1. A. There is hereby established a pilot program to further the understanding of underground electric transmission lines in regard to electric reliability, construction methods and related cost and timeline estimating, the probability of meeting such projections, and the benefits of undergrounding existing electric transmission lines to promote economic development within the Commonwealth. The pilot program shall consist of the approval to construct new electrical transmission lines, at least a portion of which have a capacity of 500 kilovolts and which are proposed to be constructed in whole or in part underground to the extent that any portion of such lines is located within one quarter mile of any area zoned residential ("qualifying project"). Such pilot program shall consist of a total of four qualifying projects, constructed in whole or in part underground, as specified and set forth in this section.

2. B. In reviewing any application submitted by a public utility for a certificate of public convenience and necessity for the construction of an electrical transmission line of 500 kilovolts filed between January 1, 2025, and July 1, 2033, the Commission may approve such project as a qualifying project to be constructed in whole or in part underground as part of the pilot program. For the purposes of this section, "qualifying project" includes a 500 kilovolt and 230 kilovolt electrical transmission line project, approximately 8.3 miles in length, that was pending final approval of a certificate of public convenience and necessity from the Commission as of February 1, 2026, provided that (i) such project otherwise meets the criteria set forth in subdivisions C 1 and 4 and G 1 and (ii) the Commission determines after review that such project substantively meets the criteria set forth in subdivisions C 2 and 3 and G 3. The Commission shall approve a maximum of four qualifying projects under the pilot program and shall provide an expedited review of any application for approval of a qualifying project.

   The electric utility may proceed to acquire right-of-way and take such other actions as it deems appropriate in furtherance of the construction of the approved transmission line, including acquiring the cables necessary for the underground installation.

3. C. For purposes of this section, the Commission may only approve a qualifying project to be placed underground in whole or in part if it meets all of the following criteria:

   1. 1. The Commission finds that an engineering analysis demonstrates that it is technically feasible to place the proposed line in whole or in part underground;
   2. 2. The application contains information regarding projections of the overall cost of the project if (i) placed in whole or in part underground and (ii) placed entirely above ground, as well as evidence that each locality in which a portion of the proposed line will be placed is interested in participating in such project;
   3. 3. The application contains evidence that the governing body of each locality in which at least a portion of the proposed line will be placed underground supports the qualifying project's inclusion in the pilot program and that each such locality agrees, by resolution, to meet its funding obligations under subdivision G 1, including through any method described in subdivision G 3; and

   4. 4. The Commission finds that the overall cost of the project is reasonable and consistent with the public interest.

      The Commission may, in its discretion, deny an application for a qualifying project that otherwise meets the criteria set forth in this subsection, provided that it provides its rationale for doing so.

4. D. A transmission line project that is found to meet the criteria of subsection C shall be deemed to satisfy the requirements of subsection B of § 56-46.1 with respect to a finding of the Commission that the line is needed.
5. E. Approval of a transmission line pursuant to this section for inclusion in the pilot program shall be deemed to satisfy the requirements of § 15.2-2232 and local zoning ordinances with respect to such transmission line and any associated facilities, such as stations, substations, transition stations and locations, and switchyards or stations, that may be required.
6. F. The Commission shall report annually to the Energy Commission of Virginia and the Governor on the progress of the pilot program by no later than December 1 of each year that this section is in effect. The Commission shall submit a final report to the Energy Commission of Virginia and the Governor no later than December 1, 2034, analyzing the entire program and making recommendations about the continued placement of transmission lines underground in the Commonwealth.

