Virginia Energy Regulatory Updates (January 2024)

Below is our firm’s summary of notable energy regulatory activity at the Virginia State Corporation Commission (“SCC” or “Commission”) during January, 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 states that it will not comply with statutory mandate to evaluate Dominion Energy’s 2023 integrated 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.

  • Dominion and other parties file comments defending proposed settlement of 2023 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 will 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, which was filed on November 14. Under the terms of the proposed 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. On January 17, the hearing examiner assigned to this case filed his report and recommendation. The examiner did not accept the stipulation as filed, but proposed several modifications. The hearing examiner’s recommendations are advisory only to the SCC. Among other recommendations, the examiner suggested that Dominion’s base rates should be reduced by approximately $20 million for the 2024 rate year. The examiner also rejected Dominion’s proposal to defer certain storm-related expenses for future recovery.

The parties filed comments and objections to the hearing examiner’s report on February 1. Dominion, the Attorney General, the SCC Staff and several other parties filed comments urging the Commission to approve the stipulation as filed. Based on the timeline in the statute, the SCC must publish a final order within eight months of the application, or by March 3, 2024.

  • 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.

  • Dominion files application to adjust environmental rider; provides update on coal waste projects – Case No. PUR-2024-000133

On January 24, Dominion Energy Virginia (“Dominion”) filed a petition to adjust its environmental rate adjustment clause. The rider, designated “Rider E,” allows Dominion to recover costs to comply with state and federal environmental laws. The Virginia Code, at Section 56-585.1(A)(5)(e) allows utilities to recover these costs through single-issue riders that are updated annually. Dominion states that its petition, if approved, would reduce the monthly bill of a residential customer using 1,000 kWh per month by $0.68. Dominion’s filing also includes an update on previously approved environmental projects at the company’s Chesterfield and Mt. Storm coal facilities.

Renewable energy, efficiency, and new energy infrastructure:

  • SCC Staff files testimony and analysis regarding Dominion grid transformation plan update – Case No. PUR-2023-00136

On August 1, 2023, Dominion filed a petition to adjust its grid transformation rider. The rate adjustment clause, designated “Rider GT,” allows Dominion to recover costs associated with grid transformation projects. Dominion’s petition seeks cost recovery for 18 new and previously approved grid transformation investments, including “hardening,” cyber security, and off-peak charging investments and various distributed energy integration measures. The General Assembly has designated such investments to be “in the public interest.” Dominion states that the adjusted rider “will incrementally increase the typical residential customer’s monthly bill, based on 1,000 kWh per month, by $2.95 compared to the current Rider GT.”

The SCC Staff filed the testimony of several witnesses on January 26. The Staff does not oppose Dominion’s projected revenue requirement for the updated rider. The Staff does request additional information regarding certain costly substation improvement projects. The SCC will hold an evidentiary hearing on February 27.

  • SCC schedules hearing regarding Appalachian Power solar PPA proposal – Case No. PUR-2023-00212 

On January 11, Appalachian Power Company (“APCo”) filed a petition for approval of three new solar power purchase agreements (“PPAs”). The three projects are all located in Virginia, in Tazewell, Charlotte, and Mecklenburg Counties. The petition is filed under Va. Code § 56-585.1:4(H). This Code section allows utilities to request pre-approval before entering into solar or wind power contracts with third parties. APCo states that the energy from the PPAs will be used to help satisfy the utility’s annual renewable portfolio standard requirements. APCo also states that the PPAs will support economic development in Virginia and will reduce the utility’s exposure to PJM market volatility.

The petition does not include an estimated rate impact for APCo’s customers. Under Virginia law, utility power contract expenses are generally recovered like fuel costs, with no rate of return for the utility. The SCC will hold an evidentiary hearing on March 6.

  • Appalachian Power files battery storage proposal – Case No. PUR-2024-00001

On January 18, Appalachian Power 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. The SCC has not yet established a procedural schedule for this case. APCo states that the project is more cost-effective than other reliability alternatives and will have a “minimal” impact on customer rates.

  • Appalachian Power and Dominion Energy file proposals regarding the accounting of certain renewable energy certificates – Case Nos. PUR-2024-00009 and PUR-2024-00210

On January 16 and January 18, 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.

  • SCC schedules hearing regarding Dominion energy efficiency and demand-side resource 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.

SCC opens docket to establish energy efficiency savings targets for electric utilities – Case No. PUR-2023-00227

On January 5, the SCC published a procedural order establishing a proceeding to set energy efficiency savings targets for electric utilities.  The order notes that the 2020 Virginia Clean Economy Act (“VCEA”) established annual savings targets for Dominion Energy and Appalachian Power Company (“APCo”) through 2025. The statute, at Va. Code § 56-596.2(B)(3), provides that the SCC must set the savings targets thereafter: “[f]or the time period 2026 through 2028, and for every successive three-year period thereafter, the [SCC] shall establish new energy efficiency savings targets.” The statute also provides that “[i]n advance of the effective date of such targets, the Commission shall, after notice and opportunity for hearing, initiate proceedings to establish such targets.”

The procedural order directs Dominion and APCo to file energy savings proposals on or before March 12. The order also states that interested parties may file comments regarding the utilities’ proposals and/or request an evidentiary hearing on or before April 30.  

  • SCC schedules hearing regarding Dominion request to increase renewable portfolio standard rider – Case No. PUR-2023-00221

On December 8, Dominion filed a petition to increase the rate adjustment clause for renewable portfolio standard (“RPS”) costs. The rider allows Dominion to recover its actual costs incurred to comply with the VCEA’s RPS. The RPS, codified in Va. Code § 56-585.5(C), requires Dominion and Appalachian Power to supply an increasing percentage of their electricity sales from clean energy sources. Dominion’s RPS Rider, Rider RPS, recovers costs associated with renewable energy certificate purchases.

The revised rider, if approved, would take effect on September 1, 2024. Dominion states that the updated rider would increase the typical residential customer’s monthly bill, based on usage of 1,000 kWh per month, by $3.48 compared to the current Rider RPS.” The SCC published a procedural order on January 5. The SCC will hold an evidentiary hearing on May 14. 

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