TITLE 20. PUBLIC UTILITIES AND TELECOMMUNICATIONS

STATE CORPORATION COMMISSION

Proposed Regulation

REGISTRAR'S NOTICE: The State Corporation Commission is exempt from the Administrative Process Act in accordance with § 2.2-4002 A 2 of the Code of Virginia, which exempts courts, any agency of the Supreme Court, and any agency that by the Constitution is expressly granted any of the powers of a court of record.

Title of Regulation: 20VAC5-316. Regulations Governing Exemptions for Large General Services Customers Under § 56-585.1 A 5 c of the Code of Virginia (adding 20VAC5-316-10 through 20VAC5-316-40).

Statutory Authority: §§ 12.1-13 and 56-585.1 of the Code of Virginia.

Public Hearing Information: A public hearing will be held upon request.

Public Comments: Public comments may be submitted until 5 p.m. on September 3, 2009.

Agency Contact: Cody Walker, Assistant Director, State Corporation Commission, P.O. Box 1197, Richmond, VA 23218, telephone (804) 371-9611, FAX (804) 371-9350, or email cody.walker@scc.virginia.gov.

Background:

The State Corporation Commission has initiated a commission rulemaking required by Chapter 824 of the 2009 Acts of Assembly. Chapter 824 authorizes Virginia's electric utilities to seek rate adjustment clause treatment of the "projected and actual costs…to design, implement and operate energy efficiency programs, including a margin to be recovered on operating expenses. . . ." § 56-585.1 A 5 c of the Code of Virginia. However, Chapter 824 prohibits electric utilities from recovering the costs of these energy efficiency programs from any customer that has a verifiable history of having used more than 10 megawatts of demand from a single meter of delivery. Additionally, the legislation prohibits program cost recovery from any large general service customer that has, at its 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 § 56-585.1 A 5 c of the Code of Virginia. For purposes of this legislation, large general service customers are customers that have a verifiable history of having used more than 500 kilowatts of demand from a single meter of delivery. Chapter 824 further directs the commission to promulgate rules and regulations not later than November 15, 2009, "to accommodate the process under which such large general service customers shall file notice for such an exemption, and (i) establish the administrative procedures by which eligible customers will notify the utility and (ii) define the standard criteria that must be satisfied by an applicant in order to notify the utility." § 56-585.1 A 5 c of the Code of Virginia. The commission's staff has prepared proposed rules implementing the exemption process outlined above (proposed rules).

Summary:

The proposed rules set forth (i) administrative procedures for notices of nonparticipation to be provided by large general service customers to electric utilities, (ii) standard criteria for such notices of nonparticipation, and (iii) dispute resolution procedures governing all disputes arising out of the exemption process. The proposed rules add a new Chapter 316 (20VAC5-316) within Title 20 of the Virginia Administrative Code.

AT RICHMOND, JULY 28, 2009

COMMONWEALTH OF VIRGINIA

At the relation of the

STATE CORPORATION COMMISSION

CASE NO. PUE-2009-00071

Ex Parte: In the matter of establishing
rules of the State Corporation Commission
governing exemptions for Large General Service
Customers under § 56-585.1 A 5 c of the Code of Virginia

ORDER FOR NOTICE AND COMMENT

This Order initiates a rulemaking required by HB 2506 as enacted by the 2009 Session of the Virginia General Assembly (Chapter 824 of the 2009 Acts of Assembly).  HB 2506 authorizes Virginia's electric utilities to seek rate adjustment clause treatment of the "projected and actual costs . . . to design, implement and operate energy efficiency programs, including a margin to be recovered on operating expenses. . . ."  Va. Code § 56-585.1 A 5 c.  However, the legislation prohibits the utilities from recovering the costs of these programs from "any customer that has a verifiable history of having used more than 10 megawatts of demand from a single meter of delivery."  Id.  Further, this 2009 legislation prohibits program cost recovery from any large general service customer that has, at its 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 [§ 56‑585.1 A 5 c of the Code]."  Id.  For purposes of this legislation, large general service customers are customers that have "a verifiable history of having used more than 500 kilowatts of demand from a single meter of delivery."  Id.

