Vol. 29 Iss. 23 (Final Regulation) 20VAC5-403, Rules Governing Small Investor-Owned Telephone Utilities July 15, 2013

REGULATIONS
Vol. 29 Iss. 23 - July 15, 2013

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TITLE 20. PUBLIC UTILITIES AND TELECOMMUNICATIONS

STATE CORPORATION COMMISSION

Chapter 403

Final Regulation

REGISTRAR'S NOTICE: The State Corporation Commission is claiming an exemption 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.

Titles of Regulations: 20VAC5-10. In General (amending 20VAC5-10-20).

20VAC5-200. Public Utility Accounting (amending 20VAC5-200-21, 20VAC5-200-40) .

20VAC5-201. Rules Governing Utility Rate Applications and Annual Informational Filings (amending 20VAC5-201-10).

20VAC5-202. Regulations Governing the Functional Separation of Incumbent Electric Utilities under the Virginia Electric Utility Restructuring Act (amending 20VAC5-202-10, 20VAC5-202-20, 20VAC5-202-30, 20VAC5-202-50; repealing 20VAC5-202-40).

20VAC5-304. Rules Governing Cost/Benefit Measures Required for Demand-Side Management Programs (amending 20VAC5-304-40).

20VAC5-312. Rules Governing Retail Access to Competitive Energy Services (amending 20VAC5-312-20, 20VAC5-312-50, 20VAC5-312-90).

20VAC5-314. Regulations Governing Interconnection of Small Electrical Generators (amending 20VAC5-314-10).

20VAC5-320. Regulations Governing Transfer of Transmission Assets to Regional Transmission Entities (amending 20VAC5-320-10, 20VAC5-320-20).

20VAC5-403. Rules Governing Small Investor-Owned Telephone Utilities (amending 20VAC5-403-50, Appendix A).

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

Effective Date: July 1, 2013.

Agency Contact: Glenn P. Richardson, Esq., Senior Counsel, Office of General Counsel, State Corporation Commission, P.O. Box 1197, Richmond, VA 23218, telephone (804) 371-9671, FAX (804) 371-9211, or email glenn.richardson@scc.virginia.gov.

Summary:

The State Corporation Commission is taking regulatory action to amend its regulations to reflect certain internal, organizational changes within the commission, effective November 16, 2011, including the elimination of the Division of Economics and Finance and the renaming of the Division of Public Utility Accounting, which is now known as the Division of Utility of Accounting and Finance. In addition, regulations are amended to reflect changes in the Code of Virginia enacted by the General Assembly and to repeal obsolete regulations and schedules relating to electric utility restructuring and functional separation that are no longer necessary. Finally, the regulations are amended to bring them into compliance with the requirements of the Virginia Register Form, Style, and Procedure Manual. The substantive contents of the regulations are not changed. Issues contained within these regulations, which were previously addressed in proceedings before the commission, are not being reopened for consideration.

AT RICHMOND, JUNE 18, 2013

COMMONWEALTH OF VIRGINIA, ex rel.

STATE CORPORATION COMMISSION

CASE NO. PUE-2013-00016

Ex Parte: In the matter of amending regulations

ORDER AMENDING REGULATIONS

On March 13, 2013, the State Corporation Commission ("Commission") issued an Order Initiating Rulemaking Proceeding in this docket for the purpose of amending numerous regulations adopted by the Commission pursuant to § 12.1-13 of the Code of Virginia ("Code"), as well as various statutes in Title 56 of the Code. These regulations are codified in Title 20 of the Virginia Administrative Code ("VAC").

The Commission’s Order Initiating Rulemaking Proceeding proposed amendments to the regulations to: (1) recognize certain internal organizational changes, effective November 16, 2011, which eliminated the Division of Economics and Finance as a separate division within the Commission and renamed the Division of Public Utility Accounting, which is now known as the Division of Utility Accounting and Finance, (2) correct out-dated references to statutes in the Code of Virginia ("Code") that have been renamed or repealed, as well as remove obsolete rules and schedules that are no longer required, and (3) bring the regulations into compliance with the Virginia Register Form, Style and Procedures Manual issued by the Virginia Code Commission. The regulations that the Commission proposed to modify included 20VAC5-10-20, 20VAC5-200-21, 20VAC5-200-40, 20VAC5-201-10, 20VAC5-202-10, 20VAC5-202-20, 20VAC5-202-30, 20VAC5-202-40, 20VAC5-202-50, 20VAC5-304-40, 20VAC5-312-20, 20VAC5-312-50, 20VAC5-312-90, 20VAC5-314-10, 20VAC5-320-10, 20VAC5-320-20, 20VAC5-403-50, and 20VAC5-403, Appendix A.

Interested persons were given the opportunity to comment or request a hearing on the proposed regulations. Appalachian Power Company ("APCo") filed a letter with the Commission on April 29, 2013, stating that it "has no comments on the specific changes" to the regulations proposed by the Commission. However, APCo further stated that its "silence on the proposed rule changes proposed in this docket should not be interpreted as waiving or withdrawing any comments [APCo] made in Case No. PUE-2012-00043."¹ No other person filed comments on the proposed changes to the regulations, nor did anyone request a hearing in this matter.

NOW THE COMMISSION, having considered this matter, is of the opinion and finds that the proposed revisions to the regulations set forth in the Commission’s Order Initiating Rulemaking Proceeding should be adopted with one minor modification. In 20VAC5‑202‑10, the word "implement" was pluralized to correct the grammar in the regulation. Otherwise, the Commission adopts the rules and regulations as published originally.

Accordingly, IT IS ORDERED THAT:

(1) The regulations appended hereto as Attachment 1 are hereby adopted effective July 1, 2013.

(2) A copy of this Order and the rules adopted herein shall be forwarded promptly to the Register of Regulations for publication in the Virginia Register of Regulations.

(3) There being nothing further to come before the Commission, this case shall be dismissed and the papers filed herein placed in the file for ended causes.

AN ATTESTED COPY hereof, without attachments, shall be sent by the Clerk of the Commission to Anthony Gambardella, Riverfront Plaza, West Tower, 901 East Byrd Street, Suite 1550, Richmond, Virginia 23219; C. Meade Browder, Jr., Senior Assistant Attorney General, Division of Consumer Counsel, Office of the Attorney General, 900 East Main Street, Second Floor, Richmond, Virginia 23219; and a copy shall be delivered to the Commission’s Office of General Counsel and Divisions of Information Resources, Energy Regulation, Utility Accounting and Finance, and Communications.

_______________________

¹ Commonwealth of Virginia, ex rel., State Corporation Commission, Ex Parte: In the matter of revising the rules of the State Corporation Commission governing utility rate applications by electric utilities subject to the Virginia Electric Utility Regulation Act, Case No. PUE-2012-00043, Doc. Cont. Cen. No. 120520119, Order Initiating Proceeding (May 10, 2012).

20VAC5-10-20. ~~Rule governing utility~~ Utility customer deposit requirements.

Each utility may require deposits from customers to protect against uncollectible accounts. The maximum amount of any deposit shall not exceed the equivalent of the customer's estimated liability for two months usage. At the request of the commission, any public utility which bills in advance for any part of its services, yet requires a deposit as herein authorized, must justify the requirement as being reasonably necessary to protect against uncollectibles from its customers.

Each utility shall be liable for interest on deposits held longer than 90 days, to accrue from the date the deposit is made until it has been refunded, or until a reasonable effort has been made to effect refund. All investor-owned utilities will pay interest on deposits at a rate established annually. The interest rate for such deposits in a given year will be established in December of the preceding year to equal the average of the one year Constant Maturity Treasury rate for September, October, and November of the preceding year. Nonprofit utilities that are owned by their customers will pay 75% of the above described interest rate. The commission's Director of ~~Economics~~ Utility Accounting and Finance shall notify utilities in December of each year of the rate prevailing for the ensuing year. At the option of each customer making a security deposit, each utility shall annually make either direct payment to the customer of all accrued interest, or shall credit same to the customer's account.

Customer deposits may be refunded by a utility at any time. Residential customers' deposits should not be held longer than one year and all other deposits should not be held longer than two years provided the customer has established satisfactory credit during that period.

Whenever a utility requires a deposit from any residential customer, the customer shall be permitted to pay it in three consecutive equal monthly installments whenever the total amount of the required deposit exceeds the sum of $40. However, each utility shall have the discretion to allow payment of any deposit (more or less than $40 total) over a longer period of time to avoid undue hardship.

20VAC5-200-21. ~~Rules governing streamlined~~ Streamlined rate proceedings and general rate proceedings for electric cooperatives subject to the State Corporation Commission's rate jurisdiction.

A. Nothing in ~~these rules~~ this section shall be interpreted to apply to applications for temporary reductions of rates pursuant to § 56-242 of the Code of Virginia.

B. All streamlined or general rate applications for jurisdictional electric distribution cooperatives ("cooperatives" or "applicants") shall be subject to the following ~~rules~~ requirements:

1. Pursuant to § 56-235.4 of the Code of Virginia and the exceptions stated therein, the regulated operating revenues of a cooperative shall not be increased more than once within any 12-month period. However, streamlined rate relief may become effective in less than 12 months after a preceding increase provided that regulated base operating revenues are not increased more than once in any calendar year.

2. An applicant may select any test period it wishes to use to support its application.

3. Any increase in revenues under ~~these rules~~ this section shall be allocated in accordance with a properly designed cost of service study.

4. A cooperative which has outstanding wholesale power cost riders which reflect permanent changes in power costs approved by a regulatory agency shall adjust its base rates to reflect such changes at the same time it increases its rates in a rate application.

5. a. Except as otherwise provided herein, all applications for rate relief shall be filed in the original and 15 copies with the Clerk of the State Corporation Commission, c/o Document Control Center, P.O. Box 2118, Richmond, Virginia 23218.

b. Where a filing contains information that the applicant claims to be confidential, the filing may be made under seal provided it is accompanied by both a motion for protective order or other confidential treatment and an additional five copies of a redacted version of the filing to be available for public disclosure. Unredacted filings containing the confidential information shall, however, be immediately available to the commission staff for internal use at the commission.

Filings containing confidential (or redacted) information shall be so stated on the cover of the filing, and the precise portions of the filing containing such confidential (or redacted) information, including supporting material, shall be clearly marked within the filing.

6. An electric cooperative intending to file a rate application shall notify the State Corporation Commission ("commission") and all parties of record appearing in the cooperative's last rate case at least 60 days in advance of the filing of the application. Also, public notice of the intent to file a rate application shall be provided 60 days in advance of the filing of said application to all of the cooperative's customers, using any of the methods of publication set out in subdivision C 12 of this section.

7. The commission retains the right to waive any or all parts of ~~these rate case rules~~ this section for good cause shown.

8. An application shall not be deemed filed under § 56-238 of the Code of Virginia unless it is in full compliance with ~~these rules~~ this section.

C. An applicant may file a complete application for streamlined rate relief provided the following limitations are met:

1. The increase in total operating revenues as calculated in column (5) of Schedule 3 of Appendix A, included herein, is not more than the test period increase in the Consumer Price Index ("CPI"), or 5.0%, whichever is less. The CPI shall be defined as the Consumer Price Index for all Urban Consumers (CPI-U) for all items, as estimated by the U.S. Department of Labor, Bureau of Labor Statistics, and published in its Summary Data from the Consumer Price Index News Release, or its successor. As calculated in this publication, the percentage change in the CPI-U for a test year will be the index for the last month of the test year divided by the index for the same month one year prior, minus one, multiplied by 100; and

2. Earnings after the proposed increase must not produce financial ratios which exceed the level approved by the commission in the applicant's most recent general rate case.

Subject to the ~~rules~~ provisions set forth below, a cooperative which files an application for streamlined rate relief may petition the commission requesting that its rates be made permanent no less than 30 days from the date the application is deemed complete and filed with the commission if there are insufficient customer objections to the application or if the commission does not suspend the proposed increase and convene a hearing.

3. A cooperative filing a rate application under the streamlined rate procedure shall not:

a. Increase rates by more than the increase in the test period CPI or 5.0% (whichever is less) of adjusted Virginia jurisdictional operating revenues;

b. Request earnings, after the proposed increase, which produce financial ratios that exceed those approved by the commission in the applicant's most recent general rate case;

c. Propose revisions to its terms and conditions of service; or

d. Propose revisions to its rate structure as part of its application.

4. The commission may, on its own motion, suspend a cooperative's proposed rate increase and tariff revisions pursuant to § 56-238 of the Code of Virginia and may convene a hearing on the cooperative's streamlined application.

5. The commission may suspend a cooperative's proposed tariff revisions and increase in rates and shall schedule a hearing thereon if the lesser of 150 or 5.0% of the customers or other persons within a class and subject to a change in a rate, toll, or charge object to the proposed revision or increase in a rate or if the lesser of 150 or 5.0% of the customers or consumers or other persons subject to such rate, toll or charge of a cooperative object to the proposed rate or tariff revision.

6. The commission may, in its discretion, suspend an electric cooperative's rate increase and proposed tariff revisions in a streamlined rate proceeding on the motion of its own staff, on the motion of the Virginia Attorney General's Division of Consumer Counsel, or on the motion of any person subject to such change who requests a hearing and states a substantive reason why a hearing is necessary.

7. The requested rate increase for streamlined rate relief shall be supported by a fully adjusted financial status statement (Schedule 3 of Appendix A included herein).

8. Adjustments to test year cost of service shall be limited to the amount of increase or decrease that will be in effect during the rate year.

9. A cooperative shall not file more than three consecutive applications for streamlined rate relief; nor shall there lapse more than five years since the later of the date of the final order or the effective date of rates specified in the final order in the applicant's last general rate case when filing an application for streamlined rate relief.

10. An application filed under the streamlined rate procedure shall include:

a. The name and post office address of the applicant and the name and post office address of counsel of record, if any.

b. A brief narrative statement describing the change in rates and tariff revisions and explaining the need for a change in rates and tariff revisions. This statement shall include a description of the actions taken by the cooperative to advise its membership of the change in rates and contents of its application.

c. A copy of the resolution calling for a change in rates adopted by the Board of Directors of the cooperative.

d. A copy of the completed notice given to the public by the cooperative, including a description of the method of publication used.

e. Schedules 1 through 9 of Appendix A included herein.

11. Public notice of the increase and tariff revisions shall be completed 30 days in advance of the date the cooperative files its application for revised rates with the commission. Actual proof of public notice shall be furnished to the commission as part of the rate application.

12. The public notice of the increase and tariff revisions in an application for streamlined rate relief may be given by:

a. Direct mailing to each customer;

b. Publication in ~~Rural~~ Cooperative Living magazine, or the cooperative's member publication;

c. Newspapers of general circulation in the area served;

d. Any combination of these methods; or

e. Any other method of publication authorized by the commission.

13. A copy of the notice shall be served on the Commonwealth's Attorney and Chairman of the Board of Supervisors of each county (or equivalent officials in the counties having alternative forms of government) in the state in which the cooperative offers service, and on the mayor or manager and the attorney of every city and town (or equivalent officials in towns and cities having alternative forms of government) in the state in which the cooperative offers service and upon the Division of Consumer Counsel, Office of the Attorney General. Service shall be made by either personal delivery or first class mail, postage prepaid, to the customary place of business of the person served or to his residence.

