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Virginia State Regulatory Commission Essay Sample

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Virginia State Regulatory Commission Essay Sample

            The Virginia State Regulatory Commission has been given by the government the regulatory authority to check the businesses in the state and the economic interests of the business in Virginia. The Commonwealth of Virginia State Corporation Commission (2007) had stated that the commission is given the authority to set the rates charged by the investor owned utilities. The rates regulated by the Commission serve as the benchmark of all the corporations in Virginia. When the commission was first established, it was meant to administer the railroad, telephone and telegraph industries only. As the years went by, the SCC already includes utilities, insurance, state-chartered financial institutions, securities, retail franchising and railroads. The commission is now considered as the state’s central organizer of records for different businesses in the state such as corporations, partnerships, limited liability companies and Uniform Commercial Code liens. The commission is considered as an independent body of government which has been delegated by the administrative, legislative and judicial powers. The decision of the commission can only be changed by the Virginia Supreme Court.

Looking back in the year 1902, the State Corporation Commission (SCC) was created to substitute the Board of Public Works and the Office of the Railroad Commissioner. The Commission has three members and it is tasked to managed the state railroads, telecommunications and in the registration of businesses in the Virginia State. The SCC operated on March 2, 1903. It has expanded its regulatory authority across industries with the help of Virginia General Assembly. According to the SCC Background from the website of the State Regulatory Commission (www.scc.gov), the Virginia 1902 constitution gave power of judicial, legislative and executive to the SCC. This in turn had made the commission serve as the court of record, and hold formal hearings if necessary. The SCC can also put into effect its orders through the use of fines and contempt citations. The right to appeal is only through the Virginia Supreme Court. The Commissions executive authority is being implemented in its daily administration and its legislative function is carried out when the commission makes rules or sets the rates for the industry.

The main goal of the commission is to balance the interests of all citizens, businesses, stockholders and customers. As enumerated in the website, the commission’s aims are to assure quality service from the regulated businesses in the state, assure that the companies are financially able to meet their obligations to the citizens, provide assistance to the citizens who are need of the Commission’s service to solve their dispute with the regulated companies, provide rules and regulations that would give requirements of social and technological hanges and lastly, to consider environmental impacts of equipments and other facilities proposed for construction in the state by the regulated companies. The SCC Organizational Chart is shown in Figure 1 on the next page.

Source: Schrad, Ken, The Commission: Overview of the Commission, Retrieved last December 11, 2007 from http://www.scc.virginia.gov/commission/overview.htm

Figure 1. State Corporate Commission Organizational Chart

The Commission has five major categories. These are the financial services, business entities, public utilities, legal services and administrative responsibilities. The Financial services category deals with all the financial institutions in the state, regulates the insurance companies, agencies and agents that does business within the state, and registers firms, brokers, dealers and investment advisors in the state. The Financial services also works with the security regulators to guard investments against fraud. The Business Entities category is the central recordkeeper of all business entities in Virginia. The business entities recorded includes corporations, limited partnerships, limited liability companies and other entities registered in the state.

The Legal Services category is responsible to provide attorneys that would represent the commission. The Legal services also presides over hearings and issuance of ruling in cases that will be presented to the commissioners for a decision. The Administrative Category deals with the Commissions budget and finances, personnel matters in the commission. The commission has also a spokesperson that would serve as a medium of communication between the Commission and the media, the legislature and he general public. Lastly is the Public Utilities Category. This category includes different companies that are concerned with telecommunications, electricity, natural gas and water, sewer companies and rail lines. These companies have a division of their own. From the State Corporation Commission the divisions of the Public Utilities category include the following Division of Energy Regulation, Division of Communications, Division of Utility & Railroad Safety, Division of Economics and Finance, Division of Public Utility Accounting, and the Division of Public Service Taxation.

Before starting a business and have a license, a competitive service provider must show its technical and financial capability of giving service to its consumers. According to the website of the SCC, there are two steps to b a service provider. The business entity must first obtain a license from the SCC. Second is the entity must be registered with the  local distribution Company that serves  area where the competitive offers are available. The purpose of the registration is to ensure that the process of switching suppliers goes smoothly. Only the accredited CSPs and aggregators are allowed to make offers in the state.

The State Corporate Commission is involved with three public utility industries. These are the Telecommunications Industry, the Energy industry and the Utility and Railroad Industry. The Division of Communications is responsible for the telecommunications industry. The Commission is responsible to promote a competitive telecommunications market, investigate complaints and answer inquiries of the consumers in Virginia and lastly to review rates and costs. The Commission must enforce all general rules and laws and service standards set by the Division of Communication. According to the State Corporate Commission, the division regulates all telecommunication services except for interstate long distance communication service, cable TV and satellite Television service, Internet Services and Digital Subscriber Lines and lastly the Voice over Internet Protocol. A telephone or telegraph service must have a certificate of Application before the company is allowed to operate in the state of Virginia. As of October 19, 2007 from the report of Virginia State Corporate Commission, there is a total of 167 companies certificated and a total of 144 cancelled certificates.

