Bill Summary – FastDemocracy

WEST VIRGINIA LEGISLATURE
REGULAR SESSION
                 ENROLLED
           House Bill 5528
    BY DELEGATES ANDERSON, ZATEZALO, HECKERT,
 FEHRENBACHER, T. CLARK, HANSEN, ROWE, YOUNG, AND
                       HOTT
  [Passed March 7, 2024; in effect ninety days from passage.]
     Enr HB 5528
  AN ACT to amend and reenact §24-2-1o of the Code of West Virginia, 1931, as amended, relating
          to the renewable energy facilities program; modifying the allowable incremental size
          increase from 50 to 100 megawatts of generating capacity by regulated utilities under the
          program; and eliminating the sunset provision of the renewable energy facilities program.
     Be it enacted by the Legislature of West Virginia:
     ARTICLE 2. POWERS AND DUTIES OF PUBLIC SERVICE COMMISSION.
     §24-2-1o. Renewable Energy Facilities Program.
          (a) The Legislature finds and declares that:
          (1) West Virginia is rich in energy resources, which provide many advantages to the state,
  its economy and its citizens;
          (2) West Virginia's abundant mineral reserves have created, and will continue to create,
  many benefits to the state and its citizens, including thousands of jobs, a strong tax base and a
  low-cost, reliable source of electricity;
          (3) Coal-fired plants currently supply over 90 percent of electricity generation to the
  citizens and businesses of this state;
          (4) Businesses that may otherwise locate or expand facilities in this state often require
 that a portion of the electricity that they purchase be generated via renewable sources;
         (5) Creating a program for the development of certain renewable sources of electricity by
 electric utilities will result in increased economic development opportunities in the state, create
 jobs and enhance the use of the state's electricity generation; and
         (6) Creating a program to authorize electric utilities to provide a portion of the state’s
 electricity needs through a process that allows them to plan, design, construct, purchase, own
 and operate renewable electric-generating facilities, energy storage resources, or both, pursuant
 to this section is in the public interest of the state.
         (b) Definitions – For the purpose of the section:
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        "Capital investments" include, but are not limited to, costs related to the planning, design,
 construction, purchase, and ownership of renewable electric-generating facilities, energy storage
 resources, and interconnections with transmission and distribution facilities.
        "Commission" or "Public Service Commission" means the Public Service Commission of
 West Virginia.
        "Electric utility" means any electric distribution company that sells electricity to retail
 customers in this state under rates regulated by the commission. Unless specifically provided for
 otherwise, for the purposes of this section, the term "electric utility" may not include rural electric
 cooperatives, municipally owned electric facilities or utilities serving less than 30,000 residential
 electric customers in West Virginia.
        "Eligible site" means any site in this state that has been previously used in electric
 generation, industrial, manufacturing or mining operations, including, but not limited to,
 brownfields, closed landfills, hazardous waste sites, former industrial sites, and former mining
 sites. In the event that there is no available site that has been previously used in electric
 generation, industrial, manufacturing or mining operations in the area to be served by a renewable
 electric facilities program, an eligible site may include any suitable site in this state approved for
 use in connection with a renewable electric facilities program by the Secretary of the Department
 of Commerce.
        "Energy storage resource" means infrastructure located on an eligible site that allows for
 the energy absorption and release of electrical energy into the electric grid.
        "Renewable electric facilities program" means a program proposed by an electric utility to
 plan, design, construct, purchase, own, and operate renewable electric-generating facilities,
 energy storage resources, or both, pursuant to this section: Provided, That a renewable electric
 facilities program may not consist solely of energy storage resources.
        "Renewable electric-generating facility" means infrastructure located on an eligible site
 that generates electricity solely through solar photovoltaic methods or other solar methods.
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        (c) Electric utilities may file with the commission an application for a multiyear
 comprehensive renewable energy facilities program that complies with the provisions of this
 section for planning, designing, constructing, purchasing, owning, and operating renewable
 electric-generating facilities, energy storage resources, or both, by the electric utility. Subject to
 commission review and approval, a renewable energy facilities program may be amended and
 updated by the electric utility. The recovery of costs in support of the renewable energy facilities
 program shall be allowed in the manner set forth in this section.
