HB 2621: Phase I Utilities; financing for certain securitized asset costs, biennial rate reviews. - Virginia

Delegate Ballard Substitute → Commerce and Labor Substitute · 5 edits

MODERATE

The Commerce and Labor Substitute replaces the Delegate Ballard Substitute by shifting the bill's focus from a broad amendment of existing rate review laws to adding a new section specifically for securitized asset costs. The new version removes the new § 56-249.8 section entirely and instead adds § 56-596.5, which establishes a customer opt-out mechanism for large commercial customers (those with demand exceeding 5 megawatts) to avoid financing storm recovery costs through securitization bonds.

Scope change

The bill's scope narrowed from amending multiple sections of the Code of Virginia related to Phase I Utilities and rate reviews to adding a single new section (§ 56-596.5) focused exclusively on customer opt-out rights for securitized asset cost financing.

FISCAL

The entire new section § 56-249.8, which created a comprehensive framework for utilities to securitize storm recovery costs and undepreciated generation plant balances, has been removed from the bill.

ELIGIBILITY

A new opt-out provision allows retail customers with demand exceeding 5 megawatts to refuse securitized asset cost financing, requiring them to pay their pro rata share directly rather than through bonds.

TIMELINE

The bill now applies to financing order petitions filed with the State Corporation Commission prior to December 31, 2023, rather than establishing a new ongoing financing mechanism.

DEFINITION

All definitions related to securitized asset costs, financing orders, assignees, and bondholders that were part of the original § 56-249.8 have been removed.

REQUIREMENT

Utilities must notify eligible customers of their opt-out eligibility through their petition filing with the Commission, and customers must submit written election within 30 days of filing.

Engrossed → Enrolled · 6 edits · Mar 24, 2025

MODERATE

This bill transitions Virginia's Phase I utility rate reviews from a triennial (every three years) schedule to a biennial (every two years) schedule starting in 2026, while adding new provisions for securitizing storm recovery costs and allowing large customers to opt out of securitized financing. The changes aim to improve rate review frequency, provide utilities with more flexible financing options for storm recovery costs, and give large commercial customers choice over how they pay these costs.

Scope change

The bill expands the scope of utility rate reviews from triennial to biennial for Phase I utilities and introduces new securitization mechanisms for storm recovery costs that were previously unavailable.

TIMELINE

Changed Phase I utility rate reviews from triennial (every 3 years) to biennial (every 2 years), with the first biennial review beginning May 31, 2026.

FISCAL

Created new Section 56-249.8 allowing utilities to securitize storm recovery costs through bonds, with financing costs included in the securitized charges.

ELIGIBILITY

Added opt-out provisions allowing large commercial customers (demand exceeding 5 megawatts) to choose not to participate in securitized asset cost financing.

DEFINITION

Defined new terms including 'securitized asset cost bonds,' 'securitized asset cost property,' 'assignee,' and 'financing order' to govern the securitization process.

REQUIREMENT

Modified Section 56-585.8 to require biennial reviews instead of triennial reviews and to combine previously separate rate adjustment clauses into single proceedings.

ENFORCEMENT

Added provisions ensuring securitized asset cost bonds are non-recourse to utility assets and establishing priority rules for financing parties in bankruptcy scenarios.

Conference Substitute → Chaptered · 8 edits

MODERATE

This bill converts Virginia's Phase I Utility rate review process from a three-year cycle to a two-year cycle, starting in 2024. It also creates a new legal framework allowing utilities to securitize storm recovery costs and undepreciated generation plant balances into bonds, protecting these assets from utility bankruptcy or restructuring. The bill adds consumer protections by prohibiting rate increases during winter months (November-February) and banning interest/late fees on residential bills during a specific summer period in 2025.

Scope change

The rate review cycle changed from triennial (every 3 years) to biennial (every 2 years), making reviews more frequent. The securitization framework applies specifically to Phase I Utilities in Virginia for storm recovery costs and large fossil-fuel generation plants.

TIMELINE

Changed rate review frequency from every 3 years to every 2 years, with the first review starting March 31, 2024.

FISCAL

Created new legal mechanism for utilities to issue bonds backed by securitized asset costs (storm recovery and undepreciated generation plant balances) to finance infrastructure investments.

ENFORCEMENT

Established that securitized asset costs and bonds are protected from utility bankruptcy, reorganization, or sale, with charges being non-bypassable for all retail customers.

REQUIREMENT

Prohibited electric utilities from increasing rates during November through February to protect customers during winter months.

Changed rate review petition filing deadline from March 31 to May 31 for biennial reviews starting in 2026.

ADDED

Banned utilities from charging residential customers interest, late fees, or reconnection fees between July 1, 2025 and March 1, 2026.

ELIGIBILITY

Allowed large commercial customers (demand exceeding 5 megawatts) to opt out of securitized asset cost financing if they filed petitions before December 31, 2025.

