20VAC5-316 Regulations Governing Exemptions for Large General Services Customers Under § 56-585.1 a 5 c of the Code of Virginia

REGULATIONS

Vol. 26 Iss. 7 - December 07, 2009

TITLE 20. PUBLIC UTILITIES AND TELECOMMUNICATIONS

STATE CORPORATION COMMISSION

Chapter 316

Final Regulation

Title of Regulation: 20VAC5-316. Regulations Governing Exemptions for Large General Services Customers Under § 56-585.1 A 5 c of the Code of Virginia (adding 20VAC5-316-10 through 20VAC5-316-50).

Statutory Authority: §§ 12.1-13 and 56-585.1 of the Code of Virginia.

Effective Date: December 1, 2009.

Agency Contact: Cody Walker, Assistant Director, State Corporation Commission, P.O. Box 1197, Richmond, VA 23218, telephone (804) 371-9611, FAX [phone], or email [e-mail].

Summary:

The rules set forth (i) administrative procedures for notices of nonparticipation to be provided by large general service customers to electric utilities, (ii) standard criteria for such notices of nonparticipation, and (iii) dispute resolution procedures governing all disputes arising out of the exemption process. The rules add a new Chapter 316 (20VAC5-316) within Title 20 of the Virginia Administrative Code.

Modifications to the initial, proposed rules now incorporated into the rules adopted by the commission include (i) new language in 20VAC5-316-10 defining "customer" as comprising all of the individual electric utility accounts owned by a single entity, located on a single site, and that are engaged in the same business; (ii) modifications to subsection B of 20VAC5-316-30 permitting customers to furnish affidavits regarding customers' investments in energy efficiency programs instead of providing investment documentation, as required in the initial, proposed rules; and (iii) modifications to subsection E of 20VAC5-316-30 now requiring, as a basis for customer exemption from utility energy efficiency RACs, that customers have or expect to have measurable, verifiable and significant energy efficiency savings consistent with § 56-585.1 A 5 c of the Code of Virginia.

AT RICHMOND, NOVEMBER 13, 2009

COMMONWEALTH OF VIRGINIA

At the relation of the

STATE CORPORATION COMMISSION

CASE NO. PUE-2009-00071

Ex Parte: In the matter of establishing
rules of the State Corporation Commission
governing exemptions for Large General Service
Customers under § 56-585.1 A 5 c of the Code of Virginia

ORDER PROMULGATING REGULATIONS

This Order concludes a State Corporation Commission ("Commission") rulemaking required by HB 2506 as enacted by the 2009 Session of the Virginia General Assembly (Chapter 824 of the 2009 Acts of Assembly). As the Commission noted in its July 28, 2009 Order for Notice and Comment ("July 28, 2009 Order") establishing this docket, HB 2506 authorizes Virginia's electric utilities to seek rate adjustment clause treatment of the "projected and actual costs . . . to design, implement and operate energy efficiency programs, including a margin to be recovered on operating expenses. . . ." Va. Code § 56-585.1 A 5 c. However, as also stated in the July 28, 2009 Order, the legislation prohibits the utilities from recovering the costs of these programs from "any customer that has a verifiable history of having used more than 10 megawatts of demand from a single meter of delivery." Id.

HB 2506 further prohibits program cost recovery from any large general service ("LGS") customer that has, at its own expense, "implemented energy efficiency programs that have produced or will produce measured and verified results consistent with industry standards and other regulatory criteria stated in [§ 56‑585.1 A 5 c of the Code]." Id. For purposes of this legislation, LGS customers are customers that have "a verifiable history of having used more than 500 kilowatts of demand from a single meter of delivery." Id.

HB 2506 also directed the Commission to promulgate rules and regulations not later than November 15, 2009, "to accommodate the process under which such LGS customers shall file notice for such an exemption, and (i) establish the administrative procedures by which eligible customers will notify the utility and (ii) define the standard criteria that must be satisfied by an applicant in order to notify the utility." § 56‑585.1 A 5 c of the Code.¹ This statute does not, however, direct the Commission to establish rules governing the statutory exemption outlined above for customers that have a verifiable history of having used more than 10 megawatts of demand from a single meter of delivery. Consequently, neither this order, nor the rules and regulations promulgated hereunder, address that exemption.

