                                 CODE OF VIRGINIA

GENERATION, DISTRIBUTION, AND TRANSMISSION RATES AFTER CAPPED RATES TERMINATE OR
EXPIRE (§ 56-585.1)

A. During the first six months of 2009, the Commission shall, after notice and
opportunity for hearing, initiate proceedings to review the rates, terms and
conditions for the provision of generation, distribution and transmission
services of each investor-owned incumbent electric utility. Such proceedings
shall be governed by the provisions of Chapter 10 (§ 56-232 et seq.), except as
modified herein. In such proceedings the Commission shall determine fair rates
of return on common equity applicable to the generation and distribution
services of the utility. In so doing, the Commission may use any methodology to
determine such return it finds consistent with the public interest, but such
return shall not be set lower than the average of the returns on common equity
reported to the Securities and Exchange Commission for the three most recent
annual periods for which such data are available by not less than a majority,
selected by the Commission as specified in subdivision 2 b, of other
investor-owned electric utilities in the peer group of the utility, nor shall
the Commission set such return more than 300 basis points higher than such
average. The peer group of the utility shall be determined in the manner
prescribed in subdivision 2 b. The Commission may increase or decrease such
combined rate of return by up to 100 basis points based on the generating plant
performance, customer service, and operating efficiency of a utility, as
compared to nationally recognized standards determined by the Commission to be
appropriate for such purposes. In such a proceeding, the Commission shall
determine the rates that the utility may charge until such rates are adjusted.
If the Commission finds that the utility&#8217;s combined rate of return on
common equity is more than 50 basis points below the combined rate of return as
so determined, it shall be authorized to order increases to the utility&#8217;s
rates necessary to provide the opportunity to fully recover the costs of
providing the utility&#8217;s services and to earn not less than such combined
rate of return. If the Commission finds that the utility&#8217;s combined rate
of return on common equity is more than 50 basis points above the combined rate
of return as so determined, it shall be authorized either (i) to order
reductions to the utility&#8217;s rates it finds appropriate, provided that the
Commission may not order such rate reduction unless it finds that the resulting
rates will provide the utility with the opportunity to fully recover its costs
of providing its services and to earn not less than the fair rates of return on
common equity applicable to the generation and distribution services; or (ii) to
direct that 60 percent of the amount of the utility&#8217;s earnings that were
more than 50 basis points above the fair combined rate of return for calendar
year 2008 be credited to customers&#8217; bills, in which event such credits
shall be amortized over a period of six to 12 months, as determined at the
discretion of the Commission, following the effective date of the
Commission&#8217;s order and 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. Commencing in 2011, the
Commission, after notice and opportunity for hearing, shall conduct reviews of
the rates, terms and conditions for the provision of generation, distribution
and transmission services by each investor-owned incumbent electric utility,
subject to the following provisions:

   1. Rates, terms and conditions for each service shall be reviewed separately
   on an unbundled basis, and such reviews shall be conducted in a single,
   combined proceeding. Pursuant to subsection A of &#xA7; 56-585.1:1, the
   Commission shall conduct a review for a Phase I Utility in 2020, utilizing the
   three successive 12-month test periods beginning January 1, 2017, and ending
   December 31, 2019. Thereafter, reviews for a Phase I Utility will be on a
   triennial basis with subsequent proceedings utilizing the three successive
   12-month test periods ending December 31 immediately preceding the year in
   which such review proceeding is conducted. Pursuant to subsection A of &#xA7;
   56-585.1:1, the Commission shall conduct a review for a Phase II Utility in
   2021, utilizing the four successive 12-month test periods beginning January 1,
   2017, and ending December 31, 2020, with subsequent reviews on a biennial
   basis commencing in 2023, with such proceedings utilizing the two successive
   12-month test periods ending December 31 immediately preceding the year in
   which such review proceeding is conducted. For purposes of this section, a
   Phase I Utility is an investor-owned incumbent electric utility that was, as
   of July 1, 1999, not bound by a rate case settlement adopted by the Commission
   that extended in its application beyond January 1, 2002, and a Phase II
   Utility is an investor-owned incumbent electric utility that was bound by such
   a settlement.

   2. Subject to the provisions of subdivision 6, the fair rate of return on
   common equity applicable separately to the generation and distribution
   services of such utility, and for the two such services combined, and for any
   rate adjustment clauses approved under subdivision 5 or 6, shall be determined
   by the Commission during each such review, as follows:
   				a. The Commission may use any methodology to determine such return it
   finds consistent with the public interest. However, for a Phase I Utility, for
   applications received by the Commission on or after January 1, 2020, such
   return shall not be set lower than the average of either (i) the returns on
   common equity reported to the Securities and Exchange Commission for the three
   most recent annual periods for which such data are available by not less than
   a majority, selected by the Commission as specified in subdivision 2 b, of
   other investor-owned electric utilities in the peer group of the utility
   subject to such triennial review or (ii) the authorized returns on common
   equity that are set by the applicable regulatory commissions for the same
   selected peer group, nor shall the Commission set such return more than 150
   basis points higher than such average.
   				b. For a Phase I Utility, in selecting such majority of peer group
   investor-owned electric utilities for applications received by the Commission
   on or after January 1, 2020, the Commission shall first remove from such group
   the two utilities within such group that have the lowest reported or
   authorized, as applicable, returns of the group, as well as the two utilities
   within such group that have the highest reported or authorized, as applicable,
   returns of the group, and the Commission shall then select a majority of the
   utilities remaining in such peer group. In its final order regarding such
   triennial review, the Commission shall identify the utilities in such peer
   group it selected for the calculation of such limitation. With respect to a
   Phase I Utility, for purposes of this subdivision 2, an investor-owned
   electric utility shall be deemed part of such peer group if (i) its principal
   operations are conducted in the southeastern United States east of the
   Mississippi River in either the states of West Virginia or Kentucky or in
   those states south of Virginia, excluding the state of Tennessee, (ii) it is a
   vertically-integrated electric utility providing generation, transmission, and
   distribution services whose facilities and operations are subject to state
   public utility regulation in the state where its principal operations are
   conducted, (iii) it had a long-term bond rating assigned by Moody&#8217;s
   Investors Service of at least Baa at the end of the most recent test period
   subject to such review, and (iv) it is not an affiliate of the utility subject
   to such review or a utility whose fair rate of return on common equity is
   determined by the Commission.
   				c. The Commission may increase or decrease the utility&#8217;s 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.
   				d. In any Current Proceeding, the Commission shall determine whether the
   Current Return has increased, on a percentage basis, above the Initial Return
   by more than the increase, expressed as a percentage, in the United States
   Average Consumer Price Index for all items, all urban consumers (CPI-U), as
   published by the Bureau of Labor Statistics of the United States Department of
   Labor, since the date on which the Commission determined the Initial Return.
   If so, the Commission may conduct an additional analysis of whether it is in
   the public interest to utilize such Current Return for the Current Proceeding
   then pending. A finding of whether the Current Return justifies such
   additional analysis shall be made without regard to any enhanced rate of
   return on common equity awarded pursuant to the provisions of subdivision 6.
   Such additional analysis shall include, but not be limited to, a consideration
   of overall economic conditions, the level of interest rates and cost of
   capital with respect to business and industry, in general, as well as electric
   utilities, the current level of inflation and the utility&#8217;s cost of
   goods and services, the effect on the utility&#8217;s ability to provide
   adequate service and to attract capital if less than the Current Return were
   utilized for the Current Proceeding then pending, and such other factors as
   the Commission may deem relevant. If, as a result of such analysis, the
   Commission finds that use of the Current Return for the Current Proceeding
   then pending would not be in the public interest, then the lower limit imposed
   by subdivision 2 a on the return to be determined by the Commission for such
   utility shall be calculated, for that Current Proceeding only, by increasing
   the Initial Return by a percentage at least equal to the increase, expressed
   as a percentage, in the United States Average Consumer Price Index for all
   items, all urban consumers (CPI-U), as published by the Bureau of Labor
   Statistics of the United States Department of Labor, since the date on which
   the Commission determined the Initial Return. For purposes of this
   subdivision:
   				&#8220;Current Proceeding&#8221; means any proceeding conducted under any
   provisions of this subsection that require or authorize the Commission to
   determine a fair combined rate of return on common equity for a utility and
   that will be concluded after the date on which the Commission determined the
   Initial Return for such utility.
   				&#8220;Current Return&#8221; means the minimum fair combined rate of
   return on common equity required for any Current Proceeding by the limitation
   regarding a utility&#8217;s peer group specified in subdivision 2 a.
   				&#8220;Initial Return&#8221; means the fair combined rate of return on
   common equity determined for such utility by the Commission on the first
   occasion after July 1, 2009, under any provision of this subsection pursuant
   to the provisions of subdivision 2 a.
   				e. In addition to other considerations, in setting the return on equity
   within the range allowed by this section, the Commission shall strive to
   maintain costs of retail electric energy that are cost competitive with costs
   of retail electric energy provided by the other peer group investor-owned
   electric utilities.
   				f. The determination of such returns shall be made by the Commission on a
   stand-alone basis, and specifically without regard to any return on common
   equity or other matters determined with regard to facilities described in
   subdivision 6.
   				g. If the combined rate of return on common equity earned by the
   generation and distribution services is no more than 50 basis points above or
   below the return as so determined or, for any test period commencing after
   December 31, 2012, for a Phase II Utility and after December 31, 2013, for a
   Phase I Utility, such return is no more than 70 basis points above or below
   the return as so determined, such combined return shall not be considered
   either excessive or insufficient, respectively. However, for any test period
   commencing after December 31, 2012, for a Phase II Utility, and after December
   31, 2013, for a Phase I Utility, if the utility has, during the test period or
   periods under review, earned below the return as so determined, whether or not
   such combined return is within 70 basis points of the return as so determined,
   the utility may petition the Commission for approval of an increase in rates
   in accordance with the provisions of subdivision 8 a as if it had earned more
   than 70 basis points below a fair combined rate of return, and such proceeding
   shall otherwise be conducted in accordance with the provisions of this
   section. The provisions of this subdivision are subject to the provisions of
   subdivision 8.
   				h. Any amount of a utility&#8217;s earnings directed by the Commission to
   be credited to customers&#8217; bills pursuant to this section shall not be
   considered for the purpose of determining the utility&#8217;s earnings in any
   subsequent review.