From these certificates of application there is a total of 891 interconnection agreements among the companies in the state of Virginia. Among the companies that have been registered in the State Corporate Commission is Access Point of Virginia Inc., ACN Communications Services Virginia LLC, Cogent Communication of Virginia Inc., American Fiber Systems VA Inc., AOC Connect LLC, Comcast Phone of Virginia Inc., BCN Telecom of Virginia Inc., Bay Telecom Inc., Broadplex LLC, Braodwing Communication LLC, Budget Phone of Virginia and Bullseye Telecom of Virginia. Telephone rates in the state may vary depending on whether it falls within the regulatory authority of the State Corporate Commission. The division of Communications had listed the telephone bill information that is not included in the regulatory authority of the SCC. The following surcharges that would be listed below are not included in the regulatory authority of SCC. The Virginia Communication Sales Tax, this is 5 percent of the bill and is being collected by the service providers every month. The collected money is remitted to the Department Taxation of the state of Virginia.

The Subscriber Line charge is another surcharge that is not included in the regulatory authority of SCC. This fee amounts to a fee of as much as $6.50 per month for the residential lines and this is allowed by the Federal Communications Commission. This charge is meant for local telephone companies to regain a part of the interstate costs      that is linked with the interstate long distance network. This fee helps the interstate long distance rates maintain its current fees. Another fee that is not included in the regulatory authority of the Commission is the Presubscribed Interexchange Carrier Charge.

The charge is a flat rate from local telephone companies to interstate long distance carriers to recuperate the remaining part of the interstate costs of a local telephone line that is not being recovered through the SCC. This charge is only applicable to multi-line businesses. The Universal Service Charges varies depending on the company. The telephone service companies are required by the FCC to give a federal universal service fund to sustain telephone service for the different areas that needs levelling up like the high-cost areas and the low-income subscribers. Other charges that are not included in the regulatory authority of the SCC is the Public Rights-of-Way Fee, E911 Tax, and Miscellaneous taxes. Telephone consumers must be aware of the different charges that are not carried by the State Corporate Commission to lessen the complaints and so that they are well informed about why the telephone subscribers need to charge them a particular fee. The State Corporate Commission must be able to identify and answer the questions from the consumers capably.

The Energy Industry is another industry that the SCC is regulating. The Energy Industry includes electricity, water and natural gas business entities. The Division of Energy Regulation handles the three specific public utilities. The Division of Energy regulation function is to review rate applications from investor owned and member owned utilities. Preparation of the testimony of the rate cases is also being done in the Division. The division is assigned to check the utility construction projects and review of applications for the transmission lines with 138 kilovolts or more, electric generating units and the natural-gas pipelines. First Utility is the Electricity, the performance of electric utilities and its distribution is being watched over by the Division. Any consumer complaints regarding electric, natural gas, water and sewer is taken under the jurisdiction of the Commission.

Expert technical assistance and the public policy recommendations is a priority of the Commission. There are two types of business entities in the electric companies that is being regulated by the SCC. These are the investor-owned and the electric cooperatives regulated by the Commission. In the investor-owned Electric Companies, there is a total of 5 electric companies in the state. The five companies are Allegheny Power, Kentucky Utilities or also known as the Old Domiion Power, the American Electric Power and the Dominion Virginia Power. The Electric Cooperatives are also being regulated by the State Corporate Commission. All in all there is a total of thirteen Electric Companies being regulated by the commission. Among the thirteen are A&N Electric Cooperative, B-A-R-C Electric Cooperative, Northern Virginia Electric Cooperative, Prince George Electric Cooperative, Central Virginia Electric Cooperative, Rappahannock Electric Cooperative, Shenandoah Valley Electric Cooperative, Southside Electric Cooperative, and Craig-Botetourt Electric Cooperative. The Commission imposes a flat monthly basic customer charge that has been approved. The rates are implemented in order to recover fixed expenses associated to make utility service possible for certain locations. The flat monthly service fee may include customer account expenses, metering, billing and payment processing.

Second Utility is the Natural Gas. As stated above, same responsibilities apply to the Natural Gas Utility. The Commission is required to set the  rate for natural gas. Same as in the electric Utility, the natural gas also has a fixed rate regulated by the Commission. Same reason is applied for the fixed rate. That is to recover fixed expenses associated with the utility service. However, unlike the electricity, the price for natural gas is unstable. This is so because the price of the natural gas fluctuates because of price volatility or te wholesale price of gas and the weather or usage votality. According to the website of the Division of Energy Regulation, the SCC does not regulate the price of the natural gas but the market regulates it.