14. The public notice shall, at a minimum, include the following information:

a. The amount of the total increase in revenues, both in percentages and dollar amounts;

b. The percentage increase being applied to each of the cooperative's rate schedules;

c. The identity of all wholesale power cost riders to be rolled-in to base rates;

d. The locations where copies of the information required to be filed with the commission can be reviewed;

e. The date the application will be delivered to the commission;

f. A notice that any person subject to the change or changes proposed by the cooperative has the right to request a hearing within 30 days of the application's delivery to the commission;

g. A notification that requests for hearing should be directed to the Clerk of the Commission, c/o Document Control Center, P.O. Box 2118, Richmond, Virginia 23218;

h. A statement advising that the commission may convene a hearing, and if a hearing is held, the commission may order rate relief, redesign rates or adopt tariff revisions which differ from those appearing in the cooperative's application;

i. A statement advising the public that if the lesser of 150 or 5.0% of the customers or other persons within a class and subject to a change in a rate, toll, or charge do not request a hearing, and if the lesser of 150 or 5.0% of the customers or consumers or other persons subject to such rate, toll or charge of the cooperative do not object to a rate change or tariff revision, the cooperative may petition the commission to make rates permanent without hearing within 30 days after the application is filed with the commission; and

j. A statement advising the public of the cooperative's proposed effective date for its new rates.

15. If the commission determines that a hearing on the application for streamlined rate relief is required, then the commission shall issue a procedural order which, among other things, shall specify the date by which the cooperative shall file with the Clerk of the Commission an original and 15 copies of any direct testimony the cooperative intends to rely on in support of its application, together with the remaining schedules set forth in Appendix A. That ~~Order~~ order shall specify such additional notice of the hearing to the electric cooperative's members that the commission deems appropriate.

D. 1. A cooperative seeking (i) an increase that produces financial ratios in excess of those allowed in the applicant's most recent general rate case; (ii) an increase in jurisdictional adjusted operating revenues of more than the test period increase in the CPI (as defined in subdivision 1 of subsection C of this section); (iii) revision of its terms and conditions of service; or (iv) to redesign or restructure its rates shall file an original and 15 copies of a general rate application with the Clerk of the State Corporation Commission, c/o Document Control Center, P.O. Box 2118, Richmond, Virginia 23218.

2. An application seeking a general rate increase shall include:

a. The name and post office address of the applicant and the name and post office address of counsel of record, if any.

c. A copy of the resolution calling for a change in rates adopted by the cooperative's Board of Directors.

d. All direct testimony which the cooperative intends to rely on in support of its rate application.

e. Exhibits consisting of the Schedules 1 through 13 14, found in Appendix A included herein. Such schedules shall be identified with the appropriate schedule number and shall be prepared in accordance with the instructions contained in Appendix A included herein and the following general instructions:

(1) Attach a table of contents to the cooperative's application, including exhibits.

(2) The applicant shall be expected to verify the accuracy of all data and calculations contained in and pertaining to every exhibit submitted, as well as support any adjustments, allocations or rate design upon which it relies.

(3) Each exhibit shall be labeled with the name of the applicant and the initials of the sponsoring witness in the upper right hand corner as shown below:

Exhibit No. (Leave Blank)

Witness: (Initials)

Statement or Schedule Number

The first page of all exhibits shall contain a caption which describes the subject matter of the exhibit.

(4) The required accounting and statistical data shall include three copies of all work papers and other information necessary to ensure that the items, statements and schedules found in the application are not misleading.

f. Exhibits consisting of additional schedules may be submitted with the cooperative's direct testimony. Such schedules shall be identified as Schedule 14 15 (this exhibit may include numerous subschedules labeled ~~14A~~ 15A et seq.) and shall conform to the general instructions contained in subdivision 2e of subsection D of this section.

g. The commission shall prescribe the general notice to be given to the public and the date by which such notice shall be completed in its procedural order.

h. The applicant shall serve a copy of the information required in subdivisions 2a through 2c of subsection D of this section upon the Commonwealth's Attorney and Chairman of the Board of Supervisors of each county or (equivalent officials in counties having alternative forms of government) in the state affected by the proposed increase and upon the mayor or manager and the attorney of every city and town (or equivalent officials in towns and cities having alternative forms of government) in the state affected by the proposed increase. The applicant shall also serve each such official with a statement that a copy of the complete application may be obtained by such official at no cost by making a request thereof orally or in writing to a specified company official or location. In addition, the applicant shall serve a copy of its complete application upon the Division of Consumer Counsel of the Office of the Attorney General in Virginia. All such service specified by this ~~rule~~ section shall be made either by (i) personal delivery or (ii) first class mail, to the customary place of business or to the residence of the person served.

E. Any cooperative filing a rate application pursuant to § 56-582 of the Virginia Electric Utility Restructuring Act (§ 56-576 et seq. of the Code of Virginia) shall include the schedules required for a general rate case, as set forth in subsection D of this section, as well as Schedules 15 through 19.

F. E. Rate reductions and tariff revisions filed pursuant to § 56-40 of the Code of Virginia shall be filed with the commission's Division of Energy Regulation and shall include the following:

1. A descriptive statement of and justification for the tariff revision;

2. Load data if applicable;

3. A certified excerpt from the minutes of the cooperative's Board of Directors, wherein the Board approved the tariff revision;

4. Identification of all customers that may be eligible for the tariff revision;

5. A revenue impact study; and

6. An affidavit by the cooperative's manager that the proposed tariff revision affects no increase in rates.

~~G. These rules do~~ F. This section does not limit the commission staff or parties other than the applicant from raising new issues not addressed by the applicant for commission consideration.

H. G. Requests for temporary increases in rates filed pursuant to § 56-245 of the Code of Virginia shall include Schedules 1, 2 and Columns (1) through (5) of Schedule 3.

I. H. Failure to comply with ~~the rules governing streamlined rate applications or general rate applications~~ this section may result in dismissal of the application, or may subject the cooperative to such other actions as the commission deems appropriate, including, but not limited to, prohibiting a cooperative from filing an application for streamlined rate relief for a period of time specified by the commission.

APPENDIX A. SCHEDULES REQUIRED FOR A STREAMLINED OR GENERAL RATE APPLICATION

Schedule Number	Streamlined Rate Proceeding Schedules
1	Comparative Balance Sheets
2	Comparative Income Statements
3	Financial Status Statement
4A and B	Detail of Ratemaking Adjustments
5A and B	Proposed Rates and Tariffs and Revenue Allocation
6	Sample Billing
7	Class Cost of Service Study
8	Capital Structure
9	Affiliate Services

Schedule Number	General Rate Proceeding Schedules
1	Comparative Balance Sheets
2	Comparative Income Statements
3	Financial Status Statement
4A and B	Detail of Ratemaking Adjustments
4A 5A and B	Proposed Rates and Tariffs and Revenue Allocation
6	Sample Billing
7	Class Cost of Service Study
8	Capital Structure
9	Affiliate Services
10	Net Original Cost Rate Base
11	Working Papers for Ratemaking Adjustments
12	Revenue and Expense Variance Analysis
13	Jurisdictional Allocation
14A, B, and C	~~Reserved for Additional Exhibits~~ Functional Unbundling
15	Reserved for Additional Exhibits

Schedule 1 — Comparative Balance Sheets

Instructions: Provide a publicly available comparative balance sheet for the test period and the corresponding 12-month period immediately preceding the test period for the applicant.

Schedule 2 — Comparative Income Statements

Instructions: Provide a publicly available comparative income statement covering the test period and 12-month period immediately preceding the test period for the applicant.

Schedule 3 — Financial Status Statement

Instructions: Use the format of the schedule identified as Schedule 3 in this Appendix.

Adjustments in Column (2) reflect any financial differences between Generally Accepted Accounting Principles (GAAP) and ratemaking accounting as prescribed by the State Corporation Commission. An example of such an adjustment would include, but would not be limited to, the reclassification of capital leases to operating leases. Each Column (2) adjustment shall be separately identified and shown using the format prescribed for Schedule 4A and 4B.

Column (4) shall reflect total nonjurisdictional operations. Jurisdictional allocation factors used to determine nonjurisdictional business in Column (4) amounts shall be fully supported and explained in Schedule 13 for general rate filings.

Each Column (6) adjustment shall be separately identified and shown in Schedule 4A and 4B. In a streamlined rate proceeding, adjustments reflected in Column (6) of Schedule 3 which do not incorporate ratemaking treatment approved by the commission in the utility's last general rate case shall be identified as new proposed adjustments in Schedule 4A and 4B.

Riders reflected on line 4 shall be separately listed to include a line for each rider in effect during the test year or projected for the rate year. The amount of other income and other expense shown in Column (5), lines 20 and 23, shall be the current amount recognized as jurisdictional in the applicant's last general rate case. Amounts reflected on line 33 shall be actual cash receipts.

Lines (29), (30), (31), and (32) shall be based on the following definitions:

Line 29.
TIER =	Total Margins (Line 24) + Interest on Long-Term Debt (Line 21)
	Interest on Long-Term Debt (Line 21)

Line 30.
DSC =	Total Margins (Line 24) + Depreciation and Amortization Expense (Line 11) + Interest on Long-Term Debt (Line 21)
	Total Principal Payments + Total Long-Term Interest Payments

Line 31.
Rate of Return on Rate Base =	Operating Margins Adj. (Line 18)
Rate of Return on Rate Base =	Total Rate Base (Line 28)

Line 32.
Rate of Return on Margins and Equities =	Total Margins (Line 24)
Rate of Return on Margins and Equities =	Total Margins and Equity Capitalization (Schedule 8)

Schedules 4A and 4B — Detail of Ratemaking Adjustments

Instructions: Use format of the schedule identified as Schedule 4A and 4B to this Appendix.

Each adjustment shall be numbered sequentially and listed under the appropriate description category (Base Rate Revenue, Fuel-WPCA Revenue, Purchased Power, etc.). The impact on cost of service from each adjustment shall be detailed in Columns (1) through (16).

Each ratemaking adjustment shall be fully explained in a supporting subschedule 4B to this schedule.

Detailed workpapers substantiating each adjustment shall be provided in Schedule 11 for general rate filings.

Schedule 5A and 5B — Proposed Rates and Tariffs, and Revenue Allocation by Class

Schedule 5A Instructions:

Provide a copy of each tariff sheet with the revisions the cooperative proposes to implement. For general rate applications, provide a copy of all tariffs and Terms and Conditions of Service Sheets proposed for revision containing the revised language.

Schedule 5B Instructions:

Provide a class revenue allocation analysis showing, by class, the present revenue recovered from each class, the proposed increase in revenue to be recovered from each class, the total proposed revenue to be recovered from each class, and the percentage of increase in total revenue to be recovered from each class.

Schedule 6 Sample Billing

Instructions: Provide a sample billing analysis showing the effect on customers of the proposed tariff changes at various levels of consumption, for all classes of service.

Schedule 7 — Class Cost of Service Study

Instructions:

A. Each streamlined rate application shall include a copy of the cost of service study used to determine the allocation of revenues to each class. The cost of service study shall be based on per books data which is no more than five years old. Each general filing shall include a copy of the cost of service study used to allocate the increase or to adjust rate design. The data used in a cost of service study submitted in a general rate case shall use the same test period as used in the cooperative's general rate application.

B. Each cost of service study shall consist of the following schedules:

1. For multi-state cooperatives, provide total system rate base, revenue and operation and maintenance expenses by account number, or major account group showing separation between Virginia and nonjurisdictional operations.

2. Provide a jurisdictional financial status statement in the format of Schedule 3, column (5) of Appendix A for each customer class and the return provided by these classes.

3. For all service schedules, present the unit cost per kilowatt, kilowatt hour, and customer resulting from the cost study. Include the kilowatt hours, demand, and number of customers, as well as the total cost for each component by class and the allocated rate base by class, as support for the unit costs derived.

4. If directed by the commission, the cooperative shall collect and maintain separate expense, rate base, and revenue data on nonjurisdictional consumers within Virginia.

5. For all service classes, provide a schedule of consumers by service class indicating the total number of customers in the class and the number of nonjurisdictional consumers in Virginia in the class.

Nonjurisdictional consumers in Virginia include government agencies: federal, state, local, and regional government authorities. If there are nonjurisdictional consumers in any class, this schedule must be accompanied by a list of all such nonjurisdictional consumers by service class and their usage characteristics.

6. Provide a short narrative describing the cost of service study methodology employed. This narrative shall include the following information:

(a) Identification and description of the classification used to assign rate base as demand, energy, or customer related. Specifically, include the classification methodology used to differentiate between demand and customer components of distribution plant; and the customer classification used in the study, i.e., minimum system, minimum size, zero intercept, etc.

(b) Identification of the allocation methodology used for assigning rate base, revenue, and expenses to customer classes. For demand allocation method, e.g., average and excess, noncoincident peak; customer allocation method, e.g., number of customers, weighted customers, etc.

(c) Provide a table showing the kilowatts, kilowatt hours, number of customers allocated to each class, including the derivation of the demand, energy, and customer allocators for each class.

7. Provide a list of classification and allocation factors used.

8. Provide a copy of the actual study by account or primary account. The primary accounts shall identify the secondary accounts included by account number. Indicate which allocators and classifiers were used to assign each account.

Schedule 8 — Capital Structure and Cost of Debt Statement and Supporting Schedules

Instructions: Use the format of the schedule identified as Schedule 8 in this Appendix.

Column (1) shall reflect the per books capital structure at the end of the test year. Data in Column (1) shall be compatible with the applicant's publicly available financial statements. Adjustments in Column (3) reflect any financial differences between Generally Accepted Accounting Principles and ratemaking accounting as prescribed by the commission. Each Column (3) adjustment shall be separately identified in a supporting schedule, if not already identified in Schedule 4A or 4B.

Schedules shall be provided to support the amounts and cost rates of short- and long-term debt in Columns (4) and (6), respectively, and the adjusted amounts and cost rates in Columns (8) and (10), respectively. Each issue of long-term debt shall be listed with its corresponding interest rate, date of issue, maturity, and lending institution(s) or other source(s). Short-term debt shall be listed with a high, low, ending, and average balance for each month, a weighted average interest rate for each month, and the name of the lending institution(s) or other source(s).

Schedule 9 — Affiliate Services

Instructions: For purposes of this schedule, affiliate services shall be defined to include those services between regulated and competitive divisions of an incumbent utility. If any portion of the required information has been filed with the commission as part of an applicant's Annual Report of Affiliate Transactions, the applicant may reference such report clearly identifying what portions of the required information are included in the Annual Report of Affiliate Transactions.

Provide a narrative description of each type of affiliated service received or provided during the test period.

Provide a summary of affiliate transactions detailing costs by function for each month of the test period. Show the final Uniform System of Account distribution of all costs billed to or by the regulated entity by month for the test period.

Identify all amounts billed to an affiliate and then billed back to the regulated entity.

Cost records and market analyses supporting all affiliated charges billed to or by the regulated entity/division shall be maintained and made readily available for commission staff review. This shall include supporting detail of costs (including the return component) incurred by the affiliated interest rendering the service and the allocation methodology. In situations when the pricing is required to be the higher (lower) of cost or market and market is unavailable, note each such transactions and have data supporting such a finding available for commission staff review.

