{"formats":[{"name":"JSON","format":"json","url":"\/downloads\/2025\/code-json\/56-602.json"},{"name":"Plain Text","format":"text","url":"\/downloads\/2025\/code-text\/56-602.txt"},{"name":"XML","format":"xml","url":"\/downloads\/2025\/code-xml\/56-602.xml"},{"name":"HTML","format":"html","url":"\/downloads\/2025\/code-html\/56-602.html"}],"law_id":77174,"edition_id":1,"section_id":77174,"structure_id":15651,"section_number":"56-602","catch_line":"Conservation and ratemaking efficiency plans","history":"2008, c. 639; 2022, cc. 728, 759.","full_text":"A\n\nNotwithstanding any provision of law to the contrary, each natural gas utility shall have the option to file a conservation and ratemaking efficiency plan as provided in this chapter. Such a plan may include one or more residential, small commercial, or small general service classes, but shall not apply to large commercial or large industrial classes of customers. Such plan shall include: (i) a normalization component that removes the effect of weather from the determination of conservation and energy efficiency results; (ii) a decoupling mechanism; (iii) one or more cost-effective conservation and energy efficiency programs; (iv) provisions to address the needs of low-income or low-usage residential customers; and (v) provisions to ensure that the rates and service to non-participating classes of customers are not adversely impacted. Such plan may also include provisions for phased or targeted implementation of rate or tariff design changes, if any, or conservation and energy efficiency programs. The Commission may approve such a plan after such notice and opportunity for hearing as the Commission may prescribe, subject to the provisions of this chapter. Nothing in this subsection shall prevent a natural gas utility from amending a conservation and ratemaking efficiency plan by amending, altering, supplementing, or deleting one or more conservation or energy efficiency programs.B\n\nThe Commission shall approve or deny, within 180 days, a natural gas utility’s initial application for any revenue-neutral conservation and ratemaking efficiency plan that allocates annual per-customer fixed costs on an intra-class basis in reliance upon a revenue study or class cost of service study supporting the rates in effect at the time the plan is filed. A plan filed pursuant to this subsection shall not require the filing of rate case schedules. The Commission shall approve or deny, within 120 days, a natural gas utility’s application to amend a previously approved plan. The Commission shall approve such a plan or amendment if it finds that the plan’s or amendment’s proposed decoupling mechanism is revenue-neutral and is otherwise consistent with this chapter. If the Commission denies such a plan or amendment, it shall set forth with specificity the reasons for such denial and the utility shall have the right to refile, without prejudice, an amended plan or amendment within 60 days, and the Commission shall thereafter have 60 days to approve or deny the amended plan or amendment. The time period for Commission review provided for in this subsection shall not apply if the conservation and ratemaking efficiency plan is filed in conjunction with a rate case using the cost of service methodology set forth in § 56-235.2 or a performance-based regulation plan authorized by § 56-235.6.C\n\nThe Commission shall approve or deny, within 270 days, a natural gas utility’s initial application for any revenue-neutral conservation and ratemaking efficiency plan that allocates per-customer fixed costs on an intra-class basis according to a class cost of service study filed with the plan, when such plan is filed in conjunction with a rate case using the cost of service methodology set forth in § 56-235.2 or a performance-based regulation plan authorized by § 56-235.6. The Commission shall approve or deny, within 120 days, a natural gas utility’s application to amend a plan previously approved pursuant to this subsection. The Commission shall approve such a plan or amendment if it finds that the plan’s or amendment’s proposed decoupling mechanism is revenue-neutral, is consistent with this chapter, and is otherwise in the public interest, including any findings required by § 56-235.2 or 56-235.6. If the Commission denies such a plan or amendment, it shall set forth with specificity the reasons for its denial and the utility shall have the right to refile, without prejudice, an amended plan or amendment within 60 days; the Commission shall thereafter have 60 days to approve or deny the amended plan or amendment.D\n\nThe Commission shall allow any natural gas utility that implements a conservation and ratemaking efficiency plan under this chapter to recover, on a timely basis and through its regulated rates charged to its classes of customers participating in the plan, its entire incremental costs associated with cost-effective conservation and energy efficiency programs that are designed to encourage the reduction of annualized, weather-normalized energy consumption per customer. Ratemaking treatment may include placing appropriate capital expenditures for technology and program costs in the respective utility’s rate base, deferral