   3. Each such utility shall make a triennial filing by March 31 of every third
   year, with such filings commencing for a Phase I Utility in 2020, and such
   filings commencing for a Phase II Utility in 2021 and terminating thereafter.
   Such filing shall encompass the three successive 12-month test periods ending
   December 31 immediately preceding the year in which such proceeding is
   conducted, except that the filing for a Phase II Utility in 2021 shall
   encompass the four successive 12-month test periods ending December 31, 2020.
   After 2021, each Phase II Utility shall make a biennial filing by March 31 of
   every second year, except that the 2023 filing for a Phase II Utility shall be
   made on or after July 1, 2023. All biennial filings shall encompass the two
   successive 12-month test periods ending December 31 immediately preceding the
   year in which such review proceeding is conducted. All such filings shall
   consist of the schedules contained in the Commission&#8217;s rules governing
   utility rate increase applications, and in every such case the filing for each
   year shall be identified separately and shall be segregated from any other
   year encompassed by the filing. In a filing under this subdivision that does
   not result in an overall rate change, a utility may propose an adjustment to
   one or more tariffs that are revenue neutral to the utility.
   				If the Commission determines that rates should be revised or credits be
   applied to customers&#8217; bills pursuant to subdivision 8 or 10, any rate
   adjustment clauses previously implemented related to facilities utilizing
   simple-cycle combustion turbines described in subdivision 6, shall be combined
   with the utility&#8217;s costs, revenues, and investments until the amounts
   that are the subject of such rate adjustment clauses are fully recovered. The
   Commission shall combine such clauses with the utility&#8217;s costs,
   revenues, and investments only after it makes its initial determination with
   regard to necessary rate revisions or credits to customers&#8217; bills, and
   the amounts thereof, but after such clauses are combined as specified in this
   paragraph, they shall thereafter be considered part of the utility&#8217;s
   costs, revenues, and investments for the purposes of future review
   proceedings.
   				As of July 1, 2023, a Phase II Utility shall select a subset of rate
   adjustment clauses previously implemented pursuant to subdivision 5 or 6
   having a combined annual revenue requirement, as of July 1, 2023, of at least
   $350 million and combine such rate adjustment clauses with the utility&#8217;s
   costs, revenues, and investments for generation and distribution services.
   After such rate adjustment clauses are combined as specified in this
   paragraph, such rate adjustment clauses shall be considered part of the
   utility&#8217;s costs, revenues, and investments for the purposes of future
   biennial review proceedings, and the combination of such rate adjustment
   clauses shall be specifically subject to audit by the Commission in the
   utility&#8217;s 2023 biennial review filing. Notwithstanding the provisions of
   subsection C of &#xA7; 56-581, such combination shall not serve as the basis
   for an increase in a Phase II Utility&#8217;s rates for generation and
   distribution services in its 2023 biennial proceeding.

   4. The following costs incurred by the utility shall be deemed reasonable and
   prudent: (i) costs for transmission services provided to the utility by the
   regional transmission entity of which the utility is a member, as determined
   under applicable rates, terms and conditions approved by the Federal Energy
   Regulatory Commission; (ii) costs charged to the utility that are associated
   with demand response programs approved by the Federal Energy Regulatory
   Commission and administered by the regional transmission entity of which the
   utility is a member; and (iii) costs incurred by the utility to construct,
   operate, and maintain transmission lines and substations installed in order to
   provide service to a business park. Upon petition of a utility at any time
   after the expiration or termination of capped rates, but not more than once in
   any 12-month period, the Commission shall approve a rate adjustment clause
   under which such costs, including, without limitation, costs for transmission
   service; charges for new and existing transmission facilities, including costs
   incurred by the utility to construct, operate, and maintain transmission lines
   and substations installed in order to provide service to a business park;
   administrative charges; and ancillary service charges designed to recover
   transmission costs, shall be recovered on a timely and current basis from
   customers. Retail rates to recover these costs shall be designed using the
   appropriate billing determinants in the retail rate schedules.

