Virginia Energy Regulatory Updates (June 2022)

Below is our firm’s summary of notable energy regulatory activity at the Virginia State Corporation Commission (“SCC” or “Commission”) during June, 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.

Rate cases, oversight, and resource planning: 

  • Dominion files rebuttal testimony regarding proposed fuel rate increase – Case No. PUR-2022-00064

On May 5, Dominion 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 on a dollar-for-dollar basis, with no rate of return applied. Fuel costs are recovered through a rate rider called the “fuel factor.” See Va. Code § 56-249.6. The filing states that, “[w]hile in most years, this is a relatively routine filing, the dramatic increases in fuel prices as a result of the pandemic, inflation generally, and the war in Ukraine have created a significant fuel cost under-recovery and projections that fuel costs will remain elevated over the next year.” The filing states that in the last year, “gas and coal fuel commodities experienced price increases of approximately 100% and 92%.”

If approved in full, the fuel increase would increase the monthly bill of a residential customer using 1,000 kWh by approximately $24.12, or 19.8%. Dominion presents two alternative recovery periods for the Commission’s consideration. The alternatives would spread the unrecovered costs over either two or three years, thereby mitigating the immediate customer rate increase. Dominion recommends that the SCC approve a three-year recovery proposal, which would result in a monthly bill increase of 12.2% for a customer using 1,000 kWh.

On June 16, Appalachian Voices filed expert witness testimony challenging Dominion’s management of its fossil generating fleet, arguing that Dominion’s methods for dispatching its coal plants results in unreasonable fuel costs. On July 24, the SCC Staff filed direct testimony consisting of three volumes. Generally, Staff found Dominion’s projected fuel expenses and commodity price forecasts to be reasonable. On June 29, Dominion filed rebuttal testimony responding to concerns expressed by Appalachian Voices and the SCC Staff. The SCC held an evidentiary hearing on July 6.

  • SCC approves new Dominion rate rider to recover costs of nuclear license extensions – Case No. PUR-2021-00229

On October 5, Dominion filed a petition seeking SCC approval of a new rate adjustment clause (“RAC”) related to four of its nuclear units. The petition states that the proposed RAC is intended to recover the costs associated with extending the licenses for nuclear units at the Surry and North Anna facilities. Dominion also proposes to undertake various capital improvement projects at the units. Dominion states that nuclear energy represents 33% of the company’s total generation portfolio and 90% of its carbon-free generation. Dominion estimates total project spending of $3.9 billion, $1.2 billion of which would be recovered between 2022 and 2024. The rider, if approved, would increase the monthly bill for a residential customer using 1,000 kWh by $2.11.

On April 22, Dominion, the Commission Staff, and the Attorney General’s office filed a joint stipulation proposing to resolve all issues in the case. On July 1, the SCC published a final order approving Dominion’s application.

  • SCC approves Dominion request to suspend RGGI cost recovery rider – Case No. PUR-2022-00070

On May 5, Dominion filed a petition to suspend its rate adjustment clause (“RAC” or “rider”) that recovers costs associated with Virginia’s participation in the Regional Greenhouse Gas Initiative (“RGGI”). RGGI requires carbon-emitting sources to purchase and surrender an allowance for each ton of carbon dioxide emissions. Dominion stated that suspension of the RAC “will immediately reduce the typical residential customer bill by approximately $2.39 per month, with greater reductions for higher energy consumers in the residential, as well as commercial and industrial classes.” Dominion stated that its petition “is driven by the anticipated withdrawal of the Commonwealth from the RGGI program and the interests of its customers in reducing RAC-related charges.” Dominion proposed to recover approximately $178 million in unrecovered RGGI costs through its base rates. The SCC published an order granting the petition on June 15.

