SB1492: Water utilities; retail rates of affiliated utilities, definitions, etc.
SB1492ER2
SB1492ER
SB1492S1
VIRGINIA ACTS OF ASSEMBLY -- CHAPTER An Act to amend the Code of Virginia by adding a section numbered 56-235.11, relating to water utilities; retail rates of affiliated entities. [S 1492] Approved
Be it enacted by the General Assembly of Virginia:
1. That the Code of Virginia is amended by adding a section numbered 56-235.11 as follows:
§ 56-235.11. Retail rates of affiliated water utilities.
A. As used in this section, unless the context requires a different meaning:
"Affiliate" of a specific water utility or a water utility "affiliated" with a specific water utility means a water utility that directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with the water utility specified.
"Control," including the terms "controlling," "controlled by," and "under common control with," means direct or indirect possession of the power to direct or cause the direction of the management and policies of a water utility through the ownership of an equity interest. Control shall be presumed to exist with respect to another water utility if any water utility directly or indirectly owns, controls, or holds with the power to vote 50 percent or more of the equity interest of the other water utility.
"Rates" includes rates, tolls, charges, or schedules.
"Subsidiary" of a specified water utility means an affiliate directly or indirectly controlled by that water utility through one or more intermediaries.
"Water utility" means an investor-owned public utility authorized to furnish water or water and sewer service within a certificated service territory in the Commonwealth except any such investor-owned public utility for which the Commission has approved, after July 1, 2009, and prior to July 1, 2017, a consolidated rate structure consisting of three or more rate groups for the same class of service and in one or more subsequent orders has approved additional consolidation of such rate groups.
"Water utility network" means a water utility and all other water utilities that the water utility is an affiliate of, is affiliated with, controls, is controlled by, is under common control with, or is a subsidiary of. "Water utility network" also means, with respect to a water utility that is authorized to furnish water or water and sewer service within multiple certificated service territories in the Commonwealth, all of the certificated service territories that the water utility is certificated to serve.
B. In any proceeding commenced on and after July 1, 2017, to establish or approve the rates of a water utility that is in a water utility network, the Commission shall ensure that the rates of each water utility in the water utility network are not unjustly discriminatory by ensuring that equal fixed and volumetric rates are charged for each customer class of each water utility that is in the water utility network.
C. Upon the commencement of a proceeding described in subsection B, the Commission shall make each water utility that is a member of the applicable water utility network a party to the proceeding and may review each member water utility's rates. In such proceeding:
1. The Commission shall review the rates of each member of the applicable water utility network and order gradual adjustments to such water utility's rates over an appropriate period in order to implement the provisions of subsection B; and
2. The Commission is authorized to aggregate the revenues and costs of the water utilities that are members of the applicable water utility network.
"Water utility" means an investor-owned public utility authorized to furnish water or water and sewer service within a certificated service territory in the Commonwealth except any such investor-owned public utility for which the Commission has approved, after July 1, 2009, and prior to July 1, 2017, a consolidated rate structure consisting of four or more rate groups for the same class of service and in one or more subsequent orders has approved additional consolidation of such rate groups.
C. Upon the commencement of a proceeding described in subsection B, the Commission shall make each water utility that is a member of the applicable water utility network a party to the proceeding and may review each member water utility's rates . In such proceeding:
1. The Commission shall review the rates of each member of the applicable water utility network and adjust such water utility's rates in order to implement the provisions of subsection B; and
SENATE BILL NO. 1492 AMENDMENT IN THE NATURE OF A SUBSTITUTE (Proposed by the Senate Committee on Commerce and Labor on February 3, 2017) (Patron Prior to Substitute--Senator Stuart) A BILL to amend the Code of Virginia by adding a section numbered 56-235.11, relating to water utilities; retail rates of affiliated entities.
SENATE BILL NO. 1492 Offered January 18, 2017 A BILL to amend the Code of Virginia by adding a section numbered 56-235.11, relating to water utilities; retail supply choice.
Patron-- Stuart
Referred to Committee on Commerce and Labor
§ 56-235.11. Retail supply choice for incumbent water utility customers.
"Competitive water supplier" means a licensed competitive water supplier or a political subdivision of the Commonwealth that is authorized under Title 15.2 to provide water utility service within the locality in which an incumbent water utility's certificated service territory is located.
"Incumbent water utility" means a water utility that has been designated as such by the Commission in a proceeding under subsection B.
"Licensed competitive water supplier" means a person that is licensed by the Commission to sell water within the service territory of an incumbent water utility pursuant to subsection I.
"Retail supply choice" means the ability of an incumbent water utility's customers to have direct access to competitive water suppliers.
"Water utility" means an investor-owned public utility authorized to furnish water or water and sewer service within a certificated service territory in the Commonwealth.
