SENATE
HOUSE
JOINT
BILL STATUS
WV CODE
REPORTS
EDUCATIONAL
CONTACT
home
home

SB600 SUB1 Senate Bill 600 History

OTHER VERSIONS  -  Introduced Version  |     |  Email


WEST virginia legislature

2018 regular session

Committee Substitute

for

Senate Bill 600

By Senators Smith, Ferns, and Weld

[Originating in the Committee on Energy, Industry, and Mining; Reported on February 23, 2018]

 

 

A BILL to amend and reenact §24-2-1j of the Code of West Virginia, 1931, as amended, relating to powers and duties of the Public Service Commission; establishing special rates and provisions for energy intensive industrial and manufacturing consumers of electric power; adding new definitions; and establishing the procedure required for approval of these rates for manufacturing consumers by the commission.

Be it enacted by the Legislature of West Virginia:


ARTICLE 2. POWERS AND DUTIES OF PUBLIC SERVICE COMMISSION.


§24-2-1j. Special rates and provisions for energy intensive industrial and manufacturing consumers of electric power.

(a) The Legislature hereby finds that:

(1) Whereas West Virginia enjoys historically enjoyed relatively low cost electric power rates for residential customers, business and industry and these relatively low rates constitute constituted a competitive economic advantage for West Virginia, this competitive economic advantage has eroded;

(2) West Virginia has many energy intensive industrial and manufacturing consumers of electric power, and has the ability to retain its existing energy intensive industrial and manufacturing consumers of electric power and attract additional energy intensive industrial and manufacturing consumers of electric power in the future, through the adoption of policies and the establishment of rates that enhance and preserve the attractiveness competitiveness of West Virginia as a place for energy intensive industrial and manufacturing consumers to do business;

(3) Energy intensive industrial and manufacturing consumers of electric power create jobs, provide a substantial tax base, and enhance the productive capacity, competitiveness, and economic opportunities of West Virginia and all of its citizens;

(4) Energy intensive industrial and manufacturing consumers of electric power help keep power rates low for all consumers of electric power, including residential customers, by providing a large consumption base over which the cost of producing and delivering electric power may be spread from time to time;

(5) It is in the best interests of West Virginia, the citizens of West Virginia, electric public utilities in West Virginia, and all consumers of electric power in West Virginia, including residential customers, to encourage the continued development, construction, operation, maintenance, and expansion in West Virginia of industrial and manufacturing plants and facilities which are energy intensive consumers of electric power, thereby increasing the creation, preservation, and retention of jobs, retaining and expanding the tax base, helping keep power rates low for all consumers of electric power, and enhancing the productive capacity, competitiveness, and economic opportunities of all citizens of West Virginia and;

(6) To encourage the continued development, construction, operation, maintenance, and expansion in West Virginia of industrial and manufacturing plants and facilities which are energy intensive consumers of electric power, the commission may accept special contracts and establish special rates and other supply arrangements under this section that in its judgment are necessary or appropriate for the continued, new, or expanded operation of energy intensive industrial and manufacturing consumers and that can reasonably be expected to support the long-term operation of energy intensive industrial and manufacturing consumers, and that do not impose an unreasonable burden upon electric public utilities or their other customers.

(7) To assist the commission in the exercise of its authority to establish special rates under this section, the Legislature creates in article thirteen-cc, chapter eleven of this code a tax credit mechanism to provide a source of funding to support special rates of which the commission may avail itself in exercising said authority in certain circumstances

(b) As used in this section:

(1) “Energy intensive industrial and manufacturing consumer” means an industrial or manufacturing facility, plant, or enterprise located or to be located in West Virginia that has an actual demand in the past 12 months, or a projected contract demand of at least fifty thousand 10,000 kilowatts of electric power at its West Virginia facilities, and the cost of electricity consumed in the industrial or manufacturing process constitutes at least 10 percent of the cost of production under normal operating conditions.

(2) “Special contract” means a bilateral contract for electric service negotiated between an energy intensive industrial or manufacturing consumer and a utility regulated by the commission, including rates, terms, and conditions that may reflect the unique circumstances of the consumer, or are designed to attract, retain, or incentivize additional investment by the consumer, or provide benefits to the utility and its customers through actions that serve to reduce the utility's cost of providing service.

(2) (3) “Special rate” means a rate set for an energy intensive industrial or manufacturing consumer pursuant to this section.

(4) “Special tariff” means a commission-approved economic development, retention, opportunity, or other tariff offering designed to attract, retain, or incentivize additional investment by energy intensive industrial and manufacturing consumer(s), or that provides benefits to the utility and its customers through actions that serve to reduce the utility's cost of providing service.

