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Committee adopts substitute for bill that would factor grid reliability into utility rates
Summary
The committee agreed to a substitute for Senate Bill 505 to require the Public Service Commission to consider bulk power system reliability and capacity value when approving utility rate increases; committee voted to report the substitute to the full Senate with a recommendation that it pass.
The West Virginia Senate committee approved a committee substitute for Senate Bill 505 on a voice vote and voted to report the substitute to the full Senate with a recommendation that it pass.
The substitute would add “bulk power system reliability” and related capacity attributes as factors the Public Service Commission (PSC) must evaluate when deciding whether proposed rate increases for electric utilities are fair, just and reasonable. Counsel told the committee the PSC would be required to evaluate “bulk power system reliability, energy capacity, on demand dispatchability, useful life of relevant assets, intermittent operational nature, and overall operational costs including back end disposal costs and environmental compliance costs of all assets used for the production or transmission of electric energy.”
The committee heard from a remote witness identified as Mr. Orr, who described the bill’s intent. “We support a our senate bill 5 0 5 because we firmly believe that families and businesses should only pay for what they get,” Orr said. He told the committee the formula in the substitute would scale a utility’s rate of return for a given asset by that asset’s capacity value — citing PJM capacity-value examples he gave for coal, natural gas, nuclear, wind and solar.
Counsel explained that the substitute would require any rate-application to demonstrate that proposed generation or transmission additions would meet the company’s capacity contributions during projected peak-demand periods; for retirements or scaling down of assets the PSC would need to find whether the proposed change would “negatively impact the company’s ability to meet its capacity contributions to power grid reliability during times of peak demand.” Counsel also said the PSC would need to include the dollar amount of any rate increase, the rate of return and its duration, and identify costs denied for recovery in approval orders.
After brief questions and discussion, the committee agreed to the substitute. The vice chair moved that the committee substitute for Senate Bill 505 be reported to the full Senate with the recommendation that it do pass, “but under the original double committee reference, first be referred to the committee on government organization,” and the motion was adopted.
No roll-call vote counts were recorded in the transcript; the committee adopted the substitute by voice vote.
