                                 CODE OF VIRGINIA

DEVELOPMENT OF OFFSHORE WIND CAPACITY (§ 56-585.1:11)

A. As used in this section:
			&#8220;Advanced clean energy buyer&#8221; means a commercial or industrial
customer of a Phase II Utility, irrespective of generation supplier, (i) with an
aggregate load over 100 megawatts; (ii) with an aggregate amount of at least 200
megawatts of solar or wind energy supply under contract with a term of 10 years
or more from facilities located within the Commonwealth by January 1, 2024; and
(iii) that directly procures from the utility the electric supply and
environmental attributes of the offshore wind facility associated with the
lesser of 50 megawatts of nameplate capacity or 15 percent of the commercial or
industrial customer&#8217;s annual peak demand for a contract period of 15
years.
			&#8220;Aggregate load&#8221; means the combined electrical load associated
with selected accounts of an advanced clean energy buyer with the same legal
entity name as, or in the names of affiliated entities that control, are
controlled by, or are under common control of, such legal entity or are the
names of affiliated entities under a common parent.
			&#8220;Control&#8221; means the legal right, directly or indirectly, to
direct or cause the direction of the management, actions, or policies of an
affiliated entity, whether through the ability to exercise voting power, by
contract, or otherwise. &#8220;Control&#8221; does not include control of an
entity through a franchise or similar contractual agreement.
			&#8220;Offshore wind affiliate&#8221; means a regulated affiliate company of
a Phase II Utility subject to the Commission&#8217;s jurisdiction established by
such utility in connection with any project constructed pursuant to subdivision
C 1 for the purpose of securing a noncontrolling equity financing partner for
the project.
			&#8220;Qualifying large general service customer&#8221; means a customer of a
Phase II Utility, irrespective of general supplier, (i) whose peak demand during
the most recent calendar year exceeded five megawatts and (ii) that contracts
with the utility to directly procure electric supply and environmental
attributes associated with the offshore wind facility in amounts commensurate
with the customer&#8217;s electric usage for a contract period of 15 years or
more.
			&#8220;Wind turbine generator&#8221; means a structure composed of a tower, a
rotor with blades connected at the hub, and nacelle and ancillary electrical and
other equipment that is affixed to a foundation of which multiple structures
comprise a generating facility.

B. In order to meet the Commonwealth&#8217;s clean energy goals, prior to
December 31, 2032, the construction or purchase by a public utility of one or
more offshore wind generation facilities located off the Commonwealth&#8217;s
Atlantic shoreline or in federal waters and interconnected directly into the
Commonwealth, with an aggregate capacity of up to 5,200 megawatts, is in the
public interest and the Commission shall so find, provided that no customers of
the utility shall be responsible for costs of any such facility in a proportion
greater than the utility&#8217;s ownership share of the facility, including any
ownership share held by an offshore wind affiliate.

C. 1. Pursuant to subsection B, construction by a Phase II Utility of one or
more new utility-owned and utility-operated generating facilities utilizing
energy derived from offshore wind and located off the Commonwealth&#8217;s
Atlantic shoreline, with an aggregate rated capacity of not less than 2,500
megawatts and not more than 3,000 megawatts, along with electrical transmission
or distribution facilities associated therewith for interconnection is in the
public interest. In acting upon any request for cost recovery by a Phase II
Utility or its offshore wind affiliate for costs associated with such a
facility, the Commission shall determine the reasonableness and prudence of any
such costs, provided that such costs shall be presumed to be reasonably and
prudently incurred if the Commission determines that (i) the utility has
complied with the competitive solicitation and procurement requirements pursuant
to subsection E; (ii) the project&#8217;s projected total levelized cost of
energy, including any tax credit, on a cost per megawatt hour basis, inclusive
of the costs of transmission and distribution facilities associated with the
facility&#8217;s interconnection, does not exceed 1.4 times the comparable cost,
on an unweighted average basis, of a conventional simple cycle combustion
turbine generating facility as estimated by the U.S. Energy Information
Administration in its Annual Energy Outlook 2019; and (iii) the utility has
commenced construction of such facilities for U.S. income taxation purposes
prior to January 1, 2024, or has a plan for such facility or facilities to be in
service prior to January 1, 2028. The Commission shall disallow costs, or any
portion thereof, only if they are otherwise unreasonably and imprudently
incurred. In its review, the Commission shall give due consideration to (a) the
Commonwealth&#8217;s renewable portfolio standards and carbon reduction
requirements, (b) the promotion of new renewable generation resources, and (c)
the economic development benefits of the project for the Commonwealth, including
capital investments and job creation, arising from project construction and
operation and the manufacture of wind turbine generator components and
subcomponents.

   2. Notwithstanding the provisions of &#xA7; 56-585.1, the Commission shall not
   grant an enhanced rate of return to a Phase II Utility for the construction of
   one or more new utility-owned and utility-operated generating facilities
   utilizing energy derived from offshore wind and located off the
   Commonwealth&#8217;s Atlantic shoreline pursuant to this section.

   3. Any such costs proposed for recovery through a rate adjustment clause
   pursuant to subdivision A 6 of &#xA7; 56-585.1 shall be allocated to all
   customers of the utility in the Commonwealth as a non-bypassable charge,
   regardless of the generation supplier of any such customer, other than (i)
   PIPP eligible utility customers, (ii) advanced clean energy buyers, and (iii)
   qualifying large general service customers. No electric cooperative customer
   of the utility shall be assigned, nor shall the utility collect from any such
   cooperative, any of the costs of such facilities, including electrical
   transmission or distribution facilities associated therewith for
   interconnection. The Commission may promulgate such rules, regulations, or
   other directives necessary to administer the eligibility for these exemptions.