(c) In addition to any authority of the commission to allow special rates or contracts or special tariffs under any other provision of the code or rule, and in addition to all other factors which the commission may consider in setting rates for consumers of electric power, including, but not limited to, the commission's responsibilities under §24-1-1(b) of this code, and notwithstanding any other provisions of this code to the contrary, in setting a special rate the commission may take into consideration fluctuations in market prices for the goods or products produced by the energy intensive industrial or manufacturing consumer of electric power, or other variables or factors which may be relevant to or affect the continuing vitality of the energy intensive industrial or manufacturing consumer of electric power in dynamic markets. In setting a special rate by reference to fluctuations in market prices for the goods and products produced by an energy intensive industrial or manufacturing consumer of electric power, the commission may establish variable rates including, but not limited to, ceilings and floors on the special rate, banking or crediting mechanisms, caps, limits, or other similar types of safeguards that are intended by the commission, in its reasonable judgment, to provide appropriate flexibility and predictability in the special rate over time, to permit the energy intensive industrial or manufacturing consumer customer the ability to make the capital investments and other commitments necessary to support the continued operation of the facility.

(d) An energy intensive industrial or manufacturing consumer wishing to apply for seeking a special contract or special rate shall first enter into negotiations with the utility that provides, or would provide, it with electric power, regarding the terms and conditions of a mutually agreeable special rate. If the negotiations result in an agreement between the energy intensive industrial or manufacturing consumer and the utility, the energy intensive industrial consumer and the utility shall make a joint filing with the commission seeking approval of the proposed special rate. If the utility may implement the provisions of the agreement pursuant to the provisions of §24-2-1j(f) and §24-2-1j(h) of this code. Nothing herein limits the legal rights of the energy intensive industrial or manufacturing consumer if the negotiations are unsuccessful. the energy intensive industrial consumer may file a petition with the commission to consider establishing a special rate. The commission shall have the authority to establish a special rate upon the filing of either a joint filing or a petition pursuant to this section

(e) In order to qualify for a special rate or special contract, an energy intensive industrial or manufacturing consumer shall:

(1) Have a contract demand of at least fifty thousand kilowatts of electric power at its West Virginia facilities under normal operating conditions Affirm and demonstrate that the electric energy consumed in the industrial or manufacturing process constitutes or will constitute at least 10 percent of the cost of production;

(2) Create or retain at least 25 full-time jobs in West Virginia;

(3) Have invested not less than $500,000 in fixed assets, including machinery and equipment, in West Virginia;

(4) Provide reasonable evidence that due to market conditions in the industry in which the energy intensive industrial or manufacturing consumer operates, or other factors bearing on investment in and operation of the industrial or manufacturing facility or facilities, without the special rate the operation or continued operation of the industrial or manufacturing facility or facilities is threatened or not economically viable under reasonable assumptions and projections regarding the market and the operation of the industrial or manufacturing facility or facilities;

(5) Provide reasonable evidence that, with the special rate, the energy intensive industrial or manufacturing consumer intends to operate the industrial or manufacturing facility or facilities in West Virginia for an extended period of time, and that the operation or continued operation of the industrial or manufacturing facility or facilities for an extended period of time appears economically viable, under reasonable assumptions and projections regarding the market in which the energy intensive industrial or manufacturing consumer operates and regarding the operation of the industrial or manufacturing facility or facilities; and

(6) Provide information and data setting forth how the energy intensive industrial or manufacturing consumer meets the qualifications of this section, and how the special rate advances the policy goals set forth in §24-2-1j(a) of this code.

(f) The commission shall determine whether any excess revenue or revenue shortfall created by a special rate authorized pursuant to this section should be allocated among any other customers of the utility. In making that determination, the commission shall consider all relevant factors, including whether such allocation is just, reasonable, and fairly balances the interests of other customers, the utility, and the customer receiving the special rate A special rate or special contract under this article related to new or expanded electrical load of the consumer shall be considered reasonable and may become effective upon filing of the agreement with the commission under its rules, provided the fixed cost recovery component of the revenue projected to be received by the utility over the term of the agreement is no less than 60 percent of the fixed cost recovery component that the utility would have received under the applicable tariff rates for which the consumer would otherwise qualify and the term of the agreement does not exceed five years in duration. If the negotiated rate is less than 60 percent of the fixed cost recovery component of the applicable tariff rate or if the term of the agreement exceeds five years, the effective date of the special rate or special contract shall be suspended for an initial period of 60 days from the date of filing. If the commission takes no action during the 60-day review period to further suspend the effectiveness by setting the agreement for hearing, the rates and any other provisions set forth in the agreement shall be considered reasonable and may be implemented by the utility. The special rate or special contract may not provide any discount on the variable cost recovery component that the utility would have received under the applicable tariff rates for which the consumer would otherwise qualify.