The July 28, 2009 Order included proposed rules prepared by the Commission Staff ("Staff"), to implement the exemption process outlined above ("Proposed Rules"). The Proposed Rules, inter alia, set forth (i) administrative procedures for notices of non‑participation to be provided by LGS customers to electric utilities, (ii) standard criteria for such notices of non-participation, and (iii) dispute resolution procedures governing all disputes arising out of the exemption process.² Additionally, the Commission directed in such order that notice of the Proposed Rules be given to the public and, further, that interested persons be provided an opportunity to file written comments on, propose modifications or supplements to, or request a hearing on these Proposed Rules on or before September 3, 2009. The Staff was also permitted to file a report concerning these comments on or before September 24, 2009.

Initial comments were filed in this rulemaking by Virginia Electric and Power Company d/b/a Dominion Virginia Power ("Dominion Virginia Power," "Dominion" or "DVP"); The Potomac Edison Company d/b/a Allegheny Power ("Allegheny Power"); Appalachian Power Company ("Appalachian"); the Virginia Manufacturers Association ("VMA"); MeadWestvaco Corporation ("MeadWestvaco"); Northrop Grumman Shipbuilding, Inc., Newport News Operation ("Northrop Grumman"); and the Virginia Committee for Fair Utility Rates and the Old Dominion Committee for Fair Utility Rates ("Committees"), filing jointly. No requests for hearing were received by the Commission. Thereafter, the Staff filed a report concerning these comments on September 24, 2009 ("Staff Report" or "Report").

The Commission, by Order dated October 2, 2009, permitted interested parties in this docket to file additional comments addressing (i) the Staff Report, and (ii) comments previously filed by other interested persons in this proceeding. These additional comments were to be filed with the Clerk of the Commission, on or before October 9, 2009. The following parties filed additional comments: Dominion Virginia Power; Appalachian; MeadWestvaco, and the Committees.

NOW UPON CONSIDERATION of the initial and additional comments filed herein, together with the Staff Report filed in this docket, we find that we should adopt and promulgate the rules appended hereto as Attachment A, governing exemptions for LGS customers under § 56‑585.1 A 5 c of the Code of Virginia, all as directed by the Virginia General Assembly in HB 2506. Such rules shall become effective on December 1, 2009.

The Commission notes that the Staff Report proposed several significant revisions to the Proposed Rules (i) addressing key concerns or issues raised by the parties in their initial comments, and (ii) incorporating suggestions from the parties for editorial improvement or clarification. The additional comments suggest that these revisions reduced the number of key issues in controversy within this rulemaking. Consequently, in this Order we will address primarily several issues raised, or reiterated, by parties in their additional comments.

First, we will address the issue of defining an LGS customer for purposes of these rules. The Staff proposes that a customer under these rules ("Customer") comprise all facilities represented by a single electric utility account. This definition of Customer, proposed in revised 20 VAC 5‑316‑10 set forth in the Staff Report (Appendix at 1), is also supported by Appalachian in its Additional Comments. Northrop Grumman, MeadWestvaco and the Committees, on the other hand, propose that a Customer should comprise all of the individual electric utility accounts owned by a single entity served by the same electric utility. Finally, the VMA advances a customer definition that would comprise "single meters aggregated serving a single site and a single business." VMA Initial Comments at 2.

We have adopted the definition of Customer as proposed, in substance, by the VMA. The Commission concludes that for purposes of exempting LGS customers from an energy efficiency rate adjustment clause ("RAC"), a Customer should comprise all of the individual electric utility accounts owned by a single entity, located on a single site, and that are engaged in the same business.³ This Customer definition, as adopted herein, should promote proper alignment between RAC exemptions and LGS facilities with actual energy efficiency programs. In contrast, the "single entity" Customer definition advanced by Northrop Grumman and the Committees (aggregating the individual customer accounts of a single entity for purposes of these rules) could potentially misalign the benefits of RAC exemptions afforded through these rules, and the energy efficiency programs contemplated by this statute.

