Below is our firm’s summary of notable energy regulatory activity at the Virginia State Corporation Commission (“SCC” or “Commission”) during February, 2022. 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.
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Rate cases, oversight, and resource planning:
- Dominion files petition to update rider for coal combustion waste – Case No. PUR-2022-00033
On January 25, Dominion filed a petition seeking to update its environmental rate adjustment clause (“RAC”). Under Virginia law, both Appalachian Power and Dominion are permitted to recover environmental compliance costs through a separate rider, or RAC. Dominion’s petition provides an update on previously approved projects at three coal facilities. These projects include upgrades to coal ash storage and handling facilities needed to comply with federal Clean Water Act requirements. Dominion also requests approval for a new $120 million capital project at the company’s Mt. Storm facility in West Virginia. Dominion states that the project is necessary to comply with federal regulations governing discharges from coal ash ponds.
On February 28, Dominion filed a petition to update its rate rider to recover costs associated coal combustion residual management (“Rider CCR”). 2019 legislation authorized Dominion to recover the costs to treat and store coal waste through a non-bypassable rider. In 2021, the SCC approved Dominion’s first rider for projects at the Bremo Power Station, Chesterfield Power Station, Possum Point Power Station, and Chesapeake Energy Center. The SCC’s 2021 order approving the rider also directed Dominion to study the feasibility of transporting coal waste via rail from its coal facilities to a landfill in Wise County, Virginia. In its petition, Dominion stated that transporting the coal waste to the Wise County would add significant costs and require 12 years.
The rider approved in 2021 is designed to recover an annual revenue requirement of $216 million. The updated rider would result in a small ($0.01) increase to the bill for a residential customer using 1,000 kilowatt-hours in a month.
- Environmental advocates file expert witness testimony regarding administrative charges for Dominion multi-family shared solar program – Case No PUR-2020-00124
In 2020, the General Assembly passed legislation requiring the SCC to promulgate regulations for a shared solar program specifically designed for customers living in multi-family housing facilities. Under the Dominion shared solar program, customers will be permitted to purchase – or “subscribe to” – a portion of a qualifying solar facility. The customer would thereafter receive a bill credit corresponding to the output from the facility. The multi-family shared solar program directives are codified in Va. Code § 56-585.1:12. The statute allows utilities to recover “reasonable costs of administering the program.”
In a September 2021 filing, Dominion proposed an administrative charge for its multi-family shared solar program. This is a charge that all shared solar customers would be required to pay. In a subsequent order, the SCC determined that a public hearing process should be held to review Dominion’s administrative charge proposal. On February 8, Dominion filed direct testimony further explaining and supporting its administrative charge proposal. Dominion’s proposal is designed to recover costs such as transmission and distribution expenses and other costs to support the multi-family shared solar program. On March 1, Appalachian Voices filed direct witness testimony opposing Dominion’s administrative charge proposal. The witness instead proposed “a three-part evidentiary standard that requires a showing of actual costs that are (1) incremental, (2) directly related to program administration, and (3) do not impinge upon the program development and growth goals in the Statute and Rules in evaluating current and future proposals for administrative charges under the Program.”
The SCC will hold an evidentiary hearing on March 25. Parties to the case may file their own testimony on or before March 1. Public witnesses may provide oral testimony on Dominion’s administrative charge proposal during a public hearing on March 22.
- SCC sets procedural schedule to review Kentucky Utilities petition to increase fuel recovery rider – Case No. PUR-2022-00021
On February 15, Kentucky Utilities, doing business as Old Dominion Power (“KU/ODP”), filed an application to increase its fuel cost recovery rider. Virginia Code Section 56-249.6 allows electric utilities to recover prudently incurred fuel costs through the fuel rider, called the “fuel factor.” Fuel costs are generally recovered on a dollar-for-dollar basis with no rate of return applied.
