                                 CODE OF VIRGINIA

(EXPIRES JULY 1, 2035) DEFINITIONS (§ 56-626)

As used in this chapter, unless the context requires a different
meaning:		&#8220;EIRE&#8221; means eligible infrastructure replacement and
enhancement.		&#8220;EIRE plan&#8221; means a plan filed by a utility that
identifies proposed eligible infrastructure projects and an EIRE
rider.		&#8220;EIRE rider&#8221; means a recovery mechanism that will allow for
recovery of the eligible infrastructure costs, through a separate mechanism from
the customer rates established in a rate case using the cost of service
methodology set forth in § 56-235.2.		&#8220;Eligible infrastructure&#8221;
means water utility projects or wastewater utility projects that maintain or
enhance safety, reliability, or efficiency or that facilitate compliance with
state or federal environmental requirements. Eligible infrastructure does not
include (i) the investment in water utility or wastewater utility infrastructure
included in the utility&#8217;s rate base in its most recent rate case or (ii)
projects designed primarily to serve new customers and increase
revenues.		&#8220;Eligible infrastructure costs&#8221; includes the following:

1. Return on investment. In calculating the return on investment, the Commission
shall use the 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 utility&#8217;s base rates in effect
during the construction period of the water or wastewater utility project. If
the utility&#8217;s cost of capital has not been changed by order of the
Commission within the preceding five years, the Commission may require the
utility to file an updated weighted average cost of capital, and the utility may
propose an updated weighted average cost of capital. The utility may recover the
external costs associated with establishing its updated weighted average cost of
capital through the EIRE rider. Such external costs shall include legal costs
and consultant costs;

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

3. Depreciation. In calculating depreciation, the Commission shall use the
utility&#8217;s current depreciation rates specific to the applicable asset;

4. Property taxes;

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

6. Unreimbursed costs of relocating facilities due to highway projects; and

7. Operation and maintenance expenses that the Commission determines are
associated with eligible infrastructure and that were not included in the
revenue requirement of the utility last approved by the Commission.
			&#8220;Investment&#8221; means costs incurred on eligible infrastructure
projects including planning, development, removal, 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 utility&#8217;s actual regulatory capital structure
as determined in subdivision 1 of the definition of eligible infrastructure
costs.			&#8220;In-kind replacement&#8221; means replacement with new materials
or equipment designed, constructed, and sized to meet current industry standards
and to comply with federal, state, and local regulation.			&#8220;Utility&#8221;
means water utility or wastewater utility.			&#8220;Wastewater utility&#8221;
means an investor-owned public service company engaged in the business of
furnishing wastewater service to the public.			&#8220;Wastewater utility
project&#8221; includes:

1. Non-growth-related collection main extensions;

2. Facilities necessary to comply with applicable state and federal laws and
regulations;

3. Improvements that enable compliance with National Pollutant Discharge
Elimination System permits;

4. Unreimbursed costs of relocating facilities due to highway construction or
relocation projects; and

5. In-kind replacement of pumps, motors, blowers, tanks, or mechanical
equipment.
			&#8220;Water utility&#8221; means an investor-owned public service company
engaged in the business of furnishing water service to the
public.			&#8220;Water utility project&#8221; includes:

1. In-kind replacement of transmission or distribution system mains as well as
replacement of valves, utility service lines, including meter boxes and
appurtenances, meters, including radio frequency meters, and hydrants connected
to a replaced transmission or distribution system main;

2. Non-growth-related main extensions installed to eliminate dead ends that will
address primary and secondary drinking water standards as defined by the
Department of Environmental Quality, the Department of Health, and the federal
Environmental Protection Agency;

3. Equipment and facilities installed to address primary and secondary drinking
water standards as defined by the Department of Environmental Quality, the
Department of Health, and the federal Environmental Protection Agency; and

4. Unreimbursed costs of relocating facilities due to highway projects.

HISTORY: 2025, cc. 501, 599.