We will also adopt MeadWestvaco's suggestion that 20 VAC 5‑316‑10 provide that where LGS customers lack three calendar years of billing history to establish demands in excess of 500 kilowatts, these LGS customers may nevertheless seek to qualify for exemption pursuant to this regulation if their highest measured demand from a single metering point is more than 500 kilowatts in a single month. This is a reasonable clarification, and we will adopt it.

Next, we will address issues raised concerning 20 VAC 5-316-30. We note, first of all, that the Staff in its Report proposes to eliminate language in the initial Proposed Rules requiring "copies of all receipts and invoices documenting the Customer's investment in any Program." The Staff now proposes to substitute for that language a requirement that the Customer's president or other corporate officer sign an affidavit attesting "to the validity of information submitted in support of the Customer's notice of nonparticipation." In their Additional Comments filed in this docket, the Committees suggest that despite the Staff's proposed revisions discussed above, a simple notice requirement would nevertheless be preferable "as being consistent with the statutory provisions." Committees Additional Comments at 3-4. We conclude, however, that the Staff's proposal to substitute attestation for documentation strikes a reasonable balance between eliminating a requirement viewed as burdensome by some, while concurrently ensuring meaningful Customer verification consistent with the provisions of § 56‑585.1 A 5 c and eliminating some risk for dispute, as underscored by Appalachian in its Additional Comments. Appalachian Additional Comments at 2. We will, therefore, adopt the Staff's proposed revisions to Subsection B of 20 VAC 5‑316‑30 as described above.

A fundamental issue in this rulemaking, highlighted by commenting parties' responses to 20 VAC 5-316-30 in the Proposed Rules, is whether § 56-585.1 A 5 c contemplates that the energy savings produced by LGS Customers' energy efficiency programs must, as a prerequisite to exemption under these rules, be equivalent⁴ to their utilities' expected energy reductions under energy efficiency programs for which RACs have been approved by this Commission.

The view on this topic expressed by Dominion Virginia Power, the Committees, and others is that to qualify for exempt status under this statute and these rules, Customers' energy efficiency programs should produce results that are "consistent with industry standards for the Customer's type of business." Dominion Virginia Power Initial Comments at 11. Dominion states that such a standard "follows the requirement of the statute and allows the LGS customer the flexibility to meet energy efficiency standards similar to those faced by its competitors." Id. at 13. The Committees also endorse an "industry standard" as the basis for Customer energy efficiency achievement sufficient to justify exemption. Committees Initial Comments at 4-6.

Northrup Grumman similarly endorses an "industry standard" benchmark,⁵ although that company states that even by January 2010 there will be no officially adopted standards and goals for industrial, commercial or even residential customers. Northrup Grumman Initial Comments at 3. MeadWestvaco proposes, however, that "applications by [Customers] proposing projects or having implemented projects that meet established energy efficiency standards such as LEED or Green Globes should be automatically accepted by the utility." MeadWestvaco Initial Comments at 4.⁶ MeadWestvaco also asserts that "[a] new or retrofitted building which qualifies for and receives LEED or Green Globes certification by definition contains exactly the caliber of energy efficiency measures contemplated by the General Assembly when it created the exemption codified in HB 2506." Id. at 5-6. In order to adapt LEED or Green Globes certification to this rulemaking, MeadWestvaco suggests that the Commission "adopt by rule a list of types of projects or energy efficiency standards which would result in automatic exemption request approvals by the utility." Id. at 6.

The VMA responded to Proposed Rule 20 VAC 5-316-30 by asserting that the equivalency requirement is outside the bounds of the statute. Specifically, the VMA stated in its Initial Comments that this requirement "adds a new requirement for [nonparticipating] customers, requiring additional energy reductions equivalent to the reductions expected by the utility energy efficiency program." VMA Initial Comments at 2. The VMA asserts that "[m]any existing systems in industry already operate at a higher energy efficiency rate than any of the utilities." Id.

