Virginia Energy Regulatory Updates (February 2024)

Below is our firm’s summary of notable energy regulatory activity at the Virginia State Corporation Commission (“SCC” or “Commission”) during February, 2024. 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 approves settlement in Dominion Energy’s 2023 biennial review rate case – Case No. PUR-2023-00101

On July 3, Dominion Energy Virginia (“Dominion”) filed an application for a biennial review of its rates and terms and conditions of service. The application was filed pursuant to Va. Code § 56-585.1, as amended by the General Assembly in 2023. The amendments changed the schedule for rate reviews from a triennial to a biennial basis. The legislation also required Dominion to move at least $350 million of costs that are currently recovered through riders to its base rates. As part of the rate case, the SCC must review Dominion’s earnings during 2021 and 2022 to determine whether Dominion earned above or below its authorized rate of return. The SCC must also evaluate whether going forward rate changes are necessary.

Dominion, the SCC Staff, the Attorney General, and several other parties agreed to a proposed settlement agreement that was filed on November 14. Under the terms of the stipulation, Dominion’s base rates would not be reduced, but Dominion would issue a one-time $15 million rate credit. Dominion estimates that the rate credit would equate to about $2.25 for a residential customer using 1,000 kWh per month. Under the agreement, Dominion must incorporate limitations on service disconnections in its terms and conditions of service. Dominion must also make revenue-neutral adjustments to move revenues from the generation component of base rates to the distribution component. The settlement agreement also requires Dominion to conduct an audit of its accounting practices for lobbying expenses and political contributions.

The SCC published a final order approving the settlement on February 28. Dominion must distribute the one-time bill credits by the end of September, 2024.

  • SCC publishes notice that it will close Dominion 2023 IRP proceeding; agency fails to comply with statutory mandate to evaluate resource plan – Case No. PUR-2023-00066.

On May 1, Dominion Energy Virginia filed its 2023 Integrated Resource Plan (“IRP”). The IRP is the utility’s plan to meet customer demand over the next 15 years. Dominion’s plan presents five alternative scenarios. All of Dominion’s alternative plans incorporate new combustion turbine gas plants, and four of the five alternatives incorporate small modular nuclear facilities. All alternatives assume that Virginia exits the Regional Greenhouse Gas Initiative in 2023.

The SCC held an evidentiary hearing on Dominion’s plan on September 19 and 20. The Hearing Examiner assigned to this case filed a report and recommendation on December 8. The examiner recommended that the SCC enter an order “finding the 2023 IRP is not reasonable and in the public interest.” The report cites Dominion’s decision to include 970MW of new gas resources in the utility’s “short-term action” plan despite “the Commonwealth’s current statutory presumption against new carbon-emitting generation unit approvals.” The examiner cited recent amendments to Va. Code § 56-585.1(A). The statute, among other things, requires utilities to demonstrate that they (1) satisfied certain statutory energy efficiency targets and (2) considered energy efficiency, demand side options, and other market alternatives before proposing new fossil generating facilities. The report includes several other recommendations regarding future resource planning.

The statute governing the IRP proceeding requires the Commission to review the plan and determine whether it is “reasonable” and “in the public interest.” The statute required the Commission to make a final determination within nine months of the filing, or by February 1. The SCC currently has only one commissioner, Jehmal Hudson. Because the SCC requires at least two commissioners to establish a quorum and enter orders, retired commissioner Jimmy Dimitri was temporarily recalled, for a period not to exceed 90 days, pursuant to Va. Code § 12.1-11.1. On February 1, the Commission published a notification stating that it was unable to reach a majority decision and therefore would not “‘make a determination within nine months after the date off [the IRP filing]’ as set forth in Code § 56-599.” Mr. Dimitri filed a separate statement indicating that he “would have found that the 2023 Integrated Resource Plan is reasonable and in the public interest.” Commissioner Hudson has not filed any statement as to why he, presumably, would not have found the IRP to be reasonable or in the public interest. On February 24, the SCC published a notice that the case is now closed.

  • Dominion Energy files 2024 fuel procurement strategy report – Case No. PUR-2023-00067

On January 31, Dominion Energy Virginia filed an updated Fuel Procurement Strategy Report. The report describes the utility’s current fuel procurement strategy “including an update of actual procurement and fuel price hedge details over the prior fuel year; an explanation of the Company’s current risk management program, as well as any changes under consideration; and cost/benefit analyses of its financial and physical price hedge programs for each fuel type.” The report describes the utility’s strategy for procuring commodities such s coal, natural gas, uranium, and fuel oil. The report also describes the price hedging strategy used to mitigate price volatility. Dominion is allowed to recover all prudently incurred fuel costs through its fuel rider per Va. Code § 56-249.6.

