Virginia Administrative Code › Title 20 - PUBLIC UTILITIES AND TELECOMMUNICATIONS › Agency 5 - STATE CORPORATION COMMISSION › Chapter 200 - PUBLIC UTILITY ACCOUNTING › Section 20VAC5-200-40 - The Small Water or Sewer Public Utility Act

Current through Register Vol. 40, No. 24, July 15, 2024
This section applies to public utilities holding a
				  certificate of public convenience and necessity issued by the State Corporation
				  Commission to provide either water or sewer service, or both, and having gross
				  annual operating revenues of less than $1 million. Such utilities are subject
				  to the Small Water or Sewer Public Utility Act (§ 56-265.13:1 et seq. of the
				  Code of Virginia) and shall be referred to herein as "company." Companies shall
				  perform their own tariff justification analysis in-house prior to changing
				  their rates, tolls, charges, fees, rates or regulations ("tariffs" or "rate
				  changes"). Companies should endeavor to meet with any organized group of
				  customers, e.g., civic associations or property owners' organizations, on a
				  regular basis at least once a year to advise them of company problems, any
				  impending tariff changes and why such changes are necessary. Companies are also
				  encouraged to meet with the staff, following any company meeting with its
				  customers to review and discuss proposed rate changes. However, each company
				  remains responsible for bearing the burden of proof regarding any changes in
				  its tariffs.
Requirements
1.
				Companies shall maintain their books and records in accordance with the Uniform
				System of Accounts for Class C companies on an accrual basis.
2. A 3.0% composite rate of depreciation is
				usual and customary and presumed to be reasonable. Any company which desires to
				use a higher accrual rate shall notify the commission's Divisions of Energy
				Regulation and Utility Accounting and Finance of its intent to change this rate
				in advance of booking same and shall provide to these divisions a copy of a
				study or other documents which the company believes supports its proposed
				change. The staff shall review this change and advise the company of the
				results of its review. If the company wishes to contest the staff's conclusions
				regarding depreciation, it may, by motion, apply to the commission for a
				hearing. If a company wishes to depreciate contributed property, it must advise
				the commission, through its Divisions of Energy Regulation and Utility
				Accounting and Finance, before booking depreciation on such property, and
				provide appropriate documentation to support the need for such depreciation
				under the requested accrual rate. The staff shall review this change and advise
				the company of the results of its review. If the company wishes to contest the
				staff's conclusions regarding depreciation of such property or the rate to be
				accrued thereon, the company, by motion, may apply to the commission for a
				hearing.
In the event that staff and company agree that depreciation
				  of contributed property is proper and agree on the accrual rate for such
				  depreciation, the amount so depreciated shall be placed in an escrow account
				  and used only for capital improvements, until a commission order is entered to
				  the contrary.
3. Working
				capital may be accrued at the rate of 1/9th of the total operating and
				maintenance expenses for the test period.
4. Each company shall file with the
				commission's Division of Energy Regulation three copies of the tariff changes,
				the notice required by subdivision 5 below, and the following information: A
				narrative statement that sets forth the name of the company, the name, address
				and telephone number of the person company wishes to have contacted about the
				tariff change and a brief explanation about why the change is being made. This
				narrative statement shall also describe whether the company's customers are
				served on a flat or metered basis; whether billed in advance or in arrears; and
				shall separately identify the number of connected customers and the number of
				customers being assessed availability fees, if applicable.
5. Each company shall complete its written
				notification to all customers 45 days prior to the effective date of any change
				in tariffs. In cases of hearings resulting from customer requests, only a
				hearing request made by the individual in whose name the account is maintained
				shall be deemed a request by a customer. Customer petitions are acceptable.
If a company wishes to contest the number of customers
				  requesting a hearing or whether one submitting a request is a customer, the
				  company may request and those requesting a hearing shall provide to the company
				  a copy of all requests for hearing or a copy of any customer petition filed
				  with this commission. If it is determined that requests for hearing have been
				  received from persons other than customers and that the requisite number of
				  customer requests have not been presented, the company may seek dismissal of
				  the case.
The Company's notice to its customers shall follow the
				  following format to the extent applicable:
NOTICE OF (INCREASES IN, CHANGES IN) RATES, CHARGES, RULES
				  AND REGULATIONS OF SERVICE OF (INSERT NAME OF COMPANY)
(Insert name of Company) will change its (tariffs) on file
				  with the State Corporation Commission, effective for service rendered on and
				  after (effective date). (Summarize existing rates, fees, and charges and all
				  new rates, fees, and charges).