B. Upon petition by the governing body of the locality within the jurisdictional boundaries of which a water utility's certificated service territory is located, the Commission shall institute a proceeding to determine whether the rates charged by the water utility to its customers impose an undue hardship on the customers. Rates shall be deemed to impose an undue hardship on customers if the volumetric rates charged to the majority of the water utility's customers have increased by over 100 percent in the five calendar years preceding the filing of the petition. If the Commission finds that the rates charged by the water utility to its customers impose an undue hardship on the customers, the Commission shall enter an order designating the water utility as an incumbent water utility.
C. Each incumbent water utility shall offer to all of the incumbent water utility's customers water supply choice by filing a plan for implementing retail supply choice with the Commission for approval. If an incumbent water utility fails or refuses to file such a plan, the governing body of the locality that filed the petition under subsection B, or any person authorized by Article 1 (§ 8.01-635 et seq.) of Chapter 25 of Title 8.01 to institute such a proceeding, may proceed against the incumbent water utility by a writ of quo warranto, or information in the nature of a writ of quo warranto, in the circuit court having jurisdiction in the locality wherein is located the principal office of the incumbent water utility in the Commonwealth. The provisions of Article 1 of Chapter 25 of Title 8.01 shall be applicable to any such proceeding except as herein otherwise provided and if, in such proceeding, there shall be a judgment of dissolution, the provisions of § 13.1-755 shall apply.
D. The Commission shall accept a plan for implementing retail supply choice submitted pursuant to subsection C within 30 days of filing if it contains, at a minimum:
1. A schedule for implementing retail supply choice for all of its customers;
2. Tariff revisions, including proposed unbundled rates for service, which may utilize a cost allocation and rate design formulated to recover the incumbent water utility's nonwater fixed costs on a nonvolumetric basis, and terms and conditions of service designed to provide nondiscriminatory open access over its transportation system, comparable to the transportation service provided by the incumbent water utility to itself, to allow competitive suppliers to sell water directly to the incumbent water utility's customers. Any proposed unbundling rates shall include an explanation of the methodology used to develop the rates and a calculation of revenues, by customer class, thereby produced;
3. Nonbypassable, competitively neutral annual surcharges for the incumbent water utility to properly allocate and recover from its customers its nonmitigable costs associated with the provision of retail supply choice, including prudently incurred contract obligation costs and transition costs;
4. Tariff provisions to balance the receipts and deliveries of water supplies to retail supply choice customers and allocate the incumbent water utility's water costs so that one class of customers is not subsidized by another class of customers;
5. Tariff provisions requiring the incumbent water utility, at a minimum, to offer competitive water suppliers or retail supply choice customers the right to acquire the incumbent water utility's well capacity in a manner that assures that one class of customers is not subsidized by another class of customers;
6. A code of conduct governing the activities and relationships between the incumbent water utility and competitive water suppliers to prevent anticompetitive or discriminatory conduct and the unlawful exercise of market power. Such codes of conduct shall incorporate or be consistent with any rule or guideline established by the Commission; and
7. Any other requirement established by Commission rule or regulation.
The Commission may, by rule or regulation, impose such additional filing requirements as it deems necessary in the public interest. The Commission may also require an incumbent water utility to continue to serve as a competitive water supplier to its customers after the incumbent water utility's plan becomes effective and under such terms and conditions as are necessary to protect the public interest.
E. After the Commission has accepted a filing of a plan, the Commission shall review and approve a plan filed by an incumbent water utility unless it determines, after notice and an opportunity for public hearing, that the plan would:
1. Adversely affect the quality, safety, or reliability of water service by the incumbent water utility or the provision of adequate service to the incumbent water utility's customers;
2. Result in rates charged by the incumbent water utility that are not just and reasonable rates within the contemplation of § 56-235.2;
3. Adversely affect the incumbent water utility's customers not participating in the retail supply choice plan;
4. Unreasonably discriminate against one class of the incumbent water utility's customers in favor of another class; or
5. Not be in the public interest.
F. The Commission shall, after the acceptance of a filing of a retail supply choice plan, approve or disapprove the plan within 120 days. The 120-day period may be extended by Commission order for an additional period not to exceed 60 days. The retail supply choice plan shall be deemed approved if the Commission fails to act within 120 days or any extended period ordered by the Commission. The Commission shall approve a retail supply choice plan filed by an incumbent water utility pursuant to this subsection regardless of whether it has promulgated rules and regulations pursuant to subsection A. The Commission may also modify a plan filed by an incumbent water utility to ensure that it conforms to the provisions of this subsection and is otherwise in the public interest.
G. Once a plan becomes effective pursuant to this section, if the Commission determines, after notice and opportunity for hearing, that the plan is causing, or is reasonably likely to cause, the effects set forth in subsection E, it may order revisions to the plan to remove such effects. Any such revisions to the plan will operate prospectively only.