If affiliate charges are booked per a pricing mechanism other than that approved by the commission for ratemaking purposes, the regulated entity shall provide a reconciliation of books to commission-approved pricing, including an explanation of why the commission-approved pricing is not used for booking purposes.

Schedule 10 — Net Original Cost Rate Base

Instructions: Use the format of the schedule identified as Schedule 10 in this Appendix.

Adjustments in Column (2) reflect any financial differences between GAAP and ratemaking accounting as prescribed by the State Corporation Commission. Each Column (2) adjustment shall be separately identified and reflected using the format prescribed for Schedule 4A and 4B.

Column (4) shall reflect total nonjurisdictional business. Allocation factors used to determine nonjurisdictional business in Column (4) shall be fully supported in Schedule 13.

Each Column (6) adjustment shall be separately identified and reflected in Schedule 4A and 4B. In a streamlined rate proceeding, adjustments reflected in Column (6) of Schedule 3 which do not incorporate the ratemaking treatment approved by the commission in the utility's last general rate case shall be separately identified as new proposed adjustments in Schedule 4A and 4B.

Schedule 11 — Working Papers for Ratemaking Adjustments

Instructions: Provide detailed workpapers and supporting schedules of all proposed adjustments. Each supporting document shall identify the origin of the data shown. Also, indicate whether data is actual or estimated. Working papers shall be numbered, indexed and tabbed for each adjustment. Two copies shall be filed with the Division of ~~Public~~ Utility Accounting and Finance, and one copy of the working papers shall be filed with the Division of Energy Regulation.

Schedule 12 — Revenue and Expense Variance Analysis

Instructions: The cooperative shall quantify jurisdictional operating revenues and system operating and maintenance ("O&M") expenses by primary account during the test period and the preceding 12 months. Also, provide jurisdictional sales volumes by customer class for the test period and the preceding 12 months.

The cooperative shall provide a detailed explanation of all jurisdictional revenue and system expense increases and decreases of more than 10% during the test period compared to the previous 12-month period. The expense variance analysis applies to test period expense items greater than two-hundredths of 1.0% (.0002) of total O&M expenses for all cooperatives with total operating expenses exceeding $50 million, and five hundredths of 1.0% (.0005) of total operating expenses for cooperatives with total operating expenses below $50 million.

Schedule 13 — Jurisdictional Allocation

Instructions: Provide summary schedules by primary account reflecting all revenue, expense, and rate base items allocated to the Virginia jurisdiction. If directed by the commission, this schedule shall include allocations relating to nonjurisdictional Virginia consumers as well as out-of-state operations. Provide working papers to support all calculated amounts, including the development of allocation factors.

Provide a narrative explanation and justification of the allocation methodology used. Discuss any changes in the applicant's operations which materially affect any allocation factor.

~~Schedule 14 — Reserved for Additional Exhibits~~

~~This schedule is reserved for additional exhibits presented by the applicant and shall be labeled 14A et seq.~~

Schedule 14A, 14B, and 14C - Functional Unbundling

Instructions: Use the format of the schedule identified as Schedule 14A, 14B, and 14C in this Appendix.

Provide cost of service studies that identify the costs associated with the functional areas of generation (production), transmission, distribution, and other.

Provide cost breakouts for subcomponents of functional areas such as primary and secondary distribution, metering, billing, and maintenance. Report cost functions and subcomponents on summary sheets by both system and class.

Schedule 15 - Reserved for Additional Exhibits

This schedule is reserved for additional exhibits presented by the applicant and shall be labeled 15A et seq.

~~APPENDIX B. ELECTRIC UTILITY RESTRUCTURING ACT ADDENDUM FOR ELECTRIC COOPERATIVES~~

~~Schedule 15 — Balance Sheet—Projected~~

Instructions: Provide projected balance sheets for each calendar year through 2007. Projections should be consistent with amounts for Rural Utility Service (RUS) financing in RUS Form 325A. Other financial forecasts that extend through 2007 may be used if RUS projections cease to remain applicable. Any deviations from the assumption used for RUS Form 325A should be noted and fully explained.

~~Schedule 16 — Income Statements—Projected~~

Instructions: Provide projected income statements for each calendar year through 2007. Projections should be consistent with amounts for RUS financing in RUS Form 325A. Other financial forecasts that extend through 2007 may be used if RUS projections cease to remain applicable. Any deviations from the assumption used for RUS Form 325A should be noted and fully explained.

~~Schedule 17 — Capital Structure—Projected~~

Instructions: Provide Capital Structure and Cost of Debt Statements for each calendar year through 2007. Projections should be consistent with amounts for RUS financing in RUS Form 325A. Other financial forecasts that extend through 2007 may be used if RUS projections cease to remain applicable. Any deviations from the assumption used for RUS Form 325A should be noted and fully explained.

~~Schedule 18 — Detail of Restructuring Act Adjustments~~

~~Instructions: This schedule shall be filed in addition to Schedule 4.~~

~~Use format of the schedule identified as Schedule 4A and 4B to this Appendix.~~

~~Each adjustment shall be numbered sequentially and listed under the appropriate description category (operating revenues, interest expense, common equity capital, etc.).~~

Restructuring Act adjustments shall reflect an annual going-forward year level of revenues, expenses, and rate base consistent with § 56-582 of the Code of Virginia. Schedule 9 shall reflect these adjustments in two additional columns after Column (5). Column (6) shall be titled Restructuring Act Adjustments.

Provide an explanation why some costs (by function) remain at a test year level. Additionally, describe and detail how increases in productivity have been factored into each cost whether adjusted or remaining at a test year level.

~~Detailed workpapers substantiating each adjustment shall be provided in Schedule 19.~~

~~Schedule 19 — Workpapers for Restructuring Act Adjustments~~

~~Instructions: This schedule shall be filed in addition to Schedule 11.~~

~~Provide detailed workpapers and supporting schedules of earnings test as well as ratemaking adjustments. Each supporting document shall identify the origin of the data shown.~~

Include 10 years actual and budgeted historical data for each adjustment. For projected adjustment amount, identify budget information as preliminary or final. If preliminary, indicate when final budget is anticipated.

~~Include a narrative of budgeting methodology as well as any significant changes that have occurred during the 10 years.~~

~~Working papers shall be indexed and tabbed for each adjustment. Two copies shall be filed with the Division of Public Utility Accounting and one copy to the Division of Energy Regulation.~~

~~Schedule 20 — Functional Unbundling~~

~~Instructions: Use the format of the schedule identified as Schedule 20 in this Appendix.~~

~~Provide cost of service studies that identify the costs associated with the functional areas of generation (production), transmission, distribution and other.~~

Provide cost breakouts for subcomponents of functional areas such as primary and secondary distribution, metering, billing and maintenance. Report cost functions and subcomponents on summary sheets by both system and class.

									Schedule 3
FINANCIAL STATUS STATEMENT PER BOOKS AND FULLY ADJUSTED FOR THE 12-MONTHS ENDING __________, ___
		(Col. 1)	(Col. 2)	(Col. 3)	(Col. 4)	(Col. 5)	(Col. 6)	(Col. 7)	(Col. 8)	(Col. 9)
Line No.	Description	Total Coopera-tive Per Books	Adjust-ments Due to Rate-making Require-ments	Total Coopera-tive As Adjusted	Non-Virginia Juris-dictional Business	Virginia Juris-dictional Business	Rate-making Adjust-ments	Amounts After Adjust-ments	Rev-enue Require-ment	Amounts After Revenue Requirement
	Operating Revenues
1.	Base Rates
2.	Fuel - WPCA
3.	Roll in of Riders
4.	Riders (List Separately)
5.	Margin Stabilization
6.	Other Electric Revenues
7.	Total Operating Revenues
	Operating Expenses
8.	Purchased Power Expense
9.	Margin Stabilization
10.	Other Operation and Maintenance Expense
11.	Depreciation and Amortization
12.	Tax Expense - Property
13.	Tax Expense - Other
14.	Total Operating Expenses
15.	Operating Margins
16.	Less: Interest on Customer Deposits

(Col. 1)

(Col. 2)

(Col. 3)

(Col. 4)

(Col. 5)

(Col. 6)

(Col. 7)

(Col. 8)

(Col. 9)

Line No.

Description

Total Coopera-tive Per Books

Adjust-ments Due to Rate-making Require-ments

Total Coopera-tive As Adjusted

Non-Virginia Juris-dictional Business

Virginia Juris-dictional Business

Rate-making Adjust-ments

Amounts After Adjust-ments

Rev-enue Require-ment

Amounts After Revenue Require-ment

17.

Charitable and Educational Donations

18.

Operating Margins Adjusted

19.

Plus: Capital Credits Accrued

20.

Other Income

21.

Less: Interest on Long-Term Debt

22.

Other Interest Expense

23.

Other Expense

24.

Total Margins

Rate Base

25.

Net Utility Plant

26.

Allowance for Working Capital

27.

Other Rate Base Deductions

28.

Total Rate Base

29.

TIER

30.

DSC

31.

Rate of Return on Rate Base

32.

Rate of Return on Margins and Equities

33.

Capital Credits Received

									SCHEDULE 4A Page ___ of ___
DETAIL OF RATEMAKING ADJUSTMENTS
		(Col. 1)	(Col. 2)	(Col. 3)	(Col. 4)	(Col. 5)	(Col. 6)	(Col. 7)	(Col. 8)	(Col. 9)
Adj. No.	Description	Operating Revenues	Purchased Power Expenses	Margin Stabil.	Other O&M Expense	Depr. & Amort.	Tax Expense	Other	Operating Margins Adjusted	Accrued Capital Credit
	Base Rate Revenues
	Fuel - WPCA Revenue
	Rider Revenue
	Margin Stabilization
	Other Electric Revenues
	Purchased Power Exp.
	Margin Stabilization
	Other O&M Expense
	Depr. & Amort.
	Tax Expense - Property
	Tax Expense - Other
	Other
	Operating Margins Adjusted
	Capital Credits Accrued
	Other Income
	Interest on Long-Term Debt
	Other Interest Expense
	Other Expense
	Total Margins
	Net Utility Plant
	Allowance for Working Capital
	Other Rate Base Deductions
	Total Rate Base

		(Col. 10)	(Col. 11)	(Col. 12)	(Col. 13)	(Col.14)	(Col. 15)	(Col. 16)	(Col. 17)
Adj. No.	Description	Other Income	Interest on Long-Term Debt	Other Exp. (Incl. Int. Exp.)	Total Margins	Net Utility Plant	Allowance for Working Capital	Other Rate Base Deductions	Total Rate Base
	Base Rate Revenues
	Fuel - WPCA Revenue
	Rider Revenue
	Margin Stabilization
	Other Electric Revenues
	Purchased Power Exp.
	Margin Stabilization
	Other O&M Expense
	Depr. & Amort.
	Tax Expense - Property
	Tax Expense - Other
	Other
	Operating Margins Adjusted
	Capital Credits Accrued
	Other Income
	Interest on Long-Term Debt
	Other Interest Expense
	Other Expense
	Total Margins
	Net Utility Plant
	Allowance for Working Capital
	Other Rate Base Deductions
	Total Rate Base

		Schedule 4B Page ___ of ___
DETAIL OF RATEMAKING ADJUSTMENTS
Adj. No.	Description	Explanation of Adjustment
	Base Rate Revenues
	Fuel - WPCA Revenue
	Rider Revenue
	Margin Stabilization
	Other Electric Revenues
	Purchased Power Exp.
	Margin Stabilization
	Other O&M Expense
	Depr. & Amort.
	Tax Expense - Property
	Tax Expense - Other
	Other
	Operating Margins Adjusted
	Capital Credits Accrued
	Other Income
	Interest on Long-Term Debt
	Other Interest Expense
	Other Expense
	Total Margins
	Net Utility Plant
	Allowance for Working Capital
	Other Rate Base Deductions
	Total Rate Base

SCHEDULE 8

CAPITAL STRUCTURE AND COST OF DEBT STATEMENT
PER BOOKS AND FULLY ADJUSTED
For the 12-Months Ending __________, ___

(Col. 1)

(Col. 2)

(Col. 3)

(Col. 4)

(Col. 5)

(Col. 6)

(Col. 7)

(Col. 8)

(Col. 9)

(Col. 10)

Total Coope-rative Per Books

Percen-tage of Col. 1 Total

Adjust-ments Due to Rate-making Require-ments

Total Coope-rative As Adjus-ted

Percen-tage of Col. 4 Total

Cost of Col. 4 Debt

Rate-making Adjust-ments

Amount After Adjust-ments

Percen-tage of Col. 8 Total

Cost of Col. 8 Debt

Short-Term Debt

Long-Term Debt

Total Margins and Equities

Other

Total Capital

Principal Repay-ments

Accumu-lated Capital Credits Accrued

Accumu-lated Capital Credits Received

							Schedule 10
NET ORIGINAL COST RATE BASE PER BOOKS AND FULLY ADJUSTED For the Period Ending __________, ___
		(Col. 1)	(Col. 2)	(Col. 3)	(Col. 4)	(Col. 5)	(Col. 6)	(Col. 7)
Line No.	Description	Total Cooperative Per Books	Adjustments Due to Ratemaking Requirements	Total Cooperative As Adjusted	Non-Virginia Jurisdictional Business	Virginia Jurisdictional Business	Ratemaking Adjustments	Amounts After Adjustments
	Net Utility Plant
1.	Electric Plant in Service
2.	Completed Construction Not Classified
3.	Construction Work in Progress
4.	Plant Held for Future Use
5.	Less: Accumulated Provision for Depreciation and Amortization
6.	Total New Utility Plant
	Allowance for Working Capital
7.	Cash Working Capital: Purchased Power
8.	Other O&M
9.	Materials and Supplies (13-month average)
10.	Deferred Fuel
11.	Other Working Capital (List Separately)
12.	Total Allowance for Working Capital
	Other Rate Base Deductions
13.	Customer Deposits
14.	Customer Advances for Construction
15.	Other Cost Free Capital (List Separately)
16.	Total Other Rate Base Deductions
17.	Total Rate Base

COOPERATIVE NAME DETAIL OF RESTRUCTURING ACT ADJUSTMENTS REFLECTED IN COL. (--) OF SCHEDULES -- AND --		Exhibit No.: _____ Witness: _______ Schedule 18
~~ADJ. NO.~~	~~ADJUSTMENT~~		~~AMOUNT~~
	~~OPERATING REVENUES ADJUSTMENTS~~
	~~OPERATING EXPENSES ADJUSTMENTS~~
	~~INTEREST ON CUSTOMER DEPOSITS ADJUSTMENTS~~
	~~CHARITABLE AND EDUCATIONAL DONATIONS ADJUSTMENTS~~
	~~CAPITAL CREDITS ACCRUED ADJUSTMENTS~~
	~~OTHER INCOME ADJUSTMENTS~~
	~~INTEREST ON LONG-TERM DEBT ADJUSTMENTS~~
	~~OTHER INTEREST EXPENSE ADJUSTMENTS~~
	~~OTHER EXPENSE ADJUSTMENTS~~
	~~ALLOWANCE FOR WORKING CAPITAL ADJUSTMENTS~~
	~~UTILITY PLANT ADJUSTMENTS~~
	~~COMPLETED CONSTRUCTION NOT CLASSIFIED ADJUSTMENTS~~
	~~CONSTRUCTION WORK IN PROGRESS ADJUSTMENTS~~
	~~PLANT HELD FOR FUTURE USE ADJUSTMENTS~~
	~~ACCUMULATED DEPRECIATION AND AMORTIZATION ADJUSTMENTS~~
	~~OTHER RATE BASE DEDUCTIONS ADJUSTMENTS~~
	~~COMMON EQUITY CAPITAL ADJUSTMENTS~~

