Virginia Energy Regulatory Updates (January 2023)

Below is our firm’s summary of notable energy regulatory activity at the Virginia State Corporation Commission (“SCC” or “Commission”) during January, 2023. 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 schedules evidentiary hearing regarding Dominion request to “reinstate” rate adjustment clause for RGGI compliance costs; proposal would add $373 million in annual rider charges – Case No. PUR-2022-00070

On December 14, Dominion Energy Virginia (“Dominion”) filed a petition to “reinstate” a rate adjustment clause (“RAC”) to recover the costs to comply with the Regional Greenhouse Gas Initiative (“RGGI”). Dominion’s petition reverses the utility’s previous proposal for recovering RGGI compliance costs. In 2022, Dominion requested permission to recover RGGI costs through its base rates as opposed to a separate rider. The Commission approved Dominion’s request to eliminate the RGGI RAC in a June 15, 2022, order.

Dominion states that its new petition, if approved, will increase the average monthly bill for a residential customer using 1,000 kWh by $4.64. The application states that the RGGI RAC, if reinstated, would recover approximately $373 million from customers during the next rate year. On January 24, the SCC published a procedural schedule for reviewing the proposal. Interested parties may intervene in the case on or before March 7. Interested persons may file comments on or before April 26.

  • SCC hearing examiner recommends fuel rate increase for Appalachian Power Company – Case No. PUR-2022-00139

On September 15, 2022, Appalachian Power Company (“APCo”) filed an application to increase its fuel recovery rate. In Virginia, fuel costs are pass through expenses. Utilities recover fuel costs such as coal and gas purchases on a dollar-for-dollar basis, with no rate of return applied. APCo cites, among other factors for the rate increase, higher natural gas prices and increased demand for coal from European buyers. 

The application states that “the Company proposes to increase the current fuel factor to 4.319 cents/kWh effective November 2, 2022 through October 31, 2023 (the “fuel year”), which is an annual net increase in the revenue of approximately $279 million.” The application also states that in order “[t]o mitigate the impact of this request, the Company proposes to recover its deferred fuel balance as of October 31, 2022 over two fuel years.” APCo proposes to recover financing charges associated with the deferred fuel balance through a separate rate rider.

Following an evidentiary hearing, the SCC hearing examiner assigned to this case recommended approval of the company’s filing. The examiner, however, recommended that the Commission defer ruling on APCo’s request to recover financing costs associated with the unrecovered fuel balance. The examiner also recommended that the Commission direct its Staff to review the reasonableness of Appalachian’s current coal procurement strategy. The hearing examiner’s report and recommendation is advisory only to the Commission. 

  • SCC approves Appalachian Power 2022 Integrated Resource Plan – Case No. PUR-2022-00051

APCo filed its 2022 Integrated Resource Plan on April 29, 2022. An IRP shows the utility’s plan to meet forecasted demand over the next 15 years. APCo projects that its overall retail sales will remain relatively constant between 2022 and 2036, while the residential class is projected to decline slightly. APCo states that its plan “strives to maintain optionality in meeting APCo’s resource obligations in order for the Company to take advantage of market opportunities and technological advancements.” The IRP shows that the utility intends to “continue the operation of, and ongoing investment in, its existing fleet of generation resources including the base-load coal units at Amos and Mountaineer, the natural gas combined-cycle (Dresden) facility, [and] combustion turbine (Ceredo) units.”

Pursuant to Va. Code Section 56-599, the SCC must review APCo’s IRP and determine whether it is reasonable and in the public interest. The SCC held an evidentiary hearing on October 25 and approved the plan in a January 23 final order. The SCC found the application to be “reasonable and in the public interest for the specific and limited purpose of filing the planning document as mandated by § 56-597 et seq. of the Code.” The SCC dismissed objections from environmental advocates regarding APCo’s maintenance and dispatch of its coal facilities. Former Commissioner Patricia West participated in this case.

  • Dominion files annual fuel procurement strategy report – Case No. PUR-2022-00064

On January 31, Dominion filed its annual fuel procurement strategy report. The report explains the utility’s strategy for obtaining commodities such as coal, gas, biomass, and purchased power. The report states that Dominion uses a mix of fixed-price, spot-market, and futures contracts to mitigate fuel cost volatility. Dominion states that “each fuel type’s unique characteristics require different procurement strategies based on required volumes, potential price volatility, availability, transportation and storage constraints, and other specific supply concerns.”

In September, the SCC approved a 12.2% increase to Dominion’s fuel cost recovery rider. In its order, the SCC approved a settlement agreement signed by Dominion and the SCC Staff. Under the terms of the settlement, Dominion is allowed to recover approximately $1 billion of fuel costs over a three-year period.

Renewable energy, efficiency, and new energy infrastructure:

  • SCC sets hearing to review Dominion energy efficiency proposals – Case No. PUR-2022-00210

On December 13, 2022, 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 published a procedural order on January 24. Interested parties may intervene in this case on or before March 8. Interested persons may file comments on or before May 10.

  • Dominion proposes guidelines for municipal net metering program – SCC Case No. PUR-2022-00211

On January 26, Dominion filed proposed guidelines for its renewable municipal net metering program. In 2019, the General Assembly established a “pilot program” for municipal net metering in Dominion’s service territory. The General Assembly amended the pilot program statute in 2022. Among other things, the 2022 legislation provided that a municipal utility customer that generates excess electricity from a renewable energy facility may apply generation credits to a particular customer account. The legislation required Dominion to submit a proposal for the Commission’s consideration. The Commission Staff and interested parties may file comments on Dominion’s proposal on or before February 23.

  • SCC establishes comment period for Appalachian Power request to modify its renewable energy tariff – SCC Case No. PUR-2022-00212

In December, Appalachian Power Company filed an application to modify its 100% renewable energy tariff, Rider WWS (Rider Wind, Water, and Sunlight). Rider WWS is a voluntary tariff through which customers can purchase 100% renewable energy from resources owned by APCo. In its filing, APCo states that it needs to raise the Rider WWS premium based on market energy prices. The filing states that “the market costs for RECs that were used to calculate the original premiums [under] Rider WWS have changed significantly” since the original application was filed. APCo proposes to raise the Rider WWS premium to $0.021/kWh, up from $0.00425/kWh. This results in a $21 monthly premium for a residential customer using 1,000 kWh.

On January 25, the SCC published a procedural order allowing comments on APCo’s proposal. Interested parties may file comments on the application, and/or request an evidentiary hearing, on or before March 15.  

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

On November 30, Appalachian Power Company 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.

  • Electric utilities submit comments regarding opportunities under the federal Infrastructure Investment and Jobs Act – Case No. PUR-2022-00180

On November 3, 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.”

Dominion Energy, Appalachian Power Company, Old Power, and Virginia’s electric cooperatives filed comments on January 5. In its comments, Dominion noted its efforts to pursue funding for rural broadband, grid modernization, and battery storage pilot programs. Appalachian Power also described potential funding for rural broadband and grid modernization. The SCC Staff will file its comments regarding the Act, including a response to comments filed by the utilities, on February 2. Other interested parties can also file comments on or before this date.