   5. A utility may at any time, after the expiration or termination of capped
   rates, but not more than once in any 12-month period, petition the Commission
   for approval of one or more rate adjustment clauses for the timely and current
   recovery from customers of the following costs:
   				a. Incremental costs described in clause (vi) of subsection B of &#xA7;
   56-582 incurred between July 1, 2004, and the expiration or termination of
   capped rates, if such utility is, as of July 1, 2007, deferring such costs
   consistent with an order of the Commission entered under clause (vi) of
   subsection B of &#xA7; 56-582. The Commission shall approve such a petition
   allowing the recovery of such costs that comply with the requirements of
   clause (vi) of subsection B of &#xA7; 56-582;
   				b. Projected and actual costs for the utility to design and operate fair
   and effective peak-shaving programs or pilot programs. The Commission shall
   approve such a petition if it finds that the program is in the public
   interest, provided that the Commission shall allow the recovery of such costs
   as it finds are reasonable;
   				c. Projected and actual costs for the utility to design, implement, and
   operate energy efficiency programs or pilot programs. Any such petition shall
   include a proposed budget for the design, implementation, and operation of the
   energy efficiency program, including anticipated savings from and spending on
   each program, and the Commission shall grant a final order on such petitions
   within eight months of initial filing. The Commission shall only approve such
   a petition if it finds that the program is in the public interest. If the
   Commission determines that an energy efficiency program or portfolio of
   programs is not in the public interest, its final order shall include all work
   product and analysis conducted by the Commission&#8217;s staff in relation to
   that program that has bearing upon the Commission&#8217;s determination. Such
   order shall adhere to existing protocols for extraordinarily sensitive
   information.
   				Energy efficiency pilot programs are in the public interest provided that
   the pilot program is (i) of limited scope, cost, and duration and (ii)
   intended to determine whether a new or substantially revised program would be
   cost-effective.
   				Prior to January 1, 2022, the Commission shall award a margin for recovery
   on operating expenses for energy efficiency programs and pilot programs, which
   margin shall be equal to the general rate of return on common equity
   determined as described in subdivision 2. Beginning January 1, 2022, and
   thereafter, if the Commission determines that the utility meets in any year
   the annual energy efficiency standards set forth in &#xA7; 56-596.2, in the
   following year, the Commission shall award a margin on energy efficiency
   program operating expenses in that year, to be recovered through a rate
   adjustment clause, which margin shall be equal to the general rate of return
   on common equity determined as described in subdivision 2. If the Commission
   does not approve energy efficiency programs that, in the aggregate, can
   achieve the annual energy efficiency standards, the Commission shall award a
   margin on energy efficiency operating expenses in that year for any programs
   the Commission has approved, to be recovered through a rate adjustment clause
   under this subdivision, which margin shall equal the general rate of return on
   common equity determined as described in subdivision 2. Any margin awarded
   pursuant to this subdivision shall be applied as part of the utility&#8217;s
   next rate adjustment clause true-up proceeding. The Commission shall also
   award an additional 20 basis points for each additional incremental 0.1
   percent in annual savings in any year achieved by the utility&#8217;s energy
   efficiency programs approved by the Commission pursuant to this subdivision,
   beyond the annual requirements set forth in &#xA7; 56-596.2, provided that the
   total performance incentive awarded in any year shall not exceed 10 percent of
   that utility&#8217;s total energy efficiency program spending in that same
   year.
   				The Commission shall annually monitor and report to the General Assembly
   the performance of all programs approved pursuant to this subdivision,
   including each utility&#8217;s compliance with the total annual savings
   required by &#xA7; 56-596.2, as well as the annual and lifecycle net and gross
   energy and capacity savings, related emissions reductions, and other
   quantifiable benefits of each program; total customer bill savings that the
   programs produce; utility spending on each program, including any associated
   administrative costs; and each utility&#8217;s avoided costs and
   cost-effectiveness results.
   				Notwithstanding any other provision of law, unless the Commission finds in
   its discretion and after consideration of all in-state and regional
   transmission entity resources that there is a threat to the reliability or
   security of electric service to the utility&#8217;s customers, the Commission
   shall not approve construction of any new utility-owned generating facilities
   that emit carbon dioxide as a by-product of combusting fuel to generate
   electricity unless the utility has already met the energy savings goals
   identified in &#xA7; 56-596.2 and the Commission finds that supply-side
   resources are more cost-effective than demand-side or energy storage
   resources.
   				As used in this subdivision, &#8220;large general service customer&#8221;
   means a customer that has a verifiable history of having used more than one
   megawatt of demand from a single site.
   				Large general service customers shall be exempt from requirements that
   they participate in energy efficiency programs if the Commission finds that
   the large general service customer has, at the customer&#8217;s own expense,
   implemented energy efficiency programs that have produced or will produce
   measured and verified results consistent with industry standards and other
   regulatory criteria stated in this section. The Commission shall, no later
   than June 30, 2021, adopt rules or regulations (a) establishing the process
   for large general service customers to apply for such an exemption, (b)
   establishing the administrative procedures by which eligible customers will
   notify the utility, and (c) defining the standard criteria that shall be
   satisfied by an applicant in order to notify the utility, including means of
   evaluation measurement and verification and confidentiality requirements. At a
   minimum, such rules and regulations shall require that each exempted large
   general service customer certify to the utility and Commission that its
   implemented energy efficiency programs have delivered measured and verified
   savings within the prior five years. In adopting such rules or regulations,
   the Commission shall also specify the timing as to when a utility shall accept
   and act on such notice, taking into consideration the utility&#8217;s
   integrated resource planning process, as well as its administration of energy
   efficiency programs that are approved for cost recovery by the Commission.
   Savings from large general service customers shall be accounted for in utility
   reporting in the standards in &#xA7; 56-596.2.
   				The notice of nonparticipation by a large general service customer shall
   be for the duration of the service life of the customer&#8217;s energy
   efficiency measures. The Commission may on its own motion initiate steps
   necessary to verify such nonparticipant&#8217;s achievement of energy
   efficiency if the Commission has a body of evidence that the nonparticipant
   has knowingly misrepresented its energy efficiency achievement.
   				A utility shall not charge such large general service customer for the
   costs of installing energy efficiency equipment beyond what is required to
   provide electric service and meter such service on the customer&#8217;s
   premises if the customer provides, at the customer&#8217;s expense, equivalent
   energy efficiency equipment. In all relevant proceedings pursuant to this
   section, the Commission shall take into consideration the goals of economic
   development, energy efficiency and environmental protection in the
   Commonwealth;
   				d. Projected and actual costs of compliance with renewable energy
   portfolio standard requirements pursuant to &#xA7; 56-585.5 that are not
   recoverable under subdivision 6. The Commission shall approve such a petition
   allowing the recovery of such costs incurred as required by &#xA7; 56-585.5,
   provided that the Commission does not otherwise find such costs were
   unreasonably or imprudently incurred;
   				e. Projected and actual costs of projects that the Commission finds to be
   necessary to mitigate impacts to marine life caused by construction of
   offshore wind generating facilities, as described in &#xA7; 56-585.1:11, or to
   comply with state or federal environmental laws or regulations applicable to
   generation facilities used to serve the utility&#8217;s native load
   obligations, including the costs of allowances purchased through a
   market-based trading program for carbon dioxide emissions. The Commission
   shall approve such a petition if it finds that such costs are necessary to
   comply with such environmental laws or regulations;
   				f. Projected and actual costs, not currently in rates, for the utility to
   design, implement, and operate programs approved by the Commission that
   accelerate the vegetation management of distribution rights-of-way. No costs
   shall be allocated to or recovered from customers that are served within the
   large general service rate classes for a Phase II Utility or that are served
   at subtransmission or transmission voltage, or take delivery at a substation
   served from subtransmission or transmission voltage, for a Phase I Utility;
   and
   				g. Projected and actual costs, not currently in rates, for the utility to
   design, implement, and operate programs approved by the Commission to provide
   incentives to (i) low-income, elderly, and disabled individuals or (ii)
   organizations providing residential services to low-income, elderly, and
   disabled individuals for the installation of, or access to, equipment to
   generate electric energy derived from sunlight, provided the low-income,
   elderly, and disabled individuals, or organizations providing residential
   services to low-income, elderly, and disabled individuals, first participate
   in incentive programs for the installation of measures that reduce heating or
   cooling costs.
   				Any rate adjustment clause approved under subdivision 5 c by the
   Commission shall remain in effect until the utility exhausts the approved
   budget for the energy efficiency program. The Commission shall have the
   authority to determine the duration or amortization period for any other rate
   adjustment clause approved under this subdivision.

