Administrative Code

Virginia Administrative Code
Title 20. Public Utilities and Telecommunications
Agency 5. State Corporation Commission
1/25/2020

Chapter 320. Regulations Governing Transfer of Transmission Assets to Regional Transmission Entities

20VAC5-320-10. Applicability and scope.

These regulations are promulgated pursuant to the provisions of the Virginia Electric Utility Regulation Act (§ 56-576 et seq. of the Code of Virginia), and they apply to any incumbent electric utility owning, operating, controlling, or having an entitlement to transmission capacity within the Commonwealth. Sections 56-577 and 56-579 of the Act require Virginia's incumbent electric utilities to (i) join or establish regional transmission entities (RTEs) by January 1, 2001, and (ii) seek the commission's authorization to transfer their transmission assets to such RTEs.

Specifically, § 56-577 of the Code of Virginia requires that on or before January 1, 2001, incumbent electric utilities owning, operating, controlling, or having entitlement to transmission capacity join or establish RTEs. The utilities are required to transfer the management and control of their transmission systems to the RTEs, subject to the provisions of § 56-579 of the Code of Virginia.

Additionally, § 56-579 provides that no incumbent electric utility shall transfer to any person any ownership, control, or operation of any portion of any transmission system within the Commonwealth without obtaining the commission's prior approval.

Finally, certain transfers of utility assets are subject to the Utilities Transfers Act (§ 56-88 et seq. of the Code of Virginia).

In short, incumbent electric utilities that own, operate, control or have entitlement to transmission capacity are subject to three provisions: (i) the obligation to join or establish an RTE, (ii) the obligation to obtain commission approval before transferring ownership, control or operation to an RTE, and (iii) obligations imposed by the Utilities Transfers Act. Although these provisions are distinct, they overlap.

In the interest of administrative efficiency, the commission will utilize a single proceeding in which the utility seeks approval for a proposed transfer under § 56-579 of the Code of Virginia and under the Utilities Transfers Act. In that proceeding, the commission will determine whether (i) the RTE to which the applicant proposes to transfer any ownership or control of, or any responsibility to operate, any portion of its transmission system satisfies the legislative criteria set forth in § 56-579 of the Code of Virginia, and (ii) the transfer otherwise satisfies the provisions of § 56-579 and the Utilities Transfers Act.

Accordingly, these regulations establish:

1. The elements of regional transmission entity structures essential to the public interest, to be applied by the commission in determining whether to authorize transfer of ownership or control from an incumbent electric utility to a regional transmission entity, all as required by § 56-579 of the Code of Virginia;

2. Filing requirements for entities that (i) are required to comply with the mandate of § 56-577 of the Code of Virginia that certain entities join or establish regional transmission entities, and (ii) seek the commission's permission to transfer control, ownership, or responsibility of or for transmission to a regional transmission entity pursuant to § 56-579 of the Code of Virginia and the Utilities Transfers Act; and

3. A schedule for such filings by the entities having obligations under § 56-577 of the Code of Virginia.

Statutory Authority

§ 12.1-13 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 16, Issue 24, eff. July 19, 2000; amended, Virginia Register Volume 29, Issue 23, eff. July 1, 2013.

20VAC5-320-20. Definitions.

The following words and terms when used in this chapter shall have the following meanings unless the context clearly indicates otherwise.

"Act" means the Virginia Electric Utility Regulation Act.

"Commission" or "SCC" means the State Corporation Commission.

"FERC" means the Federal Energy Regulatory Commission.

"Incumbent electric utility" shall have the same meaning as set forth in § 56-576 of the Code of Virginia.

"Rate pancaking" means the practice of (i) requiring a transmission customer to pay a separate access charge each time the contract path associated with the customer's transaction crosses the boundary of another transmission owner, so as to count more than once the quantity transmitted or (ii) otherwise counting the quantity transmitted more than once in the calculation of the transmission customer's charges for transmission services, ancillary services, or both.