Renewable energy, efficiency, and new energy infrastructure:

  • SCC invites additional comments regarding distributed energy resource interconnection matters – Case No. PUR-2022-00073

On May 24, 2023, the SCC opened a docket for the purpose of evaluating its current regulations governing the interconnection of distributed energy resources (“DERs”). DER interconnection is governed by Chapter 314 of Title 20 of the Virginia Administrative Code. DERs generally include solar and storage facilities with a rated capacity of 20 MW or less. The SCC’s Order for Comment asked interested parties to address several issues, including “the primary obstacles (e.g., sources of delay or cost) to the interconnection of DER on the distribution system” and whether there are “best practices” in place in other jurisdictions that the Commission should consider.

Several interested parties, including electric utilities, solar developers, and non-profit organizations, filed comments on August 1, 2023. After reviewing the comments, the SCC Staff filed a report that summarized the comments and recommended next steps for the Commission. The September 19 Staff Report identifies the major common issues identified by the parties, including concerns about cost apportionment, delays in the utility study process, and technology requirements for facility upgrades. The SCC also directed the Staff to conduct a working group to analyze these issues. The Working Group filed a report with recommendations on January 18. On February 21, the SCC published an additional order inviting comments. Interested parties may file comments on the Working Group Report on or before March 22.

  • Electric utilities file bi-annual update regarding efforts to secure funding under the federal Infrastructure Investment and Jobs Act and Inflation Reduction Act – SCC Case No. PUR-2022-00180

On November 3, 2022, the SCC published an order seeking comments regarding the federal Infrastructure Investment and Jobs Act. The Act, enacted in 2021, provides financial assistance to support electric utility investments in advanced generation, transmission, and distribution technologies. The SCC directed the utilities to submit comments addressing potential “funding opportunities that may assist them in providing utility service in the Commonwealth, actions such utilities can take or have already taken to access such funding opportunities, including the status of any such funding applications, and Commission actions or proceedings that may assist or facilitate utilities’ access to these funding opportunities.”

After considering comments from utilities and interested parties, the SCC published an order directing bi-annual update filings on September 1 and March 1 each year. The order requires the utilities to provide updates on efforts to secure funding under the Infrastructure Investment and Jobs Act and the 2022 Inflation Reduction Act. Appalachian Power (“APCo”), Kentucky Utilities, and the Association of Electric Cooperatives filed updates on March 1. APCo reported that it received funding for grid resilience and hydroelectric maintenance projects and provided the status of pending grant applications. Dominion Energy filed its report on March 5.

  • SCC hearing examiner recommends approval of new solar facilities; suggests that Dominion expand its analysis of unbundled RECs for RPS compliance – Case No. PUR-2023-00142

On October 3, 2023, Dominion Energy filed its latest Virginia Clean Economy Act (“VCEA”) compliance filing. The VCEA requires Dominion and Appalachian Power Company to comply with a mandatory renewable portfolio standard and to meet incremental renewable energy and energy storage investment targets. The utilities must file updates on progress towards the VCEA goals each year.

Dominion’s October 3 application requests approval of the Company’s current RPS development plan. The application also requests approval of 772 MW of new solar resources. This includes both proposed utility-owned projects and third-party owned facilities. The VCEA declares such projects to be “in the public interest,” but does not mandate SCC approval. Dominion also requests authority to recover all project costs through a rate adjustment clause.

The SCC held an evidentiary hearing on the application on January 10. On February 15, the hearing examiner assigned to this case filed a report and recommendation. The examiner recommended that the SCC approve all of the proposed third-party owned facilities. The examiner also recommended approval of 329 MW of the resources that Dominion proposes to own. Finally, the examiner found that “Dominion’s general plan for the development of new solar, wind, and energy storage resources appears to be a reasonable planning document” but, “given the elevated costs of solar projects and agreements shown in this case, I recommend that Dominion expand its existing RPS procurement process to accept bids for unbundled renewable energy certificates.” The examiner’s findings and recommendations are advisory only to the Commission.