COOPERATIVE NAME JURISDICTIONAL CLASS COST OF SERVICE (METHODOLOGY) COST ALLOCATION STUDY SYSTEM FUNCTIONAL ANALYSIS CASE NO. PUE------							Exhibit No.: ________ Witness: __________ Schedule ~~20A~~ 14A
Line No.	Description		System	Production	Transmission	Distribution		Other	Allocation Basis
10	Operating Revenues
20
30	Operating Expenses
40	Depreciation Expenses
50	Amortization
60	Income Taxes
70	State Income Taxes
80	Taxes Other than Income
90
100	Total Operating Expenses
110
120	Net Operating Income
130
140	Adjustments to Operating Income
150
160	Add:	AFUDC
170	Less:	Charitable Donations
180		Interest Expense - Customer Deposits
190
200	Adjusted Net Operating Income
210
220	Rate Base
230
240	ROR Earned on Rate Base

COOPERATIVE NAME JURISDICTIONAL CLASS COST OF SERVICE (METHODOLOGY) COST ALLOCATION STUDY CLASS SUMMARY CASE NO. PUE------								Exhibit No.: _______ Witness: _________ Schedule ~~20B~~ 14B
Line No.	Description		Virginia Juris	Retail Class 1	Retail Class 2	Retail Class 3	Retail Class 4		Retail Class 5	Allocation Basis
10	Operating Revenues
20
30	Operating Expenses
40	Depreciation Expenses
50	Amortization
60	Income Taxes
70	State Income Taxes
80	Taxes Other than Income
90
100	Total Operating Expenses
110
120	Net Operating Income
130
140	Adjustments to Operating Income
150
160	Add:	AFUDC
170	Less:	Charitable Donations
180		Interest Expense- Customer Deposits
190
200	Adjusted Net Operating Income
210
220	Rate Base
230
240	ROR Earned on Rate Base

COOPERATIVE NAME JURISDICTIONAL CLASS COST OF SERVICE (METHODOLOGY) COST ALLOCATION STUDY CLASS FUNCTIONAL ANALYSIS CASE NO. PUE------							Exhibit No.: ________ Witness: __________ Schedule ~~20C~~ 14C
Line No.	Description		Retail Class 1	Production	Transmission	Distribution		Other	Allocation Basis

10	Operating Revenues
20
30	Operating Expenses
40	Depreciation Expenses
50	Amortization
60	Income Taxes
70	State Income Taxes
80	Taxes Other than Income
90
100	Total Operating Expenses
110
120	Net Operating Income
130
140	Adjustments to Operating Income
150
160	Add:	AFUDC
170	Less:	Charitable Donations
180		Interest Expense - Customer Deposits
190
200	Adjusted Net Operating Income
210
220	Rate Base
230
240	ROR Earned on Rate Base

20VAC5-200-40. ~~Rules implementing the~~ The Small Water or Sewer Public Utility Act.

~~The following rules apply~~ This section applies to public utilities holding a certificate of public convenience and necessity issued by the State Corporation Commission to provide either water or sewer service, or both, and having gross annual operating revenues of less than $1 million. Such utilities are subject to the Small Water or Sewer Public Utility Act (§ 56-265.13:1 et seq. of the Code of Virginia) and shall be referred to herein as "company." Companies shall perform their own tariff justification analysis in-house prior to changing their rates, tolls, charges, fees, rates or regulations ("tariffs" or "rate changes"). Companies should endeavor to meet with any organized group of customers, e.g., civic associations or property owners' organizations, on a regular basis at least once a year to advise them of company problems, any impending tariff changes and why such changes are necessary. Companies are also encouraged to meet with the staff, following any company meeting with its customers to review and discuss proposed rate changes. However, each company remains responsible for bearing the burden of proof regarding any changes in its tariffs.

~~Rules~~ Requirements

1. Companies shall maintain their books and records in accordance with the Uniform System of Accounts for Class C companies on an accrual basis.

2. A 3.0% composite rate of depreciation is usual and customary and presumed to be reasonable. Any company which desires to use a higher accrual rate shall notify the ~~Commission's~~ commission's Divisions of Energy Regulation and ~~Public~~ Utility Accounting and Finance of its intent to change this rate in advance of booking same and shall provide to these ~~Divisions~~ divisions a copy of a study or other documents which the company believes supports its proposed change. The ~~Staff~~ staff shall review this change and advise the company of the results of its review. If the company wishes to contest the staff's conclusions regarding depreciation, it may, by motion, apply to the ~~Commission~~ commission for a hearing. If a company wishes to depreciate contributed property, it must advise the ~~Commission~~ commission, through its Divisions of Energy Regulation and ~~Public~~ Utility Accounting and Finance, before booking depreciation on such property, and provide appropriate documentation to support the need for such depreciation under the requested accrual rate. The staff shall review this change and advise the company of the results of its review. If the company wishes to contest the staff's conclusions regarding depreciation of such property or the rate to be accrued thereon, the company, by motion, may apply to the ~~Commission~~ commission for a hearing.

In the event that staff and company agree that depreciation of contributed property is proper and agree on the accrual rate for such depreciation, the amount so depreciated shall be placed in an escrow account and used only for capital improvements, until a ~~Commission~~ commission order is entered to the contrary.

3. Working capital may be accrued at the rate of 1/9th of the total operating and maintenance expenses for the test period.

4. Each company shall file with the ~~Commission's~~ commission's Division of Energy Regulation three copies of the tariff changes, the notice required by subdivision 5 below, and the following information: A narrative statement that sets forth the name of the company, the name, address and telephone number of the person company wishes to have contacted about the tariff change and a brief explanation about why the change is being made. This narrative statement shall also describe whether the company's customers are served on a flat or metered basis; whether billed in advance or in arrears; and shall separately identify the number of connected customers and the number of customers being assessed availability fees, if applicable.

5. Each company shall complete its written notification to all customers 45 days prior to the effective date of any change in tariffs. In cases of hearings resulting from customer requests, only a hearing request made by the individual in whose name the account is maintained shall be deemed a request by a customer. Customer petitions are acceptable.

If a company wishes to contest the number of customers requesting a hearing or whether one submitting a request is a customer, the company may request and those requesting a hearing shall provide to the company a copy of all requests for hearing or a copy of any customer petition filed with this ~~Commission~~ commission. If it is determined that requests for hearing have been received from persons other than customers and that the requisite number of customer requests have not been presented, the company may seek dismissal of the case.

The Company's notice to its customers shall follow the following format to the extent applicable:

NOTICE OF (INCREASES IN, CHANGES IN) RATES, CHARGES, RULES AND REGULATIONS OF SERVICE OF (INSERT NAME OF COMPANY)

(Insert name of Company) will change its (tariffs) on file with the State Corporation Commission, effective for service rendered on and after (effective date). (Summarize existing rates, fees, and charges and all new rates, fees, and charges).

[If applicable] (Insert name of Company) also will change the following portions of its rules and regulations of service, effective on the same date: (Summarize changes).

Any interested party may review (insert name of Company)'s proposed changes during regular business hours at the utility's office where customer bills may be paid.

Any interested person may file written comments in support of or objecting to the proposed changes with the Division of Energy Regulation, State Corporation Commission, P.O. Box 1197, Richmond, VA 23218.

(NAME OF COMPANY)

6. The company is free to choose any test period it wishes to support its rate changes. However, a company having flat rate structures must annualize the level of revenues derived from their current rates based upon the number of customers served as of the end of its selected test period. A company with a metered rate structure must compute revenues in effect at the end of its selected test period based upon the number of customers and usage by customer block per billing period. In the event that a hearing is held, the company shall provide the foregoing information to the ~~Commission~~ commission on or before a date specified in the order scheduling hearing.

7. A hearing shall be held after at least 30 days notice to the company and its customers if a request or petition therefor is received by the ~~Commission~~ commission from at least 25 percent of all customers affected by any filed tariff change, or from 250 affected customers, whichever is the lesser, or from the company itself, or upon the ~~Commission's~~ commission's own motion. When a hearing is to be held, the ~~Commission~~ commission shall, by order, establish a hearing date and a date by which the company shall file financial data containing the information set forth in subdivision 8 below. A copy of the order shall be sent by first class mail to the company and any customer requesting a hearing from whom the ~~Commission~~ commission has a complete mailing address. This order shall also specify a filing schedule for the company, customers and staff.

8. Financial data regarding a rate increase filed pursuant to subdivision 7 hereof shall include:

Any company electing to use a calendar year as its test period may file a copy of its annual report and a statement prepared in the format of the form rate of return statement following this ~~rule~~ subdivision. The statement shall incorporate the per books data of revenues, expenses and plant stated in the annual report and appropriate adjustments. The ~~Commission~~ commission accepts adjustments which reflect (i) annualized changes occurring during the test year, (ii) known and certain wage agreements, (iii) elimination of test year expenses pertaining to a prior year or elimination or amortization of expenses of a nonrecurring nature, and (iv) known and certain changes occurring within 12 months after the test year. The utility is not, however, precluded from making other adjustments which it can support and justify. The utility shall also file an explanation of all of its adjustments appearing in the attached rate of return statement.

Any company electing to use a noncalendar test year may, in lieu of an annual report, file a current balance sheet, income statement and tax return statement prepared in the format of the form rate of return statement following this ~~rule~~ subdivision. The statement shall incorporate per books data of revenues, expenses and plant and appropriate adjustments. The ~~Commission~~ commission accepts adjustments which reflect (i) annualized changes occurring during the test year (ii) known and certain wage agreements, (iii) elimination of test year expenses pertaining to a prior year or elimination or amortization of expenses of nonrecurring nature, and (iv) known and certain changes occurring within 12 months after the test year. A utility is not, however, precluded from making other adjustments which it can support and justify. A utility using a noncalendar test shall also file an explanation of all adjustments and workpapers showing the calculation of the adjustments.

Exhibit - RATE OF RETURN STATEMENT
			Per Books	Adjustments	After Adjustments	Proposed Increase	After Proposed Increase
Operating Revenues
	Water Service Fees
	Availability Fees
	Sewer Service Fees
	Miscellaneous Service Revenues
		Total Operating Revenues

Operating Expenses
	Operation and Maintenance
	Depreciation and Amortization
	Taxes Other
	Federal Income Taxes
		Total Operating Expenses

Net Operating Income

Utility Plant
	Utility Plant in Service
	Less: Accumulated Depreciation and Amortization
	Less: Acquisition Adjustment - Net
	Less: Contributions in Aid of Construction
		Net Utility Plant

Allowance for Working Capital
	Cash
	Materials and Supplies
		Total Allowance for Working Capital

Net Utility Plant and Allowance

20VAC5-201-10. General filing instructions.

A. An applicant shall provide a notice of intent to file an application pursuant to 20VAC5-201-20, 20VAC5-201-40, 20VAC5-201-60 and 20VAC5-201-85 to the commission 60 days prior to the application filing date.

B. Applications pursuant to 20VAC5-201-20 through 20VAC5-201-70 shall include:

1. The name and post office address of the applicant and the name and post office address of its counsel.

2. A full clear statement of the facts that the applicant is prepared to prove by competent evidence.

3. A statement of details of the objective or objectives sought and the legal basis therefore.

4. All direct testimony by which the applicant expects to support the objective or objectives sought.

5. Information or documentation conforming to the following general instructions:

a. Attach a table of contents of the company's application, including exhibits.

b. Each exhibit shall be labeled with the name of the applicant and the initials of the sponsoring witness in the upper right hand corner as shown below:

Exhibit No. (Leave Blank)
Witness: (Initials)
Statement or
Schedule Number

c. The first page of all exhibits shall contain a caption that describes the subject matter of the exhibit.

d. If the accounting and statistical data submitted differ from the books of the applicant, then the applicant shall include in its filing a reconciliation schedule for each account or subaccount that differs, together with an explanation describing the nature of the difference.

e. The required accounting and statistical data shall include all work papers and other information necessary to ensure that the items, statements and schedules are not misleading.

C. ~~These rules do~~ This chapter does not limit the commission staff or parties from raising issues for commission consideration that have not been addressed in the applicant's filing before the commission. Except for good cause shown, issues specifically decided by commission order entered in the applicant's most recent rate case may not be raised by staff or interested parties in Earnings Test Filings made pursuant to 20VAC5-201-10, 20VAC5-201-30 or 20VAC5-201-50.

D. An application filed pursuant to 20VAC5-201-20, 20VAC5-201-30, 20VAC5-201-40, 20VAC5-201-60, 20VAC5-201-70, 20VAC5-201-80 or 20VAC5-201-85 shall not be deemed filed per Chapter 10 (§ 56-232 et seq.) or Chapter 23 (§ 56-576 et seq.) of Title 56 of the Code of Virginia unless it is in full compliance with ~~these rules~~ this chapter.

E. The commission may waive any or all parts of ~~these rate case rules~~ this chapter for good cause shown.

F. Where a filing contains information that the applicant claims to be confidential, the filing may be made under seal provided it is simultaneously accompanied by both a motion for protective order or other confidential treatment and an additional five copies of a redacted version of the filing to be available for public disclosure. Unredacted filings containing the confidential information shall, however, be immediately available to the commission staff for internal use at the commission.

G. Filings containing confidential (or redacted) information shall so state on the cover of the filing, and the precise portions of the filing containing such confidential (or redacted) information, including supporting material, shall be clearly marked within the filing.

H. Applicants shall file electronic media containing an electronic spreadsheet version of Schedules 1 - 5, 8 - 28, 36, 40, and 50, as applicable, with the commission's Division of ~~Public~~ Utility Accounting~~, the Division of Economics~~ and Finance and the Division of Energy Regulation or the Division of Communications, as appropriate. Such electronic media containing calculations derived from formulas shall be provided in an electronic spreadsheet including all underlying formulas and assumptions. Such electronic spreadsheet shall be commercially available and have common use in the utility industry. Additional versions of such schedules shall be made available to parties upon request.

I. All applications, including direct testimony and Schedules 1 - 28, 30 - 39, and 41 - 50, as applicable, shall be filed in an original and 12 copies with the Clerk of the Commission, c/o Document Control Center, P.O. Box 2118, Richmond, Virginia 23218. One copy of Schedules 29 and 40 shall be filed with the Clerk of the Commission. Applicants may omit filing Schedule 29 with the Clerk of the Commission in Annual Informational Filings. Additional copies of such schedules shall be made available to parties upon request.

Two copies of Schedules 29 and 40 shall be submitted to the Division of ~~Public~~ Utility Accounting and Finance or the Division of Communications, as appropriate. Two copies of Schedule 40 shall be submitted to the Division of Energy Regulation.