        (d) Any renewable energy facilities program shall comply with the following requirements:
        (1) An electric utility may purchase each renewable electric-generating facility and each
 energy storage resource from a developer of renewable electric-generating facilities or energy
 storage resources or construct such facilities on its own, as applicable. Any purchase of a
 renewable electric-generating facility or energy storage resources shall be subject to a
 competitive procurement administered by the electric utility. An electric utility may select to
 purchase a renewable electric-generating facility, energy storage resource, or both, based on a
 myriad of factors, including, but not limited to, price and nonprice criteria, which shall include, but
 not be limited to, geographic distribution of generating capacity, areas of higher employment, or
 regional economic development.
        (2) An electric utility may elect to petition the commission, outside of a base rate case
 proceeding, at any time for a prudency determination with respect to the purchase, construction,
 and ownership by the electric utility of one or more renewable electric-generating facilities, energy
 storage resources, or both. The commission’s final order regarding any such petition shall be
 entered by the commission within 150 days after the date of the filing of such petition.
        (3) No renewable electric-generating facility shall have a generating capacity greater than
 100 megawatts until such time as 85 percent of that renewable electric-generating facility’s annual
 energy output is being sold or is contracted to be sold to residential, commercial, or industrial
 customers pursuant to a renewable special contract or renewable tariff, and, thereafter, any
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 expansion of that or another renewable energy-generating facility’s generating capacity shall
 proceed in increments of up to 100 megawatts each until such time as 85 percent or more of all
 renewable energy-generating facility’s aggregate, annual energy output is being sold or is
 contracted to be sold to customers pursuant to a renewable special contract or renewable tariff;
        (4) No single renewable electric-generating facility shall have a generating capacity
 greater than 200 megawatts;
        (5) The cumulative generating capacity of all renewable electric-generating facilities
 operating at any given time, and for which rate recovery is provided by the commission under this
 section, shall not exceed 400 megawatts among all investor-owned electric utilities in this
 state: Provided, That the cumulative generating capacity of all renewable electric-generating
 facilities operating at any one time, and for which rate recovery is provided by the commission
 under this section, shall not exceed 200 megawatts for all electric utilities within the state owned
 by the same corporate parent company;
        (6) The calculation of maximum megawatts of generating capacity for renewable electric-
 generating facilities established in this subsection shall not include the storage capacity of energy
 storage resources;
        (7) As part of the renewable energy facilities program, the electric utilities must offer the
 energy output for sale to customers from all classes of service.
        (e) Applications made under this section are in lieu of an application for a certificate of
 public convenience and necessity pursuant to §24-2-11 of this code and shall contain the
 following:
        (1) A description of the renewable electric-generating facilities, energy storage resources,
 or both, in such detail as the commission prescribes, including, but not limited to, the generating
 capacity and location of the facilities and a description of the competitive purchase procurement
 process administered by the electric utility that is required under this section;
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         (2) A proposed concurrent cost-recovery mechanism for actual and projected capital
  investments in the renewable electric-generating facilities, energy storage resources, or both, and
  for operation and maintenance expenses and taxes associated with such facilities; and
         (3) Other information that the applicant considers relevant or the commission requires.
        (f) Upon filing of an application, the applicant shall publish, in the form the commission
 directs, which form shall include, but not be limited to, the anticipated rates and, if any, rate
 increase under the proposal, by average percentage and dollar amount for customers within a
 class of service, as a Class I legal advertisement in compliance with §59-3-1 et seq., of this code,
 the publication area to be each county in which service is provided by the electric utility, a notice
 of the filing of the application and that the commission shall hold a hearing on the application
 within 90 days of the notice; unless no opposition to the rate change is received by the commission
 within one week of the proposed hearing date, in which case the hearing can be waived, and the
 commission shall issue a final order within 150 days of the application filing date.
        (g) The planning, design, construction, purchase, ownership, and operation of renewable
 electric-generating facilities, energy storage resources, or both, pursuant to this section is in the
 public interest, and the commission shall so find when considering applications for renewable
 energy facilities programs submitted by an electric utility pursuant to this section.
        (h) Upon notice and hearing, if required by the commission, the commission shall approve
 the applications made under this section and allow concurrent recovery of costs related to
 the expenditures, as provided in subsection (i) of this section, if the commission finds that the
 expenditures and the associated rate requirements are just and reasonable and that the
 applications comply with the requirements of this section.