(g) If the commission determines that: (1) A special rate is necessary for the creation, preservation or retention of jobs by the energy intensive industrial consumer; (2) in connection with the initial special rate that is authorized by the commission for an energy intensive industrial consumer, the energy intensive industrial consumer will increase the number of persons it employs, including both persons who have been previously employed by the energy intensive industrial consumer and persons not previously employed by the energy intensive industrial consumer, by at least one hundred fifty persons as a result of the special rate; (3) the energy intensive industrial consumer will employ no fewer than three hundred persons, which number may include, but is not limited to, the persons newly hired or rehired pursuant to the preceding clause in this subsection; (4) the energy intensive industrial consumer has a contract demand of at least two hundred fifty thousand kilowatts of electric power at its West Virginia facilities under normal operating conditions; and (5) a special rate for an energy intensive industrial consumer of electric power would create a revenue shortfall, the commission shall, prior to determining whether it is reasonable to allocate all or a portion of the revenue shortfall amount among a public utility's other customers, first consider the availability of tax credits and payments required to be made to public utilities pursuant to article thirteen-cc, chapter eleven of this code to reduce or eliminate a revenue shortfall. The commission shall identify in each proceeding in which it establishes a special rate for an eligible energy intensive industrial consumer the amount of any unallocated revenue shortfall in need of funding pursuant to article thirteen-cc, chapter eleven of this code to defray it and shall project the amount of the gross tax credits needed for that purpose after taking into consideration the net amounts of credits that are required to be paid to utilities pursuant to subsection (a), section four, article thirteen-cc, chapter eleven of this code and the limits specified in section three, article thirteen-cc, chapter eleven of this code. Tax credits authorized under this section may be designated by the commission only in respect of periods of time during which the eligible energy intensive industrial consumer employs at least three hundred persons. The commission's determination as to the amount of tax credits on which it relies in establishing a given special rate, shall constitute an authorization for each supplier of West Virginia coal to the utility offering that special rate to claim its allocated share of the total amount of tax credits. The allocated share shall be calculated by the affected public utility, subject to the approval of the commission A utility entering into a special rate or special contract under the provisions of §24-2-1j(f) of this code may not seek recovery outside of a general rate proceeding filed pursuant to Rule 42 of the commission's rules for the construction and filing of tariffs of any revenue differential attributable to the difference between the fixed cost recovery component of the special rate or special contract and the fixed cost recovery component of the applicable approved tariff rate for which the consumer would otherwise qualify. In a future general rate proceeding establishing rates to be effective during the term of any agreement, the commission may not impute revenues to the utility in excess of that provided for by the special rate or special contract, and any revenue differential should be allocated among other customers of the utility. In determining this allocation, the commission shall consider all relevant factors, including whether the allocation is just, reasonable, and fairly balances the interests of other customers, the utility, the consumer receiving the special rate or special contract, and the West Virginia economy. Nothing in this section may limit the utility's recovery of the variable cost recovery component.

(h) The commission shall include in the annual report to the Legislature which it makes pursuant to subsection (d), section one, article one of this chapter a report on the tax credits being employed pursuant to article thirteen-cc, chapter eleven of this code to help fund special rates created under this section A special rate or special contract under this subsection related to existing electrical load of the consumer shall become effective 60 days after the filing of the agreement with the commission under its rules, unless upon review the commission finds cause within the 60-day period to suspend the effectiveness of the agreement and sets the agreement for further consideration or hearing. If the commission takes no action to suspend the effectiveness of the agreement during the 60-day review period, the rates set forth in the agreement shall be considered reasonable and may be implemented by the utility.

(i) A utility entering into a special rate or special contract under §24-2-1j(h) of this code shall recover in a timely manner the revenue differential attributable to the difference between the special rate or special contract and the rates previously applicable to the consumer in a general rate proceeding, a special purpose rate proceeding, or other proceeding specific to the special rate or special contract. In any rate proceeding establishing revised rates to be effective during the term of any agreement, the commission may not impute revenues to the utility in excess of that provided for by the special rate or special contract, and any revenue differential should be allocated among other customers of the utility. In determining this allocation, the commission shall consider all relevant factors, including whether the allocation is just, reasonable, and fairly balances the interests of other customers, the utility, the consumer receiving the special rate or special contract, and the West Virginia economy.

(j) Notwithstanding the capacity limit for energy intensive industrial or manufacturing consumers set forth in §24-2-1j(b)(1) of this code, individual consumers with capacities less than 10,000 kilowatts and for which the cost of electricity consumed in the industrial or manufacturing process constitutes at least 10 percent of the cost of production under normal operating conditions may qualify for a special rate or special contract under this subsection provided that the aggregate capacity for consumers participating in a special rate or special contract under this subsection does not exceed 20,000 kilowatts for affiliated regulated utilities operating in West Virginia.

(k) The commission may establish or modify the total aggregate number of energy intensive industrial or manufacturing consumers or the aggregate amount of capacity eligible for special rates, special contracts, or special tariffs under this section.

 

 

This Web site is maintained by the West Virginia Legislature's Office of Reference & Information.  |  Terms of Use  |   Web Administrator   |   © 2019 West Virginia Legislature ***


X

Print On Demand

Name:
Email:
Phone:

Print