WEST VIRGINIA LEGISLATURE
2024 REGULAR SESSION
Introduced Senate Bill 798
By Senator Jeffries [Introduced February 15, 2024; referred to the Committee on Economic Development]
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1 A BILL to amend and reenact §24-1-1 and §24-2H-8, of the Code of West Virginia, 1931, as
2 amended; and to amend and reenact §31-15A-9 of said code; all relating to the Distressed
3 Utilities Account and to utilities being required to hold at least 1/8 capital reserve to be
4 eligible to request additional state funding.
Be it enacted by the Legislature of West Virginia:
CHAPTER 24. PUBLIC SERVICE COMMISSION.
ARTICLE 1. GENERAL PROVISIONS.
§24-1-1. Legislative purpose and policy; plan for internal reorganization; promulgation of
plan as rule; cooperation with Joint Committee on Government and Finance.
1 (a) It is the purpose and policy of the Legislature in enacting this chapter to confer upon the
2 Public Service Commission of this state the authority and duty to enforce and regulate the
3 practices, services, and rates of public utilities in order to:
4 (1) Ensure fair and prompt regulation of public utilities in the interest of the using and
5 consuming public;
6 (2) Provide the availability of adequate, economical, and reliable utility services throughout
7 the state;
8 (3) Encourage the well-planned development of utility resources in a manner consistent
9 with state needs and in ways consistent with the productive use of the state's energy resources,
10 such as coal;
11 (4) Ensure that rates and charges for utility services are just, reasonable, applied without
12 unjust discrimination or preference, applied in a manner consistent with the purposes and policies
13 set forth in article two-a of this chapter and based primarily on the costs of providing these
14 services;
15 (5) Encourage energy conservation and the effective and efficient management of
16 regulated utility enterprises; and
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17 (6) Encourage removal of artificial barriers to rail carrier service, stimulate competition,
18 stimulate the free flow of goods and passengers throughout the state and promote the expansion
19 of the tourism industry, thereby improving the economic condition of the state.
20 (b) The Legislature creates the Public Service Commission to exercise the legislative
21 powers delegated to it. The Public Service Commission is charged with the responsibility for
22 appraising and balancing the interests of current and future utility service customers, the general
23 interests of the state's economy and the interests of the utilities subject to its jurisdiction in its
24 deliberations and decisions.
25 (c) The Legislature directs the Public Service Commission to identify, explore and consider
26 the potential benefits or risks associated with emerging and state-of-the-art concepts in utility
27 management, rate design and conservation. The commission may conduct inquiries and hold
28 hearings regarding such concepts in order to provide utilities subject to its jurisdiction and other
29 interested persons the opportunity to comment and shall report to the Governor and the
30 Legislature regarding its findings and policies to each of these areas not later than the first day of
31 the regular session of the Legislature in the year 1985, and every two years thereafter.
32 (d) It is legislative policy to ensure that the Legislature and the general public become
33 better informed regarding the regulation of public utilities in this state and the conduct of the
34 business of the Public Service Commission. To aid in the achievement of this policy, the Public
35 Service Commission annually shall present to the Joint Committee on Government and Finance,
36 created by §4-3-1 et seq. of this code, or a subcommittee designated by the joint committee, a
37 management summary report which describes in a concise manner:
38 (1) The major activities of the commission for the year especially as such activities relate to
39 the implementation of the provisions of this chapter;
40 (2) Important policy decisions reached and initiatives undertaken during the year;
41 (3) The current balance of supply and demand for natural gas and electric utility services in
42 the state and forecast of the probable balance for the next ten 10 years; and
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43 (4) Other information considered by the commission to be important including
44 recommendations for statutory reform and the reasons for such recommendations.
45 (e) In addition to any other studies and reports required to be conducted and made by the
46 Public Service Commission pursuant to any other provision of this section, the commission shall
47 study and initially report to the Legislature no later than the first day of the regular session of the
48 Legislature in the year 1980 upon:
49 (1) The extent to which natural gas wells or wells heretofore supplying gas utilities in this
50 state have been capped off or shut in; the number of such wells; their probable extent of future
51 production and the reasons given and any justification for capping off or shutting in such wells; the
52 reasons, if any, why persons engaged or heretofore engaged in the development of gas wells in
53 this state or the Appalachian areas have been discouraged from drilling, developing or selling the
54 production of such wells; and whether there are fixed policies by any utility or group of utilities to
55 avoid the purchase of natural gas produced in the Appalachian region of the United States
56 generally and in West Virginia specifically.
