceed 100 basis points\n above the fair combined rate of return applicable to the test period under\n review. For the purposes of determining any amount of costs that are\n associated with severe weather events, the Commission shall consider\n nationally recognized standards such as those published by the Institute of\n Electrical and Electronics Engineers (IEEE).\n \t\t\t\tAny amount of a utility’s earnings directed by the Commission to be\n credited to customers’ bills pursuant to this subsection shall not be\n considered for the purpose of determining the utility’s earnings in any\n subsequent biennial review.\n\nH. In any proceeding under this title, including each biennial review, to\ndetermine the prior two years’ excess or deficiency for the purposes of\nsubsection F, the Commission shall use an average rate base using the actual\nstarting and end-of-test period capital structure of the utility, excluding any\ndebt associated with any securitized bonds and without regard to the cost of\ncapital, capital structure, or investments of any other entities with which the\nutility is affiliated. To determine a revenue requirement in any proceeding\nunder this title, the Commission shall use the utility’s actual\nend-of-test period capital structure and cost of capital without regard to the\ncost of capital, capital structure, or investments of any other entities with\nwhich the utility is affiliated, including debt associated with any securitized\nbonds, unless the Commission makes a finding, based on evidence in the record,\nthat the debt to equity ratio of the actual end-of-test period capital structure\nof such utility is unreasonable, in which case the Commission may utilize a debt\nto equity ratio that it finds to be reasonable.\n\t\t\tIn a rate review for a Phase I Utility that is part of a publicly traded,\nconsolidated group, the Commission shall determine federal and state income tax\ncosts as follows: (i) the utility’s apportioned state income tax costs\nshall be calculated according to the applicable statutory rate, as if the\nutility had not filed a consolidated return with its affiliates, and (ii) the\nutility’s federal income tax costs shall be calculated according to the\napplicable federal income tax rate and shall exclude any consolidated tax\nliability or benefit adjustments originating from any taxable income or loss of\nits affiliates.\n\nI. The Commission is authorized to determine during any biennial review the\nreasonableness or prudence of any cost subject to the rate review incurred or\nprojected to be incurred by the utility, and a Phase I Utility shall recover\nsuch costs that the Commission finds to be reasonable and prudent.\n\nJ. In any biennial review conducted pursuant to this section, a Phase I Utility\nor any other party may propose changes to its terms and conditions and the\nCommission may approve, reject, or amend any changes and may propose any special\nrates, contracts, or incentives pursuant to § 56-235.2.\n\nK. Nothing in this section shall alter a Phase I Utility’s obligations\npursuant to §§ 56-585.5 and 56-596.2.\n\nL. To the extent that the provisions of this section are inconsistent with the\nprovisions of § 56-585.1, the provisions of this section shall control.\n\nHISTORY: 2023, cc. 749, 776; 2025, cc. 497, 597.","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}}