"Regional transmission entities" or "RTEs" means any individual, corporation, cooperative, municipality, partnership, association, company, business, trust, joint venture, or other private legal entity that may receive or has received, by transfer pursuant to this chapter, any ownership or control of, or any responsibility to operate, all or part of the transmission systems in the Commonwealth.

"Transmission assets" means the facilities and equipment owned, operated, or controlled by incumbent electric utilities, and required for the transmission of electric energy. The term also includes facilities and equipment for the transmission of electric energy when incumbent electric utilities have entitlement to the transmission capacity thereof.

Statutory Authority

§ 12.1-13 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 16, Issue 24, eff. July 19, 2000; amended, Virginia Register Volume 29, Issue 23, eff. July 1, 2013.

20VAC5-320-30. Elements of an appropriate regional transmission entity; general categories.

A. Section 56-579 of the Code of Virginia requires that RTEs (i) promote practices for the reliable planning, operating, maintaining, and upgrading of the transmission systems and any necessary additions thereto, and (ii) be consistent with meeting the transmission needs of electric generation suppliers both within and without this Commonwealth.

B. Accordingly, RTEs to which any incumbent electric utility proposes to transfer its transmission assets shall satisfy commission requirements in the following five essential categories before any such transfer will be approved: (i) reliability practices, (ii) pricing and access policies, (iii) independent governance, (iv) consistency with FERC policy, and (v) fair compensation to the transferor.

Statutory Authority

§§ 12.1-13 and 56-579 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 16, Issue 24, eff. July 19, 2000.

20VAC5-320-40. Planning and reliability policies and practices.

RTE planning and reliability policies and practices shall, at a minimum:

1. Maintain short-term system reliability on an ongoing basis;

2. Identify and facilitate the addition of system enhancements needed to maintain reliability over the long term to promote efficient use of the grid, and to promote the efficient development of competition in the sale of electric energy;

3. Provide assurance that needed transmission facilities are constructed in a timely fashion, including facilities for the interconnection of generating facilities, subject to required regulatory approvals;

4. Provide assurance that connected generation facilities will provide ancillary services necessary for reliable service as a condition of transmission service from the RTE;

5. Serve as an information resource to reliability councils or committees, potential market entrants, consumers, the FERC, and state regulatory commissions;

6. Promote the construction of properly located generation facilities when such facilities represent optimal solutions for maintaining reliability and enhancing competitive markets; and

7. Provide for appropriate interconnection of new or expanded generating facilities, including the timely performance of necessary interconnection or facilities studies in cooperation with utilities.

Statutory Authority

§§ 12.1-13 and 56-579 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 16, Issue 24, eff. July 19, 2000.

20VAC5-320-50. Interconnection, pricing, and access policies and practices.

A. RTEs shall promote policies and practices for the interconnection of generating facilities and for the pricing and access for transmission service that are safe, reliable, efficient, not unduly discriminatory, and consistent with the orderly development of competition in the Commonwealth, as required in § 56-579 of the Code of Virginia.

B. Accordingly, such interconnection, pricing, and access policies shall, at a minimum:

1. Provide for efficiently priced transmission access to competing generating resources over as broad a region as possible;

2. Use transmission rates that do not discourage economic transactions, and do not encourage uneconomic transactions;

3. Be adaptable for purchasers of electricity at wholesale or at retail;

4. Provide for the efficient relief of transmission congestion through the redispatch, by direct orders or by coordination with customers and generators, of competitively priced generation on an economically efficient basis;

5. Provide for the efficient pricing of transmission transactions between different regional transmission organizations;

6. Ensure that (i) transmission-related decisions, including interconnection pricing, access, and planning, are made and (ii) operational procedures are developed openly with appropriate stakeholder input and will not harm the development of competitive markets;

7. Provide for effective market monitoring, including serving as a resource to assist the FERC and state regulatory commissions in the identification of existing market power and resolution of market power abuses;

8. Promote an environment that facilitates the development of an efficient generation market; and

9. Promote the construction of transmission facilities to enhance competitive markets within the boundaries of the RTE.

Statutory Authority

§§ 12.1-13 and 56-579 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 16, Issue 24, eff. July 19, 2000.