HB 2506 also directed the State Corporation Commission ("the Commission") to promulgate rules and regulations not later than November 15, 2009, "to accommodate the process under which such large general service customers shall file notice for such an exemption, and (i) establish the administrative procedures by which eligible customers will notify the utility and (ii) define the standard criteria that must be satisfied by an applicant in order to notify the utility."  § 56‑585.1 A 5 c of the Code.  The legislation also specifies that a "notice of nonparticipation by a large general service customer, to be given by March 1 of a given year, shall be for the duration of the service life of the customer's energy efficiency program."  Id.  HB 2506 further directs that the Commission's implementing regulations will specify the timing as to when the utility must accept and act on any such notice "taking into consideration the utility's integrated resource planning process as well as its administration of energy efficiency programs that are approved for cost recovery by the Commission."  Id. 

Pertinent to this rulemaking, HB 2506 also provides that the Commission "on its own motion may initiate steps necessary to verify such non‑participants' achievement of energy efficiency if the Commission has a body of evidence that the non‑participant has knowingly misrepresented its energy efficiency achievement."  § 56‑585.1 A 5 c of the Code.  Finally, the Virginia General Assembly directs in HB 2506 that "[I]n 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."  Id.

The Commission's Staff ("Staff") has prepared proposed rules implementing the exemption process outlined above ("Proposed Rules").  The Proposed Rules, inter alia, set forth (i) administrative procedures for notices of non‑participation to be provided by large general service customers to electric utilities, (ii) standard criteria for such notices of non-participation, and (iii) dispute resolution procedures governing all disputes arising out of the exemption process.¹ The Proposed Rules are appended hereto.

NOW THE COMMISSION, upon consideration of the foregoing, is of the opinion and finds that a rulemaking proceeding should be initiated for the purpose of establishing rules of the Commission governing exemptions for large general service customers under § 56‑585.1 A 5 c of the Code of Virginia, all as directed by the Virginia General Assembly in HB 2506 enacted in its 2009 Session.  Accordingly, we will direct that notice of the Proposed Rules be given to the public and that interested persons be provided an opportunity to file written comments on, propose modifications or supplements to, or request a hearing on these Proposed Rules. 

Accordingly, IT IS ORDERED THAT:

(1) This matter is docketed and assigned Case No. PUE-2009-00071.

(2) The Commission's Division of Information Resources shall forward a copy of this Order to the Registrar of Regulation for publication in the Virginia Register.

(3) On or before August 14, 2009, the Commission's Division of Information Resources shall publish the following notice as classified advertising in newspapers of general circulation throughout the Commonwealth of Virginia.

NOTICE TO THE PUBLIC OF A PROCEEDING TO ESTABLISH RULES OF THE STATE CORPORATION COMMISSION GOVERNING EXEMPTIONS FOR LARGE GENERAL SERVICE CUSTOMERS UNDER
§ 56-585.1 A 5 c OF THE CODE OF VIRGINIA
CASE NO. PUE-2009-00071

The State Corporation Commission ("Commission") has initiated a proceeding in which it proposes to establish Commission rules governing exemptions for large general service customers under § 56‑585.1 A 5 c of the Code of Virginia, all as directed by the Virginia General Assembly in HB 2506 enacted in the General Assembly's 2009 Session.

HB 2506 authorizes Virginia's electric utilities to seek rate recovery from its customers of the projected and actual costs to design, implement and operate energy efficiency programs, including a margin to be recovered on operating expenses. Pertinent to this rulemaking, however, the legislation bars utility recovery of these costs from any large general service customer that has, at its own expense, implemented certain energy efficiency programs. Large general service customers are customers that have a verifiable history of having used more than 500 kilowatts of demand (but less than 10 megawatts) from a single meter of delivery.

The Virginia General Assembly also directed the Commission in HB 2506 to promulgate rules and regulations not later than November 15, 2009, to accommodate the process under which such large general service customers may file notice for such an exemption, and further to (i) establish the administrative procedures by which eligible customers will notify the utility, and (ii) define the standard criteria that must be satisfied by an applicant in order to notify the utility.