KU/ODP states that its current fuel recovery rate has not been sufficient to allow the company to recover its actual fuel costs. The company also cites higher projected coal and gas prices. KU/ODP forecasts that coal expenses will increase by 8.7% on a $/kWh basis, while the company forecasts that natural gas costs will increase by $25.4% on a $/kWh basis. KU/ODP’s application, if approved, would result in a monthly bill increase of $3.22 for a residential customer using 1,000 kilowatt-hours. An evidentiary hearing on the petition will be held on June 1. Interested parties may intervene in the case by filing a notice of participation on or before April 27.
- SCC approves settlement agreement in case concerning cost recovery for Wise County coal facility – Case No. PUR-2021-00114
On June 8, 2021, Dominion filed an application to update the rate rider, or rate adjustment clause (“RAC”), for the Virginia City coal plant in Wise County. The RAC recovers both capital and operations costs for the coal plant. The filing proposes an adjustment, or “true up,” and would reset the RAC revenue requirement going forward. Under Dominion’s proposal the RAC rate will increase a residential customer’s monthly bill by $0.09, based on 1,000 kWh usage. Dominion also requests a bonus ROE of 1.0%. Virginia law authorizes Dominion to receive a bonus ROE for the first 12 years of the plant’s service life. The facility began commercial operation in 2012. (In 2013, the General Assembly eliminated ROE bonuses for most types of generation facilities.)
On November 22, the Sierra Club filed expert witness testimony urging the SCC to deny future cost recovery for the coal facility. Sierra Club’s expert witness recommends that the Commission “disallow future capital spending, totaling approximately $25.3 million, and future fixed O&M expenses, given that the data show anticipated future net losses.” The witness also argues that Dominion’s plan for future capital investments at the coal plant “ignores the fact that the unit has, and is projected to continue to have, negative value to the Company’s ratepayers.” The Sierra Club cited an analysis produced by Dominion showing that the Wise County facility will lose between $357 million and $483 million over the next ten years.
On January 4, Dominion filed a proposed stipulation and recommendation signed by Dominion, Sierra Club, and the Commission Staff. Under the proposed agreement, Dominion would agree to conduct an “analysis of a possible pathway towards economic viability” for the facility within nine months, including options for “repurposing” the site for solar and/or storage resources. Dominion would also “forego life-extension related spending at [the facility] occurring after Rate Years 1 and 2 as presented in this proceeding until the Company has completed and filed the report.” The SCC approved the settlement agreement in its final order on February 8.
Renewable energy, efficiency, and new energy infrastructure:
- Dominion files direct testimony regarding recommended administrative charges for multi-family shared solar program – Case No. PUR-2020-00124
In 2020, the General Assembly passed legislation requiring the SCC to promulgate regulations for a shared solar program specifically designed for customers living in multi-family housing facilities. Customers of Dominion and Kentucky Utilities, d/b/a Old Dominion Power, are eligible to purchase solar energy under the multi-family program. Under the Dominion shared solar program, customers will be permitted to purchase – or “subscribe to” – a portion of a qualifying solar facility. The customer would thereafter receive a bill credit corresponding to the output from the facility. The multi-family shared solar program directives are codified in Va. Code § 56-585.1:12. The statute allows utilities to recover “reasonable costs of administering the program.”
In a September 2021 filing, Dominion proposed an administrative charge for its multi-family shared solar program. This is a charge that all shared solar customers would be required to pay. In a subsequent order, the SCC determined that a public hearing process should be held to review Dominion’s administrative charge proposal. On February 8, Dominion filed direct testimony explaining and supporting its administrative charge proposal. Dominion’s proposal is designed to recover costs such as transmission and distribution expenses and other costs to support the multi-family shared solar program. In its testimony, Dominion states that “[a]lthough they will be participating in the Program and receiving the benefit of solar generation, the participating customers will nevertheless still rely on the Company’s electrical grid and generation resources.” Dominion states that “[i]f an administrative charge is not established, these generation, transmission and distribution costs would be passed on to other utility customers who are not participating in the Program.”
The SCC will hold an evidentiary hearing on March 25. Parties to the case may file their own testimony on or before March 1. Public witnesses may provide oral testimony on Dominion’s administrative charge proposal during a public hearing on March 22.