J. For any application made pursuant to 20VAC5-201-20 and 20VAC5-201-40 through 20VAC5-201-85, the applicant shall serve a copy of the information required in subsection A and subdivisions B 1 through B 3 of this section, upon the attorney and chairman of the board of supervisors of each county (or equivalent officials in the counties having alternate forms of government) in this Commonwealth affected by the proposed increase and upon the mayor or manager and the attorney of every city and town (or equivalent officials in towns and cities having alternate forms of government) in this Commonwealth affected by the proposed increase. The applicant shall also serve each such official with a statement that a copy of the complete application may be obtained at no cost by making a request therefor orally or in writing to a specified company official or location. In addition, the applicant shall serve a copy of its complete application upon the Division of Consumer Counsel of the Office of the Attorney General of Virginia. All such service specified by this ~~rule~~ section shall be made either by (i) personal delivery or (ii) first class mail, to the customary place of business or to the residence of the person served.

K. Nothing in these ~~rules~~ this chapter shall be interpreted to apply to applications for temporary reductions of rates pursuant to § 56-242 of the Code of Virginia.

20VAC5-202-10. Applicability and scope.

These regulations are promulgated pursuant to the provisions of the Virginia Electric Utility ~~Restructuring~~ Regulation Act (§ 56-576 et seq. of the Code of Virginia), and they apply only to incumbent electric utilities subject to the provisions thereof. Section 56-590 of the Act declares that all incumbent electric utilities shall functionally separate their generation, transmission and distribution services by January 1, 2002, and that such functional separation may be accomplished through the creation of affiliates or through such other means as may be acceptable to the commission. The utilities ~~are~~ were required to submit proposed functional separation plans to the Virginia State Corporation Commission by January 1, 2001.

Section 56-590 B 3 of the Act authorizes the commission to impose conditions, as the public interest requires, upon its approval of incumbent electric utilities' plan for functional separation, including requirements that (i) incumbent electric utilities' generation assets or their equivalent remain available for electric service during the capped rate period as provided in § 56-582 and, if applicable, during any period incumbent electric utilities serve as default providers pursuant to § 56-585, and (ii) incumbent electric utilities receive commission approval for the sale, transfer or other disposition of generation assets during the capped rate period and, if applicable, during any period incumbent electric utilities serve as default providers.

Pursuant to § 56-590 C, the commission is also directed, to the extent necessary to promote effective competition in the Commonwealth, to promulgate regulations:

1. Prohibiting cost-shifting or cross-subsidies between functionally separate units;

2. Prohibiting functionally separate units from engaging in anticompetitive behavior or self-dealing;

3. Prohibiting affiliated entities from engaging in discriminatory behavior toward nonaffiliated units; and

4. Establishing codes of conduct detailing permissible relations between functionally separate units.

Additionally, § 56-590 F provides, in pertinent part, that nothing in the Virginia Electric Utility ~~Restructuring~~ Regulation Act shall be deemed to abrogate or modify the commission's authority under Chapters 3 (§ 56-55 et seq.),
4 (§ 56-76 et seq.) or 5 (§ 56-88 et seq.) of Title 56 of the Code of Virginia.

~~These regulations~~ This chapter, therefore, [ ~~implement~~ implements ] the statutory provisions of the Virginia Electric Utility ~~Restructuring~~ Regulation Act described above, and are intended to aid incumbent electric utilities required to (i) functionally separate their generation, transmission and distribution services by January 1, 2002, and (ii) submit applications for such purpose to the commission by January 1, 2001. Such regulations shall not, however, be deemed to modify or supercede any regulations adopted by the commission concerning the relationships between local distribution companies and any company licensed by the commission to provide competitive energy services, which regulations shall include the commission's Interim Rules Governing Electric and Natural Gas Retail Access Pilot Programs, 20VAC5-311-10 et seq., and any successor regulations thereto.

20VAC5-202-20. Definitions.

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

"Act" means the Virginia Electric Utility ~~Restructuring~~ Regulation Act.

"Affiliated generation company" means a generation company that controls, is controlled by, or is under common control with a local distribution company. For purposes of this chapter, any unit or division created by a local distribution company for the purpose of acting as a generation company shall be treated as an affiliated generation company and shall be subject to the same provisions and regulations.

"Commission" or "SCC" means the Virginia State Corporation Commission.

"FERC" means the Federal Energy Regulatory Commission.

"Generation company" means a person owning, controlling, or operating a facility that produces electric energy for sale to wholesale customers.

"Incumbent electric utility" shall have the same meaning as set forth in § 56-576 of the Code of Virginia.

"Local distribution company" means an entity regulated by the Virginia State Corporation Commission that owns or controls the distribution facilities required for delivery of electricity to the end user.

"Market price" or "market value" means the value of comparable goods or services determined through such methods as competitive bidding, appraisals, catalog listings, sales to third parties and asset replacement cost determinations.

"Person" shall have the same meaning as set forth in § 56-576 of the Code of Virginia.

"Transmission provider" means an entity regulated by the Federal Energy Regulatory Commission (FERC) that owns or operates, or both, transmission facilities.

20VAC5-202-30. Relations between affiliated functionally separated entities; SCC oversight.

A. The following practices are prohibited:

1. Cost shifting or cross subsidies between functionally separate units;

2. Anticompetitive behavior or self-dealing between functionally separate units; and

3. Discriminatory behavior by affiliated entities toward nonaffiliated units.

B. The following provisions apply to (i) the relationships between a local distribution company and any affiliated generation company following the commission's approval of their functional separation and (ii) the commission's oversight of such affiliated companies:

1. The local distribution company shall not give undue preference to an affiliated generation company over the interests of any other generation company. For purposes of this subdivision, "undue preference" means a preference that is reasonably likely to affect adversely the development of effective competition within the Commonwealth.

2. To the extent local distribution companies administer or otherwise furnish fuel supply services, such companies shall provide information related to fuel or fuel supply resources to an affiliated generation company only if it makes such information simultaneously available, through an electronic bulletin board or similar means of public dissemination, to all other generation companies conducting business in Virginia. Nothing in this subdivision shall require any local distribution company to disseminate to all generation companies information requested and deemed competitively sensitive by a generation company and supplied by the local distribution company. This subdivision is not applicable to daily operational data provided by the local distribution company to any generation company in the ordinary course of conducting business.

3. Affiliated local distribution and generation companies shall maintain separate records and accounts for functionally separate units and separate books of account for separate legal entities.

4. Each local distribution company shall operate independently of any affiliated generation company and shall observe the following requirements:

a. Each local distribution company shall establish and implement internal controls to ensure that such company and its employees who are engaged in (i) merchant operations, transmission, or reliability functions of electric generation or natural gas supply systems, or (ii) customer service, sales, marketing, accounting or billing functions do not provide information to an affiliated generation company or to entities that provide similar functions for or on behalf of such an affiliated general company that would give any such affiliated generation company an undue advantage over nonaffiliated generation companies. For purposes of this subdivision, "undue advantage" means an advantage that is reasonably likely to affect adversely the development of effective competition within the Commonwealth.

b. Each local distribution company shall file with the commission, a listing and description of all internal controls implemented pursuant to this section ~~as provided for in 20VAC5-202-40~~ or within 10 days subsequent to any modification of such controls.

5. Local distribution companies shall be subject to the following requirements concerning affiliate transactions:

a. Local distribution companies shall be compensated at the greater of fully distributed cost or market price for all nontariffed services, facilities, and products provided to an affiliated generation company. An affiliated generation company shall be compensated at the lower of fully distributed cost or market price for all nontariffed services, facilities, and products provided to the local distribution company. If market price data are unavailable for purposes of such calculations, nontariffed services, facilities and products shall be compensated at fully distributed costs. In such event, the local distribution company shall document its efforts to determine market price data and its basis for concluding that such price data are unavailable. Notification of a determination of the unavailability of market price data shall be included with the report required in subdivision 5 b of this subsection.

b. Local distribution companies shall file annually with the commission, a report that shall, at a minimum, include: (i) the amount and description of each type of nontariffed service provided to or by an affiliated generation company; (ii) accounts debited or credited; and (iii) the compensation basis used (i.e., market price or fully distributed cost). The local distribution company shall make available to the commission's staff, upon request, the following documentation for each agreement and arrangement where services are provided to or by an affiliated generation company: (i) component costs (i.e., direct or indirect labor, fringe benefits, travel or housing, materials, supplies, indirect miscellaneous expenses, equipment or facilities charges, and overhead); (ii) profit component; and (iii) comparable market values and documentation.

6. Affiliated generation and local distribution companies shall document each occasion that (i) an employee of one becomes an employee of the other or of any transmission provider that services either, or (ii) an employee of any transmission provider that services any such affiliated distribution company or generation company becomes any employee of either. Upon request of the commission's staff, such information shall be filed with the commission identifying each such employment described in this subdivision. This information shall include a listing of each employee transferred and a brief description of each associated position and responsibility.

7. The commission may inspect the books, papers, records and documents of, and require special reports and statements from, every generation company affiliated with a local distribution company regarding) transactions with its local distribution company affiliate. Upon complaint or on its own initiative, the commission may also (i) investigate alleged violations of this chapter, and (ii) seek to resolve any complaints filed with the commission against any such affiliated generation company.

20VAC5-202-40. ~~Application for functional separation.~~ (Repealed.)

A. Each incumbent electric utility required by the Act to functionally separate its generation, transmission and distribution services shall submit a plan to the commission therefor by January 1, 2001, conforming to the requirements set forth below. In addition to information specifically required under this chapter, the incumbent electric utility shall provide any information or documentation it believes will assist the commission in evaluating such utility's functional separation plan.

B. Each plan submitted by an incumbent electric utility shall, at a minimum, contain the following provisions or information. If such information is not available as of the date of the filing, the application shall contain a detailed explanation as to why such information is not available, the efforts under way to develop such information, and an estimate of the time within which it will be available.

~~1. A table of contents detailing the plan's components that shall include, at a minimum, a list of testimonies, schedules, supporting witnesses and issues addressed.~~

~~2. An executive summary of the functional separation plan that shall include the following:~~

~~a. An overview of the present structure of the integrated utility.~~

~~b. An overview of the proposed functional separation plan, including but not limited to, the following issues or matters:~~

(1) The specific type of functional separation proposed (e.g., transfer to an affiliate or division, divestiture, etc.) with an assessment of how such method will comply with § 56-590 of the Code of Virginia.

~~(2) A timeline for implementing the functional separation plan's major components.~~

(3) A description of measures proposed to ensure that the proposed plan of functional separation will not jeopardize or impair the safety or reliability of the incumbent electric utility's generation, transmission, and distribution systems.

~~(4) The estimated amount of assets and liabilities (including deferred taxes) proposed to be transferred to each functionally separate entity or third party.~~

~~(5) The estimated cost of the proposed plan of functional separation.~~

(6) Measures proposed in the plan to enable the incumbent electric utility to (i) meet potential obligations to provide capped rate service and default service, and (ii) assure that generation assets or their equivalent remain available during the capped rate and default service periods established under the Act.

c. A list of specific approvals sought by the incumbent electric utility in conjunction with its functional separation plan, identifying the sections of the Code of Virginia under which each such approval is sought, and describing the proposed timeframe for each such approval.

~~d. A summary of any other information the incumbent electric utility believes will be helpful to the commission in assessing the proposed functional separation plan.~~

~~e. Waivers that the incumbent electric utility is requesting from the requirements of this chapter, and the reasons therefor.~~

~~f. Exemptions that the incumbent electric utility is requesting pursuant to § 56-590 F from the provisions of Chapter 5 (§ 56-88 et seq.) of Title 56 of the Code of Virginia.~~

~~3. An assessment of the financial impact of the proposed functional separation plan, including information concerning the following:~~

a. The capital structure and cost of capital, including any transaction or refinancing costs, of the functionally separate entities resulting from the proposed plan used to calculate the unbundled cost of capital supporting the cost of service study required by subdivision 7 of this subsection.

b. The manner in which any assets are proposed to be transferred in the form of a dividend from any proposed functionally separate entity to any parent entity thereof incident to functional separation.

~~c. A description of (i) how the local distribution company will account for a wires charge and (ii) how a wires charge will impact the financial statements of the local distribution company.~~

~~d. Any other financial information relevant to the incumbent electric utility's proposed functional separation plan.~~

~~4. Information concerning the proposed structure of each functionally separate entity, as follows:~~

~~a. The legal structure of each functionally separate entity proposed in the functional separation plan (e.g., corporation, limited liability company, limited liability partnership, etc.).~~

~~b. The names and addresses of each proposed functionally separate entity's officers and directors, or their equivalents.~~

~~c. The location and mailing address of each proposed functionally separate entity's headquarters.~~

~~d. A description of how functional separation requirements in any other states have affected, or may affect, the incumbent electric utility, its structure and operations.~~

e. A description of all federal agency approvals required in connection with the execution and implementation of the incumbent electric utility's proposed functional separation plan, identifying any state commission findings (i) required in conjunction with such federal agency approvals, or (ii) otherwise required pursuant to federal law.

~~f. A timeline for implementing major elements of the functional separation plan.~~

~~5. Information concerning separation of functions and operations, as follows:~~

~~a. A description of the products and services to be offered by any proposed functionally separate entity.~~

~~b. A description of functions and services to be transferred from the incumbent electric utility to any proposed functionally separate entity.~~

~~c. A description of competitive services to be offered by each functionally separate entity of the incumbent electric utility.~~

d. Information concerning the total number of incumbent electric utility employees proposed to be (i) transferred to any proposed functionally separate entity, or (ii) jointly employed by any proposed functionally separate entities, following functional separation.

e. A detailed description of measures proposed to ensure the safety and reliability of the incumbent electric utility's generation, transmission and distribution system in conjunction with functional separation.

~~f. An estimate of the cost of functional separation, and an explanation of how the costs thereof will be shared among the proposed functionally separate entities.~~

g. A list and description of the internal controls established to ensure that the local distribution company and its affiliated generation company operate independently as required by 20VAC5-202-30 B 4.

~~6. Information concerning asset and liability transfers or sales, as follows:~~

a. A list of assets or liabilities that the incumbent electric utility proposes to transfer to a functionally separate entity or proposes to sell to a third party. The list shall include the FERC account number, book value, proposed transfer date and the recipient of the assets or liabilities.

b. The method used to value the transfer of assets to a functionally separate entity or to a third party, and justification for the chosen methodology. Information furnished shall include documentation supporting the valuation and transfer thereof.

c. If the Legislative Transition Task Force adopts a resolution requesting the commission's assistance with monitoring the recovery of net stranded costs pursuant to § 56-595 C of the Act, then the following information shall be provided to the commission: (i) fair market value of each generation and transmission asset functionally unbundled, transferred or sold to a third party or affiliate and (ii) a list of all long-term power contracts functionally unbundled, transferred or sold to a third party or affiliate. Information furnished shall include the length and anticipated expiration date of each contract, annual cash payments for power, and the market value of each power contract for each year of its remaining life.

d. Detailed documentation supporting (i) the accounting for the proposed transfer or divestiture of generation assets, and (ii) projected impacts of such transfers or divestiture on current and deferred income taxes. The information furnished shall include the income statement and balance sheet effects of income taxes, both before and after the proposed transfer or divestiture.