The Staff Report responds to these comments, asserting, inter alia, that requiring equivalence or comparability between the exempt LGS Customers' energy efficiency programs and those of their utilities introduces parity between exempt and non-exempt LGS customers. Staff Report at 18. The Staff further asserts that "a standard based solely on a reference to industry standards provides little guidance with respect to the level of energy efficiency gains needed to qualify for the statutory exemption in that Staff is unaware of any industry standard that sets forth specific energy efficiency targets." Id. at 20. Moreover, the Staff emphasizes that it is "not aware of any commonly accepted industry standards regarding the level of energy efficiency improvements expected of large general service customers." Id. at 21. Thus, the Staff suggests, "[a]bsent further specification by the Commission, customers could qualify for an exemption by undertaking minimal energy efficiency improvements." Id. at 20.

Addressing MeadWestvaco's proposed LEED and Green Globes standards, the Staff questions the practical feasibility of employing standards requiring additional quantifications of

required energy efficiency improvements that would be required to be developed in conjunction with these types of certifications.⁷

The Commission has considered the views of the commenting parties and the Staff concerning this important issue. Our analysis begins with the General Assembly's directive to the Commission to undertake this rulemaking for the purpose of establishing not only procedures for LGS Customer notification of non-participation to their utilities, but also for the express purpose of "defin[ing] the standard criteria that must be established by an applicant in order to notify the utility." § 56-585.1 A 5 c of the Code.

As discussed above, some of the parties—such as Dominion and the Committees—recommend that "industry standards" should govern the sufficiency of these Customer savings to warrant an exemption. However, no commenting party offered specific industry standards for energy efficiency that are at this time sufficiently advanced in their development to guide the exemption process established under HB 2506. Instead, based upon the comments of both Northrup Grumman and the Staff discussed above, it would appear that, at this time, no such industry standards exist.⁸ We note also that with respect to the LEED and Globes standards advanced by MeadWestvaco, neither (as described by MeadWestvaco) requires a specific amount of energy savings, nor do they speak in terms of energy consumption reductions. Thus, such standards, too, would seem insufficient to the task of determining Customers' energy efficiency achievement in this rulemaking.

We conclude, therefore, that requiring Customers seeking exemption from their utilities' energy efficiency RACs to have or expect to have measurable, verifiable and significant energy efficiency savings consistent with § 56-585.1 A 5 c, provides a regulatory standard that is uniform in its application and consistent with the statute. It is this standard that we adopt in these regulations. Section 56-585.1 A 5 c of the Code requires that Customers' energy efficiency programs furnishing the basis for RAC exemptions must produce "measured and verified results consistent with industry standards and other regulatory criteria. . ." Emphasis added. The term "measured and verified" is defined in § 56-576 of the Code as "a process determined pursuant to methods accepted for use by utilities and industries to measure, verify, and validate energy savings and peak demand savings." The parties' Initial Comments and Additional Comments, considered together with the Staff Report, thus lead us to conclude that the standard we adopt herein, as outlined above, provides a reasonable process for implementing § 56-585.1 A 5 c.

Related to Customers' energy efficiency program benchmarks, § 56-585.1 A 5 c of the Code requires the Commission, among other things, "to verify such non-participants' achievement of energy efficiency if the Commission has a body of evidence that the non-participant has knowingly misrepresented its energy efficiency achievement." Additionally, Appalachian has recommended in its Additional Comments that the Proposed Rules be clarified to address "how to determine if the customer's expected level of energy efficiency savings, if used to qualify for an exemption, was ever achieved." Appalachian Additional Comments at 2. Appalachian has suggested that the Commission "require that customers provide proof of such savings in an affidavit or similar form after the savings have been realized." Id. at 3. We will adopt this suggestion. In the rules we promulgate herein, we have amended Subsection E in 20 VAC 5-316-30 to require Customers furnishing notices of nonparticipation to their utilities to provide yearly reports to the Commission's Division of Energy Regulation concerning the energy savings achieved via the Customer's program during the preceding 12 months. These reports will be required throughout the life of the Customer's energy efficiency improvements described in the Customer's notice of nonparticipation. Inasmuch as a Customer's exemption from its utility's energy efficiency RAC, once established, can continue, by statute, for the life of the Customer's energy efficiency improvements,⁹ an annual reporting requirement is both necessary and appropriate.