The Commission's Staff has prepared proposed rules implementing the rulemaking directed by HB 2506 ("Proposed Rules"). The Proposed Rules, inter alia, set forth (i) administrative procedures for notices of non-participation to be provided by large general service customers to electric utilities, (ii) standard criteria for such notices of non-participation, and (iii) dispute resolution procedures governing all disputes arising out of the exemption process. The Commission has, by Order for Notice and Comment, directed that notice of the Proposed Rules (appended to that Order) be given to the public and that interested persons be provided an opportunity to file written comments on, propose modifications or supplements to, or request a hearing on these Proposed Rules.

Interested persons are encouraged to obtain copies of this Commission Order for Notice and Comment and the Proposed Rules.  Copies are available for public inspection at the Commission's Document Control Center, Tyler Building, First Floor, 1300 East Main Street, Richmond, Virginia 23219, Monday through Friday, 8:15 a.m. to 5:00 p.m. Copies may also be downloaded from the Commission's website: http://www.scc.virginia.gov/case.

On or before September 3, 2009, any interested person may comment on, or propose modifications or supplements to, or request a hearing on the Proposed Rules by filing an original and fifteen (15) copies of such comments with the Clerk of the Commission, c/o Document Control Center, P.O. Box 2118, Richmond, Virginia 23218‑2118, making reference in such comments to Case No. PUE‑2009‑00071. Any request for hearing shall state with specificity why the issues raised in the request for hearing cannot be adequately addressed in written comments. If a sufficient request for hearing is not received, the Commission may consider the matter and enter an order based upon the papers filed in this proceeding.  Interested persons desiring to submit comments electronically may do so by following the instructions available at the Commission's website:  http://www.scc.virginia.gov/case.

All filings in this proceeding shall be directed to the Clerk of the Commission, c/o Document Control Center, P.O. Box 2118, Richmond, Virginia 23218‑2118, making reference in such comments to Case No. PUE‑2009‑00071.

STATE CORPORATION COMMISSION

(4) On or before September 3, 2009, any interested person may comment on, propose modifications or supplements to, or request a hearing on the Proposed Rules by filing an original and fifteen (15) copies of such comments with the Clerk of the Commission, c/o Document Control Center, P.O. Box 2118, Richmond, Virginia 23218‑2118, making reference in such comments to Case No. PUE‑2009‑00071. Any request for hearing shall state with specificity why the issues raised in the request for hearing cannot be adequately addressed in written comments. If a sufficient request for hearing is not received, the Commission may consider the matter and enter an order based upon the papers filed herein. Interested persons desiring to submit comments electronically may do so by following the instructions available at the Commission's website: http://www.scc.virginia.gov/case.

(5) The Commission Staff may file a report with the Clerk of the Commission on or before September 24, 2009, concerning comments submitted to the Commission by interested persons addressing the Proposed Rules.

(6) This matter is continued for further orders of the Commission.

AN ATTESTED COPY hereof shall be sent by the Clerk of the Commission to: Pamela J. Walker, Deputy General Counsel, Dominion Virginia Power, Law Department PH‑1, P.O. Box 26532, Richmond, Virginia 23261-6532; Barry Thomas, Director of Regulatory Affairs, America Electric Power, Three James Center, Suite 702, 1051 East Cary Street, Richmond, Virginia 23219; Kendrick R. Riggs, Esquire, Stoll Keenon Ogden PLLC, 2000 PNC Plaza, 500 West Jefferson Street, Louisville, Kentucky 40202; Jeffrey P. Trout, Esquire, Allegheny Power, 800 Cabin Hill Road, Greensburg, Pennsylvania 15601; C. Meade Browder, Jr., Senior Assistant Attorney General, Division of Consumer Counsel, Office of Attorney General, 900 East Main Street, 2nd Floor, Richmond, Virginia 23219; and the Commission's Office of General Counsel and Divisions of Economics and Finance and Energy Regulation.

__________________

¹ The Proposed Rules establish a new Chapter 316 in the Virginia Administrative Code, consisting of sections 20 VAC 5‑316‑10 through 20 VAC 5‑316‑40.

CHAPTER 316
EXEMPTIONS FOR LARGE GENERAL SERVICES CUSTOMERS UNDER § 56-585.1 A 5 c OF THE CODE OF VIRGINIA

20VAC5-316-10. Applicability and scope.