~~e. A copy of the proposed system of accounts, if other than the FERC uniform system of accounts, that any affected affiliated generation company will use for booking purposes.~~

~~f. A list of new investments (including amounts and time period) necessitated by the incumbent electric utility's proposed functional separation plan.~~

g. In furtherance of the commission's responsibility under § 56-590 B 3 of the Code of Virginia, each incumbent utility shall provide an assessment of how its proposed functional separation plan advances or satisfies such utility's obligation to make electric service available at the capped rates established under § 56-582 D.

h. In furtherance of the commission's responsibility under § 56-590 B 3 of the Code of Virginia, each incumbent utility shall provide an assessment of how its proposed functional separation plan advances or satisfies such utility's potential obligation to provide electric service as a default supplier pursuant to § 56-585. Such assessment shall include a detailed description of pricing and capacity if the incumbent electric utility proposes to utilize equivalent generation in satisfaction of such obligation.

i. An analysis comparing the cost of obtaining equivalent generation to the cost of retaining generation assets if the incumbent electric utility proposes to divest all or part of its generation assets supporting its Virginia load. The information furnished shall explain how such equivalent generation will produce rates, reliability and capacity that are at least comparable to that provided by the generation assets currently held by the incumbent electric utility. Additionally, the information shall include the incumbent electric utility's assessment of how obtaining equivalent generation is in the public interest.

~~7. Information concerning a cost of service study as follows:~~

~~a. A cost of service study, based on a test year beginning no earlier than January 1, 1999, reflecting total company and total Virginia operations.~~

~~b. A cost of service study that separates total Virginia operations identified in a of this subdivision into Virginia jurisdictional and Virginia nonjurisdictional operations.~~

c. A cost of service study that separates Virginia jurisdictional operations established under subdivision 7 b of this subsection, by class and function utilizing the rate of return approved by the commission in the incumbent electric utility's most recent rate case or alternative regulatory plan. Class costs shall be subdivided by generation, transmission, distribution, metering, billing, and other customer services as may be warranted or required by the commission. Such divisions shall be further subdivided as demand, energy and customer. The class study shall include computations of the average price per unit for these various subdivisions.

~~8. The incumbent electric utility's proposed unbundled tariffs, rates, terms and conditions.~~

~~9. A description of how the incumbent electric utility's proposed functional separation will comply with 20VAC5-202-30.~~

20VAC5-202-50. Waiver or exemption requests; confidential information; other filings.

A. Any request for a waiver of any provision in this chapter shall be considered by the commission on a case-by-case basis and may be granted upon such terms and conditions as the commission may impose.

B. Where a filing made pursuant to this chapter contains information that the applicant claims to be confidential, the filing may be made under seal provided it is accompanied by both a motion for protective order or other confidential treatment and an additional five copies of a redacted version of the filing to be available for public disclosure. Unredacted filings containing the confidential information shall be maintained under seal unless and until the commission rules otherwise, except that such filings shall be immediately available to the commission staff for internal use at the commission.

C. Each incumbent electric utility shall file simultaneously with its functional separation plan its application for transfer of assets pursuant to the Utility Transfers Act, Chapter 5 (§ 56-88 et seq.) of Title 56 of the Code of Virginia, if any, except for good cause shown.

D. Any incumbent electric utility requesting an exemption pursuant to § 56-590 G from the provisions of Chapter 5 (§ 56-88 et seq.) of Title 56 of the Code of Virginia, to the extent that any such incumbent electric utility's proposed functional separation plan includes a covered transaction otherwise subject to the provisions of § 56-590, shall clearly identify such request in its functional separation plan filed with the commission.

20VAC5-304-40. Pilot or experimental programs.

Utilities must seek ~~Commission~~ commission approval of pilot or experimental programs that involve rates or promotional allowances, but other limited pilot or experimental programs may be conducted without prior ~~Commission~~ commission approval. Utilities shall file reports with the ~~Commission's~~ commission's Division of ~~Economics and Finance~~ Energy Regulation that identify any pilot or experimental program at least 30 days prior to its implementation. Periodic reports shall also be filed at least semi-annually with the ~~Commission's~~ commission's Division of ~~Economics and Finance~~ Energy Regulation identifying all DSM pilot or experimental programs and the status of such programs.

20VAC5-312-20. General provisions.

A. A request for a waiver of any of the provisions in this chapter shall be considered by the State Corporation Commission on a case-by-case basis, and may be granted upon such terms and conditions as the State Corporation Commission may impose.

B. The provisions of this chapter may be enforced by the State Corporation Commission by any means authorized under applicable law or regulation. Enforcement actions may include, without limitation, the refusal to issue any license for which application has been made, and the revocation or suspension of any license previously granted. The provisions of this chapter shall not be deemed to preclude a person aggrieved by a violation of these regulations from pursuing any civil relief that may be available under state or federal law, including, without limitation, private actions for damages or other equitable relief.

C. The provisions of this chapter shall not be deemed to prohibit the local distribution company, in emergency situations, from taking actions it is otherwise authorized to take that are necessary to ensure public safety and reliability of the distribution system. The State Corporation Commission, upon a claim of inappropriate action or its own motion, may investigate and take such corrective actions as may be appropriate.

D. The State Corporation Commission maintains the right to inspect the books, papers, records and documents, and to require reports and statements, of a competitive service provider as required to verify qualifications to conduct business within the Commonwealth, to support affiliate transactions, to investigate allegations of violations of this chapter, or to resolve a complaint filed against a competitive service provider. Every competitive service provider licensed pursuant to this chapter shall establish and maintain records identifying persons or entities performing promotional or marketing activities on behalf of or in conjunction with such competitive service provider.

E. The local distribution company shall provide, pursuant to the prices, terms, and conditions of its tariffs approved by the State Corporation Commission, service to all customers that do not select a competitive service provider and to customers that chose a competitive service provider but whose service is terminated for any reason.

F. A competitive service provider selling electricity supply service or natural gas supply service, or both, at retail shall:

1. Procure sufficient electric generation and transmission service or sufficient natural gas supply and delivery capability, or both, to serve the requirements of its firm customers.

2. Abide by any applicable regulation or procedure of any institution charged with ensuring the reliability of the electric or natural gas systems, including the State Corporation Commission, the North American Electric Reliability Corporation, and the Federal Energy Regulatory Commission, or any successor agencies thereto.

3. Comply with any obligations that the State Corporation Commission may impose to ensure access to sufficient availability of capacity.

G. The local distribution company and a competitive service provider shall not:

1. Suggest that the services provided by the local distribution company are of any different quality when competitive energy services are purchased from a particular competitive service provider; or

2. Suggest that the competitive energy services provided by a competitive service provider are being provided by the local distribution company rather than the competitive service provider.

H. The local distribution company shall conduct its forecasting, scheduling, balancing, and settlement activities in a nondiscriminatory and reasonably transparent manner.

I. The local distribution company shall bear the responsibility for metering as provided by legislation and implemented by the State Corporation Commission.

J. The local distribution company and a competitive service provider shall adhere to standard practices for exchanging data and information in an electronic medium as specified by the VAEDT and filed with the State Corporation Commission or as otherwise provided by the local distribution company's tariff approved by the State Corporation Commission. In the event the parties agree to initially use a means other than those specified by VAEDT or the local distribution company's tariff, then the competitive service provider shall file a plan with the State Corporation Commission's Division of ~~Economics and Finance~~ Energy Regulation to implement VAEDT or tariff approved standards within 180 days of the initial retail offering.

K. The local distribution company and a competitive service provider that is responsible for exchanging customer information electronically with such local distribution company shall, except as otherwise provided by the local distribution company's tariff approved by the State Corporation Commission, successfully complete EDI testing and receive certification for all EDI transactions, as outlined in the VAEDT EDI Test Plan, prior to actively enrolling customers, except as permitted by subsection [ K J ] of this section.

L. A competitive service provider offering billing service that requires the direct delivery of a bill to a customer and that requires the electronic exchange of data with the local distribution company shall furnish, prior to enrolling the customer, a sample bill produced from the data exchanged in the EDI certification process, or comparable electronic data exchange process, as described in subsection L of this section, or a sample bill produced similarly elsewhere, to the State Corporation Commission's Division of Energy Regulation ~~and Division of~~ ~~Economics and Finance~~.

M. Upon enrollment of a customer to receive competitive supply service, the local distribution company shall file with the State Corporation Commission's Division of Energy Regulation ~~and Division of Economics and Finance~~ a monthly report which shall, at a minimum, include all cancellation requests alleging a customer was enrolled without authorization. Such reports shall include: (i) the approximate date of the enrollment; (ii) the identity of the competitive service provider involved; (iii) the name and address of the customer that cancelled such enrollment; and (iv) if readily available, a brief statement regarding the customer's explanation for the cancellation. Such reports shall be reviewed by commission staff and regarded as confidential unless and until the State Corporation Commission orders otherwise.

N. Upon enrollment of a customer to receive competitive supply service, the local distribution company shall file with the State Corporation Commission's Division of ~~Economics and Finance~~ Energy Regulation a quarterly report providing a detailed breakdown of residential and nonresidential customer switching activity. Such reports shall include, for the local distribution company, the total number of customers and corresponding amount of load eligible to switch; and, for each competitive service provider, the total number of customers and corresponding amount of load served. The amount of load shall be measured in MW, Mcf, or dekatherm capacity of peak load contribution and in kWh, Mcf, or therms of associated energy. Such reports shall be reviewed by commission staff and information specific to individual competitive service providers shall be regarded as confidential unless and until the State Corporation Commission orders otherwise.

O. By March 31 of each year, the provider of electricity supply service shall report to its customers and file a report with the State Corporation Commission stating to the extent feasible, fuel mix and emissions data for the prior calendar year. If such data is unavailable, the provider of electricity supply service shall file a report with the State Corporation Commission stating why it is not feasible to submit any portion of such data.

P. A competitive service provider shall file a report with the State Corporation Commission by March 31 of each year to update all information required in the original application for licensure. A $100 administrative fee payable to the State Corporation Commission shall accompany this report.

Q. A competitive service provider shall inform the State Corporation Commission within 30 days of the following: (i) any change in its name, address and telephone numbers; (ii) any change in information regarding its affiliate status with the local distribution company; (iii) any changes to information provided pursuant to 20VAC5-312-40 A 13; and (iv) any changes to information provided pursuant to 20VAC5-312-40 A 15.

R. If a filing with the State Corporation Commission, made pursuant to this chapter, contains information that the local distribution company or a competitive service provider claims to be confidential, the filing may be made under seal provided it is accompanied by both a motion for protective order or other confidential treatment and an additional five copies of a redacted version of the filing to be available for public disclosure. Unredacted filings containing the confidential information shall be maintained under seal unless the State Corporation Commission orders otherwise, except that such filings shall be immediately available to the commission staff for internal use at the commission. Filings containing confidential or redacted information shall be so stated on the cover of the filing, and the precise portions of the filing containing such confidential or redacted information, including supporting material, shall be clearly marked within the filing.

20VAC5-312-50. Competitive service provider registration with the local distribution company.

A. A competitive service provider shall submit to the local distribution company the full name of the competitive service provider, the type of entity (e.g., partnership, corporation, etc.), physical street and mailing addresses.

B. A competitive service provider shall furnish the local distribution company and the transmission provider proof of licensure from the State Corporation Commission to provide competitive energy services in the Commonwealth. A competitive service provider shall provide notice of any suspension or revocation of its license to the local distribution company and the transmission provider upon issuance of the suspension or revocation by the State Corporation Commission.

C. A competitive service provider and the local distribution company shall exchange the names, telephone numbers, and e-mail addresses of appropriate internal points of contact to address operational, business coordination and customer account issues, and the names and addresses of their registered agents in Virginia.

D. The local distribution company may require reasonable financial security from the competitive service provider to safeguard the local distribution company and its customers from the reasonably expected net financial impact due to the nonperformance of the competitive service provider. The amount of such financial security shall be commensurate with the level of risk assumed by the local distribution company, as determined by the local distribution company's applicable tariff approved by the State Corporation Commission. Such financial security may include a letter of credit, a deposit in an escrow account, a prepayment arrangement, a surety bond, or other arrangements that may be mutually agreed upon by the local distribution company and the competitive service provider. Disagreements with respect to financial security shall be subject to the dispute resolution procedures established pursuant to 20VAC5-312-110 G.

E. Prior to imposing a non-emergency related restriction or disqualification on a competitive service provider, as provided by its tariff approved by the State Corporation Commission, the local distribution company shall notify the competitive service provider of the impending restriction or disqualification and its effective date, the alleged action or inaction that merits such restriction or disqualification, and the actions, if any, that the competitive service provider may take to avoid the restriction or disqualification. Such notice shall be in writing and sent to the competitive service provider via fax or overnight delivery. A copy of the notice shall be forwarded contemporaneously to the State Corporation Commission's Division of Energy Regulation ~~and Division of~~ ~~Economics and Finance~~ via fax or overnight delivery.

20VAC5-312-90. Billing and payment.

A. A competitive service provider may offer separate billing service or consolidated billing service, where either the local distribution company or the competitive service provider would be the billing party, to prospective customers pursuant to the local distribution company's tariff approved by the State Corporation Commission. Where a competitive service provider would be the billing party, prior to an initial offering of consolidated billing service to customers within the service territory of each local distribution company, and after certification as required by 20VAC5-312-20 K, the competitive service provider shall abide by the following requirements:

1. The competitive service provider shall provide written notice, at least 30 days in advance, to the local distribution company and to the State Corporation Commission's Division of Energy Regulation ~~and Division of Economics and Finance~~. The written notification to the Division of Energy Regulation ~~and the Division of Economics and Finance~~ shall include:

a. The anticipated date of the initial consolidated billing service offering in each local distribution company service territory in which the service will be offered.

b. Any changes in information provided by the competitive service provider in its original license application pursuant to 20VAC5-312-40 A that have not been reported to the State Corporation Commission pursuant to 20VAC5-312-20 P and 20VAC5-312-20 Q.

c. The expected maximum market penetration for the provision of consolidated billing service to electricity customers during the following 12 months, including the estimated number of customers and associated annual consumption by customer type or load profile classification.

d. A representation that the electric competitive service provider has undertaken the necessary preliminary coordination efforts with tax officials of each potentially affected locality regarding the competitive service provider's obligation to collect and remit local consumption taxes and local utility consumer taxes.

2. The competitive service provider shall establish such financial security as the State Corporation Commission may require for such competitive service provider's estimated liability associated with the collection and remittance of state, local, and special regulatory consumption taxes and local utility consumer taxes.

B. Subject to the exemptions applicable to municipal electric utilities ~~and utility consumer service cooperatives~~ set forth in § ~~56-581.1 J~~ 56-581 C of the Code of Virginia, a competitive service provider shall coordinate the provision of the customer-selected billing service with the local distribution company by any means specified by VAEDT or as otherwise provided by the local distribution company's tariff approved by the State Corporation Commission.

C. Consolidated billing, except as otherwise arranged through contractual agreement between the local distribution company and a competitive service provider or as otherwise provided by the local distribution company's tariff approved by the State Corporation Commission, shall:

1. Be performed under a "bill-ready" protocol.

2. Not require the billing party to purchase the accounts receivable of the nonbilling party.

3. Not require the electric local distribution company to include natural gas competitive energy service charges on a consolidated bill or the natural gas local distribution company to include electric competitive energy service charges on a consolidated bill.

4. Not require the local distribution company to exchange billing information for any customer account with more than one competitive service provider for the same billing period.

5. Comply with the local distribution company's normal billing and credit cycle requirements for distribution service.

D. In the event a competitive service provider collects security deposits or prepayments, such funds shall be held in escrow by a third party in Virginia, and the competitive service provider shall provide to the State Corporation Commission the name and address of the entity holding such deposits or prepayments.