However, to ensure relevant information flows in both directions, we have also added a new Subsection G to 20 VAC 5-316-30. This provision responds, in part, to concerns expressed by MeadWestvaco in its Additional Comments that "the proposed rules do not include a procedure for each utility to notify its customers of what the expected percentage of savings will be [under the utilities' energy efficiency program for which an RAC has been approved by the Commission]. It would not be burdensome for utilities to provide this information, without which customers cannot submit a notice of participation." MeadWestvaco Additional Comments at 4-5. Thus, MeadWestvaco has proposed adding language in these rules establishing an annual notification requirement and deadline (December 31) for each such utility. This is a reasonable suggestion that will advance the Commission's administration of this statute, and we have adopted it in the rules we promulgate herein.

Finally, we have modified the language in Subsection C of 20 VAC 5-316-20 governing required Customer notifications to its utility and the Commission if the conditions of the Customer's notice of nonparticipation change. Our modification adds a materiality requirement, so as to require such notifications only under circumstances in which the change in conditions associated with notices of nonparticipation is sufficiently material to warrant such notice.

The rules we adopt herein also incorporate clarifying language in 20 VAC 5-316-40 requested by MeadWestvaco concerning cost sharing associated with the engagement of a dispute resolution service. The language requested by MeadWestvaco would modify Subsection C of 20 VAC 5‑316‑40 to make clear that equal cost sharing is limited to the services provided by the dispute resolution service, and that each party bears its own legal fees and other costs associated with the dispute resolution process. This is a helpful clarification, and we have incorporated it into the rules adopted herein.

Accordingly, IT IS ORDERED THAT:

(1) We hereby adopt and promulgate the Commission's Rules Governing Exemptions for Large General Service Customers under § 56‑585.1 A 5 c of the Code of Virginia to be set forth in a new Chapter 316 (20 VAC 5-316-10, et seq.) in Title 20 of the Virginia Administrative Code, appended hereto as Attachment A, all to become effective on December 1, 2009.

(2) A copy of this Order and the rules adopted herein shall be promptly forwarded for publication in the Virginia Register of Regulations.

(3) This case is dismissed and the papers herein shall be placed in the file for ended causes.

AN ATTESTED COPY hereof shall be sent by the Clerk of the Commission to all persons on the official Service List in this matter. The Service List is available from the Clerk of the State Corporation Commission, c/o Document Control Center, 1300 East Main Street, First Floor, Tyler Building, Richmond, Virginia 23219. A copy shall also be sent to the Commission's Office of General Counsel and Divisions of Energy Regulation, Public Utility Accounting, and Economics and Finance.

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¹ The legislation also specifies that a "notice of nonparticipation by a large general service customer, to be given by March 1 of a given year, shall be for the duration of the service life of the customer's energy efficiency program." § 56-585.1 A 5 c of the Code. HB 2506 further directs that the Commission's implementing regulations specify when the utility must accept and act on any such notice "taking into consideration the utility's integrated resource planning process as well as its administration of energy efficiency programs that are approved for cost recovery by the Commission." Id.

Pertinent to this rulemaking, HB 2506 also provides that the Commission "on its own motion may initiate steps necessary to verify such non‑participants' achievement of energy efficiency if the Commission has a body of evidence that the non‑participant has knowingly misrepresented its energy efficiency achievement." § 56‑585.1 A 5 c of the Code. Finally, the Virginia General Assembly directs in HB 2506 that "[I]n all relevant proceedings pursuant to this section, the Commission shall take into consideration the goals of economic development, energy efficiency and environmental protection in the Commonwealth." Id.

