Virginia Energy Regulatory Updates (December 2022)

Below is our firm’s summary of notable energy regulatory activity at the Virginia State Corporation Commission (“SCC” or “Commission”) during December, 2022. Please contact 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. The following is presented for informational purposes only and does not constitute legal advice.

Rate cases, oversight, and resource planning:

  • SCC authorizes $28 million annual base rate increase for Appalachian Power – Case No. PUR-2020-00015

On December 21, the SCC published an order approving a $28.4 million base rate increase for Appalachian Power (“APCo”) customers. This rate increase will add approximately $6 per month to the bill for a residential customer using 1,000 kWh. Separately, APCo is seeking a fuel rate increase that would result in a $20 per month increase for a 1,000 kWh customer. See Case No. PUR-2022-00139.

The SCC published its December 21 order in compliance with a directive from the Virginia Supreme Court. The Court, in a 5-2 opinion, held that the SCC made errors in its final order in APCo’s 2020 triennial review case. In particular, the Court held that APCo should have been permitted to record approximately $88 million of costs associated with coal facilities that retired early as an expense during the triennial review period. Had APCo been allowed to record the $88 million in this way, the utility’s “earnings” during the review period would have been low enough to trigger a rate increase pursuant to the ratemaking statute. The Court’s opinion directed the SCC to conduct further proceedings consistent with its ruling. In its order, the SCC overruled objections by consumer advocates who claimed that APCo should receive a much smaller rate increase.

Renewable energy, efficiency, and new energy infrastructure:

  • SCC approves settlement agreement in offshore wind case – Case No. PUR-2021-00142

On November 5, 2021, Dominion filed an application for approval of a 2.6 gigawatt wind facility (the Coastal Virginia Offshore Wind” or “CVOW project”), which would be located in federal waters off the coast of Virginia Beach. Dominion’s application requests approval for cost recovery for the wind facility and associated transmission and interconnection facilities. Dominion states that the total capital costs for the project would be $9.8 billion.

The SCC approved the project in its August 5 final order. The order approved the project subject to certain consumer protections, including a capacity factor “performance standard.” The performance standard is designed to ensure that Dominion’s ratepayers are held harmless in the event the facility does not achieve the 42% capacity factor projected by Dominion. Dominion filed a petition for reconsideration of the performance standard on August 22.

On October 28, the Attorney General’s Office filed a proposed stipulation signed by the Attorney General, Dominion and several respondents. The agreement defines how the CVOW project’s performance would be measured. The agreement also includes capital cost sharing provisions, meaning that Dominion shareholders would be required to absorb a portion of cost overruns above a certain amount. No party opposed approval of the stipulation. On December 15, the SCC published an order approving the settlement. The Commission noted that approval of the settlement agreement only affects the performance standard; the remainder of the Commission’s August 5 final order remains in effect.  

  • SCC Staff files expert witness testimony challenging the economics of Dominion’s new solar and storage proposals – Case No. PUR-2022-00124

On October 14, Dominion filed a petition requesting approval of numerous new clean energy resources (the “CE-3 Projects”). Dominion’s filing also includes an updated renewable portfolio standard (“RPS”) development plan. The petition requests approval to construct and operate 474 MW of utility-scale solar resources and 15.7 MW of battery storage, as well as four smaller-scale solar facilities. The utility requests approval to recover the costs of the new facilities through a rate adjustment clause designated “Rider CE.” Dominion also requests approval to enter into 13 power purchase agreements with solar and storage owners. If approved as filed, Rider CE would recover approximately $89 million from customers during the next rate year, increasing the monthly bill for a residential customer using 1,000 kWh by $0.38.

On December 21, the SCC Staff and two respondents filed expert witness testimony commenting on Dominion’s filing. Appalachian Voices filed testimony from a former SCC staff member who urged the SCC to require least-cost planning for Dominion’s future RPS compliance. The witness also noted the customer benefits associated with purchasing renewable energy from third-party facilities. The SCC Staff filed testimony from multiple witnesses analyzing Dominion’s filing. The Staff raised concerns about the economics of Dominion’s proposed solar and storage projects, asserting that “it would have been more economic for [Dominion] to procure energy and capacity from [PJM] than to construct the CE-3 Projects.” The Staff also claims that all of the company’s proposed distributed solar projects “appear uneconomical under traditional economic analysis under all sets of assumptions available to Staff.” The SCC will hold an evidentiary hearing on January 31.