7. G.

   1. 1. Subject to subdivision 3, at least 50 percent of the marginal cost of the portion of a qualifying project chosen to be placed underground within a locality pursuant to this section shall be paid by such locality. If the Commission determines that retail customers of the public utility that are not located in a locality in which such portion of a qualifying project is located will be adversely affected in a manner contrary to the public interest by the approval of such qualifying project, all or a portion of the remaining marginal cost of such portion shall be paid by the locality in which such portion is chosen to be placed underground, as determined by the Commission in a manner that is just, reasonable, and in the public interest. For any qualifying project located in more than one locality, each locality in which such qualifying project is located shall coordinate to divide the total marginal cost among such localities.
   2. 2. At least 30 days prior to filing an application for the approval of a qualifying project with the Commission, a public utility shall provide the locality with the estimated overall cost of the project if placed in whole or in part underground or if placed entirely above ground and the estimated marginal cost. As used in this section, "marginal cost" means the difference between the projected cost of placing an electric transmission line in whole or in part underground and the projected cost of placing such line above ground, as required by subdivision C 2. A locality's support of a qualifying project's inclusion in the pilot program and agreement to the funding obligations in subdivision 1 shall be indicated by resolution.
   3. 3. No locality shall be obligated under subdivision 1 to pay the marginal cost for an approved qualifying project if such locality files a notice with the Commission within 30 days after a final order approving such project stating that the locality has withdrawn its resolution supporting the qualifying project in the pilot program and its agreement to meet the funding obligations under subdivision 1. If a locality files such notice, the Commission shall modify its final order as necessary to withdraw a qualifying project from the pilot program. To meet its obligations pursuant to this subsection, a locality may (i) impose a levy by ordinance pursuant to subdivision 4 and issue a bond payable exclusively from the revenue from such levy; (ii) issue a general obligation bond subject to a referendum carried out pursuant to the provisions of § 15.2-2610; (iii) allocate its own funds, which allocation may be carried out over a period of multiple years subject to appropriation by the governing body of the locality; or (iv) use any combination of such methods.
   4. 4. The governing body of any locality in which a portion of an electric transmission line is proposed to be placed underground as part of a qualifying project may impose an additional levy on electric utility customers in such locality pursuant to § 58.1-3814, provided the requirements of this subdivision are satisfied. Any levy imposed pursuant to this subdivision shall be in addition to the limit for any utility consumer tax prescribed in § 58.1-3814. A locality that imposes such levy shall by ordinance fix the amount of such additional levy, provided that such levy shall not exceed $0.99 per month on residential customers. Any such levy shall be developed in consultation with Commission staff and structured based on the rate adjustment clause recovery factors and cost allocation reflected in the relevant utility's most recent transmission rate adjustment clause proceeding approved by the Commission, and the apportionment of costs among customer classes shall be consistent with cost apportionment principles applied by the Commission in establishing electric utility rates. In developing the levy structure in consultation with Commission staff, the locality shall consider whether the apportionment of costs among other customer classes reasonably reflects the electric consumption patterns and demand patterns of such classes in the locality. A locality may adjust such levy by ordinance to reflect subsequent changes to the relevant utility's transmission rates approved by the Commission. The proceeds of such levy shall be dedicated to the portion of costs required to be paid by such locality for such qualifying project pursuant to subdivision 1. For the purposes of this subdivision, "cost apportionment principles" means the principles applied by the Commission in rate proceedings to allocate costs among the customer classes, including (i) cost causation, under which costs are allocated to customer classes based on the extent to which such classes cause the utility to incur such costs; (ii) avoidance of undue discrimination among similarly situated customers; and (iii) the requirement that rates and charges be just and reasonable.
   5. 5. For any qualifying project approved pursuant to this section for which costs have not been fully recovered as charges for new transmission facilities pursuant to subdivision A 4 of § 56-585.1, the Commission shall allow a separate, supplemental rate adjustment clause under such subdivision for the limited purpose of timely recovering such costs, which shall be assigned to the public utility's jurisdictional customers in the Commonwealth.
   6. 6. A locality in which an approved qualifying project is located may acquire rights-of-way, easements, or similar interests in land directly adjacent to the approved route and rights-of-way and easements obtained by the public utility for such project solely for the co-location of other public utilities with the project. If a locality seeks to exercise this authority, it (i) shall not acquire any rights within the Commission-approved route; (ii) shall ensure that the location of other public utilities adjacent to the approved qualifying project does not interfere with the construction and operation of such project; and (iii) may enter into an agreement with the public utility to coordinate the acquisition and rights-of-way development, construction, and operation processes. Any acquisition by a locality under this subdivision shall be subject to Chapter 19 (§ 15.2-1901 et seq.) of Title 15.2 and any other applicable law. A locality that acquires interests in land pursuant to the authority of this subdivision may use any proceeds from the location of other public utilities within such interests to meet its obligations under subdivision 1.
8. H. Approval of a proposed transmission line for inclusion in the pilot program shall not preclude the placement of existing or future overhead electric facilities in the same area or corridor by other electric infrastructure projects.
9. I. The provisions of this section shall not be construed to limit the ability of the Commission to approve additional applications for placement of transmission lines underground.
10. J. Insofar as the provisions of this section are inconsistent with the provisions of any other law or local ordinance, the provisions of this section shall be controlling.

2018, c. 296; 2020, cc. 164, 165, 797; 2026, cc. 863, 864, 949.