                                 CODE OF VIRGINIA

ORGANIZATION; PURPOSE (§ 56-231.16)

A. Any number of natural persons not less than five may, by executing, filing
and recording articles of incorporation as hereinafter set forth, form a
cooperative, either with or without capital stock, not organized for pecuniary
profit, for the principal purpose of making energy, energy services, and other
utility services available at the lowest cost consistent with sound economy and
prudent management of the business of such cooperative and such other purposes
as its membership shall approve: (i) provided, however, that within its
certificated service territory, no such cooperative shall, prior to July 1,
2000, undertake or initiate any new program (a) to buy or maintain an inventory
of HVACR equipment or household appliances, (b) to install or service any such
equipment or household appliances for customers, unless such service is not
provided by the cooperative but by a third party individual, firm or corporation
licensed to perform such service, (c) to sell HVACR equipment or household
appliances to customers metered and billed on residential rates, (d) to sell
HVACR equipment to customers other than those metered and billed on residential
rates except where such sale is an incidental part of providing other energy
services or providing traditional cooperative activities, (e) to sell or
distribute propane or fuel oil; sell, install or service propane or fuel oil
equipment; or maintain or buy an inventory of propane or fuel oil equipment for
resale, or (f) to serve as a coordinator of nonelectric energy services or
provide engineering consulting services except when such energy or engineering
services are an incidental part of a marketing effort to provide other energy or
engineering services or as a part of providing services that are traditional
cooperative activities; (ii) provided further, that notwithstanding clause (i),
such cooperative may engage within its certificated service territory in any of
the activities enumerated in clause (i) that (a) have received State Corporation
Commission approval prior to February 1, 1998, (b) such cooperative is ordered
or required to undertake by any jurisdictional court or regulatory authority,
(c) were lawfully undertaken prior to February 1, 1998, (d) are specifically
permitted by statute, or (e) are undertaken by any other regulated public
service company or its unregulated affiliate within such cooperative&#8217;s
certificated service territory; and (iii) also provided that such cooperative or
its affiliate may not undertake such activities as are prohibited by clause (i)
within the certificated service territory of another public service company
unless such activities are undertaken by such public service company or its
unregulated affiliate within such cooperative&#8217;s certificated service
territory. In addition, such cooperative may establish one or more subsidiaries
to engage in any other business activities not prohibited by law, including
making unregulated sales of electric power to members of such cooperative that
are served at or by dedicated or excess facilities within the
cooperative&#8217;s certificated service territory and that contract for
electric utility services to serve a demand that is reasonably expected to
exceed 90 megawatts; notwithstanding the foregoing, no such subsidiary may
engage in any business activities that the cooperatives are prohibited from
engaging in under this section. For purposes of determining whether a
cooperative is formed not for pecuniary profit, the establishment of one or more
affiliates thereof on a for-profit basis shall not disqualify such entity from
being formed as a cooperative pursuant to this article.

B. Nothing in this article shall be construed to authorize a cooperative formed
pursuant to this article, or any affiliate thereof, to engage, on a
not-for-profit basis, within either the cooperative&#8217;s certificated service
territory or in the certificated service territory of another public service
company, in the sale of products, the provision of services, or other business
activity, except for regulated electric utility services, unregulated sales of
electric power to its members within its certificated service territory, and
traditional cooperative activities. However, if such products or services are
not currently provided by any person other than a cooperative formed under or
subject to this chapter or its affiliate and the Commission determines that no
such other person is likely, within a reasonable time, to effectively provide
such products and services in such territory, an affiliate of a cooperative may
provide such products or services on a not-for-profit basis. The Commission
shall also permit an affiliate of a cooperative formed under or subject to this
chapter to provide such products or services on a not-for-profit basis upon a
finding that the affiliate will not receive the benefit of any federal income
tax exemption that is not available to persons other than cooperatives and will
not receive the benefit of any federally guaranteed or subsidized financing that
is not available to persons other than cooperatives; and provided further that
nothing in this subsection shall prohibit the continued operation of any
business activities of any not-for-profit cooperative or affiliate formed,
operating, and actively providing products or services to customers on or before
July 1, 1999.

HISTORY: 1999, c. 874; 2000, cc. 964, 989; 2025, cc. 499, 598.