Virginia Energy Regulatory Update (September 2021)

Below is our firm’s summary of notable energy regulatory activity at the Virginia State Corporation Commission (“SCC” or “Commission”) during September, 2021. During the last month, among other activity, Dominion Energy Virginia (“Dominion”) filed its 2021 Renewable Portfolio Standard Development Plan and a proposal to implement a shared solar program.

Please contact regulatory attorneys Will Reisinger or Matt Gooch should you have any questions about these cases or Virginia’s energy market. ReisingerGooch PLC provides regulatory and transactional counsel to clean energy businesses, associations, and public interest organizations.

Rate cases, oversight, and resource planning:

  • SCC Staff files direct testimony regarding Dominion’s 2021 grid transformation plan – SCC Case No. PUR-2021-00127

On June 21, Dominion filed its 2021 grid transformation plan, designated “Phase II” of its 10-year grid transformation program. Dominion states that the primary focus of its 2021 grid plan “leans more heavily into facilitating the integration of [distributed energy resources or “DERs”], while continuing to address the reality that reliability and security are vital to the success of DERs.” Dominion notes that “industry developments in the past year alone will accelerate the proliferation of DERs, from the development targets for DERs set forth in the Virginia Clean Economy Act of 2020 (“VCEA”), to the market opportunities for DERs enabled by FERC Order 2222, to the myriad of commitments and incentives to speed the transition to electric vehicles.” Dominion projects that its distribution system must be able to handle an expected 170,000 electric vehicles in its service territory by 2030.

The 2021 grid transformation plan includes $670 million in proposed capital spending projects, including deployment of advanced metering infrastructure, new cyber and physical security measures, and infrastructure updates necessary to accommodate additional DERs. Dominion’s petition does not include an estimate of the monthly bill impact of its plan for residential customers. Virginia Code Section 56-585.1 A 6 allows Dominion to propose a grid transformation plan on an annual basis. The law also allows Dominion to recover grid transformation investments through a rate adjustment clause.

On September 24, the Commission Staff filed its direct testimony. The Staff filed the testimony of four witnesses who evaluated Dominion’s proposed investments. The Staff supported several portions of Dominion’s application. However, the Staff opposed some of Dominion’s proposed investments in substation upgrades as not needed based on current distributed energy growth projections. The Staff “took no position” on Dominion’s proposal to deploy advanced metering infrastructure.

The Commission will hold an evidentiary hearing to review the filing on October 12.

  • Dominion files 2021 Integrated Resource Plan update – Case No. PUR-2021-00201

On September 1, Dominion filed an update to its most recent Integrated Resource Plan (“IRP”). Dominion and Appalachian Power file full IRPs every three years, but are required to file “updates” in the intervening years. Dominion states that the updated document includes new “long-term planning assumptions, including load forecasts, commodity prices, and projected costs of future resources, and has incorporated a social cost of carbon.” Dominion also states that its IRP update “is an interim update meant for use as a long-term planning document based on a ‘snapshot in time’ of current technologies, market information, and projections, and should be viewed in that context, not as a decision to pursue any particular project or action.”

The SCC did not find Dominion’s 2020 IRP to be reasonable. In its final order, the SCC cited many of the concerns raised by the SCC Staff and respondents. The SCC stated that it “cannot conclude, based on the record in this proceeding … that Dominion’s 2020 IRP, as filed, is reasonable and in the public interest for purposes of a planning document.”

  • SCC publishes procedural schedule for Kentucky Utilities rate increase request – Case No. PUR-2021-00171

On August 31, Kentucky Utilities, doing business as Old Dominion Power (“KU/ODP”), filed a request for a $12.2 million increase in rates. The rate increase equates to an 18.1% increase in total operating revenues. According to the utility, the proposed increase would raise the monthly bill of a residential customer using 1,000 kilowatt hours per month by $24.20, from $123.28 to $147.48, an increase of 19.63%. The application states that the rate increase is necessary due to the utility’s “continuous significant investments in facilities to provide safe, reliable access to low-cost energy in accordance with applicable environmental regulations.” The utility also says that lower electricity sales means it is not recovering its authorized rate of return. The Commission approved a $9 million rate increase for KU/ODP in April 2020 in Case No. PUR-2019-00060

KU/ODP is the smallest of three investor-owned electric utilities operating in Virginia, serving about 30,000 customers in Scott, Lee, and Wise Counties. KU/ODP, unlike Dominion and Appalachian Power Company, is regulated under Chapter 10 of Title 56 of the Code of Virginia.