   6. To ensure the generation and delivery of a reliable and adequate supply of
   electricity, to meet the utility&#8217;s projected native load obligations and
   to promote economic development, a utility may at any time, after the
   expiration or termination of capped rates, petition the Commission for
   approval of a rate adjustment clause for recovery on a timely and current
   basis from customers of the costs of (i) a coal-fueled generation facility
   that utilizes Virginia coal and is located in the coalfield region of the
   Commonwealth as described in &#xA7; 15.2-6002, regardless of whether such
   facility is located within or without the utility&#8217;s service territory,
   (ii) one or more other generation facilities, (iii) one or more major unit
   modifications of generation facilities, including the costs of any system or
   equipment upgrade, system or equipment replacement, or other cost reasonably
   appropriate to extend the combined operating license for or the operating life
   of one or more generation facilities utilizing nuclear power, (iv) one or more
   new underground facilities to replace one or more existing overhead
   distribution facilities of 69 kilovolts or less located within the
   Commonwealth, (v) one or more pumped hydroelectricity generation and storage
   facilities that utilize on-site or off-site renewable energy resources as all
   or a portion of their power source and such facilities and associated
   resources are located in the coalfield region of the Commonwealth as described
   in &#xA7; 15.2-6002, regardless of whether such facility is located within or
   without the utility&#8217;s service territory, or (vi) one or more electric
   distribution grid transformation projects; however, subject to the provisions
   of the following sentence, the utility shall not file a petition under clause
   (iv) more often than annually and, in such petition, shall not seek any annual
   incremental increase in the level of investments associated with such a
   petition that exceeds five percent of such utility&#8217;s distribution rate
   base, as such rate base was determined for the most recently ended 12-month
   test period in the utility&#8217;s latest review proceeding conducted pursuant
   to subdivision 3 and concluded by final order of the Commission prior to the
   date of filing of such petition under clause (iv). In all proceedings
   regarding petitions filed under clause (iv) or (vi), the level of investments
   approved for recovery in such proceedings shall be in addition to, and not in
   lieu of, levels of investments previously approved for recovery in prior
   proceedings under clause (iv) or (vi), as applicable. As of December 1, 2028,
   any costs recovered by a utility pursuant to clause (iv) shall be limited to
   any remaining costs associated with conversions of overhead distribution
   facilities to underground facilities that have been previously approved or are
   pending approval by the Commission through a petition by the utility under
   this subdivision. Such a petition concerning facilities described in clause
   (ii) that utilize nuclear power, facilities described in clause (ii) that are
   coal-fueled and will be built by a Phase I Utility, or facilities described in
   clause (i) may also be filed before the expiration or termination of capped
   rates. A utility that constructs or makes modifications to any such facility,
   or purchases any facility consisting of at least one megawatt of generating
   capacity using energy derived from sunlight and located in the Commonwealth
   and that utilizes goods or services sourced, in whole or in part, from one or
   more Virginia businesses, shall have the right to recover the costs of the
   facility, as accrued against income, through its rates, including projected
   construction work in progress, and any associated allowance for funds used
   during construction, planning, development and construction or acquisition
   costs, life-cycle costs, costs related to assessing the feasibility of
   potential sites for new underground facilities, and costs of infrastructure
   associated therewith, plus, as an incentive to undertake such projects, an
   enhanced rate of return on common equity calculated as specified below;
   however, in determining the amounts recoverable under a rate adjustment clause
   for new underground facilities, the Commission shall not consider, or increase
   or reduce such amounts recoverable because of (a) the operation and
   maintenance costs attributable to either the overhead distribution facilities
   being replaced or the new underground facilities or (b) any other costs
   attributable to the overhead distribution facilities being replaced.
   Notwithstanding the preceding sentence, the costs described in clauses (a) and
   (b) thereof shall remain eligible for recovery from customers through the
   utility&#8217;s base rates for distribution service. A utility filing a
   petition for approval to construct or purchase a facility consisting of at
   least one megawatt of generating capacity using energy derived from sunlight
   and located in the Commonwealth and that utilizes goods or services sourced,
   in whole or in part, from one or more Virginia businesses may propose a rate
   adjustment clause based on a market index in lieu of a cost of service model
   for such facility. A utility seeking approval to construct or purchase a
   generating facility that emits carbon dioxide shall demonstrate that it has
   already met the energy savings goals identified in &#xA7; 56-596.2 and that
   the identified need cannot be met more affordably through the deployment or
   utilization of demand-side resources or energy storage resources and that it
   has considered and weighed alternative options, including third-party market
   alternatives, in its selection process.
   				The costs of the facility, other than return on projected construction
   work in progress and allowance for funds used during construction, shall not
   be recovered prior to the date a facility constructed by the utility and
   described in clause (i), (ii), (iii), or (v) begins commercial operation, the
   date the utility becomes the owner of a purchased generation facility
   consisting of at least one megawatt of generating capacity using energy
   derived from sunlight and located in the Commonwealth and that utilizes goods
   or services sourced, in whole or in part, from one or more Virginia
   businesses, or the date new underground facilities are classified by the
   utility as plant in service. In any application to construct a new generating
   facility, the utility shall include, and the Commission shall consider, the
   social cost of carbon, as determined by the Commission, as a benefit or cost,
   whichever is appropriate. The Commission shall ensure that the development of
   new, or expansion of existing, energy resources or facilities does not have a
   disproportionate adverse impact on historically economically disadvantaged
   communities. The Commission may adopt any rules it deems necessary to
   determine the social cost of carbon and shall use the best available science
   and technology, including the Technical Support Document: Technical Update of
   the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order
   12866, published by the Interagency Working Group on Social Cost of Greenhouse
   Gases from the United States Government in August 2016, as guidance. The
   Commission shall include a system to adjust the costs established in this
   section with inflation.
   				Such enhanced rate of return on common equity shall be applied to
   allowance for funds used during construction and to construction work in
   progress during the construction phase of the facility and shall thereafter be
   applied to the entire facility during the first portion of the service life of
   the facility. The first portion of the service life shall be as specified in
   the table below; however, the Commission shall determine the duration of the
   first portion of the service life of any facility, within the range specified
   in the table below, which determination shall be consistent with the public
   interest and shall reflect the Commission&#8217;s determinations regarding how
   critical the facility may be in meeting the energy needs of the citizens of
   the Commonwealth and the risks involved in the development of the facility.
   After the first portion of the service life of the facility is concluded, the
   utility&#8217;s general rate of return shall be applied to such facility for
   the remainder of its service life. As used herein, the service life of the
   facility shall be deemed to begin on the date a facility constructed by the
   utility and described in clause (i), (ii), (iii), or (v) begins commercial
   operation, the date the utility becomes the owner of a purchased generation
   facility consisting of at least one megawatt of generating capacity using
   energy derived from sunlight and located in the Commonwealth and that utilizes
   goods or services sourced, in whole or in part, from one or more Virginia
   businesses, or the date new underground facilities or new electric
   distribution grid transformation projects are classified by the utility as
   plant in service, and such service life shall be deemed equal in years to the
   life of that facility as used to calculate the utility&#8217;s depreciation
   expense. Such enhanced rate of return on common equity shall be calculated by
   adding the basis points specified in the table below to the utility&#8217;s
   general rate of return, and such enhanced rate of return shall apply only to
   the facility that is the subject of such rate adjustment clause. Allowance for
   funds used during construction shall be calculated for any such facility
   utilizing the utility&#8217;s actual capital structure and overall cost of
   capital, including an enhanced rate of return on common equity as determined
   pursuant to this subdivision, until such construction work in progress is
   included in rates. The construction of any facility described in clause (i) or
   (v) is in the public interest, and in determining whether to approve such
   facility, the Commission shall liberally construe the provisions of this
   title. The construction or purchase by a utility of one or more generation
   facilities with at least one megawatt of generating capacity, and with an
   aggregate rated capacity that does not exceed 16,100 megawatts, including
   rooftop solar installations with a capacity of not less than 50 kilowatts, and
   with an aggregate capacity of 100 megawatts, that use energy derived from
   sunlight or from onshore wind and are located in the Commonwealth or off the
   Commonwealth&#8217;s Atlantic shoreline, regardless of whether any of such
   facilities are located within or without the utility&#8217;s service
   territory, is in the public interest, and in determining whether to approve
   such facility, the Commission shall liberally construe the provisions of this
   title. A utility may enter into short-term or long-term power purchase
   contracts for the power derived from sunlight generated by such generation
   facility prior to purchasing the generation facility. The replacement of any
   subset of a utility&#8217;s existing overhead distribution tap lines that
   have, in the aggregate, an average of nine or more total unplanned outage
   events-per-mile over a preceding 10-year period with new underground
   facilities in order to improve electric service reliability is in the public
   interest. In determining whether to approve petitions for rate adjustment
   clauses for such new underground facilities that meet this criteria, and in
   determining the level of costs to be recovered thereunder, the Commission
   shall liberally construe the provisions of this title.
   				The conversion of any such facilities on or after September 1, 2016, is
   deemed to provide local and system-wide benefits and to be cost beneficial,
   and the costs associated with such new underground facilities are deemed to be
   reasonably and prudently incurred and, notwithstanding the provisions of
   subsection C or D, shall be approved for recovery by the Commission pursuant
   to this subdivision, provided that the total costs associated with the
   replacement of any subset of existing overhead distribution tap lines proposed
   by the utility with new underground facilities, exclusive of financing costs,
   shall not exceed an average cost per customer of $20,000, with such customers,
   including those served directly by or downline of the tap lines proposed for
   conversion, and, further, such total costs shall not exceed an average cost
   per mile of tap lines converted, exclusive of financing costs, of $750,000. A
   utility shall, without regard for whether it has petitioned for any rate
   adjustment clause pursuant to clause (vi), petition the Commission, not more
   than once annually, for approval of a plan for electric distribution grid
   transformation projects. Any plan for electric distribution grid
   transformation projects shall include both measures to facilitate integration
   of distributed energy resources and measures to enhance physical electric
   distribution grid reliability and security. In ruling upon such a petition,
   the Commission shall consider whether the utility&#8217;s plan for such
   projects, and the projected costs associated therewith, are reasonable and
   prudent. Such petition shall be considered on a stand-alone basis without
   regard to the other costs, revenues, investments, or earnings of the utility;
   without regard to whether the costs associated with such projects will be
   recovered through a rate adjustment clause under this subdivision or through
   the utility&#8217;s rates for generation and distribution services; and
   without regard to whether such costs will be the subject of a customer credit
   offset, as applicable, pursuant to subdivision 8 d. The Commission&#8217;s
   final order regarding any such petition for approval of an electric
   distribution grid transformation plan shall be entered by the Commission not
   more than six months after the date of filing such petition. The Commission
   shall likewise enter its final order with respect to any petition by a utility
   for a certificate to construct and operate a generating facility or facilities
   utilizing energy derived from sunlight, pursuant to subsection D of &#xA7;
   56-580, within six months after the date of filing such petition. The basis
   points to be added to the utility&#8217;s general rate of return to calculate
   the enhanced rate of return on common equity, and the first portion of that
   facility&#8217;s service life to which such enhanced rate of return shall be
   applied, shall vary by type of facility, as specified in the following table:
   				Only those facilities as to which a rate adjustment clause under this
   subdivision has been previously approved by the Commission, or as to which a
   petition for approval of such rate adjustment clause was filed with the
   Commission, on or before January 1, 2013, shall be entitled to the enhanced
   rate of return on common equity as specified in the above table during the
   construction phase of the facility and the approved first portion of its
   service life.
   				Thirty percent of all costs of such a facility utilizing nuclear power
   that the utility incurred between July 1, 2007, and December 31, 2013, and all
   of such costs incurred after December 31, 2013, may be deferred by the utility
   and recovered through a rate adjustment clause under this subdivision at such
   time as the Commission provides in an order approving such a rate adjustment
   clause. The remaining 70 percent of all costs of such a facility that the
   utility incurred between July 1, 2007, and December 31, 2013, shall not be
   deferred for recovery through a rate adjustment clause under this subdivision;
   however, such remaining 70 percent of all costs shall be recovered ratably
   through existing base rates as determined by the Commission in the test
   periods under review in the utility&#8217;s next review filed after July 1,
   2014. Thirty percent of all costs of a facility utilizing energy derived from
   offshore wind that the utility incurred between July 1, 2007, and December 31,
   2013, and all of such costs incurred after December 31, 2013, may be deferred
   by the utility and recovered through a rate adjustment clause under this
   subdivision at such time as the Commission provides in an order approving such
   a rate adjustment clause. The remaining 70 percent of all costs of such a
   facility that the utility incurred between July 1, 2007, and December 31,
   2013, shall not be deferred for recovery through a rate adjustment clause
   under this subdivision; however, such remaining 70 percent of all costs shall
   be recovered ratably through existing base rates as determined by the
   Commission in the test periods under review in the utility&#8217;s next review
   filed after July 1, 2014.
   				In connection with planning to meet forecasted demand for electric
   generation supply and assure the adequate and sufficient reliability of
   service, consistent with &#xA7; 56-598, planning and development activities
   for a new utility-owned and utility-operated generating facility or facilities
   utilizing energy derived from sunlight or from onshore or offshore wind are in
   the public interest.
   				Notwithstanding any provision of Chapter 296 of the Acts of Assembly of
   2018, construction, purchasing, or leasing activities for a new utility-owned
   and utility-operated generating facility or facilities utilizing energy
   derived from sunlight or from onshore wind with an aggregate capacity of
   16,100 megawatts, including rooftop solar installations with a capacity of not
   less than 50 kilowatts, and with an aggregate capacity of 100 megawatts,
   together with a utility-owned and utility-operated generating facility or
   facilities utilizing energy derived from offshore wind with an aggregate
   capacity of not more than 3,000 megawatts, are in the public interest.
   Additionally, energy storage facilities with an aggregate capacity of 2,700
   megawatts are in the public interest. To the extent that a utility elects to
   recover the costs of any such new generation or energy storage facility or
   facilities through its rates for generation and distribution services and does
   not petition and receive approval from the Commission for recovery of such
   costs through a rate adjustment clause described in clause (ii), the
   Commission shall, upon the request of the utility in a review proceeding,
   provide for a customer credit reinvestment offset, as applicable, pursuant to
   subdivision 8 d with respect to all costs deemed reasonable and prudent by the
   Commission in a proceeding pursuant to subsection D of &#xA7; 56-580 or in a
   review proceeding.
   				Electric distribution grid transformation projects are in the public
   interest. To the extent that a utility elects to recover the costs of such
   electric distribution grid transformation projects through its rates for
   generation and distribution services, and does not petition and receive
   approval from the Commission for recovery of such costs through a rate
   adjustment clause described in clause (vi), the Commission shall, upon the
   request of the utility in a review proceeding, provide for a customer credit
   reinvestment offset, as applicable, pursuant to subdivision 8 d with respect
   to all costs deemed reasonable and prudent by the Commission in a proceeding
   for approval of a plan for electric distribution grid transformation projects
   pursuant to subdivision 6 or in a review proceeding.
   				Neither generation facilities described in clause (ii) that utilize
   simple-cycle combustion turbines nor new underground facilities shall receive
   an enhanced rate of return on common equity as described herein, but instead
   shall receive the utility&#8217;s general rate of return during the
   construction phase of the facility and, thereafter, for the entire service
   life of the facility. No rate adjustment clause for new underground facilities
   shall allocate costs to, or provide for the recovery of costs from, customers
   that are served within the large power service rate class for a Phase I
   Utility and the large general service rate classes for a Phase II Utility. New
   underground facilities are hereby declared to be ordinary extensions or
   improvements in the usual course of business under the provisions of &#xA7;
   56-265.2.
   				As used in this subdivision, a generation facility is (1) &#8220;coalbed
   methane gas powered&#8221; if the facility is fired at least 50 percent by
   coalbed methane gas, as such term is defined in &#xA7; 45.2-1600, produced
   from wells located in the Commonwealth, and (2) &#8220;landfill gas
   powered&#8221; if the facility is fired by methane or other combustible gas
   produced by the anaerobic digestion or decomposition of biodegradable
   materials in a solid waste management facility licensed by the Waste
   Management Board. A landfill gas powered facility includes, in addition to the
   generation facility itself, the equipment used in collecting, drying,
   treating, and compressing the landfill gas and in transmitting the landfill
   gas from the solid waste management facility where it is collected to the
   generation facility where it is combusted.
   				For purposes of this subdivision, &#8220;general rate of return&#8221;
   means the fair combined rate of return on common equity as it is determined by
   the Commission for such utility pursuant to subdivision 2.
   				Notwithstanding any other provision of this subdivision, if the Commission
   finds during the triennial review conducted for a Phase II Utility in 2021
   that such utility has not filed applications for all necessary federal and
   state regulatory approvals to construct one or more nuclear-powered or
   coal-fueled generation facilities that would add a total capacity of at least
   1500 megawatts to the amount of the utility&#8217;s generating resources as
   such resources existed on July 1, 2007, or that, if all such approvals have
   been received, that the utility has not made reasonable and good faith efforts
   to construct one or more such facilities that will provide such additional
   total capacity within a reasonable time after obtaining such approvals, then
   the Commission, if it finds it in the public interest, may reduce on a
   prospective basis any enhanced rate of return on common equity previously
   applied to any such facility to no less than the general rate of return for
   such utility and may apply no less than the utility&#8217;s general rate of
   return to any such facility for which the utility seeks approval in the future
   under this subdivision.
   				Notwithstanding any other provision of this subdivision, if a Phase II
   utility obtains approval from the Commission of a rate adjustment clause
   pursuant to subdivision 6 associated with a test or demonstration project
   involving a generation facility utilizing energy from offshore wind, and such
   utility has not, as of July 1, 2023, commenced construction as defined for
   federal income tax purposes of an offshore wind generation facility or
   facilities with a minimum aggregate capacity of 250 megawatts, then the
   Commission, if it finds it in the public interest, may direct that the costs
   associated with any such rate adjustment clause involving said test or
   demonstration project shall thereafter no longer be recovered through a rate
   adjustment clause pursuant to subdivision 6 and shall instead be recovered
   through the utility&#8217;s rates for generation and distribution services,
   with no change in such rates for generation and distribution services as a
   result of the combination of such costs with the other costs, revenues, and
   investments included in the utility&#8217;s rates for generation and
   distribution services. Any such costs shall remain combined with the
   utility&#8217;s other costs, revenues, and investments included in its rates
   for generation and distribution services until such costs are fully recovered.