  • SCC schedules hearing regarding Appalachian Power and Dominion Energy renewable energy certificate proposals – Case Nos. PUR-2024-00009 and PUR-2024-00210

On January 18 and January 16, Appalachian Power (“APCo”) and Dominion Energy filed proposals regarding how the SCC should account for certain renewable energy certificates (“RECs”). In particular, the proposals concern RECs procured for (1) shopping customers who purchase 100% renewable energy from competitive suppliers and (2) customers who subscribe to the utility’s voluntary renewable energy tariff. In its petition, APCo notes that the Commission previously directed both APCo and Dominion to “make a filing (jointly or separately) in a new standalone docket containing the proposed treatment of RECs associated with (i) customers taking service under each utilities’ voluntary renewable tariffs and (ii) shopping customers purchasing 100 percent renewable energy, for purposes of RPS program compliance.”

APCo argues that the SCC should not permit utilities to use RECs that have been dedicated to a renewable tariff subscriber to comply with the utility’s RPS goals. APCo also argues that RECs attributable to renewable energy shopping customers should also not count towards the RPS goals. APCo asserts that this would result in “double counting” of these RECs. Dominion raises similar arguments in its petition.

The SCC will hold an evidentiary hearing regarding the consolidated proposals on July 31. Interested parties may intervene by filing a notice of participation on or before March 28.

  • SCC hearing examiner recommends approval of Dominion Energy battery storage investments – Case No. PUR-2023-00162

On September 18, 2023, Dominion Energy Virginia (“Dominion”) filed an application for approval of additional battery storage resources pursuant to the 2018 Grid Transformation and Security Act (“GTSA”). The 2018 law states that such projects are “in the public interest.” The Commission has already approved three projects under the pilot program. Dominion states that the additional projects, if approved, “will bring the aggregate capacity of all Pilot Program projects approved by the Commission for the utility to 28.34 MW.” In its application, Dominion requests approval of “three projects for deployment of battery energy storage systems (“BESS”) as part of the Pilot Program: BESS-4: Evaluation of Two Co-Located Nonlithium-Ion Technologies; BESS-5: Outage Mitigation and Grid Support Through a Microgrid Capable BESS; and BESS-6: Long Duration Energy Storage in a Behind-the-Meter Application.”

The SCC held an evidentiary hearing on January 24. The hearing examiner assigned to this case filed a report and recommendation on February 12. The examiner concluded that, “based upon applicable law, the weight of the evidence supports a finding that the proposed projects are in the public interest and should be approved.” The examiner’s recommendation is advisory only to the Commission.

  • SCC publishes procedural schedule for Appalachian Power battery storage proposal – Case No. PUR-2024-00001

On January 18, Appalachian Power Company (“APCo”) filed an application to develop a new $57 million battery storage project. The application is filed pursuant to the Virginia Clean Economy Act, at Va. Code § 56-585.5(D), which, among other things, requires APCo to propose at least 400MW of new battery storage resources by 2035. APCo states that its project “will be composed of two separate [battery energy storage] sites connected to the Glade-Whitetop 34.5 kV distribution circuit in Southwestern Virginia, with a total rating of 7.5 MW (capacity) and 30 MWh (energy).” One site is located in Smyth County, the other in Grayson County. APCo states that the project is more cost-effective than other reliability alternatives and will have a “minimal” impact on customer rates.

The SCC will hold an evidentiary hearing on June 11. Interested parties may file comments on the application on or before June 5.

  • SCC schedules hearing regarding Dominion energy efficiency and demand-side proposals – Case No. PUR-2023-00217

On December 11, 2023, Dominion Energy Virginia (“Dominion”) filed its 2023 demand-side management (“DSM”) update. Dominion’s application requests approval to continue cost recovery, through rate adjustment clauses, for previously approved DSM programs. Dominion also requests approval to offer several new programs, designated the “Phase XII” programs. The Phase XII offerings include incentives for homebuilders to construct energy efficiency buildings and incentives for consumers to install smart thermostats. Dominion proposes a cost cap of $102.4 million for Phase XII.

Dominion also proposes to measure its compliance with the Virginia Clean Economy Act (“VCEA”) energy savings targets based on a “gross savings” as opposed to a “net savings” metric. The VCEA, at Va. Code § 56-596.2, states that “each investor-owned incumbent electric utility shall implement energy efficiency programs and measures to achieve” annual energy savings targets identified in the statute. Measuring energy savings on a “net” as opposed to “gross” savings basis would mean that only savings attributable to utility efficiency programs count towards the VCEA targets. Dominion filed a “Legal Memorandum” addressing these issues on December 11. The memorandum argues that the General Assembly, when enacting the VCEA, intended the use of gross savings. Dominion also asserts that customers would be required “to pay for significantly more DSM Programs and measures over the next several years under a net savings scenario than they would [under a gross savings scenario].”

The SCC will hold an evidentiary hearing on May 21.

To sign up for weekly regulatory updates delivered via email, click here and add your email address.