SB 1058: Electric utilities; distribution cost sharing program established, etc. - Virginia

Governor Substitute → Chaptered · 5 edits

MODERATE

This bill transitions from a Governor-substituted draft to a formally enacted chapter, adding a new distribution cost sharing program for electric utilities and creating income tax deductions for qualifying infrastructure upgrades. The changes establish a regulatory framework for utilities to share distribution upgrade costs among distributed energy projects while providing tax incentives to encourage investment in grid modernization.

Scope change

The bill's scope remains substantively unchanged, but its legal status changed from a proposed substitute to an enacted law (Chapter 615) with formal approval dates and chapter numbering.

TIMELINE

Added specific implementation deadlines: regulations must be finalized by July 1, 2026, utility tariffs filed by December 1, 2026, and a progress report submitted by November 1, 2028.

REQUIREMENT

Established a new distribution cost sharing program requiring utilities to allocate upgrade costs among distributed energy projects based on their capacity ratings, with exemptions for projects that voluntarily pay full upgrade costs.

ELIGIBILITY

Created a new income tax deduction for taxpayers who pay for qualifying distribution system upgrades needed to interconnect triggering projects, effective for taxable years beginning on or after January 1, 2026.

ENFORCEMENT

Added provisions requiring the State Corporation Commission to establish refund systems for projects not yet operational and to determine cost recovery limits for ratepayers.

TECHNICAL

Converted from Senate substitute markup format to official chapter format with proper chapter numbering (Chapter 615) and approval date (April 2, 2025).

Labor and Commerce Substitute → Governor Substitute · 4 edits

MODERATE

The bill was converted from a House Substitute to a Senate Substitute, with the Governor making amendments. The core policy regarding the distribution cost sharing program for solar projects remains largely intact, but the language was adjusted to align with the Governor's preferences. Key changes include renaming 'participating projects' to 'sharing projects' and 'triggering projects' to better reflect the cost-sharing relationship, and adding a new section for income tax deductions related to the program.

Scope change

The bill's scope remains focused on establishing a distribution cost sharing program for solar projects (250 kW to 3 MW) that require infrastructure upgrades to interconnect with the grid. The applicability to Phase I and Phase II Utilities is unchanged.

DEFINITION

Terminology was updated from 'participating project' to 'sharing project' to clarify that these projects are sharing the costs of upgrades required by other projects.

FISCAL

Added a new provision for income tax deductions related to the program, though specific deduction amounts were not detailed in the provided text.

REQUIREMENT

The Commission's authority to set limits on cost recovery for ratepayers was added, giving the Commission more control over how much utility customers pay for these upgrades.

TECHNICAL

The bill was renumbered and reformatted from House Substitute to Senate Substitute, with the date changed from February 13, 2025 to March 24, 2025.

Commerce and Labor Substitute → Labor and Commerce Substitute · 6 edits

MODERATE

The bill was amended from a Senate Substitute to a Labor and Commerce Substitute, changing the committee proposing the amendment and adding a requirement for the State Corporation Commission to submit a report by November 1, 2028. The most significant changes involve modifying eligibility criteria for participating solar projects, adjusting how costs are allocated, and adding exemptions for projects that pay upfront.

Scope change

The bill's scope was expanded to include projects seeking to participate in net energy metering under § 56-594, and the committee proposing the substitute was changed from Commerce and Labor to Labor and Commerce.

ELIGIBILITY

Changed the size threshold for participating solar projects from greater than 50 kilowatts and less than two megawatts to greater than or equal to 250 kilowatts and less than or equal to three megawatts.

FISCAL

Modified how costs are shared by changing the allocation basis from kilowatt-hour output to alternating current (AC) nameplate capacity rating.

REQUIREMENT

Added a requirement for the State Corporation Commission to submit an implementation report to committee chairs by November 1, 2028.

Added an exemption allowing projects to opt out of cost sharing if they elect to pay the full approved cost of any qualifying upgrade upfront.

