TITLE 20. PUBLIC UTILITIES AND TELECOMMUNICATIONS

STATE CORPORATION COMMISSION

Proposed Regulation

Title of Regulation: 20VAC5-335. Regulations Governing the Deployment of Energy Storage (amending 20VAC5-335-20, 20VAC5-335-30, 20VAC5-335-40).

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

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

Public Comment Deadline: November 2, 2026.

Agency Contact: Mike Cizenski, Deputy Director, Public Utility Regulation, State Corporation Commission, P.O. Box 1197, Richmond, VA 23218, telephone (804) 371-9441, or email mike.cizenski@scc.virginia.gov.

Summary:

Pursuant to Chapters 694 and 695 of the 2026 Virginia Acts of Assembly, the proposed amendments update the minimum deployment targets for short-duration energy storage for Phase I and Phase II utilities.

AT RICHMOND, SEPTEMBER 29, 2026

COMMONWEALTH OF VIRGINIA, ex rel.

STATE CORPORATION COMMISSION

CASE NO. PUR-2026-00141

Ex Parte: In the matter of amending rules

and regulations pursuant to § 56-585.5 E 5

of the Code of Virginia related to the

deployment of energy storage

ORDER ESTABLISHING PROCEEDING

The Rules Governing the Deployment of Energy Storage, 20VAC5-335-10 et seq. (Energy Storage Rules), adopted by the State Corporation Commission (Commission) pursuant to Virginia Code (Code) §§ 56-580 and 56-585.5, establish the requirements for achieving the deployment of energy storage for the Commonwealth, as required under the Virginia Clean Economy Act.¹ Chapter 694 of the 2026 Virginia Acts of Assembly (collectively, 2026 Energy Storage Legislation) amended Code §§ 56-580 and 56-585.5, effective July 1, 2026. The 2026 Energy Storage Legislation, inter alia, increases the energy storage capacity that Virginia's Phase I and Phase II electric utilities are required to construct, acquire, or procure, and extends the time frames by which such revised capacity requirements must be met.

NOW THE COMMISSION, upon consideration of the matter, is of the opinion and finds that a proceeding should be established to amend the Energy Storage Rules to comply with the 2026 Energy Storage Legislation.

To initiate this proceeding, the Commission Staff (Staff) has prepared proposed amendments (Proposed Amendments) to the Energy Storage Rules, which are appended to this Order.² The Commission finds that notice of the Proposed Amendments should be given to the public; that interested persons should be provided an opportunity to file written comments on, propose modifications or supplements to, or request a hearing on the Proposed Amendments; and that Staff should transmit copies of this Order to those persons and entities identified as having a potential interest in this matter.

Accordingly, IT IS ORDERED THAT:

(1) This case is docketed and assigned Case No. PUR-2026-00141.

(2) All comments or other documents and pleadings filed in this matter shall be submitted electronically to the extent authorized by Rule 5VAC5-20-150, Copies and format, of the Commission's Rules of Practice and Procedure (Rules of Practice).³ Confidential and Extraordinarily Sensitive Information shall not be submitted electronically and shall comply with Rule 5VAC5-20-170, Confidential information, of the Rules of Practice. Any person seeking to hand deliver and physically file or submit any pleading or other document shall contact the Clerk's Office Document Control Center at (804) 371-9838 to arrange the delivery.

(3) Pursuant to 5VAC5-20-140, Filing and service, of the Rules of Practice, the Commission directs that service on parties and Staff in this matter shall be accomplished by electronic means. Concerning Confidential or Extraordinarily Sensitive Information, parties and Staff are instructed to work together to agree upon the manner in which documents containing such information shall be served upon one another, to the extent practicable, in an electronically protected manner, even if such information is unable to be filed in the Office of the Clerk, so that no party or Staff is impeded from preparing its case.

(4) The Commission's Office of General Counsel shall forward a copy of this Order Establishing Proceeding to the Registrar of Regulations for publication in the Virginia Register of Regulations.

(5) Within five (5) business days of the filing of this Order Establishing Proceeding with the Clerk of the Commission, Staff of the Commission's Division of Public Utility Regulation shall electronically transmit copies of this Order to those persons and entities identified by Staff as potentially having an interest in this matter. Staff shall maintain a list of names and addresses of the persons and entities to whom the Order was transmitted.

(6) An electronic copy of the Proposed Amendments may be obtained by submitting a request to Mike Cizenski in the Commission's Division of Public Utility Regulation at the following email address: mike.cizenski@scc.virginia.gov. An electronic copy of the Proposed Amendments can also be found at the Division of Public Utility Regulation's website: scc.virginia.gov/regulated-industries/utility-regulation/pur-responsibilities/rulemaking. Interested persons may also download unofficial copies of this Order and the Proposed Amendments from the Commission's website: scc.virginia.gov/case-information.