² The Proposed Rules establish a new Chapter 316 in Title 20 of the Virginia Administrative Code, consisting of sections 20 VAC 5‑316‑10 through 20 VAC 5‑316‑50.

³ We note, for purposes of clarification—and as stated earlier in this order—that § 56-585.1 A 5 c's threshold requirement for LGS Customers seeking RAC exemption under this statute is a requirement that these Customers have "a verifiable history of having used more than 500 kilowatts of demand from a single meter of delivery." Emphasis added. This requirement parallels this statute's express exemption for customers that have "a verifiable history of having used more than 10 megawatts of demand from a single meter of delivery." Emphasis added. Consequently, Customers subject to the regulations we adopt herein must establish their threshold exemption eligibility of 500 kilowatts of demand at a single meter of delivery; they may not do so by aggregating demand from multiple meters to achieve this minimum demand requirement (500 kW).

⁴ The pertinent provisions of Subsection E of 20 VAC 5-316-30 in the Proposed Rules initially required Customers to establish that their programs produced energy savings "equal to or greater than" the percentage reductions expected from their utilities' energy efficiency programs. However, modifications to 20 VAC 5-316-30 proposed in the Staff Report amended Subsection E to substitute the phrase "equivalent to" for "equal to." While the Staff Report does not state this directly, it is evident that this modification is associated with a discussion on pp. 24-25 of the Report providing Staff's view that energy savings associated with Customers' energy efficiency programs need not result solely from Customers' reductions in electricity consumption.

⁵ Specifically, Northrup Grumman in its Initial Comments states that "[a]s we read the statute, the only standard that the Commission should apply to an applicant for exemption is 1) does it have or plan to have an energy efficiency program with measured and verifiable results; and 2) will those results meet industry standards. There is no authorization in the statute to apply any other regulatory requirement, despite the reference to 'other regulatory criteria' stated in the section." Northrup Grumman Initial Comments at 2.

⁶ MeadWestvaco explains in its Initial Comments that "LEED is an internationally recognized green building certification system, providing third-party verification that a building or community was designed or built using strategies aimed at improving performance across all the metrics that matter most: energy savings, water efficiency, CO2 emissions reductions, improved environmental quality, and stewardship of resources and sensitivity to their impacts." MeadWestvaco Initial Comments at 4. MeadWestvaco also states that the LEED program was developed by the U.S. Green Building Council. Id. at 4-5. The Company further explains that "the Green Building Initiative's Green Globes system is an accepted green management tool that includes an assessment protocol, rating system and guide for integrating environmentally friendly design into commercial buildings." Id. at 5.

⁷ Responding to Staff's assessment of LEEDS and Green Globes in this context, MeadWestvaco stated in its Additional Comments that it disagreed "with Staff's assertion that it would be impractical for the Commission to develop a list of energy efficiency standards such as LEED or Green Globes as qualifying for exemption under HB 2506. Such certifications recognized as demonstrating that the certified project has been built using state-of-the-art energy efficiency measures, although neither program requires applicants to demonstrate a specific amount of energy savings. Because these certifications apply to new construction as well as major retrofits, they do not speak in terms of percentages of energy consumption reductions. Nevertheless, projects built to these standards nevertheless involve 'energy efficiency programs that . . . will produce measured and verified results consistent with industry standards and other regulatory criteria' as defined in HB 2506." MeadWestvaco Additional Comments at 3.

⁸ In this regard, we note, however, that Subsection F of 20 VAC 5-316-30 requires Customers to include in their notice of non-participation a Measurement and Verification Plan "conforming to the protocol set forth in the definition of 'measured and verified' as provided in § 56-576 of the Code of Virginia." Inasmuch as that definition makes reference to methodology accepted for use by utilities and industry, Customers can potentially utilize their Measurement and Verification Plans to advance any applicable industry energy efficiency standards then available for purposes of supporting their proposed notices of non-participation.

