On May 1, Dominion Energy Virginia (“Dominion”) filed its first Integrated Resource Plan (“IRP”) since the enactment of the Virginia Clean Economy Act (“VCEA”), 2020 SB 851. The law requires Virginia’s two largest electric utilities, Dominion and Appalachian Power Company (“APCo”), to file IRPs every three years. Dominion’s IRP is its first public plan to comply with the VCEA, including the required investments in energy efficiency, solar, and battery storage resources.
An IRP is not a commitment to pursue any particular course of action, but represents a utility’s general plan – based on current technology – to meet customer demand over the next 15 years. The IRP statutes, Virginia Code Sections 56-597 et seq., require the State Corporation Commission (“SCC”) to review the IRP and determine whether the plan is “reasonable and in the public interest.”
The VCEA includes an escalating renewable portfolio standard requiring Dominion to source 100% of its electricity sales from clean energy sources by 2045. The law also requires Dominion to petition the SCC to construct or acquire at least 16,100 MW of onshore wind or solar resources and add at least 2,700 MW of battery storage by 2035. The General Assembly directed that 65% of these new resources must be owned by the utility, while 35% should be purchased via third-party power purchase agreements. The legislation also declared up to 5,200 MW of offshore wind resources to be “in the public interest,” subject to certain cost criteria.
Dominion’s IRP includes four planning scenarios designed to comply with the VCEA. Each scenario includes over 5,000 MW of offshore wind and between 16,000 and 18,800 MW of new solar during the 15-year planning period. Despite the ambitious solar construction envisioned by the VCEA, Dominion cautions that “challenges will arise from the significant development [of solar],” including reliability challenges and local permitting issues. “The addition of large quantities of intermittent renewable generation,” Dominion suggests, “will adversely affect both electric system reliability and the Company’s ability to restore the system in the event of a largescale blackout.” Dominion also states that “the supply chain organization for the solar industry will be challenged to meet the level of solar generation” required by the VCEA.
Natural gas peaking facilities
Notably, Dominion does not model combined renewable energy and battery storage as a potential peaking resource. This technology can help utilities provide 24/7 reliability using clean energy resources. Each of Dominion’s planning scenarios includes 970 MW of new natural gas generation as a placeholder to serve peak demand needs. Dominion’s proposal is in contrast with many other U.S. utilities, which are rapidly deploying solar and wind coupled with storage as alternatives to gas peaking facilities. In its final order approving APCo’s 2019 IRP, the SCC directed APCo to model “solar coupled with battery storage as a potential capacity resource option” in all future IRPs.
Estimated rate and bill impacts and economic assumptions
Dominion’s planned investments in new generation resources are, of course, not without cost. Dominion forecasts that a typical monthly bill for a residential customer using 1,000 kWh per month could increase by 45% over the next decade, from $116.18 in 2020 to $168.58 in 2030. Dominion claims that “about 40% of the projected bill increase from 2020 to 2030 is associated with investments incentivized or mandated by the VCEA” and other legislation enacted in 2020.
In recent years, the utility has been criticized for overcharging customers through its base rates. SCC audits of the utility’s books found that Dominion retained excess profits of at least $277 million in 2018 and $365 million in 2017. A former SCC commissioner recently argued in the Richmond Times-Dispatch that Dominion’s base rates should be reduced by at least $250 million to account for the utility’s overearnings position.
Finally, while recognizing the uncertainty caused by the COVID-19 health crisis, Dominion’s IRP assumes consistent economic growth during the planning period. The plan forecasts annual growth in gross state product and per capita income of approximately 2% through 2035. Dominion forecasts median per capita income in its service territory to increase from approximately $48,000 in 2020 to $62,345 in 2035.
The SCC will hold an evidentiary hearing on the IRP on October 27. Interested parties may intervene in the case on or before August 4. The IRP and supporting exhibits can be viewed in the online docket for SCC Case No. PUR-2020-00035.