H. If, upon application of the governing body of the locality and the greater of either at least 25 percent of customers receiving water service from the incumbent water utility or a competitive water supplier or 500 customers receiving water service from the incumbent water utility or a competitive water supplier, it is alleged that the marketplace for retail supply choice customer is not reasonably competitive or results in rates unreasonably in excess of what would otherwise be charged by the incumbent water utility, or if the Commission renders such a determination upon its own motion, then the Commission may, after notice, and opportunity for hearing, terminate the incumbent water utility's retail supply choice program and provide for an orderly return of the retail choice customers to the incumbent water utility's traditional retail water sales service. In such event, the incumbent water utility shall be given the opportunity to acquire, under reasonable and competitive terms and conditions and within a reasonable time period, such water resources as are necessary for it to provide retail water sales service to former retail supply choice customers.
I. No person, other than an incumbent water utility or a political subdivision of the Commonwealth that is authorized under Title 15.2 to provide water utility service within the locality in which an incumbent water utility's certificated service territory is located, shall engage in the business of selling water to the customers of an incumbent water utility that has an approved plan implementing retail supply choice unless the person holds a license issued by the Commission pursuant to this subsection. An application for licensure as a competitive water supplier shall be made to the Commission in writing, be verified by oath or affirmation and be in such form and contain such information as the Commission may, by rule or regulation, require. For purposes of this subsection, the Commission shall require an applicant for licensure as a competitive water supplier to demonstrate that it has or will have the means to provide water to customers. A competitive water supplier license shall be issued to any qualified applicant within 45 days of the date of filing such application, authorizing in whole or in part the service covered by the application, unless the Commission determines otherwise for good cause shown. A competitive water supplier shall not be considered a "public service corporation," "public service company," or a "public utility" and shall not be subject to regulation as such; however, nothing contained herein shall be construed to affect the liability of such a person for any license tax levied pursuant to Article 2 (§ 58.1-2620 et seq.) of Chapter 26 of Title 58.1. No license issued under this subsection shall be transferred without prior Commission approval finding that such transfer is not inconsistent with the public interest. If the Commission determines, after notice and opportunity for public hearing, that a licensed competitive water supplier has failed to comply with the provisions of this section or the Commission's rules, regulations, or orders, the Commission may enjoin, fine, or punish any such failure pursuant to the Commission's authority under this statute and under Title 12.1. The Commission may also suspend or revoke the licensed competitive water supplier's license or take such other action as is necessary to protect the public interest. The Commission shall establish rules and regulations for the implementation of this subsection, provided that:
1. The Commission's rules and regulations shall not govern the rates charged by competitive water suppliers, except that the Commission's rules and regulations may govern the terms and conditions of service of competitive water suppliers to protect the incumbent water utility's customers from commercially unreasonable terms and conditions; and
2. The Commission shall also have the authority to issue rules and regulations governing the marketing practices of competitive water suppliers.
J. No competitive water supplier shall use any deception, fraud, false pretense, misrepresentation, or deceptive or unfair practice in providing or marketing water service. Any person who suffers loss (i) as the result of fraudulent marketing practices, including telemarketing practices, engaged in by any competitive water supplier providing any service made competitive under this section, or of any violation of rules and regulations issued by the Commission or (ii) as the result of any violation of this subsection shall be entitled to initiate an action to recover actual damages, or $500, whichever is greater. If the trier of fact finds that the violation was willful, it may increase damages to an amount not exceeding three times the actual damages sustained, or $1,000, whichever is greater. Notwithstanding any other provisions of law to the contrary, in addition to any damages awarded, such person also may be awarded reasonable attorney fees and court costs. The Attorney General, the attorney for the Commonwealth, or the attorney for the county, city, or town may cause an action to be brought in the appropriate circuit court for relief of violations of this subsection. Notwithstanding any other provision of law to the contrary, in addition to any damages awarded, such person or governmental agency initiating an action pursuant to this section may be awarded reasonable attorney fees and court costs. Any action pursuant to this subsection shall be commenced by persons other than the Commission within two years after its accrual. The cause of action shall accrue as provided in § 8.01-230. However, if the Commission initiates proceedings, or any other governmental agency files suit for violations under this section, the time during which such proceeding or governmental suit and all appeals therefrom are pending shall not be counted as any part of the period within which an action under this section shall be brought. The circuit court may make such additional orders or decrees as may be necessary to restore to any identifiable person any money or property, real, personal, or mixed, tangible or intangible, which may have been acquired from such person by means of any act or practice violative of this subsection, provided that such person shall be identified by order of the court within 180 days from the date of any order permanently enjoining the unlawful act or practice. In any case arising under this subsection, no liability shall be imposed upon any competitive water supplier who shows by a preponderance of the evidence that (a) the act or practice alleged to be in violation of this subsection was an act or practice over which the same had no control or (b) the alleged violation resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adopted to avoid a violation. However, nothing in this section shall prevent the court from ordering restitution and payment of reasonable attorney fees and court costs to individuals aggrieved as a result of an unintentional violation of this subsection.
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