An evidentiary hearing will be held on March 10, 2022. Interested parties may intervene in this case on or before November 12.

  • SCC establishes hearing process for Appalachian Power request to increase fuel recovery rider – Case No. PUR-2021-00205

On September 14, Appalachian Power (“APCo”) filed an application to increase its fuel cost recovery rider, called the “fuel factor.” Pursuant to Virginia law (Code Section 56-249.6), APCo is permitted to recover its prudently incurred fuel costs through the fuel factor. APCo is entitled to dollar-for-dollar recovery of its fuel costs, with no rate of return applied. Purchased power costs are considered “fuel” under the fuel factor statute. APCo states that the increase is needed based on higher costs for coal and natural gas in 2021. If approved, the increase would add approximately $3 to the monthly bill of a residential customer using 1,000 kWh.

On September 23, the SCC published an order establishing a hearing process for this case. An evidentiary hearing will be held on February 3, 2022.

Renewable energy, efficiency, and new energy infrastructure:

  • Dominion files direct testimony supporting minimum bill proposal for new shared solar program – Case No. PUR-2020-00125

On July 23, 2021, the SCC established a procedural schedule to review Dominion’s minimum bill proposal for the shared solar program established by 2020 legislation. The legislation requires the SCC to promulgate regulations allowing customers of Dominion to participate in a solar subscription program. This program will allow the customers (“subscribers”) to purchase the output from a solar facility or facilities up to 5 MW in size owned by a third party. Per the statute, the minimum bill is “an amount… that subscribers are required to, at a minimum, pay on their utility bill each month after accounting for any bill credits.” The minimum bill is intended to ensure that subscribers still pay necessary costs to maintain the electric distribution system.

Dominion filed its initial minimum bill proposal on March 1. On September 21, Dominion filed direct testimony supporting its minimum bill proposal. Dominion states that the “rationale for its minimum bill proposal is to ensure that participating customers pay their share of the costs associated with the electric services they will continue to receive from the Company, including use of delivery infrastructure, generation balancing services, and administrative and billing support, even as they receive credits for electricity generated in the Program.”  Dominion states that the estimated typical minimum bill, excluding administrative charges, for a residential customer assuming a 1,000 kWh subscription, would be $74.28.

The SCC will hold an evidentiary hearing on November 18. Public comments can be filed on or before October 27.

  • SCC approves Dominion energy efficiency proposal; requires utility to submit long-term plan showing progress towards VCEA savings targets – Case No. PUR-2020-00274

On December 2, 2020, Dominion Energy Virginia filed an application for approval to continue recovering the costs of several previously-approved energy efficiency programs and for authority to implement eleven new programs. The eleven new programs include residential, low-income, agricultural, and business efficiency measures. Dominion also includes a proposal intended to provide access to solar energy for low-income customers. Dominion proposes to recover the costs of the current and proposed programs through four energy efficiency rate adjustment clauses. Dominion asserts that ten of the eleven proposed programs are “in the public interest,” as defined by Virginia law. Dominion asserts that the final program, a low-income solar measure, is specifically encouraged by 2019 legislation.

The SCC approved Dominion’s application on September 7. The SCC authorized a total revenue requirement of $73.8 million to be recovered during the next rate year. The SCC’s order also directed Dominion, in its next rider update filing, to include a long-term efficiency plan that describes anticipated savings levels and program budgets for a five-year period. The SCC’s final order noted that “while approval of [the application] is uncontested in this case, we are mindful of the total energy savings targets set forth in the VCEA and that under current projections, Dominion does not anticipate achieving such targets in 2023.”