E. A competitive service provider requiring a deposit or prepayment from a customer shall limit the amount of the deposit or prepayment to the equivalent of a customer's estimated liability for no more than three months' usage of services from the competitive service provider by that customer.

F. Customer deposits held or collected by a local distribution company shall be for only those services provided by the local distribution company. Any deposit held in excess of this amount shall be promptly credited or refunded to the customer. The local distribution company may, upon a customer's return to regulated electricity supply service or natural gas supply service, collect that portion of a customer deposit as permitted by the local distribution company's tariffs and 20VAC5-10-20.

G. Terms and conditions concerning customer disconnection for nonpayment of regulated service charges shall be set forth in each local distribution company's tariff approved by the State Corporation Commission. A customer may not be disconnected for nonpayment of unregulated service charges. If a customer receives consolidated billing service and a competitive service provider is the billing party, the local distribution company shall advise the customer directly of any pending disconnection action for nonpayment through 10 days' notice by mail, separate from the consolidated bill. Such notice shall clearly identify the amount that must be paid and the date by which such amount must be received by, and also provide instructions for direct payment to, the local distribution company to avoid disconnection.

H. The provision of consolidated billing service shall conform to the following requirements:

1. The billing party shall apply a customer's partial payment of a consolidated bill as designated by the customer, or, in the absence of a customer's designation, to charges in the following order: (i) to regulated service arrearages owed the local distribution company; (ii) to competitive energy service arrearages owed the competitive service provider; (iii) to regulated service current charges of the local distribution company; (iv) to competitive energy service current charges of the competitive service provider; and (v) to other charges.

2. Collections of state and local consumption taxes and local utility consumer taxes shall be remitted as required by law. The person responsible for collecting and remitting such taxes shall:

a. Submit simultaneously, on or before the last day of the succeeding month of collection to the State Corporation Commission's Division of Public Service Taxation, the payment of the preceding month's state and special regulatory consumption taxes and associated Electric Utility or Natural Gas Consumption Tax Monthly Report.

b. Submit simultaneously, in accordance with the Code of Virginia and local ordinance, to each local government in whose jurisdiction the taxes have been collected, the payment of local consumption taxes and local utility consumer taxes and associated tax remittance reports.

I. The local distribution company and a competitive service provider shall comply with the following minimum billing information standards applicable to all customer bills:

1. Sufficient information shall be provided or referenced on the bill so that a customer can understand and calculate the billing charges.

2. Charges for regulated services and unregulated services shall be clearly distinguished.

3. Standard terminology shall be employed and charges shall be categorized for the following key bill components, as applicable: (i) distribution service; (ii) electricity supply service or natural gas supply service; (iii) state and local consumption tax; and (iv) local (or locality name) utility tax. The bill may provide further detail of each of these key components as appropriate.

4. Nonroutine charges and fees shall be itemized including late payment charges and deposit collections.

5. The total bill amount due and date by which payment must be received to avoid late payment charges shall be clearly identified.

6. The 24-hour toll-free telephone number of the local distribution company for service emergencies shall be clearly identified.

7. In the event a disconnection notice for nonpayment is included on a customer bill issued by the local distribution company, the notice shall appear on the first page of the bill and be emphasized in a manner that draws immediate attention to such notice. The notice shall clearly identify the amount that must be paid and the date by which such amount must be paid to avoid disconnection.

8. The following additional information shall be provided on customer bills to the extent applicable:

a. Customer name, service address, billing address, account number, rate schedule identifier, and meter identification number.

b. Billing party name, payment address, and toll-free telephone number for customer inquiries and complaints.

c. For consolidated bills, nonbilling party name and toll-free telephone number for customer inquiries and complaints and the customer's local distribution company account number.

d. Bill issue date and notice of change in rates.

e. Previous and current meter readings and dates of such meter readings or metering period days, current period energy consumption, meter reading unit conversion factor, billing-demand information, and "estimated" indicator for non-actual meter reads.

f. Previous bill amount or account balance, payments received since previous billing, balance forward, current charges, total amount due or current account balance, and payment plan information.

g. For consolidated bills, billing party and nonbilling party elements as specified in subdivision 8 f of this subsection.

J. The local distribution company shall comply with the following additional billing information standards applicable to the bills of customers that are not subject to demand-based billing charges and that purchase regulated electricity supply service or regulated natural gas supply service from the local distribution company:

1. The local distribution company shall employ standard terminology and categorize charges for the following key billing components: (i) distribution service; (ii) electricity supply service or natural gas supply service; (iii) state and local consumption tax; and (iv) local (or locality name) utility tax. Brief explanations of distribution service and electricity supply service or natural gas supply service shall be presented on the bill. Such explanations shall convey that distribution service is a regulated service that must be purchased from the local distribution company and that electricity supply service or natural gas supply service may be purchased from the competitive market;

2. The local distribution company shall provide on customer bills a customer's monthly energy consumption, numerically or graphically, for the previous 12 months; and

3. The investor-owned electric local distribution company shall provide on each bill a "price-to-compare" value, stated in cents per kilowatt-hour, representing the cost of regulated electricity supply service that would be applicable if such service were purchased from a competitive service provider. The appropriate use and limitations of such "price-to-compare" value shall be stated on the bill.

K. The local distribution company shall develop and implement a program to provide "price-to-compare" information and assistance to customers. Such a program shall ensure that customers will be provided meaningful information for evaluating competitive offers of electricity supply service or natural gas supply service. At a minimum, the program shall include a mechanism for providing, or making readily accessible, customer-specific "price-to-compare" information, including explanations of its appropriate use and limitations.

L. The billing party shall, except as otherwise arranged through contractual agreement with the nonbilling party, provide sufficient space on a consolidated bill to accommodate the local distribution company's customer account number and the nonbilling party's name and toll-free telephone number, previous bill amount or account balance, payments applied since the previous billing, balance forward, total current charges, total amount due or current account balance, six additional numeric fields to detail current charges, and 240 additional text characters.

M. If the local distribution company, as the billing party, provides consolidated billing service to a customer and continues to be the customer's billing party after the customer's service with a competitive service provider terminates, the local distribution company shall, except as otherwise arranged through contractual agreement with such competitive service provider, continue to track and bill customer account arrearages owed to such competitive service provider for two billing cycles after service has terminated. The bill shall list, at a minimum, the name, toll-free telephone number, and balance due for each former competitive service provider.

N. If the current charges of the nonbilling party are not included on the consolidated bill issued by the billing party, the bill shall note that such charges are not included.

O. If the current charges of the nonbilling party are not included on the consolidated bill issued by the billing party due to causes attributable to the nonbilling party, the charges shall be billed in the following month unless the two parties mutually agree to other arrangements.

P. If the current charges of the nonbilling party are not included on the consolidated bill issued by the billing party due to causes attributable to the billing party, the bill shall be cancelled and reissued to include such charges unless the two parties mutually agree to other arrangements.

Q. The local distribution company or a competitive service provider shall report any significant deficiency regarding the timely issuance, accuracy, or completeness of customer bills to the State Corporation Commission's Division of Energy Regulation as soon as practicable. Such reports shall detail the circumstances surrounding the deficiency and the planned corrective actions.

R. If the local distribution company has an approved tariff for electric energy provided 100% from renewable energy pursuant to § 56-577 A 5 of the Code of Virginia, the provisions of subsections A through Q of this section shall not be applicable. Instead, an electric distribution company and an electric competitive service provider shall only offer separate billing service where both would be the billing party for the respective services to prospective customers pursuant to the local distribution company's tariff approved by the State Corporation Commission.

20VAC5-314-10. Applicability and scope; waiver.

A. These regulations are promulgated pursuant to § 56-578 of the Virginia Electric Utility ~~Restructuring~~ Regulation Act (§ 56-576 et seq. of the Code of Virginia). They establish standardized interconnection and operating requirements for the safe operation of electric generating facilities with a rated capacity of 20 megawatts (MW) or less connected to electric utility distribution (and in certain cases transmission) systems in Virginia. These regulations apply to utilities providing interconnections to retail electric customers, independently owned generators and any other parties operating, or intending to operate, a distributed generation facility in parallel with utility systems. These regulations do not apply to customer generators operating pursuant to the Virginia State Corporation Commission's Regulations Governing Net Energy Metering (20VAC5-315) or those that fall under the jurisdiction of the Federal Energy Regulatory Commission (FERC).

If the utility has turned over control of its transmission system to a Regional Transmission Entity (RTE), and if the small generator interconnection process identifies upgrades to the transmission system as necessary to interconnect the small generating facility, then the utility will coordinate with the RTE, and the procedures herein will be adjusted as necessary to satisfy the RTE's requirements with respect to such upgrades.

There are three review paths for the interconnection of generation in Virginia having an output of not more than 20 MW:

Level 1 - A request to interconnect a small generating facility (SGF) no larger than 500 kilowatts (kW) shall be evaluated under the Level 1 process.

Level 2 - A request to interconnect a certified SGF no larger than 2 MW and not qualifying for the Level 1 process shall be evaluated under the Level 2 process.

Level 3 - A request to interconnect an SGF no larger than 20 MW and not qualifying for the Level 1 process or Level 2 process, shall be evaluated under the Level 3 process.

The utility may limit the interconnection of an SGF to a distribution feeder to a capacity substantially less than 20 MW, depending upon the characteristics of that feeder and the potential for upgrading it, as well as the nature of the loads and other generation on the feeder relative to the proposed point of interconnection. If the SGF cannot be safely and reliably interconnected to the utility's distribution feeder, the utility shall work with the IC to interconnect the SGF to the utility's transmission system. In such cases, the interconnection of the SGF may be governed by the regulations promulgated by FERC rather than the regulation of the State Corporation Commission.

The utility shall designate an employee or office from which the interconnection customer (IC) may informally request information concerning the application process. The name, telephone number, and email address of such contact employee or office shall be made available on the utility's Internet website. Electric system information relevant to the location of the proposed SGF shall be provided to the IC upon request and may include interconnection studies and any other relevant materials, to the extent such provision does not violate confidentiality provisions of prior agreements or release critical infrastructure information. The utility shall comply with reasonable requests for such information unless the information is proprietary or confidential and cannot be provided pursuant to a confidentiality agreement.

The utility shall make reasonable efforts to meet all time frames provided in these regulations unless the utility and the IC agree to a different schedule. If the utility cannot meet a deadline provided herein, it shall notify the IC, explain the reason for the failure to meet the deadline, and provide an estimated time by which it will complete the applicable interconnection procedure in the process.

Each utility shall have on file with the commission terms and conditions applicable to the interconnection of SGFs. Such terms and conditions shall, at a minimum, incorporate this chapter by reference, shall set forth terms and conditions applicable to SGFs for which no Small Generator Interconnection Agreement (SGIA) is executed, and shall not conflict with the provisions of this chapter. The terms and conditions applicable to SGFs for which no SGIA is executed shall be reasonably consistent with the terms and conditions of the SGIA.

B. The commission may waive any or all parts of the provisions of this chapter for good cause shown.

20VAC5-320-10. Applicability and scope.

These regulations are promulgated pursuant to the provisions of the Virginia Electric Utility ~~Restructuring~~ Regulation Act (§ 56-576 et seq. of the Code of Virginia), and they apply to any incumbent electric utility owning, operating, controlling, or having an entitlement to transmission capacity within the Commonwealth. Sections 56-577 and 56-579 of the Act require Virginia's incumbent electric utilities to (i) join or establish regional transmission entities (RTEs) by January 1, 2001, and (ii) seek the commission's authorization to transfer their transmission assets to such RTEs.

Specifically, § 56-577 of the Code of Virginia requires that on or before January 1, 2001, incumbent electric utilities owning, operating, controlling, or having entitlement to transmission capacity join or establish RTEs. The utilities are required to transfer the management and control of their transmission systems to the RTEs, subject to the provisions of § 56-579 of the Code of Virginia.

Additionally, § 56-579 provides that no incumbent electric utility shall transfer to any person any ownership, control, or operation of any portion of any transmission system within the Commonwealth without obtaining the commission's prior approval.

Finally, certain transfers of utility assets are subject to the Utilities Transfers Act (§ 56-88 et seq. of the Code of Virginia).

In short, incumbent electric utilities that own, operate, control or have entitlement to transmission capacity are subject to three provisions: (i) the obligation to join or establish an RTE, (ii) the obligation to obtain commission approval before transferring ownership, control or operation to an RTE, and (iii) obligations imposed by the Utilities Transfers Act. Although these provisions are distinct, they overlap.

In the interest of administrative efficiency, the commission will utilize a single proceeding in which the utility seeks approval for a proposed transfer under § 56-579 of the Code of Virginia and under the Utilities Transfers Act. In that proceeding, the commission will determine whether (i) the RTE to which the applicant proposes to transfer any ownership or control of, or any responsibility to operate, any portion of its transmission system satisfies the legislative criteria set forth in § 56-579 of the Code of Virginia, and (ii) the transfer otherwise satisfies the provisions of § 56-579 and the Utilities Transfers Act.

Accordingly, these regulations establish:

1. The elements of regional transmission entity structures essential to the public interest, to be applied by the commission in determining whether to authorize transfer of ownership or control from an incumbent electric utility to a regional transmission entity, all as required by § 56-579 of the Code of Virginia;

2. Filing requirements for entities that (i) are required to comply with the mandate of § 56-577 of the Code of Virginia that certain entities join or establish regional transmission entities, and (ii) seek the commission's permission to transfer control, ownership, or responsibility of or for transmission to a regional transmission entity pursuant to § 56-579 of the Code of Virginia and the Utilities Transfers Act; and

3. A schedule for such filings by the entities having obligations under § 56-577 of the Code of Virginia.

20VAC5-320-20. Definitions.

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

"Act" means the Virginia Electric Utility ~~Restructuring~~ Regulation Act.

"Commission" or "SCC" means the State Corporation Commission.

"FERC" means the Federal Energy Regulatory Commission.

"Incumbent electric utility" shall have the same meaning as set forth in § 56-576 of the Code of Virginia.

"Rate pancaking" means the practice of (i) requiring a transmission customer to pay a separate access charge each time the contract path associated with the customer's transaction crosses the boundary of another transmission owner, so as to count more than once the quantity transmitted or (ii) otherwise counting the quantity transmitted more than once in the calculation of the transmission customer's charges for transmission services, ancillary services, or both.

"Regional transmission entities" or "RTEs" means any individual, corporation, cooperative, municipality, partnership, association, company, business, trust, joint venture, or other private legal entity that may receive or has received, by transfer pursuant to this chapter, any ownership or control of, or any responsibility to operate, all or part of the transmission systems in the Commonwealth.

"Transmission assets" means the facilities and equipment owned, operated, or controlled by incumbent electric utilities, and required for the transmission of electric energy. The term also includes facilities and equipment for the transmission of electric energy when incumbent electric utilities have entitlement to the transmission capacity thereof.

20VAC5-403-50. Contents of application for a rate increase by a company having more than $3 million in gross annual operating revenue or that is a subsidiary of a telecommunications company.