  • SCC approves curtailment service rider for Appalachian Power customers – Case No. PUR-2021-00293

On December 15, 2021, Appalachian Power (“APCo”) filed a petition requesting SCC approval to implement a voluntary energy Curtailment Service Rider (“Rider CS”). Rider CS, a voluntary rate schedule, would provide qualified standard service Large Power Service customers an option to curtail their energy usage when periods of high market energy prices occur, in exchange for bill credits. APCo states that this curtailment would allow APCo to avoid the purchase of energy to serve the curtailed load, which would result in a net reduction in fuel and purchased power costs.

No party opposed APCo’s proposed Rider. The SCC Staff found that Rider CS could result in customer savings for both participating and non-participating customers. The SCC approved APCo’s petition on June 7.

Renewable energy, efficiency, and new energy infrastructure:

  • Dominion files update on participation in 100% renewable energy tariff and request to continue tariff rate – Case No. PUR-2022-00101

On July 1 Dominion filed an update regarding its 100% renewable energy tariff option, Rider Total Renewable Generation (“Rider TRG”). Customers who participate in the voluntary tariff are allocated generation from several solar, hydroelectric, and biomass facilities. According to Dominion, participating customers “pay an amount over standard service that is based on the prevailing market value of retail renewable energy.” This represents a premium of 2.91%, or approximately $3.98 per month for a residential customer using 1,000 kWh. Dominion proposes to keep this premium rate in place.

Dominion states that, as of June 15, 2022, there were approximately 3,481 residential customers and 82 commercial customers enrolled in [Rider TRG].” Dominion estimates that the Company expects that the current TRG Portfolio will be able to meet the 100% renewable energy requirements of approximately 12,000 customers, including residential, commercial, and industrial customers. The SCC has not yet established a procedural schedule for this case.  

  • SCC publishes order directing Dominion and APCo to file electric vehicle integration plans – Case No. PUR-2020-00051

On June 15, the SCC published an order directing Dominion and APCo to file electric vehicle (“EV”) plans on or before May 1, 2023. The order directs the utilities to address several issues described in an appendix to the order. Among other things, the utilities must provide estimates of future EV load growth in their service territories, the level of investments each utility expects will be necessary to accommodate this load growth, and explain the ways the utilities and/or the Commission can encourage EV adoption.

The order cites 2021 legislation declaring that “it is necessary to ensure there is adequate electric vehicle charging infrastructure deployed throughout the Commonwealth” and that it is “the policy of the Commonwealth to promote, to the greatest extent possible, private competition and investment in transportation electrification and to enable public utilities and the public sector to complement such private investment where most effective.”

  • Consumer advocates file expert witness testimony regarding Dominion RPS cost allocation proposal – Case No. PUR-2021-00156

On August 11, 2021, the SCC opened a new docket to consider several cost recovery issues associated with Dominion’s Virginia Clean Economy Act (“VCEA”) compliance. The VCEA provides that Dominion may recover certain costs necessary to comply with the VCEA’s renewable portfolio standard (“RPS”) through a rate adjustment clause. RPS costs can be recovered from all jurisdictional customers, except those customers that qualify for one of the exemptions set forth in the law. Dominion filed its RPS cost allocation proposal on November 1, 2021. Dominion’s November 1 filing includes five potential methodologies for allocating VCEA costs and benefits (including energy, capacity, and renewable energy certificate costs and benefits) to jurisdictional customers.

On June 7, the Attorney General’s Office, Walmart, Direct Energy, and industrial consumer advocates filed expert testimony commenting on Dominion’s filing. Walmart and the industrial consumer advocates both expressed support for Dominion’s proposed cost-of-service allocation methodology, while the Attorney General’s expert witness expressed concern regarding transparency and the complexity of Dominion’s VCEA cost recovery proposals. Direct Energy, a competitive service provider, filed testimony arguing that Dominion’s proposal would require shopping customers to overpay for generation services. The SCC will hold an evidentiary hearing on August 8-9.

  • SCC hearing examiner files report recommending approval of Dominion energy efficiency filing – PUR-2021-00247 

On December 14, Dominion filed an application to update and continue its cost recovery rider for energy efficiency and demand-side management (“DSM”) program spending. Dominion proposes nine new programs, designated the “Phase X” programs, including measures for residential and commercial customers. Dominion states that approval of its application will result in a $0.29 bill increase for a residential customer using 1,000 per month.