of such interim incremental costs (which costs would not be subject to an earnings test), or recovering the utility’s technology and program costs through another ratemaking methodology approved by the Commission, such as a tracking mechanism. Such conservation and energy efficiency programs may also be jointly conducted or co-sponsored with other utilities, federal, state or local government agencies, nonprofit organizations, trade associations, homebuilders, and other for-profit vendors. Incremental costs recovered pursuant to this subsection shall be in addition to all other costs that the utility is permitted to recover, shall not be considered an offset to other Commission-approved costs of service or revenue requirements, and shall not be included in any computation relative to a performance-based regulation plan revenue sharing mechanism.E\n\nThe Commission shall require every natural gas utility operating under a conservation and ratemaking efficiency plan approved pursuant to this chapter to file annual reports showing the year over year weather-normalized use of energy on an average customer basis, by customer class, as well as the incremental, independently verified net economic benefits created by the utility’s cost-effective conservation and energy-efficiency programs during the previous year.F\n\nThe Commission shall grant recovery, on an annual basis, of a performance-based incentive for delivering conservation and energy efficiency benefits, which shall be included in the utility’s respective purchased gas adjustment mechanism. The incentive shall be calculated as a reasonable share of the verified net economic benefits created by the utility’s cost-effective conservation and energy efficiency programs, and may be recovered over a period of years equal to the payback period or discounted to net present value and recovered in the first year. In structuring this incentive, the Commission shall create a reasonable opportunity for a utility to earn up to a 15 percent share of such independently verified net economic benefits upon meeting target levels of such benefits set forth in a plan approved by the Commission. The level of net economic benefits to be used as the basis for such calculation shall be the sum of customer savings less utility costs recovered through subsection D, measured over the number of years of the payback period, rounded up to the next highest year. The incentives authorized by this subsection shall be in addition to any other revenue requirements or rates established pursuant to § 56-235.2 or 56-235.6 and independent of any computation of shared revenues under an approved performance-based regulation plan.G\n\nUnless the context clearly indicates otherwise, nothing in this chapter shall impair the Commission’s authority under § 56-234.2, 56-235.2, or 56-235.6; provided, however, that notwithstanding any other provision of law, the Commission shall not reduce an authorized return on common equity or other measure of utility profit as a result of the implementation of a natural gas conservation and ratemaking efficiency plan pursuant to this chapter.","order_by":null,"text":{"0":{"id":276842,"text":"Notwithstanding any provision of law to the contrary, each natural gas utility shall have the option to file a conservation and ratemaking efficiency plan as provided in this chapter. Such a plan may include one or more residential, small commercial, or small general service classes, but shall not apply to large commercial or large industrial classes of customers. Such plan shall include: (i) a normalization component that removes the effect of weather from the determination of conservation and energy efficiency results; (ii) a decoupling mechanism; (iii) one or more cost-effective conservation and energy efficiency programs; (iv) provisions to address the needs of low-income or low-usage residential customers; and (v) provisions to ensure that the rates and service to non-participating classes of customers are not adversely impacted. Such plan may also include provisions for phased or targeted implementation of rate or tariff design changes, if any, or conservation and energy efficiency programs. The Commission may approve such a plan after such notice and opportunity for hearing as the Commission may prescribe, subject to the provisions of this chapter. Nothing in this subsection shall prevent a natural gas utility from amending a conservation and ratemaking efficiency plan by amending, altering, supplementing, or deleting one or more conservation or energy efficiency programs.","type":"section","prefixes":["A"],"prefix":"A","entire_prefix":"A","prefix_anchor":"A","level":1,"next_prefix":"B"},"1":{"id":276843,"text":"The Commission shall approve or deny, within 180 days, a natural gas utility’s initial application for any revenue-neutral conservation and ratemaking efficiency plan that allocates annual per-customer fixed costs on an intra-class basis in reliance upon a revenue study or class cost of service study supporting the rates in effect at the time the plan is filed. A plan filed pursuant to this subsection shall not require the filing of rate case schedules. The Commission shall approve or deny, within 120 