[If applicable] (Insert name of Company) also will change the
				  following portions of its rules and regulations of service, effective on the
				  same date: (Summarize changes).
Any interested party may review (insert name of Company)'s
				  proposed changes during regular business hours at the utility's office where
				  customer bills may be paid.
Any interested person may file written comments in support of
				  or objecting to the proposed changes with the Division of Energy Regulation,
				  State Corporation Commission, P.O. Box 1197, Richmond, VA 23218.
(NAME OF COMPANY)
6. The company is free to choose any test
				period it wishes to support its rate changes. However, a company having flat
				rate structures must annualize the level of revenues derived from their current
				rates based upon the number of customers served as of the end of its selected
				test period. A company with a metered rate structure must compute revenues in
				effect at the end of its selected test period based upon the number of
				customers and usage by customer block per billing period. In the event that a
				hearing is held, the company shall provide the foregoing information to the
				commission on or before a date specified in the order scheduling
				hearing.
7. A hearing shall be held
				after at least 30 days notice to the company and its customers if a request or
				petition therefor is received by the commission from at least 25 percent of all
				customers affected by any filed tariff change, or from 250 affected customers,
				whichever is the lesser, or from the company itself, or upon the commission's
				own motion. When a hearing is to be held, the commission shall, by order,
				establish a hearing date and a date by which the company shall file financial
				data containing the information set forth in subdivision 8 below. A copy of the
				order shall be sent by first class mail to the company and any customer
				requesting a hearing from whom the commission has a complete mailing address.
				This order shall also specify a filing schedule for the company, customers and
				staff.
8. Financial data regarding
				a rate increase filed pursuant to subdivision 7 hereof shall include:
Any company electing to use a calendar year as its test
				  period may file a copy of its annual report and a statement prepared in the
				  format of the form rate of return statement following this subdivision. The
				  statement shall incorporate the per books data of revenues, expenses and plant
				  stated in the annual report and appropriate adjustments. The commission accepts
				  adjustments which reflect (i) annualized changes occurring during the test
				  year, (ii) known and certain wage agreements, (iii) elimination of test year
				  expenses pertaining to a prior year or elimination or amortization of expenses
				  of a nonrecurring nature, and (iv) known and certain changes occurring within
				  12 months after the test year. The utility is not, however, precluded from
				  making other adjustments which it can support and justify. The utility shall
				  also file an explanation of all of its adjustments appearing in the attached
				  rate of return statement.
Any company electing to use a noncalendar test year may, in
				  lieu of an annual report, file a current balance sheet, income statement and
				  tax return statement prepared in the format of the form rate of return
				  statement following this subdivision. The statement shall incorporate per books
				  data of revenues, expenses and plant and appropriate adjustments. The
				  commission accepts adjustments which reflect (i) annualized changes occurring
				  during the test year (ii) known and certain wage agreements, (iii) elimination
				  of test year expenses pertaining to a prior year or elimination or amortization
				  of expenses of nonrecurring nature, and (iv) known and certain changes
				  occurring within 12 months after the test year. A utility is not, however,
				  precluded from making other adjustments which it can support and justify. A
				  utility using a noncalendar test shall also file an explanation of all
				  adjustments and workpapers showing the calculation of the adjustments.
Exhibit - RATE OF RETURN STATEMENT
Per Books
Adjustments
After Adjustments
Proposed Increase
After Proposed Increase
Operating Revenues
Water Service Fees
Availability Fees
Sewer Service Fees
Miscellaneous Service Revenues
Total Operating Revenues
Operating Expenses
Operation and Maintenance
Depreciation and Amortization
Taxes Other
Federal Income Taxes
Total Operating Expenses
Net Operating Income
Utility Plant
Utility Plant in Service
Less: Accumulated Depreciation and
						  Amortization
Less: Acquisition Adjustment - Net
Less: Contributions in Aid of Construction
Net Utility Plant
Allowance for Working Capital
Cash
Materials and Supplies
Total Allowance for Working Capital
Net Utility Plant and Allowance
Statutory Authority
§ 12.1-13 of the Code of Virginia.