   7. Any petition filed pursuant to subdivision 4, 5, or 6 shall be considered
   by the Commission on a stand-alone basis without regard to the other costs,
   revenues, investments, or earnings of the utility. Any costs incurred by a
   utility prior to the filing of such petition, or during the consideration
   thereof by the Commission, that are proposed for recovery in such petition and
   that are related to subdivision 5 a, or that are related to facilities and
   projects described in clause (i) of subdivision 6, or that are related to new
   underground facilities described in clause (iv) of subdivision 6, shall be
   deferred on the books and records of the utility until the Commission&#8217;s
   final order in the matter, or until the implementation of any applicable
   approved rate adjustment clauses, whichever is later. Except as otherwise
   provided in subdivision 6, any costs prudently incurred on or after July 1,
   2007, by a utility prior to the filing of such petition, or during the
   consideration thereof by the Commission, that are proposed for recovery in
   such petition and that are related to facilities and projects described in
   clause (ii) or clause (iii) of subdivision 6 that utilize nuclear power, or
   coal-fueled facilities and projects described in clause (ii) of subdivision 6
   if such coal-fueled facilities will be built by a Phase I Utility, shall be
   deferred on the books and records of the utility until the Commission&#8217;s
   final order in the matter, or until the implementation of any applicable
   approved rate adjustment clauses, whichever is later. Any costs prudently
   incurred after the expiration or termination of capped rates related to other
   matters described in subdivision 4, 5, or 6 shall be deferred beginning only
   upon the expiration or termination of capped rates, provided, however, that no
   provision of this act shall affect the rights of any parties with respect to
   the rulings of the Federal Energy Regulatory Commission in PJM Interconnection
   LLC and Virginia Electric and Power Company, 109 F.E.R.C. P 61,012 (2004). A
   utility shall establish a regulatory asset for regulatory accounting and
   ratemaking purposes under which it shall defer its operation and maintenance
   costs incurred in connection with (i) the refueling of any nuclear-powered
   generating plant and (ii) other work at such plant normally performed during a
   refueling outage. The utility shall amortize such deferred costs over the
   refueling cycle, but in no case more than 18 months, beginning with the month
   in which such plant resumes operation after such refueling. The refueling
   cycle shall be the applicable period of time between planned refueling outages
   for such plant. As of January 1, 2014, such amortized costs are a component of
   base rates, recoverable in base rates only ratably over the refueling cycle
   rather than when such outages occur, and are the only nuclear refueling costs
   recoverable in base rates. This provision shall apply to any nuclear-powered
   generating plant refueling outage commencing after December 31, 2013, and the
   Commission shall treat the deferred and amortized costs of such regulatory
   asset as part of the utility&#8217;s costs for the purpose of proceedings
   conducted (a) with respect to filings under subdivision 3 made on and after
   July 1, 2014, and (b) pursuant to &#xA7; 56-245 or the Commission&#8217;s
   rules governing utility rate increase applications as provided in subsection
   B. This provision shall not be deemed to change or reset base rates.
   				The Commission&#8217;s final order regarding any petition filed pursuant
   to subdivision 4, 5, or 6 shall be entered not more than three months, eight
   months, and nine months, respectively, after the date of filing of such
   petition. If such petition is approved, the order shall direct that the
   applicable rate adjustment clause be applied to customers&#8217; bills not
   more than 60 days after the date of the order, or upon the expiration or
   termination of capped rates, whichever is later. At any time, the Commission
   may, in its discretion, for a Phase I Utility, upon petition by such a utility
   or upon its own initiated proceeding, direct the consolidation of any one or
   more subsets of rate adjustment clauses previously implemented pursuant to
   subdivision 5 or 6 in the interest of judicial economy, customer transparency,
   or other factors the Commission determines to be appropriate. Any subset of
   rate adjustment clauses so consolidated shall continue to be considered by the
   Commission without regard to the other costs, revenues, investments, or
   earnings of the utility and remain as a cost recovery mechanism independent
   from the utility&#8217;s rates for generation and distribution services
   pursuant to &#xA7; 56-585.8 and subdivisions 5 and 6, but will be combined as
   a single rate adjustment clause for cost recovery and review purposes. Any
   rate adjustment clause or subset of rate adjustment clauses so consolidated
   shall be named in a manner, as determined by the Commission, that reasonably
   informs customers as to the nature of the costs recovered by the consolidated
   rate adjustment clause.
   				At any time, the Commission may, in its discretion, for a Phase II
   Utility, upon petition by such a utility or upon its own initiated proceeding,
   direct the consolidation of any one or more subsets of rate adjustment clauses
   previously implemented pursuant to subdivision 5 or 6 in the interest of
   judicial economy, customer transparency, or other factors the Commission
   determines to be appropriate. Any subset of rate adjustment clauses so
   consolidated shall continue to be considered by the Commission without regard
   to the other costs, revenues, investments, or earnings of the utility and
   remain as a cost recovery mechanism independent from the utility&#8217;s rates
   for generation and distribution services pursuant to this subdivision and
   subdivisions 5 and 6, but will be combined as a single rate adjustment clause
   for cost recovery and review purposes. Any rate adjustment clause or subset of
   rate adjustment clauses so consolidated shall be named in a manner, as
   determined by the Commission, that reasonably informs customers as to the
   nature of the costs recovered by the consolidated rate adjustment clause.