days, a natural gas utility’s application to amend a previously approved plan. The Commission shall approve such a plan or amendment if it finds that the plan’s or amendment’s proposed decoupling mechanism is revenue-neutral and is otherwise consistent with this chapter. If the Commission denies such a plan or amendment, it shall set forth with specificity the reasons for such denial and the utility shall have the right to refile, without prejudice, an amended plan or amendment within 60 days, and the Commission shall thereafter have 60 days to approve or deny the amended plan or amendment. The time period for Commission review provided for in this subsection shall not apply if the conservation and ratemaking efficiency plan is filed in conjunction with a rate case using the cost of service methodology set forth in § 56-235.2 or a performance-based regulation plan authorized by § 56-235.6.","type":"section","prefixes":["B"],"prefix":"B","entire_prefix":"B","prefix_anchor":"B","level":1,"prior_prefix":"A","next_prefix":"C"},"2":{"id":276844,"text":"The Commission shall approve or deny, within 270 days, a natural gas utility’s initial application for any revenue-neutral conservation and ratemaking efficiency plan that allocates per-customer fixed costs on an intra-class basis according to a class cost of service study filed with the plan, when such plan is filed in conjunction with a rate case using the cost of service methodology set forth in § 56-235.2 or a performance-based regulation plan authorized by § 56-235.6. The Commission shall approve or deny, within 120 days, a natural gas utility’s application to amend a plan previously approved pursuant to this subsection. The Commission shall approve such a plan or amendment if it finds that the plan’s or amendment’s proposed decoupling mechanism is revenue-neutral, is consistent with this chapter, and is otherwise in the public interest, including any findings required by § 56-235.2 or 56-235.6. If the Commission denies such a plan or amendment, it shall set forth with specificity the reasons for its denial and the utility shall have the right to refile, without prejudice, an amended plan or amendment within 60 days; the Commission shall thereafter have 60 days to approve or deny the amended plan or amendment.","type":"section","prefixes":["C"],"prefix":"C","entire_prefix":"C","prefix_anchor":"C","level":1,"prior_prefix":"B","next_prefix":"D"},"3":{"id":276845,"text":"The Commission shall allow any natural gas utility that implements a conservation and ratemaking efficiency plan under this chapter to recover, on a timely basis and through its regulated rates charged to its classes of customers participating in the plan, its entire incremental costs associated with cost-effective conservation and energy efficiency programs that are designed to encourage the reduction of annualized, weather-normalized energy consumption per customer. Ratemaking treatment may include placing appropriate capital expenditures for technology and program costs in the respective utility’s rate base, deferral of such interim incremental costs (which costs would not be subject to an earnings test), or recovering the utility’s technology and program costs through another ratemaking methodology approved by the Commission, such as a tracking mechanism. Such conservation and energy efficiency programs may also be jointly conducted or co-sponsored with other utilities, federal, state or local government agencies, nonprofit organizations, trade associations, homebuilders, and other for-profit vendors. Incremental costs recovered pursuant to this subsection shall be in addition to all other costs that the utility is permitted to recover, shall not be considered an offset to other Commission-approved costs of service or revenue requirements, and shall not be included in any computation relative to a performance-based regulation plan revenue sharing mechanism.","type":"section","prefixes":["D"],"prefix":"D","entire_prefix":"D","prefix_anchor":"D","level":1,"prior_prefix":"C","next_prefix":"E"},"4":{"id":276846,"text":"The Commission shall require every natural gas utility operating under a conservation and ratemaking efficiency plan approved pursuant to this chapter to file annual reports showing the year over year weather-normalized use of energy on an average customer basis, by customer class, as well as the incremental, independently verified net economic benefits created by the utility’s cost-effective conservation and energy-efficiency programs during the previous year.","type":"section","prefixes":["E"],"prefix":"E","entire_prefix":"E","prefix_anchor":"E","level":1,"prior_prefix":"D","next_prefix":"F"},"5":{"id":276847,"text":"The Commission shall grant recovery, on an annual basis, of a performance-based incentive for delivering conservation and energy efficiency benefits, which shall be included in the utility’s respective purchased gas adjustment mechanism. The incentive shall be calculated as a reasonable share of the verified net economic benefits created by the utility’s cost-effective conservation and energy efficiency programs, and may be recovered over a period of years equal to the payback period or discounted to net present