The SCC held an evidentiary hearing on the filing on May 12. No party opposed approval of Dominion’s application. Environmental advocates urged the Commission to require Dominion to measure progress towards the VCEA savings targets based on “net” as opposed to “gross” savings. Measuring gross savings would include energy savings not attributable to Dominion’s energy efficiency programs. Environmental advocates also urged the Commission to authorize a new administrative process that would allow Dominion to modify its energy efficiency programs in certain circumstances without seeking SCC approval.

The hearing examiner assigned to this case filed her report and recommendation on June 24. The hearing examiner recommends approval of all proposed programs. The examiner found the “gross savings metric to be more appropriate than net savings when evaluating Dominion Energy’s compliance with the statutory targets going forward.” The examiner also recommended that the SCC reject Dominion’s proposed administrative process. The SCC can approve or reject any of the hearing examiner’s recommendations. Based on the statutory timeline, the SCC must enter a final order on or before August 14.

  • Parties file post-hearing briefs regarding Dominion offshore wind proposal; respondents, citing risks of cost overruns, urge SCC to require consumer protections – Case No. PUR-2021-00142

On November 5, 2021, Dominion filed an application for approval of a 2.6 gigawatt wind facility (the Coastal Virginia Offshore Wind or “CVOW project”), which would be located in federal waters off the coast of Virginia Beach. Dominion’s application requests approval for cost recovery for the wind facility and associated transmission and interconnection facilities. Dominion states that the total capital costs for the project would be $9.8 billion. The 2020 Virginia Clean Economy Act includes a provision, Va. Code § 56-585.1:11 C, stating that the costs of an offshore wind facility between 2,500 and 3,000 MW that is proposed by Dominion “shall be presumed to be reasonably and prudently incurred,” provided that certain cost criteria are satisfied. Dominion states that the project costs are “well within this cost governor established by the Commonwealth.” Dominion and the SCC Staff project that the CVOW rider, if approved, would increase a typical residential customer bill by $14.21 by 2027.

The SCC held an evidentiary hearing between May 17 and May 19. The parties filed post-hearing briefs on June 24. While no party opposed approval of the application, several intervenors raised concerns regarding the costs and risks borne by Dominion’s ratepayers. The Attorney General’s brief urged the Commission to impose a “performance guarantee.” A performance guarantee would protect consumers in the event the wind facility does not generate as much electricity as forecasted. Clean Virginia recommended the Commission require an independent monitor to oversee the construction phase of the project and adopt a capital cost cap for the project consistent with the SCC’s precedent in prior generation cost recovery cases. Walmart’s brief also recommended that the Commission adopt additional consumer protections, citing the risks associated with Dominion’s turbine supply and installation agreements.

The SCC must enter a final order on Dominion’s application within nine months, or by August 5.

  • Dominion files measurement and verification report regarding recently approved efficiency programs – Case No. PUR-2020-00274

On December 2, 2020, Dominion Energy Virginia filed an application for approval to continue recovering the costs of several previously-approved energy efficiency programs and for authority to implement eleven new programs. The eleven new programs include residential, low-income, agricultural, and business efficiency measures. The SCC approved Dominion’s application on September 7. The SCC’s final order directed Dominion to prepare a long-term efficiency plan and provide an evaluation, measurement, and verification (“EM&V”) plan quantifying the energy savings from its approved programs.

Dominion filed its EM&V plan on June 15. The plan, prepared by a consultant, states that Dominion’s approved programs in Virginia in North Carolina achieved approximately “196 MWh/year of net annual energy savings in 2021 as a system, reaching more than 360,000 program participants and incentivizing more than 3.9 million LEDs through stores.” The plan also states that “the programs achieved approximately 75% of planned net energy savings in 2021.” The EM&V plan consists of several volumes and is available in the docket for this case.