Virginia Energy Regulatory Updates (July 2023)

Below is our firm’s summary of notable energy regulatory activity at the Virginia State Corporation Commission (“SCC” or “Commission”) during July, 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 Hearing Examiner recommends approval of Dominion proposal to “reinstate” rate adjustment clause for RGGI compliance costs – 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 had previously requested and received SCC approval to recover RGGI costs through its base rates. Dominion’s petition requested a $373 million revenue requirement for the coming rate year. On March 21, Appalachian Voices filed expert witness testimony regarding Dominion’s application. The witness, a former SCC staff member, criticized Dominion for scheduling its coal units to run even when it is uneconomic to do so based on PJM market prices. Appalachian Voices recommends a reduction to the rider rate increase due to the economic losses incurred by Dominion’s coal unit operation.

The SCC held an evidentiary hearing before a Hearing Examiner on May 1. On June 1, the Hearing Examiner filed her Report and Recommendation. The examiner recommended a rate year revenue requirement of $356.6 million. This revenue requirement, if approved, will increase the average monthly bill for a residential customer using 1,000 kWh by $4.44.The examiner rejected the recommendation from the Appalachian Voices witness that the rider rate increase should be reduced based on uneconomic coal unit dispatch.

The Hearing Examiner’s recommendations are advisory only to the Commission. Parties to the case can file comments and objections to the report on or before June 16.

  • SCC approves Dominion request to expand time-of-use rate schedules – Case No. PUR-2019-00214

On March 24, 2023, Dominion filed an application to expand its previously approved time-of-use (“TOU”) rate schedule. The TOU rate schedule is a voluntary program that allows customers to pay lower per-kWh rates during “off-peak” and “super off-peak” hours. The rate schedule was approved as an “experimental” tariff in 2020 and limited to 10,000 customers. Dominion’s application requests approval to expand the tariff to 20,000 customers. Dominion states that it reached the 10,000 customer cap in January 2022. Dominion also states that expanding the cap “will lead to more data to better develop and inform a system-wide rate to be proposed in a future biennial review.” Dominion also notes that over 650,000 customers now have advanced metering infrastructure that would allow them to participate in the TOU program.

On May 10, the Attorney General’s Division of Consumer Counsel filed a response to the application. The Attorney General noted that to date Dominion has “received approval for billions of dollars of capital expenditures” associated with advanced metering infrastructure and a new customer information platform and that “the economic justification for these investments rests upon robust and successful TOU rates.” The Attorney General urged the Commission “to ensure the customer benefits of [advanced metering infrastructure] are unlocked as soon as possible.”

The SCC approved Dominion’s application on June 21. In its order, the SCC directed Dominion “to evaluate new communication strategies, in addition to monthly emails, to educate high baseline customers, to make in order to save money on the [TOU rate schedule].” The SCC also required Dominion to file annual reports regarding the results of the rate schedule.

Renewable energy, efficiency, and new energy infrastructure:

  • Solar advocates seek injunction against Dominion interconnection policies for small solar projects; utility files response in opposition – Case No. PUR-2023-00097

On June 1, a group of solar advocates, the Distributed Solar Alliance (“DSA”) filed a petition seeking to enjoin Dominion from implementing its current interconnection standards for small solar facilities. Dominion’s internal policies are separate from the SCC’s interconnection regulations found in the Virginia Administrative Code. The group claims that Dominion’s technology and security requirements are onerous and unreasonably expensive. The DSA petition alleges that Dominion’s new standards, which include expensive fiber communication equipment, “impose substantial new costs on solar developers yet are not required by the Interconnection Rules and [net energy metering rules], nor, prior to mid-2022, were they required by Dominion.”

Dominion filed a response on June 21. In its response, Dominion asserts that its policies are necessary to safely interconnect generators. Dominion also asserts that North Carolina’s interconnection regulations include similar fiber communications requirements. Finally, Dominion noted that the SCC recently opened a separate docket to consider changes to the current interconnection regulations. The DSA filed a reply supporting their petition on June 28. 

  • SCC approves Appalachian Power request to modify its renewable energy tariff – SCC Case No. PUR-2022-00212

In December, Appalachian Power Company (“APCo”) 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 participating residential customer using 1,000 kWh. Finally, APCo proposes to review and adjust REC prices twice annually. These bi-annual REC price reviews would be handled administratively by the SCC Staff.

The SCC published a final order approving APCo’s application on June 22.

  • SCC Staff files analysis and recommendations regarding Dominion’s updated Grid Transformation Plan – Case No. PUR-2023-00051

On March 31, 2023, Dominion Energy Virginia (“Dominion”) filed a petition for approval of a new phase of its Grid Transformation Plan pursuant to § 56-585.1(A)(6) of the Code of Virginia. Dominion requests approval of “Phase III” of its ten-year plan to transform its electric distribution grid. Phase III consists of approximately $1 billion of capital investments to be completed in 2024, 2025 and 2026. The largest Phase III investments are associated with “grid hardening” that Dominion claims are necessary to reduce customer outages. Dominion’s application also requests approval to continue recovering the costs of previously approved investments. Dominion has previously received approval for various grid transformation projects including cyber security upgrades, advanced metering infrastructure, grid hardening projects, and transportation electrification investments.

On June 12, the SCC Staff filed its analysis and recommendations regarding Dominion’s application. The Staff either supports or does not oppose most of Dominion’s proposed Phase III investments. The Staff, however, expressed some concerns with Dominion’s cost-benefit-analysis for grid hardening. The Staff recommends that the SCC only approve the grid hardening projects that are already underway. The SCC will hold an evidentiary hearing on July 18. Based on the statutory timeline, the SCC must publish a final order by the end of November.