value and recovered in the first year. In structuring this incentive, the Commission shall create a reasonable opportunity for a utility to earn up to a 15 percent share of such independently verified net economic benefits upon meeting target levels of such benefits set forth in a plan approved by the Commission. The level of net economic benefits to be used as the basis for such calculation shall be the sum of customer savings less utility costs recovered through subsection D, measured over the number of years of the payback period, rounded up to the next highest year. The incentives authorized by this subsection shall be in addition to any other revenue requirements or rates established pursuant to § 56-235.2 or 56-235.6 and independent of any computation of shared revenues under an approved performance-based regulation plan.","type":"section","prefixes":["F"],"prefix":"F","entire_prefix":"F","prefix_anchor":"F","level":1,"prior_prefix":"E","next_prefix":"G"},"6":{"id":276848,"text":"Unless the context clearly indicates otherwise, nothing in this chapter shall impair the Commission’s authority under § 56-234.2, 56-235.2, or 56-235.6; provided, however, that notwithstanding any other provision of law, the Commission shall not reduce an authorized return on common equity or other measure of utility profit as a result of the implementation of a natural gas conservation and ratemaking efficiency plan pursuant to this chapter.","type":"section","prefixes":["G"],"prefix":"G","entire_prefix":"G","prefix_anchor":"G","level":1,"prior_prefix":"F"}},"ancestry":[{"id":15651,"edition_id":1,"name":"Natural Gas Conservation and Ratemaking Efficiency Act","identifier":"25","label":"chapter","depth":2,"order_by":1,"parent_id":12881,"metadata":{},"date_created":"2026-06-26 03:57:24","date_modified":"2026-06-26 03:57:24","permalink":{"id":250873,"object_type":"structure","relational_id":15651,"identifier":"25","token":"56\/25","url":"\/56\/25\/","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":76005,"structure_id":15651,"section_number":"56-600","catch_line":"Definitions","url":"\/56-600\/","token":"56\/25\/56-600","metadata":false},{"id":59830,"structure_id":15651,"section_number":"56-601","catch_line":"Natural gas conservation and ratemaking efficiency","url":"\/56-601\/","token":"56\/25\/56-601","metadata":false},{"id":77174,"structure_id":15651,"section_number":"56-602","catch_line":"Conservation and ratemaking efficiency plans","url":"\/56-602\/","token":"56\/25\/56-602","metadata":false}],"previous_section":{"id":59830,"structure_id":15651,"section_number":"56-601","catch_line":"Natural gas conservation and ratemaking efficiency","url":"\/56-601\/","token":"56\/25\/56-601","metadata":false},"metadata":false,"official_url":"https:\/\/law.lis.virginia.gov\/vacode\/56-602\/","history_text":"

This law was first created in 2008. The record of its establishment is cataloged in chapter 639<\/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 2022, chapters 728<\/a> and 759<\/a>.<\/p>","references":false,"refers_to":[{"id":56457,"section_number":"56-234.2","catch_line":"Review of rates","order_by":null,"url":"\/56-234.2\/"},{"id":62621,"section_number":"56-235.2","catch_line":"All rates, tolls, etc., to be just and reasonable to jurisdictional customers; findings and conclusions to be set forth; alternative forms of regulation for electric companies","order_by":null,"url":"\/56-235.2\/"},{"id":71641,"section_number":"56-235.6","catch_line":"Optional performance-based regulation of certain utilities","order_by":null,"url":"\/56-235.6\/"}],"permalink":{"id":250883,"object_type":"law","relational_id":77174,"identifier":"56-602","token":"56\/25\/56-602","url":"\/56-602\/","edition_id":1,"permalink":0,"preferred":1},"url":"\/56-602\/","token":"56\/25\/56-602","dublin_core":{"Title":"Conservation and ratemaking efficiency plans","Type":"Text","Format":"text\/html","Identifier":"\u00a7 56-602","Relation":"Code of Virginia"},"html":"\n\t\t\t\t\t\t

A.<\/span> Notwithstanding any provision of law<\/span> to the contrary, each natural gas utility<\/span> shall have the option to file a conservation and ratemaking efficiency plan<\/span> as provided in this chapter. Such a plan may include one or more residential, small commercial, or small general service classes, but shall not apply to large commercial or large industrial classes of customers. Such plan shall include: (i) a normalization component that removes the effect of weather from the determination of conservation and energy efficiency results; (ii) a decoupling mechanism<\/span>; (iii) one or more cost-effective conservation and energy efficiency programs<\/span>; (iv) provisions to address the needs of low-income or low-usage residential customers; and (v) provisions to ensure that the rates<\/span> and service to non-participating classes of customers are not adversely impacted. Such plan may also include provisions for phased or targeted implementation of rate<\/span> or tariff design changes, if any, or conservation and energy efficiency programs. The Commission<\/span> may approve such a plan after such notice and opportunity for hearing<\/span> as the Commission<\/span> may prescribe, subject to the provisions of this chapter. Nothing in this subsection shall prevent a natural gas utility<\/span> from amending a conservation and ratemaking efficiency plan<\/span> by amending, altering, supplementing, or deleting one or more conservation or energy efficiency programs. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