This chapter is promulgated pursuant to the provisions of § 56-585.1 A 5 c of the Virginia Electric Utility Regulation Act, Chapter 23 (§ 56-576 et seq.) of Title 56 of the Code of Virginia. This chapter is specifically applicable to the large general service customers (customers or customer) of Virginia's electric utilities (utilities or utility) subject to the provisions of § 56-585.1 A 5 c, if the customers have verifiable histories of using more than 500 kilowatts but less than 10 megawatts of demand from a single metering point. Customers are eligible for an exemption from any rate adjustment clause approved for a utility by the State Corporation Commission (commission) pursuant to § 56-585.1 A 5 c of the Code of Virginia, if any customer can demonstrate that it has implemented an energy efficiency program (program), at the customer's expense, that has produced or will produce measured and verified results.

20VAC5-316-20. Administrative procedures for notice to utility.

A. Any customer seeking to establish its exemption from a rate adjustment clause authorized by the commission pursuant to § 56-585.1 A 5 c shall provide a notice of nonparticipation concerning the rate adjustment clause to its utility on or before March 1 of the year in which an exemption is sought. The notice of nonparticipation shall be concurrently filed by the customer with the commission's Division of Energy Regulation.

B. Upon receipt of the notice of nonparticipation, a utility shall, within 60 days thereof, review the same, and shall accept or deny the exemption request. In the event the utility fails to accept or deny the exemption request within that 60-day period, the exemption shall be deemed accepted by the utility. The utility's acceptance or denial of any exemption request shall be concurrently filed by the utility with the commission's Division of Energy Regulation.

20VAC5-316-30. Standard criteria for notice to utility.

A. Each notice of nonparticipation shall identify the customer, the customer's billing address and utility account number, and the location of the specific facility and metering point for which any such exemption is being sought.

B. The notice of nonparticipation shall also contain copies of all receipts and invoices documenting the customer's investment in any program.

C. The notice of nonparticipation shall describe the energy efficiency savings achieved or expected to be achieved from its investment in its program and the specific measures undertaken to achieve those savings.

D. The notice of nonparticipation shall include information concerning any anticipated change in operations that may affect achieved or expected energy efficiency savings, including (i) changes in operating hours or equipment efficiency; (ii) any changes required to comply with new or existing standards, a partial facility closure, a modification of a production shift, or improved quality of maintenance; (iii) the life expectancy of the energy efficiency measures undertaken; and (iv) ongoing maintenance activities necessary to maintain energy efficiency improvements.

E. To qualify for the exemption, each customer shall demonstrate energy efficiency savings equal to or greater than the percentage energy efficiency reductions expected to be achieved by its utility's energy efficiency programs for which the commission has approved a rate adjustment clause pursuant to § 56-585.1 A 5 c of the Code of Virginia.

F. Each notice of nonparticipation shall also include a measurement and verification plan conforming to the protocol set forth in the definition of "measured and verified" as provided in § 56-576 of the Code of Virginia.

20VAC5-316-40. Dispute resolution.

A. Customers and utilities shall seek to resolve all disputes arising out of the exemption process established under this chapter pursuant to the provisions of this section.

B. In the event of any such dispute, either party shall furnish the other a written notice of dispute. The notice shall describe in detail the nature of the dispute. The parties shall make good faith efforts to resolve the dispute informally within 10 business days of the receipt of such notice.

C. If any such dispute has not been resolved within 10 business days following receipt of the notice, either party may seek resolution assistance from the commission's Division of Energy Regulation where such matter will be treated as an informal complaint under the commission's Rules of Practice and Procedure (5VAC5-20).

Alternatively, the parties may, upon mutual agreement, seek resolution through the assistance of a dispute resolution service for the purpose of assisting the parties in (i) resolving the dispute, or (ii) selecting an appropriate dispute resolution method or mechanism (e.g., mediation, settlement judge, early neutral evaluation, or technical expert) to assist the parties in resolving their dispute. In any such dispute resolution proceeding, each party shall conduct all negotiations in good faith and shall be responsible for 1/2 of any charges for such services.

D. If any such dispute remains unresolved following the parties' good faith exercise of the dispute resolution alternatives set forth in this section, either party may file a formal complaint with the commission pursuant to the commission's Rules of Practice and Procedure.

VA.R. Doc. No. R09-2071; Filed July 29, 2009, 10:42 a.m.