        (j) Upon commission approval, electric utilities shall be authorized to implement renewable
 electric facilities programs and to concurrently recover their costs, including a return on capital
 investments, operation and maintenance, depreciation, and tax expenses directly attributable to
 the renewable electric facilities program capital investments, if any, as provided in the following:
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         (1) An allowance for return shall be calculated by applying a rate of return to the
 average planned net incremental increase to rate base attributable to the renewable electric
 facilities program for the coming year, considering the projected amount and timing of capital
 investments under the renewable electric facilities program plus any capital investments in
 previous years of the program. The rate of return shall be determined by utilizing the rate of return
 on equity and the capital structure authorized by the commission in the electric utility's most recent
 base rate case proceeding or in the case of a settled base rate case, a rate of return on equity set
 forth in or associated with such settlement or, if neither is set forth in or associated with such
 settlement, a rate of return on equity and a capital structure determined by the commission to be
 reasonable, and the projected average weighted cost of the electric utility's debt during the period
 of the renewable electric facilities program to determine the weighted cost of capital based upon
 the electric utility's capital structure determined as specified above.
         (2) Income taxes applicable to the return allowed on the renewable electric facilities
 program shall be calculated at the statutory rate for inclusion in rates.
         (3) Incremental operation and maintenance, depreciation, and property tax expenses
 directly attributable to the renewable electric facilities program shall be estimated for the upcoming
 year.
         (4) Following commission approval of its application made under this section, an electric
 utility shall place into effect rates that include an increment for concurrent cost recovery that
 recovers the allowance for return, related income taxes at the statutory rate, operation and
 maintenance, depreciation, and property tax expenses associated with the electric utility’s actual
 and projected capital investments under the renewable electric facilities program for the upcoming
 year, net of contributions to recovery of those incremental costs provided by customers who have
 executed renewable special contracts, or who are taking power under renewable tariffs and are
 served by the renewable electric facilities program investments, if any, ("incremental cost-
 recovery increment"). In each year subsequent to the order approving the renewable electric
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 facilities program and the incremental cost-recovery increment, the electric utility shall file an
 application with the commission setting forth   a new proposed incremental cost
 recovery increment for concurrent cost recovery of forecasted costs to be made in the subsequent
 year, plus any under-recovery or minus any over-recovery of actual incremental costs attributable
 to the renewable electric facilities program, for the preceding year.
         (5) The renewable electric-generating facilities, energy storage resources, or both,
 constructed, purchased, contracted, owned, installed, and in service pursuant to an application
 approved by the commission shall be considered used and useful for rate recovery purposes. Any
 concurrent cost recovery mechanism approved by the commission shall limit the amount of cost
 to be recovered from any individual customer of the electric utility to a maximum of $1,000 per
 month: Provided, That this limitation shall not impact the electric utility's ability to recover all costs
 incurred pursuant to this section from other customers. Customers who have executed renewable
 special contracts or are taking power under renewable tariffs pursuant to an approved renewable
 electric facilities program are not subject to any such limits imposed by the commission.
         (6) If an electric utility serves customers in more than one jurisdiction, and a jurisdiction
 other than this state denies the electric utility recovery of the costs incurred pursuant to a
 renewable electric facilities program approved by the commission and allocated to that
 jurisdiction, the electric utility shall recover all of the costs of the renewable electric facilities
 program from its West Virginia jurisdictional customers if the commission finds that the
 expenditures and the associated rate requirements are just and reasonable, and all attributes of
 the renewable electric facilities program, including energy, capacity, and renewable energy credits
 shall be assigned to this state.
         (j) The electric utility may make any accounting accruals necessary to establish a
 regulatory asset or liability through which actual incremental costs incurred and costs recovered
 through the rate mechanism are tracked.
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        (k) With respect to renewable electric facilities programs, electric utilities may defer
 incremental operation and maintenance expenses attributable to regulatory and compliance-
 related requirements introduced after the electric utility's last base rate case proceeding and not
 included in the electric utility's current base rates or incremental cost-recovery increment in lieu
 of current recovery. In a future base rate case, the commission shall allow recovery of such
 deferred costs amortized over a reasonable period of time to be determined by the commission
 provided the commission finds that the costs were reasonable and prudently incurred and were
 not reflected in rates in prior base rate cases.
         (l) Notwithstanding any provision of this article to the contrary, no provision herein this
 section shall displace any current levels of coal-fired generation capacity.
         (m) Notwithstanding the provisions of §24-2-11c of this code, any person or entity: (1)
 Who is not an electric utility; (2) who intends to purchase or construct and operate an electric
 generating fac