   8. For a Phase I Utility in any triennial review proceeding filed on or before
   June 30, 2023 or for a Phase II Utility in any biennial review proceeding, for
   the purposes of reviewing earnings on the utility&#8217;s rates for generation
   and distribution services, the following utility generation and distribution
   costs not proposed for recovery under any other subdivision of this
   subsection, as recorded per books by the utility for financial reporting
   purposes and accrued against income, shall be attributed to the test periods
   under review and deemed fully recovered in the period recorded: costs
   associated with asset impairments related to early retirement determinations
   made by the utility for utility generation facilities fueled by coal, natural
   gas, or oil or for automated meter reading electric distribution service
   meters; costs associated with projects necessary to comply with state or
   federal environmental laws, regulations, or judicial or administrative orders
   relating to coal combustion by-product management that the utility does not
   petition to recover through a rate adjustment clause pursuant to subdivision 5
   e; costs associated with severe weather events; and costs associated with
   natural disasters. Such costs shall be deemed to have been recovered from
   customers through rates for generation and distribution services in effect
   during the test periods under review unless such costs, individually or in the
   aggregate, together with the utility&#8217;s other costs, revenues, and
   investments to be recovered through rates for generation and distribution
   services, result in the utility&#8217;s earned return on its generation and
   distribution services for the combined test periods under review to fall more
   than 50 basis points below the fair combined rate of return authorized under
   subdivision 2 for such periods or, for any test period commencing after
   December 31, 2012, for a Phase II Utility and after December 31, 2013, for a
   Phase I Utility, to fall more than 70 basis points below the fair combined
   rate of return authorized under subdivision 2 for such periods. In such cases,
   the Commission shall, in such review proceeding, authorize deferred recovery
   of such costs and allow the utility to amortize and recover such deferred
   costs over future periods as determined by the Commission. The aggregate
   amount of such deferred costs shall not exceed an amount that would, together
   with the utility&#8217;s other costs, revenues, and investments to be
   recovered through rates for generation and distribution services, cause the
   utility&#8217;s earned return on its generation and distribution services to
   exceed the fair rate of return authorized under subdivision 2, less 50 basis
   points, for the combined test periods under review or, for any test period
   commencing after December 31, 2012, for a Phase II Utility and after December
   31, 2013, for a Phase I Utility, to exceed the fair rate of return authorized
   under subdivision 2 less 70 basis points. Notwithstanding the prior sentence,
   the aggregate amount of actual and reasonable costs associated with severe
   weather events eligible for such deferral shall not exceed an amount that
   would, together with the utility&#8217;s other costs, revenues, and
   investments to be recovered through rates for generation and distribution
   services, cause the utility&#8217;s earned return on its generation and
   distribution services to exceed the fair rate of return authorized for the
   combined test periods 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). Nothing in this
   section shall limit the Commission&#8217;s authority, pursuant to the
   provisions of Chapter 10 (&#xA7; 56-232 et seq.), including specifically
   &#xA7; 56-235.2, following the review of combined test period earnings of the
   utility in a review, for normalization of nonrecurring test period costs and
   annualized adjustments for future costs, in determining any appropriate
   increase or decrease in the utility&#8217;s rates for generation and
   distribution services pursuant to subdivision 8 a or 8 c.
   				If the Commission determines as a result of any triennial review initiated
   prior to July 1, 2023 that:
   				a. Revenue reductions related to energy efficiency measures or programs
   approved and deployed since the utility&#8217;s previous triennial review have
   caused the utility, as verified by the Commission, during the test period or
   periods under review, considered as a whole, to earn more than 50 basis points
   below a fair combined rate of return on its generation and distribution
   services or, for any test period commencing after December 31, 2012, for a
   Phase II Utility and after December 31, 2013, for a Phase I Utility, more than
   70 basis points below a fair combined rate of return on its generation and
   distribution services, as determined in subdivision 2, without regard to any
   return on common equity or other matters determined with respect to facilities
   described in subdivision 6, the Commission shall order increases to the
   utility&#8217;s rates for generation and distribution services necessary to
   recover such revenue reductions. If the Commission finds, for reasons other
   than revenue reductions related to energy efficiency measures, that the
   utility has, during the test period or periods under review, considered as a
   whole, earned more than 50 basis points below a fair combined rate of return
   on its generation and distribution services or, for any test period commencing
   after December 31, 2012, for a Phase II Utility and after December 31, 2013,
   for a Phase I Utility, more than 70 basis points below a fair combined rate of
   return on its generation and distribution services, as determined in
   subdivision 2, without regard to any return on common equity or other matters
   determined with respect to facilities described in subdivision 6, the
   Commission shall order increases to the utility&#8217;s rates necessary to
   provide the opportunity to fully recover the costs of providing the
   utility&#8217;s services and to earn not less than such fair combined rate of
   return, using the most recently ended 12-month test period as the basis for
   determining the amount of the rate increase necessary. However, in the first
   triennial review proceeding conducted after January 1, 2021, for a Phase II
   Utility, the Commission may not order a rate increase, and in all triennial
   reviews of a Phase I or Phase II utility, the Commission may not order such
   rate increase unless it finds that the resulting rates are necessary to
   provide the utility with the opportunity to fully recover its costs of
   providing its services and to earn not less than a fair combined rate of
   return on both its generation and distribution services, as determined in
   subdivision 2, without regard to any return on common equity or other matters
   determined with respect to facilities described in subdivision 6, using the
   most recently ended 12-month test period as the basis for determining the
   permissibility of any rate increase under the standards of this sentence, and
   the amount thereof; and provided that, solely in connection with making its
   determination concerning the necessity for such a rate increase or the amount
   thereof, the Commission shall, in any triennial review proceeding conducted
   prior to July 1, 2028, exclude from this most recently ended 12-month test
   period any remaining investment levels associated with a prior customer credit
   reinvestment offset pursuant to subdivision d.
   				b. The utility has, during the test period or test periods under review,
   considered as a whole, earned more than 50 basis points above a fair combined
   rate of return on its generation and distribution services or, for any test
   period commencing after December 31, 2012, for a Phase II Utility and after
   December 31, 2013, for a Phase I Utility, more than 70 basis points above a
   fair combined rate of return on its generation and distribution services, as
   determined in subdivision 2, without regard to any return on common equity or
   other matters determined with respect to facilities described in subdivision
   6, the Commission shall, subject to the provisions of subdivisions 8 d and 9,
   direct that 60 percent of the amount of such earnings that were more than 50
   basis points, or, for any test period commencing after December 31, 2012, for
   a Phase II Utility and after December 31, 2013, for a Phase I Utility, that 70
   percent of the amount of such earnings that were more than 70 basis points,
   above such fair combined rate of return for the test period or periods under
   review, considered as a whole, shall be credited to customers&#8217; bills.
   Any such credits shall be amortized over a period of six to 12 months, as
   determined at the discretion of the Commission, following the effective date
   of the Commission&#8217;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
   				c. The utility has, during the test period or test periods under review,
   considered as a whole, earned more than 50 basis points above a fair combined
   rate of return on its generation and distribution services or, for any test
   period commencing after December 31, 2012, for a Phase II Utility and after
   December 31, 2013, for a Phase I Utility, more than 70 basis points above a
   fair combined rate of return on its generation and distribution services, as
   determined in subdivision 2, without regard to any return on common equity or
   other matter determined with respect to facilities described in subdivision 6,
   and the combined aggregate level of capital investment that the Commission has
   approved other than those capital investments that the Commission has approved
   for recovery pursuant to a rate adjustment clause pursuant to subdivision 6
   made by the utility during the test periods under review in that triennial
   review proceeding in new utility-owned generation facilities utilizing energy
   derived from sunlight, or from wind, and in electric distribution grid
   transformation projects, as determined pursuant to subdivision 8 d, does not
   equal or exceed 100 percent of the earnings that are more than 70 basis points
   above the utility&#8217;s fair combined rate of return on its generation and
   distribution services for the combined test periods under review in that
   triennial review proceeding, the Commission shall, subject to the provisions
   of subdivision 10 and in addition to the actions authorized in subdivision b,
   also order reductions to the utility&#8217;s rates it finds appropriate.
   However, in the first triennial review proceeding conducted after January 1,
   2021, for a Phase II Utility, any reduction to the utility&#8217;s rates
   ordered by the Commission pursuant to this subdivision shall not exceed $50
   million in annual revenues, with any reduction allocated to the
   utility&#8217;s rates for generation services, and in each triennial review of
   a Phase I or Phase II Utility, the Commission may not order such rate
   reduction unless it finds that the resulting rates will provide the utility
   with the opportunity to fully recover its costs of providing its services and
   to earn not less than a fair combined rate of return on its generation and
   distribution services, as determined in subdivision 2, without regard to any
   return on common equity or other matters determined with respect to facilities
   described in subdivision 6, using the most recently ended 12-month test period
   as the basis for determining the permissibility of any rate reduction under
   the standards of this sentence, and the amount thereof; and
   				d. (Expires July 1, 2028) In any review proceeding conducted after
   December 31, 2017, upon the request of the utility, the Commission shall
   determine, prior to directing that 70 percent of earnings that are more than
   70 basis points above the utility&#8217;s fair combined rate of return on its
   generation and distribution services for the test period or periods under
   review be credited to customer bills pursuant to subdivision 8 b, the
   aggregate level of prior capital investment that the Commission has approved
   other than those capital investments that the Commission has approved for
   recovery pursuant to a rate adjustment clause pursuant to subdivision 6 made
   by the utility during the test period or periods under review in both (i) new
   utility-owned generation facilities utilizing energy derived from sunlight, or
   from onshore or offshore wind, and (ii) electric distribution grid
   transformation projects, as determined by the utility&#8217;s plant in service
   and construction work in progress balances related to such investments as
   recorded per books by the utility for financial reporting purposes as of the
   end of the most recent test period under review. Any such combined capital
   investment amounts shall offset any customer bill credit amounts, on a dollar
   for dollar basis, up to the aggregate level of invested or committed capital
   under clauses (i) and (ii). The aggregate level of qualifying invested or
   committed capital under clauses (i) and (ii) is referred to in this
   subdivision as the customer credit reinvestment offset, which offsets the
   customer bill credit amount that the utility has invested or will invest in
   new solar or wind generation facilities or electric distribution grid
   transformation projects for the benefit of customers, in amounts up to 100
   percent of earnings that are more than 70 basis points above the
   utility&#8217;s fair rate of return on its generation and distribution
   services, and thereby reduce or eliminate otherwise incremental rate
   adjustment clause charges and increases to customer bills, which is deemed to
   be in the public interest. If 100 percent of the amount of earnings that are
   more than 70 basis points above the utility&#8217;s fair combined rate of
   return on its generation and distribution services, as determined in
   subdivision 2, exceeds the aggregate level of invested capital in new
   utility-owned generation facilities utilizing energy derived from sunlight, or
   from wind, and electric distribution grid transformation projects, as provided
   in clauses (i) and (ii), during the test period or periods under review, then
   70 percent of the amount of such excess shall be credited to customer bills as
   provided in subdivision 8 b in connection with the review proceeding. The
   portion of any costs associated with new utility-owned generation facilities
   utilizing energy derived from sunlight, or from wind, or electric distribution
   grid transformation projects that is the subject of any customer credit
   reinvestment offset pursuant to this subdivision shall not thereafter be
   recovered through the utility&#8217;s rates for generation and distribution
   services over the service life of such facilities and shall not thereafter be
   included in the utility&#8217;s costs, revenues, and investments in future
   review proceedings conducted pursuant to subdivision 2 and shall not be the
   subject of a rate adjustment clause petition pursuant to subdivision 6. The
   portion of any costs associated with new utility-owned generation facilities
   utilizing energy derived from sunlight, or from wind, or electric distribution
   grid transformation projects that is not the subject of any customer credit
   reinvestment offset pursuant to this subdivision may be recovered through the
   utility&#8217;s rates for generation and distribution services over the
   service life of such facilities and shall be included in the utility&#8217;s
   costs, revenues, and investments in future review proceedings conducted
   pursuant to subdivision 2 until such costs are fully recovered, and if such
   costs are recovered through the utility&#8217;s rates for generation and
   distribution services, they shall not be the subject of a rate adjustment
   clause petition pursuant to subdivision 6. Only the portion of such costs of
   new utility-owned generation facilities utilizing energy derived from
   sunlight, or from wind, or electric distribution grid transformation projects
   that has not been included in any customer credit reinvestment offset pursuant
   to this subdivision, and not otherwise recovered through the utility&#8217;s
   rates for generation and distribution services, may be the subject of a rate
   adjustment clause petition by the utility pursuant to subdivision 6.
   				e. In any biennial review of a Phase II Utility, the Commission&#8217;s
   final order regarding such review shall be entered not more than eight months
   after the date of filing, and any revisions in rates or credits so ordered
   shall take effect not more than 60 days after the date of the order. The fair
   combined rate of return on common equity determined pursuant to subdivision 2
   in such review shall apply, for purposes of reviewing the utility&#8217;s
   earnings on its rates for generation and distribution services, to the entire
   two or three, as applicable, successive 12-month test periods ending December
   31 immediately preceding the year of the utility&#8217;s subsequent review
   filing under subdivision 3 and shall apply to applicable rate adjustment
   clauses under subdivisions 5 and 6 prospectively from the date the
   Commission&#8217;s final order in the review proceeding, utilizing rate
   adjustment clause true-up protocols as the Commission in its discretion may
   determine.

