plants; findings; expedited process; requirements; rulemaking.
(a) The Legislature hereby finds 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 coal reserves have created, and will continue to create, many
benefits to the state and its citizens;
(3) West Virginia is experiencing a significant downturn in the coal industry as a result of
increasing environmental regulation and increased competition from natural gas and oil;
(4) Stabilization of the coal industry to maintain its accaompanying benefits to the state and
its citizens requires West Virginia to be proactive and focus on the modernization and
improvement of coal-fired boilers used by electric ultilities in this state to allow the more
efficient use of coal in the generation of electricity with reduced environmental impact;
(5) A comprehensive program of modernizing, upgrading and improving coal-fired boilers at
existing West Virginia power plants owned by electric utilities at reasonable cost to
ratepayers, will benefit the customers of the electric utilities, the public in West Virginia and
the economy of the state as a whole;
(6) A coal-fired boiler modernization and improvement program will create jobs, provide for
continued and enhanced safety and reliability of aging electrical generation infrastructure,
and provide for more economical generation of electricity from coal, all of which will benefit
customers located th roughout the state; and
(7) Efforts to modernize and improve coal-fired boilers owned by electric utilities and used to
generate electricity in this state involve the investment of capital and the incurrence of
associated incremental costs. Accordingly, in order for the electric utility undertaking those
coal-fired boiler modernization and improvement programs to attract the necessary capital,
the electric utility should be permitted to recover the incremental rate of return, related
income taxes, depreciation and property taxes associated with the coal-fired boiler
modernization and improvement programs commencing with the implementation of a coal-
fired boiler modernization and improvement program approved by the commission without
waiting for a full base rate tariff filing, as more fully described in subsection (f) of this
section.
(b) Electric utilities may file with the commission an application for a multiyear
comprehensive program for modernizing and improving coal-fired boilers at power plants
located in this state and owned, in whole or in part, by the electric utility. Subject to
commission review and approval, a program may be amended and updated by the electric
utility as circumstances warrant. The recovery of costs in support of the program shall be
allowed in the manner set forth in this section if the proposed program and related rates are
found to be just, reasonable, and based on prudent investments that are used and useful to
the utilities' West Virginia ratepayers.
(c) The application is in lieu of a proceeding pursuant to section eleven of this article and
shall contain the following:
(1) A description of the coal-fired boiler modernization and improvement program, in such
detail as the commission prescribes, which may include costs associated with or incidental
to the reduction of emissions or compliance with environmental requirements, the projected
cost, and timing of the installation of equipment and facilities thaut the applicant proposes to
replace, construct, modernize and/or improve;
(2) The projected net cost, on an annual basis, of the replacement, construction or
improvements; a
(3) The projected starting and completion dates forl the modernization and improvement
program; s
(4) The projected cost of debt for the coal-ifired boiler modernization and improvement
program funding and the projected capital structure for coal-fired boiler modernization and
improvement program funding;
(5) Testimony, exhibits or other evidence that demonstrates the need for the modernization
and improvement of coal-fired boilers in order to provide and maintain adequate, efficient,
safe, reliable and reasonably priced electrical generation;
(6) A proposed cost r ecovery mechanism consistent with this section; and
(7) Other information the applicant considers relevant or the commission requires.
(d) WUpon filing of the 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 the provisions of
article three, chapter fifty-nine of this code, the publication area to be each county in which
service is provided by the electrical utility, a notice of the filing of the application and that
the commission shall hold a hearing on the application within one-hundred eighty days of the
notice; unless no opposition to the application is received by the Public Service Commission
within one week of the proposed hearing date, in which case the hearing can be waived, and
issue a final order within two-hundred seventy days of the application filing date.
(e) Upon notice and hearing, if required by the commission, the commission shall approve
the coal-fired boiler modernization and improvement program and allow expedited recovery
of costs related to the expenditures as provided in subsection (f) of this section if the
commission finds that the expenditures and the associated rate requirements are just,
reasonable, prudent, not contrary to the West Virginia public interest and will allow for the
provision and maintenance of adequate, efficient, safe, reliable and reasonably priced
electricity generated from coal.
(f) Upon commission approval, electric utilities will be authorized to implement the coal-fired
boiler modernization and improvement programs and to recover related incremental capital
and operation and maintenance costs, net of contributions to recovery of reteurn and
depreciation and property tax expenses directly attributable to the coal-fired boiler
modernization and improvement program provided by electric utility's rcustomers, if any, as
provided in the following:
(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 tot the coal-fired boiler
modernization and improvement program for the coming year, considering the projected
amount and timing of expenditures under the coal-fired boiler modernization and
improvement program plus any expenditures in previous years of the program. The rate of
return shall be determined by utilizing the rate of return on equity authorized by the
commission in the electric utility's most recenst rate case proceeding or in the case of a
settled rate case, a rate of return on equity as determined by the commission, and the
projected cost of the electric utility's debt during the period of the coal-fired boiler
modernization and improvement proggram to determine the weighted cost of capital based
upon the electric utility's capital structure.
(2) Income taxes at the corporate statutory income rates applicable to the return allowed on
the coal-fired boiler modLernization and improvement program shall be calculated for
inclusion in rates.
(3) Incremental depreciation and property tax expenses directly attributable to the coal-fired
boiler modernization and improvement program shall be estimated for the upcoming year.
(4) WFollowing commission approval of its coal-fired boiler modernization and improvement
program, an electric utility shall place into effect rates that include an increment that
recovers the allowance for return, operation and maintenance expense, related income
taxes, depreciation and property tax expenses associated with the electric utility's estimated
coal-fired boiler modernization and improvement program investments for the upcoming
year, net of contributions to recovery of those incremental costs provided by the electric
utility's customers, if any, ("incremental cost recovery increment"). In each year subsequent
to the order approving the coal-fired boiler modernization and improvement program and an
incremental cost recovery increment, the electric utility shall file a petition with the
commission setting forth a new proposed incremental cost recovery increment based on
investments and expenses to be made in the subsequent year, plus any under-recovery or
minus any over-recovery of actual incremental costs attributable to the coal-fired boiler
modernization and improvement program investments, for the preceding year.
(g) 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.
(h) Electric utilities may defer incremental operation and maintenance expenditures
attributable to regulatory and compliance-related requirements introduced after the electric
utility's last rate case proceeding and not included in the electric utility's current base rates.
In a future rate case, the commission shall allow recovery of the deferred coests amortized
over a reasonable period of time to be determined by the commission if the commission finds
that the costs were reasonable and prudently incurred and were not rerflected in rates in
prior rate cases.‹ Prev All West Virginia sections Next ›
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