   4. The Commission shall permit a portion of the nameplate capacity of any such
   facility, in the aggregate, to be allocated to (i) advanced clean energy
   buyers or (ii) qualifying large general service customers, provided that no
   more than 10 percent of the offshore wind facility&#8217;s capacity is
   allocated to qualifying large general service customers. A Phase II Utility or
   its offshore wind affiliate shall petition the Commission for approval of a
   special contract with any advanced clean energy buyer, or any special rate
   applicable to qualifying large general service customers, pursuant to &#xA7;
   56-235.2, no later than 15 months prior to the projected commercial operation
   date of the facility, and all customer enrollments associated with such
   special contracts or rates shall be completed prior to commercial operation of
   the facility. Any such special contract or rate may include provisions for
   levelized rates of service over the duration of the customer&#8217;s
   contracted agreement with the utility, and the Commission shall determine that
   such special contract or rate is designed to hold nonparticipating customers
   harmless over its term in connection with any petition for approval by the
   utility. The utility may petition for approval of such special contracts or
   rates in connection with any petition for approval of a rate adjustment clause
   pursuant to subdivision A 6 of &#xA7; 56-585.1 to recover the costs of the
   facility, and the Commission shall rule upon any such petitions in its final
   order in such proceeding within nine months from the date of filing.

D. In constructing any such facility contemplated in subsection B, the utility
shall develop and submit a plan to the Commission for review that includes the
following considerations: (i) options for utilizing local workers; (ii) the
economic development benefits of the project for the Commonwealth, including
capital investments and job creation; (iii) consultation with the
Commonwealth&#8217;s Chief Workforce Development Officer, the Chief Diversity,
Equity, and Inclusion Officer, and the Virginia Economic Development Partnership
on opportunities to advance the Commonwealth&#8217;s workforce and economic
development goals, including furtherance of apprenticeship and other workforce
training programs; (iv) giving priority to the hiring, apprenticeship, and
training of veterans, as that term is defined in &#xA7; 2.2-2000.1, local
workers, and workers from historically economically disadvantaged communities;
and (v) procurement of equipment from Virginia-based or United States-based
manufacturers using materials or product components made in Virginia or the
United States, if reasonably available and competitively priced.

E. Any project constructed or purchased pursuant to subsection B shall (i) be
subject to competitive procurement or solicitation for a substantial majority of
the services and equipment, exclusive of interconnection costs, associated with
the facility&#8217;s construction; (ii) involve at least one experienced
developer; and (iii) demonstrate the economic development benefits within the
Commonwealth, including capital investments and job creation. A utility may give
appropriate consideration to suppliers and developers that have demonstrated
successful experience in offshore wind.

F. Any project constructed or purchased pursuant to subsection B shall include
an environmental and fisheries mitigation plan submitted to the Commission for
the construction and operation of such offshore wind facilities, provided that
such plan includes an explicit description of the best management practices the
bidder will employ that considers the latest science at the time the proposal is
made to mitigate adverse impacts to wildlife, natural resources, ecosystems, and
traditional or existing water-dependent uses. The plan shall include a summary
of pre-construction assessment activities, consistent with federal requirements,
to determine the spatial and temporal presence and abundance of marine mammals,
sea turtles, birds, and bats in the offshore wind lease area.

G. In connection with any project constructed by a Phase II Utility pursuant to
subdivision C 1, such utility may, subject to Commission approval pursuant to
Chapter 4 (&#xA7; 56-76 et seq.), establish an offshore wind affiliate for the
purpose of securing a noncontrolling equity financing partner for the project,
and such offshore wind affiliate may be permitted to construct, own, or operate
such project pursuant to subdivision C 1, or a portion thereof. Notwithstanding
the provisions of the Utility Facilities Act (&#xA7; 56-265.1 et seq.), an
offshore wind affiliate shall be permitted to operate as a public utility in
association with the Phase II Utility and shall be entitled to all rights and
privileges of a public utility solely in connection with the project. Nothing in
this subsection shall prevent the Phase II Utility or its offshore wind
affiliate from recovering the prudently incurred costs of constructing or
operating the project pursuant to this section or subdivision A 6 of &#xA7;
56-585.1, regardless of whether such costs are incurred by the utility or its
offshore wind affiliate. In acting upon any such request for cost recovery by
the Phase II Utility, the Commission shall utilize the capital structure and
cost of capital of the utility, consistent with subdivision A 10 of &#xA7;
56-585.1, and the capital structure and cost of capital of any noncontrolling
entity&#8217;s interest in the offshore wind affiliate shall be disregarded. If
any ownership interest in the offshore wind affiliate is transferred to such a
noncontrolling entity, the Commission shall ensure, in granting any approval for
such transfer pursuant to the Utility Transfers Act (&#xA7; 56-88 et seq.), or
for cost recovery under this section or subdivision A 6 of &#xA7; 56-585.1, that
any gain on the utility&#8217;s basis for the project is credited to the
utility&#8217;s customers through a rate adjustment clause credit mechanism and
amortized over such period as the Commission determines to be appropriate.

HISTORY: 2020, cc. 1193, 1194, 1240, 1273, 1279; 2021, Sp. Sess. I, c. 328;
2023, cc. 510, 808, 809.