   9. a. In any biennial review for a Phase II Utility filed on or prior to
   December 31, 2023, if the Commission determines that the utility has during
   the test period or test periods under review, considered as a whole, earned
   more than 70 basis points above a fair combined rate of return on its
   generation and distribution services previously authorized by the Commission,
   as determined in subdivision 2, without regard to any return on common equity
   or other matters determined with respect to facilities described in
   subdivision 6, which have not been combined with the utility&#8217;s costs,
   revenues, and investments for generation and distribution services, the
   Commission shall direct that 85 percent of the amount of such earnings that
   were more than 70 basis points above such fair combined rate of return for the
   test period or periods under review, considered as a whole, be credited to
   customers&#8217; bills. Any such credits shall be amortized over a period of
   six to 12 months, as determined at the discretion of the Commission, following
   the effective date of the Commission&#8217;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.
   				b. In any biennial review for a Phase II Utility filed on or after January
   1, 2024, if the Commission determines that the utility has during the test
   period or test periods under review, considered as a whole, earned above its
   fair combined rate of return on its generation and distribution services
   previously authorized by the Commission, as determined in subdivision 2,
   without regard to any return on common equity or other matters determined with
   respect to facilities described in subdivision 6, which have not been combined
   with the utility&#8217;s costs, revenues, and investments for generation and
   distribution services, the Commission shall direct that 85 percent of the
   amount of such earnings above such fair combined rate of return for the test
   period or periods under review, considered as a whole, be credited to
   customers&#8217; bills. Further, if the Commission determines that during the
   test period or test periods under review, considered as a whole, a Phase II
   Utility earned more than 150 basis points above a fair combined rate of return
   on its generation and distribution services previously authorized by the
   Commission, without regard to any return on common equity or other matters
   determined with respect to facilities described in subdivision 6, which have
   not been combined with the utility&#8217;s costs, revenues, and investments
   for generation and distribution services, the Commission shall direct that all
   such earnings that were more than 150 basis points above such fair combined
   rate of return for the test period or periods under review, considered as a
   whole, be credited to customers&#8217; bills. Any such credits shall be
   amortized over a period of six to 12 months, as determined at the discretion
   of the Commission, following the effective date of the Commission&#8217;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.