Added authority for the Commission to establish a refund system for interconnection upgrade costs during periods when projects are not operational.

DEFINITION

Updated the definition of 'Participating project' to include the requirement of seeking to participate in net energy metering pursuant to § 56-594.

Reenrolled → Commerce and Labor Substitute · 4 edits

MODERATE

The bill was changed from a reenrolled version to a Commerce and Labor Committee substitute version. The main substantive change involves modifying how costs are allocated under the new distribution cost sharing program. The substitute version changes the allocation method from being based on AC nameplate capacity rating to being based on kilowatt-hour output, and also narrows the definition of eligible projects from distributed energy resources to specifically solar generating facilities.

Scope change

The scope of eligible projects was narrowed from general distributed energy resources (250 kW to 3 MW) to specifically solar generating facilities (50 kW to 2 MW).

ELIGIBILITY

Changed the definition of eligible projects from general distributed energy resources with AC nameplate capacity of 250 kW to 3 MW to specifically solar generating facilities with AC nameplate rating of 50 kW to 2 MW.

REQUIREMENT

Changed the cost allocation method from being based on AC nameplate capacity rating to being based on kilowatt-hour output of each participating project.

DEFINITION

Added a new definition for 'Participating project' to specifically define solar generating facilities eligible for the program.

Removed the definition of 'Sharing project' which previously covered distributed energy resources seeking to interconnect and participate in net energy metering.

Enrolled → Reenrolled · 5 edits · Apr 2, 2025

MODERATE

The bill was reenrolled with minor formatting and structural changes. The substantive policy content regarding the distribution cost sharing program for solar projects remains the same, though the bill now includes an income tax deduction section that was not present in the enrolled version.

Scope change

The bill now amends and reenacts existing Code of Virginia sections (§§ 58.1-322.03 and 58.1-402) and adds a new section (§ 56-596.5), whereas the enrolled version only added the new section without explicitly referencing amendments to existing sections.

SCOPE

The bill now explicitly states it amends and reenacts existing Code of Virginia sections 58.1-322.03 and 58.1-402, and adds a new section 56-596.5.

DEFINITION

A new definition of 'Sharing project' was added to clarify which projects are subject to cost sharing.

REQUIREMENT

The Commission is now required to establish limits on cost recovery for ratepayers, which was not specified in the enrolled version.

FISCAL

An income tax deduction section was added, allowing deductions for federal itemized deductions and providing specific deduction amounts for various taxpayers.

TECHNICAL

Formatting changes were made, including session labels and spacing adjustments between the enrolled and reenrolled versions.

Introduced → Enrolled · 6 edits · Apr 2, 2025

MODERATE

The bill was amended from an introduced version to an enrolled version, transforming it from a net energy metering amendment into a new distribution cost sharing program for solar projects. The original text focused on net energy metering regulations, while the enrolled version establishes a program requiring utilities to share distribution upgrade costs among participating solar projects based on their capacity ratings.

Scope change

The bill's scope shifted from amending net energy metering provisions to creating a new distribution cost sharing program specifically for solar projects between 250 kilowatts and 3 megawatts.

SCOPE

The bill was completely rewritten to establish a distribution cost sharing program rather than amending net energy metering provisions.

DEFINITION

New definitions were added for 'hosting capacity', 'participating project', 'qualifying upgrade', and 'triggering project' to support the new cost sharing program.

TIMELINE

New timeline requirements were established, including a July 1, 2026 deadline for the Commission to establish the program and a November 1, 2028 deadline for submitting a report.

REQUIREMENT

Utilities must now share distribution upgrade costs among participating solar projects based on their AC nameplate capacity rating, with costs recovered from jurisdictional or nonjurisdictional customers accordingly.

ELIGIBILITY

New eligibility criteria were established for participating projects, limited to solar facilities between 250 kilowatts and 3 megawatts seeking interconnection.

TECHNICAL

The original net energy metering provisions were removed and replaced entirely with new cost sharing program provisions.

Electric utilities; distribution cost sharing program established, etc.

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