DEFINITION

Created new definitions for 'securitized asset costs,' 'financing order,' 'assignee,' and related terms to establish the legal framework for bond-backed utility financing.

Commerce and Labor Substitute → Conference Substitute · 4 edits

MODERATE

The bill was amended to change from a Senate substitute to a Conference substitute, which typically represents a compromise between House and Senate versions. The substantive policy content regarding securitized asset costs for Phase I Utilities appears largely unchanged, though the bill now also includes amendments to § 56-585.8 and adds a new section 56-596.5 prohibiting rate increases in December, January, and February, as well as restrictions on disconnecting residential customers and charging late fees during a specified period. The formatting was significantly altered with spacing changes and the addition of line numbers.

Scope change

The bill's scope was expanded to include amendments to § 56-585.8 and a new section 56-596.5 regarding rate increase restrictions and customer disconnection protections, in addition to the original securitized asset cost provisions.

TIMELINE

Added prohibition on rate increases for Phase I Utilities during December, January, and February, with rate adjustment clauses applying starting March 1 following petitions filed between October 1 and December 31.

REQUIREMENT

Added restrictions prohibiting Phase I Utilities from disconnecting residential customers for nonpayment or charging interest/late fees between July 1, 2025, and December 31, 2026.

SCOPE

Changed the bill to amend and reenact § 56-585.8 in addition to adding new sections 56-249.8 and 56-596.5.

TECHNICAL

Significant formatting changes including addition of line numbers, spacing adjustments, and reorganization of header information from Senate to Conference substitute format.

Labor and Commerce Substitute → Delegate Ballard Substitute · 4 edits

MODERATE

The bill was amended from a House Committee substitute to a Delegate Ballard substitute, primarily changing the bill's title and scope. The original version focused on biennial rate reviews, while the amended version now includes both biennial and annual rate reviews. The amendment also adds amendments to § 56-585.1 in addition to § 56-585.8, expanding the bill's regulatory scope.

Scope change

The bill's scope was expanded to include amendments to § 56-585.1 (Phase I Utility definitions) in addition to § 56-585.8 (Annual rate reviews). The review frequency was changed from biennial to include annual reviews.

TIMELINE

Changed rate review frequency from biennial to include annual reviews, with the first review commencing on or before March 31, 2026.

SCOPE

Added amendments to § 56-585.1 to include Phase I Utility definitions alongside the existing § 56-585.8 amendments.

REQUIREMENT

Modified the review process to combine all costs into a single proceeding except for specific cost categories that must be reviewed separately under existing statutory provisions.

DEFINITION

Added new definitions for 'Phase I Utility' and 'Storm recovery costs' to clarify the scope of utilities subject to these rate review requirements.

Labor and Commerce Subcommittee Substitute → Labor and Commerce Substitute · 1 edit

MINOR

The bill text was reformatted from a plain text legislative format to a numbered line-by-line format with proper indentation and spacing. The substantive policy content, definitions, requirements, and provisions remain identical between the two versions.

TECHNICAL

Formatting changes including addition of line numbers, indentation, spacing, and removal of the original plain text header structure

Enrolled → Labor and Commerce Subcommittee Substitute · 1 edit

MINOR

The bill text was reformatted from an Enrolled version to a House Substitute version, with some formatting adjustments but no substantive policy changes to the legislation itself. The core provisions regarding securitized asset costs, financing orders, and rate reviews remain identical in both versions.

TECHNICAL

Formatting and layout changes between Enrolled and House Substitute versions, including spacing, line numbers, and header information, with no substantive policy modifications.

Introduced → Engrossed · 4 edits · Mar 7, 2025

MODERATE

The bill was amended from its original introduced version to an engrossed version with a floor amendment substitute. The substantive policy content regarding securitized asset costs for Phase I Utilities remains unchanged, but the bill's scope was expanded to also amend and reenact §§ 56-585.1 and 56-585.8 of the Code of Virginia, and the bill title was updated to include 'biennial rate reviews' and 'recovery of certain costs' in addition to the original focus on securitized asset costs.

Scope change

The bill's scope was expanded to include amendments to §§ 56-585.1 and 56-585.8, which were not part of the original introduced version. The bill now addresses both securitized asset costs and biennial rate reviews for Phase I Utilities.

SCOPE

The bill was changed from adding only a new section 56-249.8 to also amending and reenacting existing sections 56-585.1 and 56-585.8, expanding its regulatory scope.

TITLE

The bill title was updated to include 'biennial rate reviews' and 'recovery of certain costs' to reflect the broader scope of the amendments.

TECHNICAL

The bill format changed from 'Introduced' status to 'Engrossed' status with a floor amendment substitute, indicating it has been amended on the House floor.

PATRONS

The list of bill patrons was updated to reflect the floor amendment, adding Delegate Ballard and Delegate Williams as patrons of the substitute version.

Phase I Utilities; financing for certain securitized asset costs, biennial rate reviews.

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