(7) On or before November 2, 2026, any interested person may comment on, propose modifications or supplements to, or request a hearing on the Proposed Amendments following the instructions on the Commission's website:

scc.virginia.gov/case-information/submit-public-comments. Those unable, as a practical matter, to submit comments electronically may file such comments by U.S. mail to the Clerk of the State Corporation Commission, c/o Document Control Center, P.O. Box 2118, Richmond, Virginia 23218-2118. All such documents shall refer to Case No. PUR-2026-00141. Individuals should be specific in their comments, proposals, or supplements to the Proposed Amendments and should address only those issues pertaining to the 2026 Energy Storage Legislation. Issues outside the scope of addressing these amendments will not be open for consideration. 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 comments, documents or other pleadings filed in this proceeding.

(8) On or before December 2, 2026, Staff shall file with the Clerk of the Commission a report on or a response to any comments, proposals, or requests for hearing submitted to the Commission on the Proposed Amendments.

(9) This matter is continued.

A COPY hereof shall be sent electronically by the Clerk of the Commission to all persons on the official Service List in this matter. The Service List is available from the Clerk of the Commission.

20VAC5-335-20. Definitions.

The following words and terms when used in this chapter shall have the following meanings unless the context clearly indicates otherwise:

"Behind the meter" means any system that is on the customer side of the utility service meter.

"Behind-the-meter incentive" means any incentive that encourages an end-use electric customer to implement energy storage systems that are connected to the customer side of the utility service meter, regardless of who actually owns the energy storage equipment.

"Commission" means the Virginia State Corporation Commission.

"Demand-side management program" means energy efficiency, demand response, or peak shaving programs or pilots approved by the commission that a utility may offer to customers pursuant to § 56-585.1 A 5 of the Code of Virginia.

"Energy storage" means any technology that is capable of absorbing energy, storing that energy for a period of time, and re-delivering that energy after storage.

"Energy storage aggregator" means a person or entity that, as an agent or intermediary, (i) offers to purchase or purchases energy storage system capabilities; or (ii) offers to arrange for or arranges for the purchase of energy storage system capabilities for the purposes of combining or aggregating those capabilities to enable the participation of multiple energy storage systems in electricity markets where such individual systems could not participate individually.

"Energy storage capacity" or "stored usable energy" means the maximum amount of stored energy of the energy storage system in kilowatt-hours or megawatt-hours that can be delivered to the grid.

"Energy storage facility" or "energy storage system" means an energy storage resource and any equipment, other than a transmission or distribution line, needed to interconnect the energy storage resource to the utility's electric system. This additional equipment can include switchgear, transformers, inverters, switches, cables, wires, conductors, bus work, protection devices and systems, communication and control devices and systems, fire protection systems, and environmental protection systems. Other costs associated with the construction and operation of an energy storage facility or energy storage system may include property acquisition costs, development and study costs, or other costs necessary to complete an operative facility or system.

"Energy storage power rating" means the total possible instantaneous discharge capability in kilowatts or megawatts of the energy storage system, or the maximum sustained rate of discharge that the energy storage system can achieve starting from a fully charged state to a fully discharged state.

"Energy storage project" means an energy storage facility with a specified location and an associated nameplate energy storage capacity and energy storage power rating.

"Energy storage resource" means (i) a resource capable of collecting energy from the electric power grid or a power generation facility and then discharging the energy at a future point in time to provide electricity or other grid services, or (ii) a resource capable of the active or dynamic exchange of energy.

"Non-wires alternative program" means any electricity grid investment, project, or program that uses nontraditional transmission or distribution solutions, such as distributed generation, energy storage, energy efficiency, demand response, and grid software and controls, to delay or remove the need for traditional system upgrades of equipment, such as transmission or distribution lines or transformers, without impacting the safety or overall performance of the electric power system.

"Peak demand reduction program" means any project or program aimed at shifting time of use of electricity from one period to another for the overall economic and reliability benefit of the electric power grid.

"Person" means any individual, corporation, partnership, association, company, business, trust, joint venture, or other private legal entity, and the Commonwealth or any municipality.

"Phase I Utility" has the same meaning as provided in subdivision A 1 of § 56-585.1 of the Code of Virginia.

"Phase II Utility" has the same meaning as provided in subdivision A 1 of § 56-585.1 of the Code of Virginia.

"Short-duration energy storage" means energy storage resources with less than 10 hours of generation capacity.