20VAC5-320-60. Independent governance.

A. Section 56-579 of the Act requires RTE policies that are not unduly discriminatory and that are consistent with the orderly development of competition in the Commonwealth.

B. Accordingly, RTEs shall:

1. Be governed independent of competitive interests;

2. Allow their decision-makers full discretion and appropriate incentives to achieve all the policies of this chapter; and

3. Provide for advisory boards with equitable stakeholder representation.

Statutory Authority

§§ 12.1-13 and 56-579 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 16, Issue 24, eff. July 19, 2000.

20VAC5-320-70. Consistency with FERC policy.

Every transfer of transmission assets by an incumbent electric utility to an RTE pursuant to this regulation shall be consistent with all lawful requirements of the FERC as required by the provisions of § 56-579 of the Code of Virginia.

Statutory Authority

§§ 12.1-13 and 56-579 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 16, Issue 24, eff. July 19, 2000.

20VAC5-320-80. Fair compensation to transferor.

The RTE's method for acquiring control of transmission rights or assets transferred by an SCC-jurisdictional entity shall fairly compensate the transferor as specified in § 56-579 of the Code of Virginia.

Statutory Authority

§§ 12.1-13 and 56-579 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 16, Issue 24, eff. July 19, 2000.

20VAC5-320-90. Filing requirements; generally.

Each incumbent electric utility owning, operating, controlling, or having an entitlement to transmission capacity within the Commonwealth, proposing to transfer all or part of the control, ownership or responsibility for such transmission capacity to an RTE, shall file an application with the commission. The application shall be prepared and submitted as follows:

1. Part I, to be filed if an applicant proposes to transfer to an RTE only the management or control of, or responsibility for, such transmission capacity, shall consist of prefiled testimony and supporting exhibits or schedules necessary to demonstrate that the RTE to which the applicant proposes to transfer such management, control, or responsibility satisfies the elements set forth in this chapter and all applicable statutory requirements.

2. Part II, to be filed in addition to Part I if an applicant also proposes to transfer ownership of such capacity to an RTE, shall consist of prefiled testimony and supporting exhibits or schedules necessary to demonstrate that the transfer of such transmission ownership to the RTE satisfies the elements set forth in this chapter and all applicable statutory requirements.

Statutory Authority

§§ 12.1-13 and 56-579 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 16, Issue 24, eff. July 19, 2000.

20VAC5-320-100. Contents of incumbent electric utility filing, Part I.

Part I of the filing required pursuant to 20VAC5-320-90 shall include the following (if such information is not available as of the date of the filing, the application shall contain a detailed explanation as to why such information is not available, the efforts under way to develop such information, and an estimate of the time within which it will be available):

1. Copies of each agreement entered into between the RTE and member transmission owner. Copies of each draft agreement proposed to be entered into by and among the RTE and any member transmission owner.

2. A description of the proposed business structure of the RTE (e.g., public service corporation, limited liability company). Copies of the RTE's articles of incorporation, articles of organizations, or similar documentation shall be provided in conjunction with this description.

3. A detailed description of the RTE's governance, including but not limited to, explanations of the selection process for the RTE's board of directors and officers, codes of conduct, transmission owner rights and voting conditions.

4. A detailed description of the specific planning, operational, maintenance, and other responsibilities that will be within the province of the RTE, and those that will remain within the province of the transmission owners. Such description should specify authorities and powers granted to the RTE. The list of responsibilities to be addressed shall include the following:

a. Construction of facilities;

b. Dispatch and redispatch of generation;

c. Maintenance of facilities;

d. Decision to order line loading relief;

e. Filing of initial tariffs at FERC;

f. Filing of changes to tariffs at FERC;

g. Acquisition of ownership or control of transmission facilities from transmission-owning members of the RTE;

h. Acquisition of ownership or control of transmission facilities from entities who are prospective members of the RTE;

i. Admission of new members;

j. Establishment of budget;