   10. If, as a result of a triennial review required under this subsection and
   conducted with respect to any test period or periods under review ending later
   than December 31, 2010 (or, if the Commission has elected to stagger its
   biennial reviews of utilities as provided in subdivision 1, under review
   ending later than December 31, 2010, for a Phase I Utility, or December 31,
   2011, for a Phase II Utility), the Commission finds, with respect to such test
   period or periods considered as a whole, that (i) any utility has, during the
   test period or periods under review, considered as a whole, earned more than
   50 basis points above a fair combined rate of return on its generation and
   distribution services or, for any test period commencing after December 31,
   2012, for a Phase II Utility and after December 31, 2013, for a Phase I
   Utility, more than 70 basis points above a fair combined rate of return on its
   generation and distribution services, as determined in subdivision 2, without
   regard to any return on common equity or other matters determined with respect
   to facilities described in subdivision 6, and (ii) the total aggregate
   regulated rates of such utility at the end of the most recently ended 12-month
   test period exceeded the annual increases in the United States Average
   Consumer Price Index for all items, all urban consumers (CPI-U), as published
   by the Bureau of Labor Statistics of the United States Department of Labor,
   compounded annually, when compared to the total aggregate regulated rates of
   such utility as determined pursuant to the review conducted for the base
   period, the Commission shall, unless it finds that such action is not in the
   public interest or that the provisions of subdivisions 8 b and c are more
   consistent with the public interest, direct that any or all earnings for such
   test period or periods under review, considered as a whole that were more than
   50 basis points, or, for any test period commencing after December 31, 2012,
   for a Phase II Utility and after December 31, 2013, for a Phase I Utility,
   more than 70 basis points, above such fair combined rate of return shall be
   credited to customers&#8217; bills, in lieu of the provisions of subdivisions
   8 b and c, provided that no credits shall be provided pursuant to this
   subdivision in connection with any triennial review unless such bill credits
   would be payable pursuant to the provisions of subdivision 8 d, and any
   credits under this subdivision shall be calculated net of any customer credit
   reinvestment offset amounts under subdivision 8 d. Any such credits shall be
   amortized and allocated among customer classes in the manner provided by
   subdivision 8 b. For purposes of this subdivision:
   				&#8220;Base period&#8221; means (i) the test period ending December 31,
   2010 (or, if the Commission has elected to stagger its biennial reviews of
   utilities as provided in subdivision 1, the test period ending December 31,
   2010, for a Phase I Utility, or December 31, 2011, for a Phase II Utility), or
   (ii) the most recent test period with respect to which credits have been
   applied to customers&#8217; bills under the provisions of this subdivision,
   whichever is later.
   				&#8220;Total aggregate regulated rates&#8221; shall include: (i) fuel
   tariffs approved pursuant to &#xA7; 56-249.6, except for any increases in fuel
   tariffs deferred by the Commission for recovery in periods after December 31,
   2010, pursuant to the provisions of clause (ii) of subsection C of &#xA7;
   56-249.6; (ii) rate adjustment clauses implemented pursuant to subdivision 4
   or 5; (iii) revisions to the utility&#8217;s rates pursuant to subdivision 8
   a; (iv) revisions to the utility&#8217;s rates pursuant to the
   Commission&#8217;s rules governing utility rate increase applications, as
   permitted by subsection B, occurring after July 1, 2009; and (v) base rates in
   effect as of July 1, 2009.

   11. For purposes of this section, the Commission shall regulate the rates,
   terms and conditions of any utility subject to this section on a stand-alone
   basis utilizing the actual end-of-test period capital structure and cost of
   capital of such utility, excluding any debt associated with securitized bonds
   that are the obligation of non-Virginia jurisdictional customers, unless the
   Commission finds that the debt to equity ratio of such capital structure is
   unreasonable for such utility, in which case the Commission may utilize a debt
   to equity ratio that it finds to be reasonable for such utility in determining
   any rate adjustment pursuant to subdivisions 8 a and c, and without regard to
   the cost of capital, capital structure, revenues, expenses or investments of
   any other entity with which such utility may be affiliated. In particular, and
   without limitation, the Commission shall determine the federal and state
   income tax costs for any such utility that is part of a publicly traded,
   consolidated group as follows: (i) such utility&#8217;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) such utility&#8217;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.

B. Nothing in this section shall preclude an investor-owned incumbent electric
utility from applying for an increase in rates pursuant to &#xA7; 56-245 or the
Commission&#8217;s rules governing utility rate increase applications; however,
in any such filing, a fair rate of return on common equity shall be determined
pursuant to subdivision A 2. Nothing in this section shall preclude such
utility&#8217;s recovery of fuel and purchased power costs as provided in &#xA7;
56-249.6.

C. Except as otherwise provided in this section, the Commission shall exercise
authority over the rates, terms and conditions of investor-owned incumbent
electric utilities for the provision of generation, transmission and
distribution services to retail customers in the Commonwealth pursuant to the
provisions of Chapter 10 (&#xA7; 56-232 et seq.), including specifically &#xA7;
56-235.2.

D. The Commission may determine, during any proceeding authorized or required by
this section, the reasonableness or prudence of any cost incurred or projected
to be incurred, by a utility in connection with the subject of the proceeding. A
determination of the Commission regarding the reasonableness or prudence of any
such cost shall be consistent with the Commission&#8217;s authority to determine
the reasonableness or prudence of costs in proceedings pursuant to the
provisions of Chapter 10 (&#xA7; 56-232 et seq.). In determining the
reasonableness or prudence of a utility providing energy and capacity to its
customers from renewable energy resources, the Commission shall consider the
extent to which such renewable energy resources, whether utility-owned or by
contract, further the objectives of the Commonwealth Clean Energy Policy set
forth in &#xA7; 45.2-1706.1, and shall also consider whether the costs of such
resources is likely to result in unreasonable increases in rates paid by
customers.

E. Notwithstanding any other provision of law, the Commission shall determine
the amortization period for recovery of any appropriate costs due to the early
retirement of any electric generation facilities owned or operated by any Phase
I Utility or Phase II Utility. In making such determination, the Commission
shall (i) perform an independent analysis of the remaining undepreciated capital
costs; (ii) establish a recovery period that best serves ratepayers; and (iii)
allow for the recovery of any carrying costs that the Commission deems
appropriate.

F. The Commission shall include in its report required by subsection B of &#xA7;
56-596 any information concerning the reliability impacts of generation unit
additions and retirement determinations by a Phase I or Phase II Utility, along
with the potential impact on the purchase of power from generation assets
outside the Virginia jurisdiction used to serve the utility&#8217;s native load,
utilizing information from the respective utility&#8217;s integrated resource
plan or information from the respective utility&#8217;s plan filed pursuant to
subsection D of &#xA7; 56-585.5.

G. The Commission shall promulgate such rules and regulations as may be
necessary to implement the provisions of this section.

HISTORY: 2007, cc. 888, 933; 2008, c. 476; 2009, c. 824; 2011, cc. 236, 367,
371, 380, 382; 2012, c. 435; 2013, c. 2; 2014, cc. 212, 541, 548, 550; 2015, cc.
37, 599; 2016, c. 3; 2017, cc. 246, 564, 583, 820; 2018, cc. 296, 795; 2019, cc.
535, 741, 773; 2020, cc. 662, 799, 801, 1108, 1190, 1193, 1194; 2021, Sp. Sess.
I, c. 327; 2023, cc. 704, 705, 749, 757, 775, 776.