HB2711 creates a new chapter in Title 56 of the Code of Virginia establishing an “eligible infrastructure replacement and enhancement” (EIRE) program for investor-owned water and wastewater utilities. The bill allows a utility to file an EIRE plan with the State Corporation Commission (SCC) identifying qualifying infrastructure projects and a separate EIRE rider to recover related costs outside a general rate case. Qualifying projects are limited to infrastructure that maintains or improves safety, reliability, efficiency, or compliance with state or federal environmental requirements, and the bill excludes projects primarily intended to serve new customers or increase revenues.
The bill defines the costs that may be recovered through the rider, including return on investment, depreciation, property taxes, carrying costs, certain relocation costs, and some operation and maintenance expenses. It also sets procedures for SCC review, including deadlines for approval or denial of initial plans, amendments, and annual rider adjustments, and requires utilities to reconcile over- or under-recoveries each year. The act expires on July 1, 2035, and requires utilities with approved riders to submit an earnings test in annual filings or base rate cases by December 1, 2030, along with a status report to legislative and water oversight committees.
The bill’s main legal effect is to add a new cost-recovery mechanism in Virginia utility law for water and wastewater infrastructure investment. It changes how investor-owned utilities may recover certain capital and operating expenses by authorizing a separate rider rather than waiting for recovery through a full rate case, while also limiting the SCC’s review to the EIRE plan itself and preventing broader ratemaking issues from being considered in that proceeding. It also directs how costs are allocated among customer classes and restricts the use of any updated capital structure approved for EIRE purposes to that rider only.
Overall sentiment appears generally favorable, as reflected by strong committee and floor support in both chambers and final passage by conference report. The bill moved through the House and Senate with substantial majorities, suggesting broad agreement that water and wastewater utilities need a more targeted mechanism to replace aging infrastructure and meet regulatory requirements. The inclusion of a sunset date and a later earnings test/reporting requirement also indicates an effort to monitor the program’s effects after implementation.
The main points of contention likely centered on utility cost recovery and ratepayer protections. Supporters would favor the bill as a way to accelerate infrastructure replacement and environmental compliance, while opponents may have been concerned that the rider could allow utilities to recover costs outside a full rate case, potentially increasing bills or reducing scrutiny. The bill addresses some of those concerns by requiring prudence and reasonableness findings, annual reconciliation, cost-causation allocation rules, and a future earnings review, but the narrow SCC review and separate rider mechanism remain the most notable policy tradeoffs.
HB2711 adds Chapter 31 to Title 56, authorizing investor-owned water and wastewater utilities to seek SCC approval of EIRE plans and riders to recover specified infrastructure costs outside traditional base-rate proceedings. It affects the ratemaking framework for these utilities by defining eligible projects and recoverable costs, setting review deadlines and reconciliation requirements, and limiting the scope of SCC review in EIRE proceedings. The act also imposes a sunset in 2035 and requires later earnings-test reporting and a status report to legislative and water oversight bodies.
The bill appears to have had broadly positive reception. It passed both chambers with strong margins and advanced through committee with little recorded opposition, indicating general agreement that the state should provide a dedicated mechanism for water and wastewater infrastructure replacement. The final conference report was adopted by both chambers, suggesting that any differences between the House and Senate versions were resolved without derailing support.
The likely debate focused on whether utilities should be allowed to recover infrastructure costs through a separate rider rather than through a full rate case, and how much oversight the SCC should have over those recoveries. Consumer advocates or skeptical legislators may have worried about rate impacts, cross-subsidization, and reduced scrutiny of utility earnings, while supporters likely emphasized aging infrastructure, reliability, safety, and compliance with environmental standards. The bill’s reconciliation requirement, earnings test, and sunset date appear to be the main safeguards used to address those concerns.