"Storage duration" means the amount of time an energy storage system can discharge at its energy storage power rating before depleting the stored usable energy when the system is at maximum energy storage capacity. Energy storage resources can de-rate their maximum output in order to increase energy storage duration.

20VAC5-335-30. Minimum interim targets for energy storage deployment by Phase I and Phase II Utilities.

A. A Phase I Utility shall petition the commission for any necessary approvals to construct or, acquire, or procure the level of energy storage power rating by the following dates:

1. By December 31, 2025, 25 megawatts;

2. By December 31, 2030, an additional 125 megawatts for a total of 150 megawatts; and

3. By December 31, 2035, an additional 300 megawatts for a total of 450 megawatts; and

4. By December 31, 2035 2040, an additional 250 330 megawatts for a total of 400 780 megawatts.

B. A Phase II Utility shall petition the commission for any necessary approvals to construct or acquire the level of short-duration energy storage power rating by the following dates:

1. By December 31, 2025, 250 megawatts;

2. By December 31, 2030, an additional 950 3,750 megawatts for a total of 1,200 4,000 megawatts; and

3. By December 31, 2035, an additional 3,500 megawatts for a total of 7,500 megawatts;

4. By December 31, 2040, an additional 3,500 megawatts for a total of 11,000 megawatts; and

5. By December 31, 2035 2045, an additional 1,500 5,000 megawatts for a total of 2,700 16,000 megawatts.

C. At least 35% of energy storage facilities placed into service by a Phase I or Phase II Utility shall be (i) purchased by the Phase I or Phase II Utility from a party other than the utility, or (ii) owned by a party other than the Phase I or Phase II Utility with the capacity from such facilities sold to the utility. The 35% threshold shall also apply to each interim target identified in this section.

D. Any type of energy storage technology shall count toward the interim targets set forth in subsections A and B of this section.

E. Each Phase I or Phase II Utility shall report on its plan to meet these interim targets and its progress toward meeting these interim targets in the proceedings established by § 56-585.5 D 4 and §§ 56-597 through 56-599 of the Code of Virginia, consistent with the requirements of each respective statute.

20VAC5-335-40. Procurement of energy storage projects by Phase I and Phase II Utilities.

A. In procuring energy storage projects, each Phase I or Phase II Utility shall use competitive bidding to the extent practicable, consistent with § 56-233.1 of the Code of Virginia.

B. Beginning in 2021 and ending in either 2035 2045 or when the storage targets set forth in 20VAC5-335-30 are met, whichever is sooner, each Phase I or Phase II Utility shall sponsor at least one competitive solicitation for energy storage projects per calendar year, consistent with the following requirements:

1. The request for proposals shall quantify and describe the utility's need for energy or capacity.

2. The request for proposals shall be publicly announced and made available for public review on the utility's website at least 60 calendar days prior to the closing of such request for proposals.

3. The request for proposals shall provide, at a minimum, the following information: (i) the size, type, and timing of energy storage projects for which the utility anticipates contracting; (ii) any minimum thresholds that must be met by respondents, consistent with established codes and standards; (iii) major assumptions to be used by the utility in the bid evaluation process, including environmental emission standards; (iv) detailed instructions for preparing bids so that bids can be evaluated on a consistent basis; (v) the preferred general location of additional energy storage projects; and (vi) specific information concerning the factors involved in determining the price and non-price criteria used for selecting winning bids.

4. A utility may evaluate responses to the request for proposals based on any criteria that it deems reasonable but shall at a minimum consider the following in its selection process: (i) the status of a particular project's development; (ii) the age of existing facilities; (iii) the demonstrated financial viability of a project and the developer; (iv) a developer's prior experience in the field; (v) the location and effect on the transmission grid of an energy storage project; (vi) the benefits to the Commonwealth that are associated with particular projects, including regional economic development and the use of goods and services from Virginia businesses; (vii) the environmental impacts of particular resources, including impacts on air quality within the Commonwealth and the carbon intensity of the utility's generation portfolio; and (viii) how any project impacts the goals established by the Virginia Environmental Justice Act (§ 2.2-234 et seq. of the Code of Virginia).

5. A utility shall maintain documentation of its reasoning for rejecting any specific response to the request for proposals.

C. Each utility shall provide, upon request, equitable access to relevant electric system data, with appropriate confidentiality safeguards in place for privacy, system security, and public safety. Access shall be provided in a timely manner such that third parties may reasonably utilize the data to inform responses to the request for proposal.

D. Each utility shall report on any competitive solicitations for energy storage projects as part of the annual plan required by § 56-585.5 D 4 of the Code of Virginia.