                                 CODE OF VIRGINIA

DEFINITIONS (§ 56-603)

As used in this chapter:		&#8220;Commission&#8221; means the State Corporation
Commission.		&#8220;Eligible infrastructure replacement&#8221; means natural gas
utility facility replacement projects that: (i) enhance safety or reliability by
reducing system integrity risks associated with customer outages, corrosion,
equipment failures, material failures, or natural forces; (ii) do not increase
revenues by directly connecting the infrastructure replacement to new customers;
(iii) reduce or have the potential to reduce greenhouse gas emissions; (iv) are
commenced on or after January 1, 2010; and (v) are not included in the natural
gas utility&#8217;s rate base in its most recent rate case using the cost of
service methodology set forth in § 56-235.2, or the natural gas utility&#8217;s
rate base included in the rate base schedules filed with a performance-based
regulation plan authorized by § 56-235.6, if the plan did not include the rate
base. &#8220;Eligible infrastructure replacement&#8221; includes natural gas
utility facility replacement projects that are identified as a result of an
enhanced leak detection and repair program.		&#8220;Eligible infrastructure
replacement costs&#8221; includes the following:

1. Return on the investment. In calculating the return on the investment, the
Commission shall use the natural gas utility&#8217;s regulatory capital
structure as calculated utilizing the weighted average cost of capital,
including the cost of debt and the cost of equity used in determining the
natural gas utility&#8217;s base rates in effect during the construction period
of the eligible infrastructure replacement project. If the natural gas
utility&#8217;s cost of capital underlying the base rates in effect at the time
its proposed SAVE plan is filed has not been changed by order of the Commission
within the preceding five years, the Commission may require the natural gas
utility to file an updated weighted average cost of capital, and the natural gas
utility may propose an updated weighted average cost of capital. The natural gas
utility may recover the external costs associated with establishing its updated
weighted average cost of capital through the SAVE rider. Such external costs
shall include legal costs and consultant costs;

2. A revenue conversion factor, including income taxes and an allowance for bad
debt expense, shall be applied to the required operating income resulting from
the eligible infrastructure replacement costs;

3. Depreciation. In calculating depreciation, the Commission shall use the
natural gas utility&#8217;s current depreciation rates;

4. Property taxes;

5. Carrying costs on the over- or under-recovery of the eligible infrastructure
replacement costs. In calculating the carrying costs, the Commission shall use
the natural gas utility&#8217;s regulatory capital structure as determined in
subdivision 1 of the definition of eligible infrastructure replacement costs;
and

6. Enhanced leak detection and repair program costs. Such costs shall include
the costs of operating an enhanced leak detection and repair program.
			&#8220;Enhanced leak detection and repair program&#8221; means a program that
is designed to allow a natural gas utility to deploy advanced leak detection
technologies to more accurately identify active leaks as part of the natural gas
utility&#8217;s leak management program and to prioritize the repair of leaks
that present a risk to safety or the environment. A natural gas utility may
amend its SAVE plan to include an enhanced leak detection and repair program by
filing an application to amend its previously approved SAVE plan, as set forth
in subsection B of &#xA7; 56-604.			&#8220;Investment&#8221; means costs
incurred on eligible infrastructure replacement projects including planning,
development, and construction costs; costs of infrastructure associated
therewith; and an allowance for funds used during construction. In calculating
the allowance for funds used during construction, the Commission shall use the
natural gas utility&#8217;s actual regulatory capital structure as determined in
subdivision 1 of the definition of eligible infrastructure replacement
costs.			&#8220;Natural gas utility&#8221; means any investor-owned public
service company engaged in the business of furnishing natural gas service to the
public.			&#8220;Natural gas utility facility replacement project&#8221; means
the replacement of storage, peak shaving, transmission or distribution
facilities used in the delivery of natural gas, or supplemental or substitute
forms of gas sources by a natural gas utility.			&#8220;SAVE&#8221; means Steps
to Advance Virginia&#8217;s Energy Plan.			&#8220;SAVE plan&#8221; means a plan
filed by a natural gas utility that identifies proposed eligible infrastructure
replacement projects and a SAVE rider.			&#8220;SAVE rider&#8221; means a
recovery mechanism that will allow for recovery of the eligible infrastructure
replacement costs, through a separate mechanism from the customer rates
established in a rate case using the cost of service methodology set forth in
&#xA7; 56-235.2, or a performance-based regulation plan authorized by &#xA7;
56-235.6.

HISTORY: 2010, cc. 142, 514; 2022, cc. 728, 759.