⁹ In this regard, we have also streamlined Subsection D of 20 VAC 5-316-30 in the final rules we adopt herein, concerning the information required in a Customer's notice of non-participation as such notice concerns anticipated changes in operations that may affect the Customer's achieved or expected energy efficiency savings. This requirement is now expressed more broadly and identifies "the life expectancy of the [Customer's] energy efficiency measures undertaken" as the sole item of specific information sought from the Customer under this subsection.

CHAPTER 316
[ RULES GOVERNING ] EXEMPTIONS FOR LARGE GENERAL SERVICES CUSTOMERS UNDER § 56-585.1 A 5 c OF THE CODE OF VIRGINIA

20VAC5-316-10. Applicability and scope.

This chapter is promulgated pursuant to the provisions of § 56-585.1 A 5 c of the Virginia Electric Utility Regulation Act, Chapter 23 (§ 56-576 et seq.) of Title 56 of the Code of Virginia. This chapter is specifically applicable to the large general service customers (customers or customer) of Virginia's electric utilities (utilities or utility) subject to the provisions of § 56-585.1 A 5 c [ , if the customers that ] have verifiable histories of using more than 500 kilowatts but [ less no more ] than 10 megawatts of demand from a single metering point. [ Customers are As used in this chapter, a customer comprises all of the individual electric utility accounts owned by a single entity, located on a single site, and that are engaged in the same business. This chapter is also applicable to customers with highest measured demands from a single metering point of more than 500 kilowatts in any single month if such customers do not have three calendar years of history. A customer is ] eligible for an exemption from any rate adjustment clause approved for a utility by the State Corporation Commission (commission) pursuant to § 56-585.1 A 5 c of the Code of Virginia, if any customer can demonstrate that it has implemented an energy efficiency program (program), at the customer's expense, that has produced or will produce measured and verified results.

20VAC5-316-20. Administrative procedures for notice to utility [ and commission ].

A. Any customer seeking to establish its exemption from a rate adjustment clause authorized by the commission pursuant to § 56-585.1 A 5 c shall provide a notice of nonparticipation concerning the rate adjustment clause to its utility on or before March 1 of the year in which an exemption is sought. The notice of nonparticipation shall be concurrently filed by the customer with the commission's Division of Energy Regulation.

B. Upon receipt of the notice of nonparticipation, a utility shall, within 60 days thereof, [ review the same, and verify the customer's highest measured demand in the three prior calendar years preceding the receipt of such notice. The utility ] shall accept [ or deny ] the exemption request [ if the customer has a highest measured usage in excess of 500 kilowatts and has submitted the information required by 20VAC5-316-30 ]. In the event the utility fails to [ accept or deny the exemption request within that notify the customer of any deficiency in its notice of nonparticipation within the ] 60-day period, the exemption shall be deemed accepted by the utility. The utility's acceptance or denial of any exemption request shall [ be ] concurrently [ be sent to the customer and ] filed by the utility with the commission's Division of Energy Regulation.

[ C. Once a utility has accepted a customer's exemption request, that customer shall be exempt from any rate adjustment clause approved for the utility by the commission pursuant to § 56-585.1 A 5 c of the Code of Virginia, beginning with the billing month following the date of acceptance of the exemption request and continuing throughout the life of the customer's energy efficiency improvements described in the customer's notice of nonparticipation. A customer shall notify the utility and the commission if the conditions of the customer's notice of nonparticipation change in any material respect. ]

20VAC5-316-30. Standard criteria for notice to utility.

A. Each notice of nonparticipation shall identify the customer, the customer's billing address and utility account number, and the location of the specific facility and metering point for which any such exemption is being sought.

B. The notice of nonparticipation shall also contain [ copies of all receipts and invoices documenting the customer's investment in any program an affidavit signed by the customer's president, corporate secretary, or other officer of the customer concerning the program or programs. Such affidavit shall attest to the validity of information submitted in support of the customer's notice of nonparticipation ].