B.<\/span> The Commission<\/span> shall approve or deny, within 180 days, a natural gas utility<\/span>’s initial application for any revenue-neutral<\/span> conservation and ratemaking efficiency plan<\/span> that allocates annual per-customer fixed costs<\/span> on an intra-class basis in reliance upon a revenue study or class cost of service study supporting the rates<\/span> in effect at the time the plan is filed. A plan filed pursuant to this subsection shall not require the filing of rate<\/span> case schedules<\/span>. The Commission<\/span> shall approve or deny, within 120 days, a natural gas utility<\/span>’s application to amend<\/span> a previously approved plan. The Commission<\/span> shall approve such a plan or amendment if it finds that the plan’s or amendment’s proposed decoupling mechanism<\/span> is revenue-neutral<\/span> and is otherwise consistent with this chapter. If the Commission<\/span> denies such a plan or amendment, it shall set forth with specificity the reasons for such denial and the utility shall have the right to refile, without prejudice, an amended plan or amendment within 60 days, and the Commission<\/span> shall thereafter have 60 days to approve or deny the amended plan or amendment. The time period for Commission<\/span> review provided for in this subsection shall not apply if the conservation and ratemaking efficiency plan<\/span> is filed in conjunction with a rate<\/span> case using the cost of service methodology set forth in § 56-235.2<\/a> or a performance-based regulation plan authorized by § 56-235.6<\/a>. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

C.<\/span> The Commission<\/span> shall approve or deny, within 270 days, a natural gas utility<\/span>’s initial application for any revenue-neutral<\/span> conservation and ratemaking efficiency plan<\/span> that allocates per-customer fixed costs<\/span> on an intra-class basis according to a class cost of service study filed with the plan, when such plan is filed in conjunction with a rate<\/span> case using the cost of service methodology set forth in § 56-235.2<\/a> or a performance-based regulation plan authorized by § 56-235.6<\/a>. The Commission<\/span> shall approve or deny, within 120 days, a natural gas utility<\/span>’s application to amend<\/span> a plan previously approved pursuant to this subsection. The Commission<\/span> shall approve such a plan or amendment if it finds that the plan’s or amendment’s proposed decoupling mechanism<\/span> is revenue-neutral<\/span>, is consistent with this chapter, and is otherwise in the public interest, including any findings<\/span> required by § 56-235.2<\/a> or 56-235.6<\/a>. If the Commission<\/span> denies such a plan or amendment, it shall set forth with specificity the reasons for its denial and the utility shall have the right to refile, without prejudice, an amended plan or amendment within 60 days; the Commission<\/span> shall thereafter have 60 days to approve or deny the amended plan or amendment. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

D.<\/span> The Commission<\/span> shall allow any natural gas utility<\/span> that implements a conservation and ratemaking efficiency plan<\/span> under this chapter to recover, on a timely basis and through its regulated rates<\/span> charged to its classes of customers participating in the plan, its entire incremental costs associated with cost-effective conservation and energy efficiency programs<\/span> that are designed to encourage the reduction of annualized, weather-normalized energy consumption per customer. Ratemaking treatment may include placing appropriate capital expenditures for technology and program<\/span> costs in the respective utility’s rate<\/span> base, deferral of such interim incremental costs (which costs would not be subject to an earnings test), or recovering the utility’s technology and program<\/span> costs through another ratemaking methodology approved by the Commission<\/span>, such as a tracking mechanism. Such conservation and energy efficiency programs may also be jointly conducted or co-sponsored with other utilities, federal, state or local government agencies, nonprofit organizations, trade associations, homebuilders, and other for-profit vendors. Incremental costs recovered pursuant to this subsection shall be in addition to all other costs that the utility is permitted to recover, shall not be considered an offset to other Commission<\/span>-approved costs of service or revenue requirements, and shall not be included in any computation relative to a performance-based regulation plan revenue sharing mechanism. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

