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ARTICLE · 08 MARCH 2023

Yet Another Use For Utility Tariff Bonds: Deferred Fuel Costs

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Under the recently adopted amendments1 to the Virginia Electric Utility Regulation Act, on or before July 1, 2024, an electric utility may petition the Virginia State Corporation Commission (Commission)...

United StatesEnergy and Natural Resources
J. Paul Forrester
J. Paul Forrester
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Under the recently adopted amendments1 to the Virginia Electric Utility Regulation Act, on or before July 1, 2024, an electric utility may petition the Virginia State Corporation Commission (Commission) for a financing order for certain deferred fuel costs that would back related utility tariff bonds2.

Current law in Virginia (and as is generally the typical treatment in most states), permits recovery of fuel costs on a dollar-for-dollar basis as expenses without any additional return. Fuel costs (including purchased power) are estimated annually in advance for purposes of assigning a fuel factor in rates. If actual fuel costs (including purchased power) exceed that annual estimate, the excess is deferred and future rates are adjusted to collect such deferred costs.

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