- SCC hearing examiner files report and recommendation regarding minimum bill and bill credit rates for Dominion 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.
On September 21, Dominion filed direct testimony supporting its minimum bill proposal. Under Dominion’s proposal, customers would continue to pay all standard service charges, but would receive monthly bill credits based on the market value of the solar generated. 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. On October 5, the Coalition for Community Solar Access and the Chesapeake Solar and Storage Association filed direct testimony recommending a minimum bill of $7.58. The solar advocates support a minimum bill that is a fixed monthly amount, rather than the volumetric charge proposed by Dominion. The SCC Staff also filed testimony proposing two different methodologies, resulting a minimum bill of either $10.95 or $55.10.
On February 15, the hearing examiner assigned to this case filed his report and recommendation. The hearing examiner found that the minimum bill does not need to be a fixed amount. The examiner recommended that the SCC approve the Staff Alterative B proposal, which would result in a minimum bill of $55.10. The hearing examiner’s recommendations are advisory only to the Commission. There is no deadline for the SCC to publish a final order.
- SCC publishes procedural schedule to review Appalachian Power VCEA compliance plan – Case No. PUR-2021-00206
On December 30, Appalachian Power (“APCo”) file its latest Virginia Clean Economy Act implementation plan and petition for approval of new resources. The VCEA requires Dominion and APCo to meet increasing renewable portfolio standard (“RPS”) percentage targets. The law also requires both utilities to propose minimum amounts – in megawatts – of new solar, onshore wind, and storage resources by 2035. Both utilities must petition the Commission for approval of such resources based on a schedule set forth in the Code.
The filing includes six alternative portfolios that comply with the RPS targets based on different resource allocations, such as earlier coal retirements or larger solar investments. APCo’s filing requests approval of several new solar generation facilities. In particular, APCo requests that the Commission approve APCo’s proposal to acquire one new solar facility and to enter into three power purchase agreements (“PPAs”) for solar energy. APCo also requests approval to acquire two out-of-state energy facilities: a 50 MW solar facility located in West Virginia and a 200 MW wind facility located in Illinois. In total, the petition proposes cost recovery for $6.6 million in new expenditures. APCo’s cost recovery requests, if approved, would increase the bill for a customer using 1,000 kWh by $2.37 as compared to rates in effect in 2021.
On February 11, the SCC published a procedural schedule for this case. An evidentiary hearing will be held on April 21. Interested parties may intervene by filing a notice of participation on or before March 14.
- SCC approves Appalachian Power request to purchase 5 MW solar facility – Case No. PUR-2021-00066
On November 18, Appalachian Power Company (“APCo” or “Company”) filed a petition for approval to purchase a 4.875 MW solar facility located in Amherst County, Virginia. APCo’s filing requests a “prudency determination” pursuant to Va. Code § 56-585.1:4 H. This Code section allows Dominion and APCo to request SCC approval before purchasing renewable energy projects or entering into power purchase agreements.
APCo states that the solar facility would be operational by 2023 and will help the Company comply with its mandatory renewable portfolio standard targets. APCo also states that the Virginia Clean Economy Act requires the Company to propose at least 200 MW of new solar projects, located in Virginia, by 2023. Because the facility’s capacity would be less than 5 MW (AC), APCo asserts that the project will be exempt from some of the Department of Environmental Quality’s permitting requirements. APCo states that, provided that cost recovery is also approved by the West Virginia commission, “the increase to retail rates in Virginia would only be 0.01%.”
The SCC approved APCo’s application on February 18. In its final order, the Commission noted that the project would support APCo’s renewable portfolio standard goals, has a positive net present value for customers, and was selective after a competitive solicitation.
Will Reisinger is an attorney specializing in energy law and policy. Will advises clean energy companies, citizens, and non-profit organizations regarding regulatory, business, and policy matters. He represents clients before the Virginia State Corporation Commission and the Virginia General Assembly. Prior to entering private practice, Will served as an assistant Virginia attorney general and as a staff attorney for a non-profit environmental organization.