E.<\/span> The Commission<\/span> shall require every natural gas utility<\/span> operating under a conservation and ratemaking efficiency plan<\/span> approved pursuant to this chapter to file annual reports showing the year over year weather-normalized use of energy on an average customer basis, by customer class, as well as the incremental, independently verified net economic benefits created by the utility’s cost-effective conservation and energy-efficiency programs during the previous year. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

F.<\/span> The Commission<\/span> shall grant recovery, on an annual basis, of a performance-based incentive for delivering conservation and energy efficiency benefits, which shall be included in the utility’s respective purchased gas adjustment mechanism. The incentive shall be calculated as a reasonable share of the verified net economic benefits created by the utility’s cost-effective conservation and energy efficiency programs<\/span>, and may be recovered over a period of years equal to the payback period or discounted to net present value and recovered in the first year. In structuring this incentive, the Commission<\/span> shall create a reasonable opportunity for a utility to earn up to a 15 percent share of such independently verified net economic benefits upon meeting target levels of such benefits set forth in a plan approved by the Commission<\/span>. The level of net economic benefits to be used as the basis for such calculation shall be the sum of customer savings less utility costs recovered through subsection D, measured over the number of years of the payback period, rounded up to the next highest year. The incentives authorized by this subsection shall be in addition to any other revenue requirements or rates<\/span> established pursuant to § 56-235.2<\/a> or 56-235.6<\/a> and independent of any computation of shared revenues under an approved performance-based regulation plan. <\/i><\/a><\/p><\/section>\n\t\t\t\t\t\t

G.<\/span> Unless the context clearly indicates otherwise, nothing in this chapter shall impair the Commission<\/span>’s authority under § 56-234.2<\/a>, 56-235.2<\/a>, or 56-235.6<\/a>; provided, however, that notwithstanding any other provision of law<\/span>, the Commission<\/span> shall not reduce an authorized return on common equity<\/span> or other measure<\/span> of utility profit as a result of the implementation of a natural gas conservation and ratemaking efficiency plan<\/span> pursuant to this chapter. <\/i><\/a><\/p><\/section>","plain_text":" CODE OF VIRGINIA\n\nCONSERVATION AND RATEMAKING EFFICIENCY PLANS (\u00a7 56-602)\n\nA. Notwithstanding any provision of law to the contrary, each natural gas\nutility shall have the option to file a conservation and ratemaking efficiency\nplan as provided in this chapter. Such a plan may include one or more\nresidential, small commercial, or small general service classes, but shall not\napply to large commercial or large industrial classes of customers. Such plan\nshall include: (i) a normalization component that removes the effect of weather\nfrom the determination of conservation and energy efficiency results; (ii) a\ndecoupling mechanism; (iii) one or more cost-effective conservation and energy\nefficiency programs; (iv) provisions to address the needs of low-income or\nlow-usage residential customers; and (v) provisions to ensure that the rates and\nservice to non-participating classes of customers are not adversely impacted.\nSuch plan may also include provisions for phased or targeted implementation of\nrate or tariff design changes, if any, or conservation and energy efficiency\nprograms. The Commission may approve such a plan after such notice and\nopportunity for hearing as the Commission may prescribe, subject to the\nprovisions of this chapter. Nothing in this subsection shall prevent a natural\ngas utility from amending a conservation and ratemaking efficiency plan by\namending, altering, supplementing, or deleting one or more conservation or\nenergy efficiency programs.\n\nB. The Commission shall approve or deny, within 180 days, a natural gas\nutility’s initial application for any revenue-neutral conservation and\nratemaking efficiency plan that allocates annual per-customer fixed costs on an\nintra-class basis in reliance upon a revenue study or class cost of service\nstudy supporting the rates in effect at the time the plan is filed. A plan filed\npursuant to this subsection shall not require the filing of rate case schedules.\nThe Commission shall approve or deny, within 120 days, a natural gas\nutility’s application to amend a previously approved plan. The Commission\nshall approve such a plan or amendment if it finds that the plan’s or\namendment’s proposed decoupling mechanism is revenue-neutral and is\notherwise consistent with this chapter. If the Commission denies such a plan or\namendment, it shall set forth with specificity the reasons for such denial and\nthe utility shall have the right to refile, without prejudice, an amended plan\nor amendment within 60 days, and the Commission shall thereafter have 60 days to\napprove or deny the amended plan or amendment. The time period for Commission\nreview provided for in this subsection shall not apply if the conservation and\nratemaking efficiency plan is filed in conjunction with a rate case using the\ncost of service methodology set forth in § 56-235.2 or a performance-based\nregulation plan authorized by § 56-235.6.