A. An application for a rate increase filed pursuant to this chapter by a small telephone company having more than $3 million in gross annual operating revenue or that is a subsidiary of a telecommunications company, which means a corporation that owns, manages, or controls any plant or equipment for the conveyance of voice or data messages, either directly or indirectly to or for the public, shall include:

1. The name and post office address of the applicant and the name and post office address of its counsel (if any);

2. A clear description of the proposed tariff changes, and a narrative explaining why an increase in rates is needed, as well as the overall percentage increase in rates proposed;

3. All direct testimony by which the applicant expects to support the rate increase. In lieu of prefiling direct testimony, the applicant may submit an affidavit which certifies that the information in the application is correct and that the applicant adopts the information contained in the schedules as its evidence in support of the application.

4. Exhibits consisting of Schedules 1 through 16 shown in the Appendix to this chapter shall be submitted with the applicant's direct testimony or affidavit adopting the information contained in the schedules.

5. Exhibits consisting of additional schedules may be submitted with the applicant's direct testimony. Such schedules shall be identified as Schedule 17 et seq.

B. All applications shall be filed in an original and 15 copies with the exception of Schedule 12. Two copies of Schedule 12 shall be filed directly with the commission's Division of ~~Public~~ Utility Accounting and Finance. Additional copies of Schedule 12 shall be made available to parties upon request. An application shall not be deemed filed with the commission for the purposes of §§ 56-238 and 56-240 of the Code of Virginia unless all information required is filed in conformity with this chapter and accompanying schedules.

C. The selection of a test period is up to the applicant. However, the use of overlapping test periods shall not be permitted.

D. 1. The applicant shall serve a copy of the information required in subdivisions A 1 and A 2 of this section upon the Commonwealth's Attorney and Chairman of the Board of Supervisors of each county (or equivalent officials in counties having alternate forms of government) in this Commonwealth affected by the proposed rate increase and upon the mayor or manager and the attorney of every city and town (or on equivalent officials in towns and cities having alternate forms of government) in this Commonwealth affected by the proposed rate increase.

2. The applicant shall also serve each such official with a statement that a copy of the complete application may be obtained at no cost by making a request either orally or in writing to a specified officer of the applicant.

3. The applicant shall serve a copy of its complete application upon the Division of Consumer Counsel, Office of the Attorney General.

4. All service specified by this section shall be made either by (i) personal delivery, or (ii) by first-class mail, postage prepaid, to the customary place of business or the residence of the person served.

APPENDIX A

Schedule 1
Capital Structure and Cost of Capital Statement

Instructions: This schedule shall state the amount of each capital component per balance sheet, the amount for ratemaking purposes, the percentage weight in the capital structure, the component cost, and the weighted capital cost, using the format of the attached schedule. This information shall be provided for the test period. In Part A, the test period information should be compatible with the State Corporation Commission Annual Operating Report. The methodology used in constructing the capital structure should be consistent with that approved in the applicant's last rate case. If the applicant wishes to use a different methodology (including a change in cost of equity) in constructing its capital structure in a rate application, it may prepare an additional schedule labelled as Schedule 1(a) explaining the methodology used and justifying any departure from applicant's last rate case.

The amounts and costs for short-term debt, revolving credit agreements, and similar arrangements shall be based on a 13-month average over the test year, or, preferably, a daily average during the test year, if available. All other test period amounts are end-of-year. The component weighted cost rates equal the product of each component's capital structure weight for ratemaking purposes times its cost rate. The weighted cost of capital is equal to the sum of the component weighted cost rates.

Schedule 1
Capital Structure and Cost of Capital Statement Test Period

A. Capital Structure Per Balance Sheet ($)

Short-Term Debt

Customer Deposits

Other Current Liabilities

Long-Term Debt

Common Equity

Investment Tax Credits

Other Tax Deferrals

Other Liabilities

Total Capitalization

B. Capital Structure Approved for Ratemaking Purposes ($)

Short-Term Debt

Long-Term Debt

Job Development Credits

Cost-Free Capital

Common Equity

Total Capitalization

C. Capital Structure Weights for Ratemaking Purposes (%)

Short-Term Debt

Long-Term Debt

Job Development Credits

Cost-Free Capital

Common Equity

Total Capitalization (100%)

D. Component Capital Cost Rates (%)

Short-Term Debt

Long-Term Debt

Job Development Credits

Cost-Free Capital

Common Equity (Authorized)

E. Component Weighted Cost Rates (%)

Short-Term Debt

Long-Term Debt

Job Development Credits

Cost-Free Capital

Common Equity (Authorized)

Weighted Cost of Capital

Schedule 2
Schedule of Bonds, Mortgages, Other Long-Term Debt, and Cost-Free Capital

Instructions: Provide a description of each issue, amount outstanding, percentage of total capitalization, and annualized cost based on the embedded cost rate. These data shall support the debt cost contained in Schedule 1. Provide a detailed breakdown of all cost-free capital items contained in Schedule 1.

Schedule 3
Schedule of All Short-Term Debt, Revolving Credit Agreements, and Similar Arrangements

Instructions: Provide data and explain the methodology used to calculate the cost and balance contained in Schedule l for short-term debt, revolving credit agreements, and similar arrangements.

Schedule 4
Stockholders' Annual Report

Instructions: Provide a copy of the most recent stockholders' annual report and SEC Form 10K (if SEC Form 10K is available).

Schedule 5
Company Profitability and Capital Markets Data

Instructions: This schedule shall be prepared by companies having more than $3 million in gross annual operating revenue which are not a subsidiary of a telecommunications company, using the definitions provided below and the format of the attached schedule. These companies shall provide data for the two most recent calendar years plus the test period. This information shall be compatible with the latest Stockholders' Annual Reports (including any restatements).

Definitions

Return on Year-End Equity* =	Earnings Available for Common Stockholders
	Year-End Common Equity

Return on Average Equity* =	Earnings Available for Common Stockholders
	The Average of Year-End Equity for the Current & Previous Year

Earnings Per Share (EPS) =	Earnings Available for Common Shareholders
	Average No. Common Shares Outstanding

Dividends Per Share (DPS) = Common Dividends Paid Per Share During the Year

Payout Ratio = DPS/EPS

Average Market Price** = (Yearly High + Yearly Low Price)/2 (if known)

*Job Development Credits shall not be included as part of equity capital nor shall a deduction be made from earnings for a capital charge on these Job Development Credits.

**An average based on monthly highs and lows is also acceptable. If this alternative is chosen, provide monthly market prices and sufficient data to show how the calculation was made.

Schedule 5
Company Profitability and Capital Market Data Test Period

A. Ratios

Return on Year-End Equity

Return on Average Equity

Earnings Per Share

Dividends Per Share

Payout Ratio

Market Price of Common Stock:

Year's High

Year's Low

Average Price

B. External Funds Raised

External Funds Raised -- All Sources (itemized)

Dollar Amount Raised

Coupon Rate (if applicable)

Rating Service (if applicable)

Average Offering Price (for Stock)

Schedule 6
Coverage Ratios and Cash Flow Profile Data

Instructions: This schedule shall be prepared using the definitions and instructions given below and using the format of the attached schedule for the past two calendar years plus the test period.

- Interest (lines 3, 4, 5) shall include amortization of discount expense and premium on debt without deducting an allowance for borrowed funds used during construction.

- Income taxes (line 2) shall include federal and state income taxes (in Virginia gross receipts tax should be considered State income tax).

- Earnings before interest and taxes (line 6) equals net income plus income taxes plus total interest = (line 1) + (line 2) + (line 5).

- IDC (line 8), where applicable, is total IDC - allowance for borrowed and other funds.

- Cash flow generated (line 14) = (line 1) + (line 9) + (line 10) + (line 11) + (line 12) - (line 8) - (line 13).

- Construction expenditures (line 15) is net of IDC.

Coverage definitions for Schedule 6

Pre-Tax Interest Coverage =	Earnings before Interest & Taxes	=	line 6
	Interest		line 5

Common Dividend Coverage =	Cash Flow Generated	=	line 14
	Common Dividends		line 16

Cash Coverage of Construction Expenditures =	Cash Flow Generated	=	line 14
	Construction		line 15

Schedule 6
Coverage Ratios and Cash Flow Data Test Period

Interest Coverage Ratios

a. Pre-Tax Method

Cash Flow Coverage Ratios

a. Common Dividend Coverage

b. Cash Flow Coverage of Construction Expenditures

Data for Interest Coverage

Line 1. Net Income

Line 2. Income Taxes

Line 3. Interest on Mortgages

Line 4. Other Interest

Line 5. Total Interest

Line 6. Earnings Before Interest and Taxes

Line 7. Estimated Rental Interest Factor (SEC)

Data for Cash Flow Coverage

Line 1. Net Income

Line 8. Interest During Construction (IDC)

Line 9. Amortization

Line 10. Depreciation

Line 11. Change in Deferred Taxes

Line 12. Change in Investment Tax Credits

Line 13. Preferred Dividends Paid

Line 14. Cash Flow Generated

Line 15. Construction Expenditures

Line 16. Common Dividends Paid

Schedule 7
Comparative Balance Sheets

Instructions: Provide a comparative balance sheet for the test period and the corresponding 12-month period immediately preceding the test period.

Schedule 8
Comparative Income Statement

Instructions: Provide a comparative income statement for the test period and the 12-month period immediately preceding the test period.

Schedule 9
Rate of Return Statement

Instructions: Use the format of the attached schedule. Column 1 should state the Applicant's total Company per books results for the test period. Non-jurisdictional amounts will be shown in Column 2, and Column 3 will reflect Virginia jurisdictional amounts. Adjustments to test period per books results shall be shown in Column 4. These adjustments shall be explained in Schedule 11. If a calendar year test period is used, Column 1 can be prepared from information filed by Applicant in its annual report to the commission. If a calendar year test period is used, operating revenue line items can be found in Schedule 34 at page 58 of the Annual Report. "Depreciation and Amortization" is set forth on Line 23 of Schedule 35 at page 60 of the Annual Report. "Operating and Maintenance Expense" can be derived by subtracting the amount of depreciation and amortization expense from total operating expenses (Schedule 35, line 68). Interest on customer deposits must be calculated from Applicant's books. Column 6 should show the increase requested by Applicant.

Schedule 9
Rate of Return Statement Test Period

	Total Company Per Books	Virginia Non-Jurisdic. Amounts	Jurisdic. Amounts	Amounts Adjustments	Effect of After Adjustments	After Proposed Increase	Proposed Increase
	Col. (1)	Col. (2)	Col. (3)	Col. (4)	Col. (5)	Col. (6)	Col. (7)
Operating Revenues
Local Service
Toll Service
Access Charges
Miscellaneous
Less: Uncollectible
Total Revenues
Operating Expenses
Operating and Maintenance Expense
Depreciation and Amortization
Income Taxes
Taxes Other than Income Taxes
Gain/Loss on Property Disposition
Total Expenses
Operating Income
Less: Charitable Donations
Interest Expense on Customer Deposits
Net Operating Income -- Adjusted
Plus: Other Income (Expense)
Less: Interest Expense
Preferred Dividend Expense
JDC Capital Expense
Income Available for Common Equity
Allowance for working capital
Net Utility Plant
Total Rate Base
Total Capital for Ratemaking
Common Equity Capital
Rate of Return Earned on Rate Base
Rate of Return Earned on Common Equity

Schedule 10
Statement of Net Original Cost of Utility Plant and Allowances for Working Capital for the Test Year

Instructions: This schedule should be constructed using the ratemaking policies, procedures, and guidelines last prescribed for Applicant by the commission. The schedule should indicate all property held for future use by account number and the date of the planned use should be shown. In a footnote, applicant should identify the amount of plant and working capital devoted to non-regulated business activities, if any. Such plant shall not be included in the rate base. Applicants should use the format described below. The unamortized balance of investment tax credits shall be deducted from the rate base if the telephone company is subject to Option 1 treatment under I.R.S. Code § 46(f). Column (4) adjustments should be explained and detailed in Schedule 11. Columns (2) and (3) only apply to companies with over $3,000,000 in gross annual operating revenues which are subsidiaries of telecommunications companies.

Schedule 10
Net Original Cost of Utility Plant and Allowances

	Total Company Per Books	Non-Jurisdic. Amounts	Jurisdic. Amounts	Adjustments	Amounts After Adjustments
	Col. (1)	Col. (2)	Col. (3)	Col. (4)	Col. (5)
Telephone Plant in Service
Telephone Plant under construction
Property held for future use
Gross Plant
Less: Reserve for Depreciation
Net Telephone Plant
Allowance for Working Capital
Materials and supplies (13-month average)
Cash (20 days of O&M expenses)
Total Allowance for Working Capital
Other Rate Base Deductions:
Customer Deposits
Deferred Federal Income Taxes
Customer Advances for Construction
Option 1 Investment Tax Credits
Total Other Rate Base Deductions
Rate Base

Schedule 11
Explanation of Adjustments to Book Amounts

Instructions: All ratemaking adjustments to test period operations (test period and proforma) are to be fully explained in a supporting schedule to the applicant's Schedules 9 and 10. Such adjustments shall be numbered sequentially beginning with operating revenues. Supporting data for each adjustment, including the details of its calculation, should be provided. Examples of adjustments include:

1. Adjustments to annualize changes occurring during the test period.

2. Adjustments to reflect known and certain changes in wage agreements and payroll taxes occurring in the test period and proforma period (the 12-month period following the test period).

3. Adjustments to reflect depreciation and property taxes based on end-of-period plant balances.

4. Adjustments relating to other known changes occurring during the test period or proforma period.

5. Amounts relating to known and certain changes in company operations that take place in the proforma period can be adjusted through the end of the rate year. The rate year shall be defined as the 12 months following the effective date of new rates. The proforma period shall be defined as the 12 months immediately following the test year.

Schedule 12
Working Papers

Instructions: Provide detailed work papers and supporting schedules of all proposed adjustments. Two copies of this exhibit shall be filed with the commission's ~~Divisions~~ Division of ~~Public~~ Utility Accounting and ~~Economics and~~ Finance. Copies shall be provided to other parties on request. Each schedule shall identify sources of all data. Data shall be clearly identified as actual or estimated.

Schedule 13
Revenue and Expense Schedule

Instructions: The applicant shall provide information about revenues by primary account (consumer classification) and operating and maintenance expenses by primary account during the test period.

The applicant shall also provide a detailed explanation of all revenue and expense item increases and decreases of more than 10% during the test period as compared to the 12-month period immediately preceding the test period. Worksheets used to compute the percentage change should be available for review upon request.

Schedule 14
Explanation of Proposed Revenue Requirement Calculation

Instructions: Provide a schedule describing the methodology used to determine the revenue requirement shown on Schedule 9, Column 6.

Schedule 15
Additional Revenues

Instructions: Show the calculations of the additional gross revenues and percentage increases by customer classes that would be produced by the new rates during the test period.

Schedule 16
Statement of Compliance

Instructions: Include the following statement signed by the person(s) sponsoring the application:

I, (Name of Sponsoring Party), (Title), affirm that this application complies with the commission's rules for small investor-owned telephone utilities' applications for increases in rates, and I further affirm that the schedules filed to support the application comply with the instructions for the schedules set forth in the Appendix to those rules.


(Signature of Sponsoring Party)		(Date)

VA.R. Doc. No. R13-3583; Filed June 18, 2013, 4:13 p.m.

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REGULATIONSVol. 29 Iss. 23 - July 15, 2013

REGULATIONS
Vol. 29 Iss. 23 - July 15, 2013