57 (2) The extent of the export and import of natural gas utility supplies in West Virginia.
58 (3) The cumulative effect of the practices mentioned in §24-1-1(e)(1) and §24-1-1(e)(2)
59 upon rates theretofore and hereafter charged gas utility customers in West Virginia. In carrying out
60 the provisions of this section the commission shall have jurisdiction over such persons, whether
61 public utilities or not, as may be in the opinion of the commission necessary to the exercise of its
62 mandate and may compel attendance before it, take testimony under oath and compel the
63 production of papers or other documents. Upon reasonable request by the commission, all other
64 state agencies shall cooperate with the commission in carrying out the provisions and
65 requirements of this subsection.
66 (f) No later than the first day of the regular session of the Legislature in the year 1980, the
67 Public Service Commission shall submit to the Legislature a plan for internal reorganization which
68 plan shall specifically address the following:
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69 (1) A division within the Public Service Commission which shall include the office of the
70 commissioners, the hearing examiners and such support staff as may be necessary to carry out
71 the functions of decision-making and general supervision of the commission, which functions shall
72 not include advocacy in cases before the commission;
73 (2) The creation of a division which shall act as an advocate for the position of and in the
74 interest of all customers;
75 (3) The means and procedures by which the division to be created pursuant to the
76 provisions of §24-1-1(f)(2) shall protect the interests of each class of customers and the means by
77 which the commission will assure that such division will be financially and departmentally
78 independent of the division created by §24-1-1(f)(1);
79 (4) The creation of a division within the Public Service Commission which shall assume the
80 duties and responsibilities now charged to the commissioners with regard to motor carriers which
81 division shall exist separately from those divisions set out in §24-1-1(f)(1) and §24-1-1(f)(2) and
82 which shall relieve the commissioners of all except minimal administrative responsibilities as to
83 motor carriers and which plan shall provide for a hearing procedure to relieve the commissioners
84 from hearing motor carrier cases;
85 (5) Which members of the staff of the Public Service Commission shall be exempted from
86 the salary schedules or pay plan adopted by the Civil Service Commission and identify such staff
87 members by job classification or designation, together with the salary or salary ranges for each
88 such job classification or designation;
89 (6) The manner in which the commission will strengthen its knowledge and independent
90 capacity to analyze key conditions and trends in the industries it regulates extending from general
91 industry analysis and supply-demand forecasting to continuing and more thorough scrutiny of the
92 capacity planning, construction management, operating performance, and financial condition of
93 the major companies within these industries.
94 Such plan shall be based on the concept that each of the divisions mentioned in §24-1-
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95 1(f)(1), §24-1-1(f)(2), and §24-1-1(f)(4) shall exist independently of the others and the plan shall
96 discourage ex parte communications between them by such means as the commission shall
97 direct, including, but not limited to, separate clerical and professional staffing for each division.
98 Further, the Public Service Commission is directed to incorporate within the said plan to the fullest
99 extent possible the recommendations presented to the subcommittee on the Public Service
100 Commission of the Joint Committee on Government and Finance in a final report dated February
101 1979, and entitled A Plan for Regulatory Reform and Management Improvement.
102 The commission shall, before January 5, 1980, adopt said plan by order, which order shall
103 promulgate the same as a rule of the commission to be effective upon the date specified in said
104 order, which date shall be no later than December 31, 1980. Certified copies of such order and rule
105 shall be filed on the first day of the 1980 regular session of the Legislature, by the chairman of the
106 commission with the clerk of each house of the Legislature, the Governor, and the Secretary of
107 State. The chairman of the commission shall also file with the office of the Secretary of State the
108 receipt of the clerk of each house and of the Governor, which receipt shall evidence compliance
109 with this section.
110 Upon the filing of a certified copy of such order and rule, the clerk of each house of the
111 Legislature shall report the same to their respective houses and the presiding officer thereof shall
112 refer the same to appropriate standing committee or committees.
113 Within the limits of funds appropriated therefor, the rule of the Public Service Commission
114 shall be effective upon the date specified in the order of the commission promulgating it unless an
115 alternative plan be adopted by general law or unless the rule is disapproved by a concurrent
116 resolution of the Legislature adopted prior to adjournment sine die of the regular session of the
117 Legislature to be held in the year 1980: Provided, That if such rule is approved in part and
118 disapproved in part by a concurrent resolution of the Legislature adopted prior to such
119 adjournment, such rule shall be effective to the extent and only to the extent that the same is
120 approved by such concurrent resolution.