C. The notice of nonparticipation shall describe the energy efficiency savings achieved or expected to be achieved from its investment in its program and the specific measures undertaken to achieve those savings.

D. The notice of nonparticipation shall include information concerning any anticipated change in operations that may affect achieved or expected energy efficiency savings, including [ (i) changes in operating hours or equipment efficiency; (ii) any changes required to comply with new or existing standards, a partial facility closure, a modification of a production shift, or improved quality of maintenance; (iii) ] the life expectancy of the energy efficiency measures undertaken [ ; and (iv) ongoing maintenance activities necessary to maintain energy efficiency improvements ].

E. To qualify for the exemption, each customer shall [ demonstrate energy efficiency savings equal to or greater than the percentage energy efficiency reductions expected to be achieved by its utility's energy efficiency programs for which the commission has approved a rate adjustment clause pursuant to have or expect to have measurable, verifiable, and significant energy efficiency savings consistent with ] § 56-585.1 A 5 c of the Code of Virginia. [ Additionally, each customer providing a notice of nonparticipation to its utility pursuant to this chapter shall subsequently furnish yearly reports to the commission's Division of Energy Regulation describing the energy efficiency savings achieved by the customer during each 12-month period in which such notice of nonparticipation is in effect. Such reports shall be filed on or about March 1 of the year following such customer's filing of its notice of nonparticipation, with such March 1 filings continuing thereafter throughout the life of the customer's energy efficiency improvements described in the customer's notice of nonparticipation. ]

F. Each notice of nonparticipation shall also include a measurement and verification plan conforming to the protocol set forth in the definition of "measured and verified" as provided in § 56-576 of the Code of Virginia.

[ G. Not later than December 31 of each year, each utility shall notify its customers of the percentage energy efficiency reductions expected to be achieved by the utility's energy efficiency programs for which the commission has approved rate adjustment clauses pursuant to § 56-585.1 A 5 c of the Code of Virginia. ]

20VAC5-316-40. Dispute resolution.

A. Customers and utilities shall seek to resolve all disputes arising out of the exemption process established under this chapter pursuant to the provisions of this section.

B. In the event of any such dispute, either party shall furnish the other a written notice of dispute. The notice shall describe in detail the nature of the dispute. The parties shall make good faith efforts to resolve the dispute informally within 10 business days of the receipt of such notice.

C. If any such dispute has not been resolved within 10 business days following receipt of the notice, either party may seek resolution assistance from the commission's Division of Energy Regulation where such matter will be treated as an informal complaint under the commission's Rules of Practice and Procedure (5VAC5-20).

Alternatively, the parties may, upon mutual agreement, seek resolution through the assistance of a dispute resolution service for the purpose of assisting the parties in (i) resolving the dispute, or (ii) selecting an appropriate dispute resolution method or mechanism (e.g., mediation, settlement judge, early neutral evaluation, or technical expert) to assist the parties in resolving their dispute. In any such dispute resolution proceeding, each party shall conduct all negotiations in good faith and shall be responsible for 1/2 of any charges for [ such services the dispute resolution provider, but each party shall bear its own legal fees and other costs incurred as a result of the dispute resolution process ].

D. If any such dispute remains unresolved following the parties' good faith exercise of the dispute resolution alternatives set forth in this section, either party may file a formal complaint with the commission pursuant to the commission's Rules of Practice and Procedure [ (5VAC5-20) ].

[ 20VAC5-316-50. Waiver and enforcement.

A. The commission may waive any or all parts of this chapter for good cause shown.

B. The commission on its own motion may initiate steps necessary to verify a nonparticipating customer's achievement of energy efficiency if the commission has a body of evidence that the nonparticipating customer has knowingly misrepresented its energy efficiency achievement. Such proceedings shall be governed by the commission's Rules of Practice and Procedure (5VAC5-20). ]

VA.R. Doc. No. R09-2071; Filed November 17, 2009, 9:29 a.m.