  • Dominion files petition for approval of new energy efficiency programs; summary of 2021 performance of previously approved measures – Case No. PUR-2022-00210

On December 13, Dominion filed a petition for approval of several new energy efficiency and demand-side management programs. The petition requests approval of new programs and to continue cost recovery for previously approved measures. Dominion states that the new measures are intended to “fill ‘gaps’ in the Company’s existing portfolio of programs as identified by [the Company’s long-term efficiency plan].” The new programs include education measures for high-usage customers, rebates for energy efficient appliances, and a peak time rebate program. The filing also includes a report on the energy savings from previously approved efficiency programs.

The petition, if approved, would increase Dominion’s current rate adjustment clause for energy efficiency costs. For a residential customer using 1,000 kWh per month, the current energy efficiency rider results in a $1.60 monthly charge. Dominion’s new petition, if approved, would increase this rider by $0.24 per month. The SCC has not yet published a hearing schedule for this case.

  • Appalachian Power requests price increase for renewable energy tariffs – Case No. PUR-2022-00212

On December 7, Appalachian Power Company (“APCo”) filed a petition requesting approval to adjust two of its voluntary renewable energy tariffs. APCo proposes to increase the rate of Rider REC and Rider Wind, Water, and Sunlight (“Rider WWS”). Rider REC allows customers to purchase renewable energy certificates (“RECs”) to match some or all of their energy usage. Rider WWS allows customers to purchase the output from several renewable facilities that APCo either owns or has under contract. Under both tariff options, customers pay a premium rate for the environmental attributes.

APCo proposes to increase both the Rider REC and Rider WWS rate to reflect current PJM REC prices. APCo states that there has been an increased demand for RECs due to renewable energy requirements in several states, leading to a “dramatic increase” in prices. APCo proposes to increase the price of Rider REC from $1.00 per REC to $9.50 per REC. APCo proposes to increase the renewable energy premium cost of Rider WWS from $4.25 per 1,000 kWh to $21.00 per 1,000 kWh. The SCC has not yet established a procedural schedule for this case.

  • SCC publishes rules regarding certification procedures for distributed renewable facilities – Case No. PUR-2022-00045

On December 9, the SCC published an order modifying its rules governing registration procedures for distributed renewable facilities. To produce RECs eligible for compliance with Virginia’s renewable portfolio standard, a renewable generation facility must be registered with PJM’s Generation Attribute Tracking System. The order includes rules for self-certification by generators and rules governing facilities qualifying as “low-income” solar resources under the Virginia Clean Economy Act. The rules continue to require all resources to use a revenue-grade meter for purposes of measuring energy generated. 

  • Environmental advocates oppose Roanoke Gas project based on greenhouse gas emissions analysis – Case No. PUR-2022-00125

On August 3, Roanoke Gas Company filed an application for approval of a $7.7 million biogas investment plan. The plan included a request for a certificate of public convenience and necessity to construct and operate a renewable natural gas facility at a water treatment plant in Roanoke. The gas company proposes to process gas produced by digesters at the treatment plant and blend the gas into the company’s distribution system. A 2022 law, allows gas companies to obtain cost recovery for “eligible biogas supply infrastructure projects.” The Code defines eligible projects as “capital investments in biogas facilities that, alone or in combination with other projects or strategies, offer reasonably anticipated benefits to customers.” Under the statute, such “benefits to customers” must include carbon dioxide and methane emissions reductions. See 2020 SB 565 codified at Va. Code § 56-625.

The SCC held an evidentiary hearing on November 18. In its post-hearing brief, Appalachian Voices urged the SCC to deny the biogas investment plan “because [Roanoke Gas] has not shown that greenhouse gas emission reductions are reasonably anticipated as a result of the Project.” An expert witness for Appalachian Voices testified that the gas company inflated the potential greenhouse gas emissions reductions attributable to the project. In its post-hearing brief, the gas company defended its emissions analysis. There is no deadline for the SCC to publish a final order.

  • Appalachian Power files update on previously approved efficiency programs – Case No. PUR-2021-00236

On November 30, Appalachian Power Company (“APCo”) filed a report regarding previously approved energy efficiency programs, including residential and commercial measures. APCo reported spending approximately $15.6 million between September 2021 and August 2022. The report also provides estimated kilowatt-hour savings that are attributable to the approved measures. APCo is permitted to recover the costs of approved efficiency programs through a rate adjustment clause that is updated annually.