\n\nC. The Commission shall approve or deny, within 270 days, a natural gas\nutility’s initial application for any revenue-neutral conservation and\nratemaking efficiency plan that allocates per-customer fixed costs on an\nintra-class basis according to a class cost of service study filed with the\nplan, when such plan is filed in conjunction with a rate case using the cost of\nservice methodology set forth in § 56-235.2 or a performance-based\nregulation plan authorized by § 56-235.6. The Commission shall approve or\ndeny, within 120 days, a natural gas utility’s application to amend a plan\npreviously approved pursuant to this subsection. The Commission shall approve\nsuch a plan or amendment if it finds that the plan’s or amendment’s\nproposed decoupling mechanism is revenue-neutral, is consistent with this\nchapter, and is otherwise in the public interest, including any findings\nrequired by § 56-235.2 or 56-235.6. If the Commission denies such a plan or\namendment, it shall set forth with specificity the reasons for its denial and\nthe utility shall have the right to refile, without prejudice, an amended plan\nor amendment within 60 days; the Commission shall thereafter have 60 days to\napprove or deny the amended plan or amendment.\n\nD. The Commission shall allow any natural gas utility that implements a\nconservation and ratemaking efficiency plan under this chapter to recover, on a\ntimely basis and through its regulated rates charged to its classes of customers\nparticipating in the plan, its entire incremental costs associated with\ncost-effective conservation and energy efficiency programs that are designed to\nencourage the reduction of annualized, weather-normalized energy consumption per\ncustomer. Ratemaking treatment may include placing appropriate capital\nexpenditures for technology and program costs in the respective utility’s\nrate base, deferral of such interim incremental costs (which costs would not be\nsubject to an earnings test), or recovering the utility’s technology and\nprogram costs through another ratemaking methodology approved by the Commission,\nsuch as a tracking mechanism. Such conservation and energy efficiency programs\nmay also be jointly conducted or co-sponsored with other utilities, federal,\nstate or local government agencies, nonprofit organizations, trade associations,\nhomebuilders, and other for-profit vendors. Incremental costs recovered pursuant\nto this subsection shall be in addition to all other costs that the utility is\npermitted to recover, shall not be considered an offset to other\nCommission-approved costs of service or revenue requirements, and shall not be\nincluded in any computation relative to a performance-based regulation plan\nrevenue sharing mechanism.\n\nE. The Commission shall require every natural gas utility operating under a\nconservation and ratemaking efficiency plan approved pursuant to this chapter to\nfile annual reports showing the year over year weather-normalized use of energy\non an average customer basis, by customer class, as well as the incremental,\nindependently verified net economic benefits created by the utility’s\ncost-effective conservation and energy-efficiency programs during the previous\nyear.\n\nF. The Commission shall grant recovery, on an annual basis, of a\nperformance-based incentive for delivering conservation and energy efficiency\nbenefits, which shall be included in the utility’s respective purchased\ngas adjustment mechanism. The incentive shall be calculated as a reasonable\nshare of the verified net economic benefits created by the utility’s\ncost-effective conservation and energy efficiency programs, and may be recovered\nover a period of years equal to the payback period or discounted to net present\nvalue and recovered in the first year. In structuring this incentive, the\nCommission shall create a reasonable opportunity for a utility to earn up to a\n15 percent share of such independently verified net economic benefits upon\nmeeting target levels of such benefits set forth in a plan approved by the\nCommission. The level of net economic benefits to be used as the basis for such\ncalculation shall be the sum of customer savings less utility costs recovered\nthrough subsection D, measured over the number of years of the payback period,\nrounded up to the next highest year. The incentives authorized by this\nsubsection shall be in addition to any other revenue requirements or rates\nestablished pursuant to § 56-235.2 or 56-235.6 and independent of any\ncomputation of shared revenues under an approved performance-based regulation\nplan.\n\nG. Unless the context clearly indicates otherwise, nothing in this chapter shall\nimpair the Commission’s authority under § 56-234.2, 56-235.2, or\n56-235.6; provided, however, that notwithstanding any other provision of law,\nthe Commission shall not reduce an authorized return on common equity or other\nmeasure of utility profit as a result of the implementation of a natural gas\nconservation and ratemaking efficiency plan pursuant to this chapter.\n\nHISTORY: 2008, c. 639; 2022, cc. 728, 759.","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}}