CODE OF VIRGINIA

RECOVERY OF FUNDS USED FOR CAPITAL PROJECTS PRIOR TO A RATE CASE FOR STRATEGIC
NATURAL GAS FACILITIES (§ 56-235.9)

A. As used in this section:”Capitalized carrying cost” includes the
return on the investment, depreciation, and tax.”Natural gas transmission
company” means any investor-owned public service company engaged in the
business of transporting natural gas to more than one electric utility, natural
gas utility, or non-jurisdictional customer.”Natural gas utility”
means any investor-owned public service company engaged in the business of
furnishing natural gas service to the public.”Strategic natural gas
facility” includes, without limitation, a natural gas distribution or
transmission pipeline, storage facility, compressor station, liquefied natural
gas facility, peaking facility or other appurtenant facility, used to furnish
natural gas service in the Commonwealth that, for a natural gas utility with
fewer than 150,000 customers, adds stand-alone design day deliverability or
designed send-out of at least 10,000 dekaTherms per day or two or more such
facilities, regardless of size, that add design day deliverability or designed
send out of at least 75,000 dekaTherms per day in the aggregate, and for a
natural gas utility with 150,000 or more customers, adds stand-alone design day
deliverability or designed send out of at least 20,000 dekaTherms per day or two
or more such facilities, regardless of size, that add design day deliverability
or designed send out of at least 100,000 dekaTherms per day in the aggregate,
and for a natural gas transmission company, adds design day deliverability or
designed send out of at least 100,000 dekaTherms per day in the aggregate.

B. Any natural gas utility that places a strategic natural gas facility into
service on or after July 1, 2008, or natural gas transmission company that
places a strategic natural gas facility into service on or after July 1, 2014,
to serve its customers shall have the right to recover through its rates charged
to those customers the entire prudently incurred costs of the facility
including: planning, development and construction costs; costs of infrastructure
associated therewith; an allowance for funds used during construction; and the
capitalized carrying cost from the time construction is completed and the asset
is placed into service until the time that the Commission establishes new rates
that include recovery of all costs as defined herein. Such recovery shall be
permitted by allowing such costs to be recorded in the utility’s plant
accounts and included in rate base for purposes of cost recovery (i) in new rate
schedules for service not offered under existing rate schedules or new rate
schedules for expansion of existing services as permitted by § 56-235.4, (ii)
in a rate case using the cost of service methodology set forth in § 56-235.2,
or (iii) in a performance-based regulation plan authorized by § 56-235.6,
subject to Commission determination that such costs were prudently incurred. The
allowance for funds used during construction and the return on investment shall
be calculated utilizing the weighted average cost of capital, including the cost
of debt and cost of equity used in determining the natural gas utility’s
base rates in effect during the construction period of the strategic natural gas
facility.

C. Nothing in this section shall be construed to prohibit the Commission from
granting similar treatment to other natural gas facilities when the Commission
deems such treatment to be in the public interest.

HISTORY: 2008, c. 867; 2014, cc. 467, 507.