An Act to amend and reenact §§ 56-234 and 56-264.3 of the Code of Virginia, relating to public utilities; water and sewerage companies; discounted rates for low-income customers.
Summary
HB770 amends Virginia’s public utility laws to expressly allow water and sewerage companies to propose discounted rates and tariff provisions for low-income customers. The bill defines eligible customers as households at or below 200 percent of the federal poverty level, as determined by the Department of Social Services, and permits a tiered discount structure. Utilities may recover the cost of these discounts through their base and general rates, meaning the program can be spread across the utility’s broader customer base rather than absorbed solely by the utility.
The bill also revises rate-setting rules for smaller water and sewerage companies, those with fewer than 10,000 customer accounts. It requires class cost-of-service studies when revenue requirements are allocated among customer classes, directs the State Corporation Commission to tie allocations more closely to cost causation, and limits how far class-specific returns on equity may deviate from the company-wide return on equity unless supported by strong evidence. The measure becomes effective January 1, 2027.
Impact
The bill changes §§ 56-234 and 56-264.3 of the Code of Virginia by creating explicit authority for water and sewerage utilities to offer income-based discounted service and recover those costs in rates. It also strengthens rate-design requirements for smaller water and sewerage companies by imposing additional study and evidentiary standards in Commission proceedings. The practical effect is to expand utility affordability tools for low-income households while giving the State Corporation Commission a clearer framework for reviewing class allocations and discount programs.
Sentiment
The bill appears to have had generally favorable support overall, as reflected by passage through subcommittee, committee, and both chambers, including a unanimous Senate block vote on second reading. At the same time, the recorded votes show meaningful opposition in the House and Senate final passage votes, indicating that while the concept of low-income discounts was broadly acceptable, the bill was not without concern among some legislators. The absence of committee transcript detail limits insight into specific arguments, but the vote pattern suggests a mix of support and caution rather than unanimous enthusiasm.
Contention
The main point of contention likely centered on how the discounted-rate program would be funded and whether allowing utilities to recover those costs through base and general rates would shift costs to other customers. Another likely issue was the added regulatory structure for smaller water and sewerage companies, especially the requirement for class cost-of-service studies and limits on class-level returns on equity, which could be viewed as either consumer protection or added compliance burden depending on perspective. Supporters likely emphasized affordability and access for low-income households, while opponents may have questioned rate impacts, utility flexibility, and the extent of Commission oversight.