However, the Commission makes sure that the gas distributor makes practical purchases of gas. The gas distributor company must make sure that it obtains gas from producers at the best possible market price. Gas Price is shown as 80% of the bill of the consumer. On the other hand, the 20% is the regulated price of the SCC. This is the distribution expenses of the Natural Gas from the source up to the consumer. The 20% state above is the distribution expenses experienced by the Gas distributors. This regulated amount also depends on the amount of gas used by the company. There is a total of 10 Natural Gas Companies regulated by the SCC. These are Appalachian Natural Gas Distribution Company, Roanoke Gas Company, Shenandoah Gas Divison of Washington Gas Light, Atmos Energy, Southwestern Virginia Gas Company, Virginia Natural Gas, Inc., Duke Energy Early Grove Company, Duke Energy Virginia Pipeline Company, and Washington Gas Light Company

Aside from the electricity and Natural Gas, the SCC also regulates the Water distributed by the Water and Sewage Companies. Same as with electricity and natural gas, water has a monthly flat rate that is designed to recover a portion of the fixed expenses that has been used to distribute the utilities. The State of Virginia has 81 Water and sewage companies that is being regulated by the SCC that is used by the state to distribute water. Ten of the companies that are included in the list of the SCC is the Alpha Water, James River Service Corporation, Aquarius Water Systems Inc., Lake Holiday Estates Utility, Aqua Source Utility-Virginia Inc. Land Or Utility Company Inc., AquaSource Utility S/L Inc., Long Hollow Water Development Company, Aqua Virginia Inc. and Lundie Utilities Inc.

The Commission is allowed to check for the environmental impacts of the new plants being built inside the state. With the help of Virginia Department of Environmental Quality, the Commission is able to conduct air and water monitoring that would ensure that both utility is within the environmental standards.

Aside from the water, natural gas and electricity, the Commission also regulates the fare of the railroads and safety of the public in it. The Division of Utility and Railroad Safety serves as the division that is involved in hosting safety programs involving the three energy utilities which are the electricity, water and natural gas. It also provides for the underground utility prevention.  There are three categories in the Division of Utility and Railroad safety. First section is the Pipeline safety, this section ensures the  safe operation of natural gas, and liquid pipeline facilities through inspection, review and investigation of incidents. Second Section is the Railroad regulation, this particular section ensures safety of all railroads within Virginia and lastly Damage Control, this section investigates reports of violations of the Underground Utility Damage Prevention Act. Among the three the Railroad Safety section is another public Utility. The Railroad is one of the original responsibilities of the commission. The Commission is only assigned to maintain the safety of the Railroads. Railroad regulation involves the citizen complaints regarding the rail crossing blocks, accident investigations, inspection of railroad.

The Commission includes two Class I major Railroad, Nine Class II short line railroads and more than 6,700 rail tracks in the state. The Virginia Rail Rates are dependent on the regulated fare by the Commission. The said rates follow the Interstate Commerce Act as amended by the Staggers Rail Act of 1980. According to Section 20 of the Interstate Commerce Act, Virginia will not exercise jurisdiction in accordance with general rate increase, inflation based rate increase and fuel adjustment surcharges. There must be a notice period of 20 days before rail rate increases and 10 days of notice before rail rate decreases.

The rates given by the railroad companies must be reasonable enough. The State Corporate Commission will conduct investigations to make sure that each price rate increase or decrease is justifiable. Lastly, the Railroad rates may be changed depending on the zone of rate flexibility provisions. An exemption on price change can be given by the Commission depending on the circumstance. For transport of materials, the state of Virginia regulates two special classes of rates. These are the limited liability rates and the rates of recyclable materials. Recyclable materials are transported at a revenue to variable cost ratio of no more than 146%. The railroads are also allowed to publish rates if the rate is limited to the value established by the written declaration of the shipper or by written agreement between the shipper and the railroad.

As per the stated facts above, the State Corporate Commission of Virginia is a very important part of the state because of the functions that it does. Public Utilities such as electricity, water, and natural gas are regulated in such a way that everybody in the state would benefit from. Through the regulation of price, the Commission is able to apply fair charging and there is a control of price increase and decrease in the state. The decision of any increase and decrease all depends on what would be the decision of the industry and it is not based on the individual company alone. Because of the State Corporate Commission, the competition of the companies in the state is good. There are no price competitions but the competition is focused on how to give proper service to the customers since the price of public utilities are the same, the people would choose whether to switch companies because of service and not because of the price change.

There are several companies that are included in the State Corporate Commission. The state of Virginia must be strict in the implementation of registration of business. This would ensure that all companies operating in the state is regulated by the commission. There would be an imbalance of price regulation and competition in the industry. The Corporate Commission makes sure that all business entities that operates in the state have the right suppliers and provides the right prices for the consumers in the state of Virginia.

Works Cited

Scrhad Ken, (2007) The Commission: Overview of the Commisssion, 11 December 2007, Commonwalth of Virginia State Corporation Commission <http://www.scc.virginia.gov/commission/overview.htm>

Scrhad Ken, (2007) The Commission: Divisions, 11 December 2007, Commonwalth of Virginia State Corporation Commission <http://www.scc.virginia.gov/division.htm>

State Corporate Commission, (2007) The Virginia CLEC Certificate Application Status Report, 11 December 2007, Commonwalth of Virginia State Corporation Commission <http://www.scc.virginia.gov/division/puc/industry/lecap.pdf>

State Corporate Commission, (2007) Division of Communications: Interconnection Agreements, 11 December 2007, Commonwalth of Virginia State Corporation Commission < http://www.scc.virginia.gov/division/puc/industry/chinter.pdf>

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