SB850 creates a new chapter in Title 56 of the Code of Virginia establishing an “Eligible Infrastructure Replacement and Enhancement” (EIRE) framework 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 associated costs outside of a general rate case. The bill defines eligible projects broadly to include in-kind replacement, non-growth-related main extensions, compliance-related improvements, and certain facility relocations, with a focus on maintaining or improving safety, reliability, efficiency, and compliance with state and federal environmental requirements.
The bill specifies the types of 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 procedural deadlines for SCC review: 180 days for an initial plan, 120 days for amendments, and 90 days for annual rider adjustments. The act expires on July 1, 2035, and requires utilities with approved riders to submit an earnings test in annual informational filings or base rate proceedings through December 1, 2030, along with a status report from the SCC to legislative and water commission leaders.
The bill’s impact is to give investor-owned water and wastewater utilities a new, more streamlined cost-recovery mechanism for infrastructure investment, potentially reducing the need to wait for a full rate case before recovering certain capital costs. It also limits the SCC’s review in EIRE proceedings to the plan and rider itself, bars consideration of other revenue requirement or ratemaking issues in that proceeding, and requires allocation under cost-causation principles to avoid undue cross-subsidization. In effect, the bill amends Virginia utility regulation by creating a specialized rider process for infrastructure replacement and enhancement.
Overall sentiment appears favorable, as reflected in strong committee and floor votes in both chambers and final concurrence on the House substitute. The vote margins suggest broad bipartisan support for the concept of allowing utilities to recover infrastructure costs more efficiently, likely tied to reliability and compliance concerns. At the same time, the presence of several no votes indicates some reservations about the scope of cost recovery and the potential rate impacts on customers.
The main points of contention are likely the shift away from traditional rate-case scrutiny, the ability to recover costs through a separate rider, and the inclusion of return on equity, carrying costs, and certain external costs in the recoverable amount. Critics may also be concerned about whether the bill could increase customer bills or reduce regulatory oversight, while supporters likely view it as a targeted tool to address aging water and wastewater infrastructure and environmental compliance needs.
SB850 adds Chapter 31 to Title 56 of the Code of Virginia, authorizing investor-owned water and wastewater utilities to seek SCC approval of EIRE plans and riders for recovery of qualifying infrastructure costs outside a standard rate case. It establishes definitions for eligible infrastructure, eligible projects, and recoverable costs, sets review timelines and reconciliation requirements, and requires periodic earnings-test reporting and a later SCC implementation report. The act sunsets on July 1, 2035, unless extended or reenacted.
The bill appears to have been generally well received, with strong committee approvals and large floor majorities in both the Senate and House, followed by Senate agreement to the House substitute. The voting pattern suggests broad support for the policy goal of facilitating infrastructure investment and compliance, though the recorded no votes indicate some lawmakers remained concerned about the mechanics of cost recovery and regulatory oversight.
The likely areas of disagreement are the bill’s use of a separate rider rather than a full rate case, the limited scope of SCC review in EIRE proceedings, and the inclusion of return on investment, carrying costs, and other expenses in the recoverable amount. Opponents may worry about customer rate impacts, cross-subsidization, and reduced scrutiny of utility earnings, while supporters likely argue the bill is a necessary and targeted mechanism to fund aging water and wastewater infrastructure and meet environmental and safety requirements.