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121 The rules promulgated and made effective pursuant to this section shall be effective
122 notwithstanding any other provisions of this code for the promulgation of rules or regulations.
123 (g) The Public Service Commission is hereby directed to cooperate with the Joint
124 Committee on Government and Finance of the Legislature in its review, examination and study of
125 the administrative operations and enforcement record of the Railroad Safety Division of the Public
126 Service Commission and any similar studies.
127 (h) (1) The Legislature hereby finds that rates for natural gas charged to customers of all
128 classes have risen dramatically in recent years to the extent that such increases have adversely
129 affected all customer classes. The Legislature further finds that it must take action necessary to
130 mitigate the adverse consequences of these dramatic rate increases.
131 (2) The Legislature further finds that the practices of natural gas utilities in purchasing high-
132 priced gas supplies, in purchasing gas supplies from out-of-state sources when West Virginia
133 possesses abundant natural gas, and in securing supplies, directly or indirectly, by contractual
134 agreements including take-or-pay provisions, indefinite price escalators or most-favored nation
135 clauses have contributed to the dramatic increase in natural gas prices. It is therefore the policy of
136 the Legislature to discourage such purchasing practices in order to protect all customer classes.
137 (3) The Legislature further finds that it is in the best interests of the citizens of West Virginia
138 to encourage the transportation of natural gas in intrastate commerce by interstate or intrastate
139 pipelines or by local distribution companies in order to provide competition in the natural gas
140 industry and in order to provide natural gas to consumers at the lowest possible price.
141 (i) The Legislature further finds that transactions between utilities and affiliates are a
142 contributing factor to the increase in natural gas and electricity prices and tend to confuse
143 consideration of a proper rate of return calculation. The Legislature therefore finds that it is
144 imperative that the Public Service Commission have the opportunity to properly study the issue of
145 proper rate of return for lengthy periods of time and to limit the return of a utility to a proper level
146 when compared to return or profit that affiliates earn on transactions with sister utilities.
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147 (j) The Legislature further finds that water and sewer utilities that are political subdivisions
148 of the state providing separate or combined services and having at least four thousand five
149 hundred customers and annual gross revenues of $3 million or more are most fairly and effectively
150 regulated by the local governing body with respect to rates, borrowing and capital projects.
151 Therefore, notwithstanding any contrary provisions of this section, the jurisdiction of the Public
152 Service Commission over water and sewer utilities that are political subdivisions of the state is
153 limited to that granted specifically in this code.
154 (k) The Legislature further finds that an adequate cash working capital fund is essential to
155 allow water and sewer utilities that are political subdivisions of the state to deliver continuous and
156 compliant service. Therefore, these utilities shall maintain a working capital reserve in an amount
157 of no less than one eighth of actual annual operation and maintenance expense. This reserve shall
158 be separate and distinct from and in addition to any repair and replacement fund that may be
159 required by bond covenants. Further, any public utility that requests any funding from the State
160 shall maintain a working capital reserve in an amount of no less than one eighth of actual annual
161 operation and maintenance expense, prior to requesting or being considered to receive such
162 additional funding.
163 (1) Any public utility that requests such funding from the State shall establish an initial set
164 of rates, approved by the Public Service Commission that will allow the accumulation of the net
165 additional funds over current cash balances necessary to achieve the working capital reserve for a
166 period of 24 months. Nothing in this section shall require the Public Service Commission to
167 approve any rates for locally rate regulated utilities.
168 (2) The term "funding" in this section includes any loans, grants, bonds, or any other
169 monies administered or approved by a state agency.
170 (3) Funding for failing or distressed utilities may only be granted under this Article upon an
171 order from the Public Service Commission, establishing that the utility is failing or distressed,
172 pursuant to §24-2H-5 of this code, and a capable proximate utility, pursuant to §24-2H-5 of this
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173 code, can adequately acquire such failing or distressed utility. The Public Service Commission’s
174 order shall further require the failing or distressed utility to request such funding from the
175 Distressed Utilities Account established pursuant to §31-15A-9(i) of this code. Such funding shall
176 only be applied at the direction of the capable proximate utility identified for acquisition and may
177 only be used by the failing or distressed utility for debt repayment, capital improvements, o