k. Hiring of staff leadership;

l. Planning activities for interconnecting new generating facilities;

m. Planning activities for transmission facilities controlled by the RTE;

n. Planning activities for transmission facilities not controlled by the RTE or distribution facilities to be interconnected with the RTE;

o. Open access transmission tariff (OATT) administration;

p. Transmission transaction scheduling;

q. Provision of energy imbalance services;

r. Procurement and provision of ancillary services;

s. Market monitoring activities;

t. Control area or security coordination responsibilities;

u. Calculation and posting of available transmission capacity;

v. Dissemination of reliability-related information and coordination with reliability councils or organizations; and

w. Coordination with generators and policies for interconnecting new generators.

5. A detailed description of (i) each type of transmission-related decision the transmission owner will continue to make after the transfer of the management and control of its transmission assets, or the responsibility to operate such assets to an RTE and (ii) the role, if any, that the RTE will play in the decision-making process.

6. A detailed description of the plans for hiring and training the employees of the RTE.

7. A description of the transmission rate or rates that will be collected by the RTE, including:

a. The type of rates to be charged (e.g., zonal rates, grid-wide rates);

b. Provisions for transitioning to a particular type of rate or for modifying existing rates;

c. A statement indicating whether there will be any rate pancaking for transactions within the RTE and, if so, the following information shall be furnished:

(1) A detailed description of how rate pancaking occurs, with realistic hypothetical examples;

(2) A detailed analysis of the economic effect of rate pancaking on representative types of transactions affecting customers in Virginia;

(3) A statement of how long rate pancaking will last;

(4) The rationale for permitting rate pancaking; and

(5) A discussion of any FERC precedent relevant to determining the lawfulness or appropriateness of such rate pancaking, including a description of all similarities and differences between the facts addressed in the FERC precedent and the facts in the RTE agreement at issue;

d. A statement indicating whether there is any charge, other than rate pancaking that is intended to recover, or has the effect of recovering, from the transmission customer, revenues that one or more transmission owners would no longer receive as a result of the elimination of pancaked rates, and, if so, the following information shall be furnished:

(1) A detailed description of how such charge operates, with realistic hypothetical examples;

(2) A detailed analysis of the economic effect of such charge on representative types of transactions affecting customers in Virginia;

(3) A statement of how long such charge will last;

(4) An explanation of the rationale for permitting the charge; and

(5) A discussion of any FERC precedent relevant to determining the lawfulness or appropriateness of such charge, including a description of all similarities and differences between the facts addressed in the FERC precedent and the facts in the RTE agreement at issue;

e. A schedule comparing and contrasting the RTE's expected transmission charges and resulting RTE revenues with embedded retail transmission charges for each of the utility's Virginia jurisdictional rate classes;

f. An explanation of any special or innovative transmission rates or charges;

g. An explanation of the expected transmission pricing provisions applicable to transmission transactions with other regional transmission organizations; and

h. An explanation of the transmission pricing applicable to wheel-in, wheel-out, drive-through, and drive-within transactions.

8. A description of any complaint and dispute resolution procedure.

9. A detailed description of the facilities that will be subject to the RTE's control and/or that will be transferred to the RTE. Such description shall specify (i) whether the basis for determining the facilities to be transferred is FERC's seven factor test set forth in FERC Order 8881 or some other method, (ii) how such test or method was applied, (iii) whether and how frequently such test will be reviewed and revisited, and (iv) who, as between the RTE and the owners, will require such review and any subsequent transfer made necessary by such review.

10. A detailed discussion of generation markets or hubs within the RTE and within one wheel of the RTE. Such discussion shall:

a. Compare and contrast historical and expected average prices in these markets with embedded generation charges for each of the utility's Virginia jurisdictional rate classes;

b. Describe how the proposed RTE will promote improved access to each of these markets; and

c. Describe the current and projected transmission capability between these markets and the utility.

11. If an application to form an RTE already has been submitted to FERC, the filing shall include:

a. A copy of the application to the FERC (including applications made under § 203 and §§ 205 or 206 of the Federal Power Act,2 and all amendments thereto); and

b. Any pleadings and orders issued in such FERC case;

12. If the FERC has approved or conditionally approved the RTE, describe any conditions or requirements imposed on the RTE and the RTE's plans for satisfying such conditions.

13. A detailed description of the RTE's experience in grid management. If the RTE is a new entity, describe the qualifications and/or personnel requirements for the principal RTE employees who will be engaged in the management and operation of transmission facilities controlled by the RTE.

14. A detailed explanation of why the particular RTE was selected reasonably available to the applicant. Such statements should include assessments of the financial and technical abilities of the proposed RTE as contrasted with such alternative RTEs. Such technical assessment shall identify the current and projected transmission capability between the RTE and the utility for each RTE alternative.

15. A detailed description of the role and composition of the RTE's stakeholder advisory board or boards.

1Promoting Wholesale Competition Through Open Access Non-discriminatory Transmission Services by Public Utilities and Recovery of Stranded Costs by Public Utilities and Transmitting Utilities, Order No. 888, 61 FR 21,540 (May 10, 1996), FERC Stats. & Regs. %5731,036 (1996) (Order No. 888), order on reh'g, Order No. 888-A, 62 FR 12,274 (March 14, 1997), FERC Stats. & Regs. %5731,048 (1997) (Order) No. 888-A), order on reh'g, Order No. 888-B, 81 FERC %5761,248 (1997), order on reh'g, Order No. 888-C, 82 FERC %5761,046 (1998), aff'd., Transmission Access Policy Study Group, et al. v. FERC, 2000 WL 762706 D.C. Cir. (June 30, 2000).

216 USC §§ 824b, 824d and 824e.

Statutory Authority

§§ 12.1-13 and 56-579 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 16, Issue 24, eff. July 19, 2000.

20VAC5-320-110. Contents of incumbent electric utility filing, Part II.

Part II of the filing required pursuant to 20VAC5-320-90 shall include, at a minimum, the following:

1. A copy of the transaction agreement signed by an appropriate utility official.

2. A description of the proposed transfer and the terms and conditions of the transaction to include historical and current use of the property, proposed use of the property, original cost of the property, current net book cost of the property, proposed sales price of the property and the method of determining the price, and the proposed accounting treatment of the transaction as well as current recording on company's books of record.

3. Assurances that adequate service to the public at just and reasonable rates will not be impaired by the proposed transfer.

4. Other details of the sale, such as:

a. A showing that the sales price was or will be determined at arms length;

b. A description of whether the purchase price is at book cost, market value, or some other measure;

c. A description of how the proceeds from the sale will be used;

d. A schedule of plant, book depreciation, and contributed property related to the assets to be transferred up to the current date;

e. An analysis of the anticipated impact of the transfer on the regulated company's rates and service, capital structure, and access to capital and financial markets, including copies of any pertinent published financial reports.

5. Discussion of favorable and unfavorable economic impacts on the Commonwealth of Virginia to include employee levels, facilities, and services provided.

6. Anticipated impact of the transfer on competition and market power.

Statutory Authority

§§ 12.1-13 and 56-579 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 16, Issue 24, eff. July 19, 2000.

20VAC5-320-120. Filing schedule.

Each incumbent electric utility required to obtain commission authorization for the transfer of its transmission assets to an RTE shall file the application required by 20VAC5-320-90 with the Clerk of the Commission not later than October 16, 2000.

Statutory Authority

§§ 12.1-13 and 56-579 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 16, Issue 24, eff. July 19, 2000.

20VAC5-320-130. Waivers.

Requests for waivers of any of the provisions of this chapter shall be considered by the State Corporation Commission on a case-by-case basis, and may be granted upon such terms and conditions as the State Corporation Commission deems appropriate in the public interest.

Statutory Authority

§§ 12.1-13 and 56-579 of the Code of Virginia.

Historical Notes

Derived from Virginia Register Volume 16, Issue 24, eff. July 19, 2000.



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