Virginia Energy Regulatory Updates (June 2024)

Below is our firm’s summary of notable energy regulatory activity at the Virginia State Corporation Commission (“SCC” or “Commission”) during June, 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 schedules hearing regarding Columbia Gas rate increase request – Case No. PUR-2024-00030

On April 29, Columbia Gas of Virginia (“CGV”) filed an application to increase its base rate for gas distribution service. CGV requests a $52.6 million annual increase to revenues. CGV also seeks an increase to its authorized rate of return on common equity (“ROE”). CGV’s current ROE is 9.7%, and the utility requests a new ROE of 10.85%. CGV states that it earned an ROE of only 8.08% during the 2023 test year. CGV states that its rate increase, if granted, will increase a typical residential customer’s bill by 11.68% per month. CGV claims that it requires additional revenues in order to make necessary capital investments in its distribution system. The utility also states that it “continues to experience growth in its residential, commercial, and industrial sectors [and that] investment in its facilities will enable [CGV] to meet the demand in its territory for safe and reliable natural gas service.”

The SCC will hold an evidentiary hearing on December 10.

  • SCC approves Dominion request to remove RGGI rider from customer bills – Case No. PUR-2024-00088

On May 15, Dominion Energy Virginia (“Dominion”) filed a petition seeking approval to reset its “Rider RGGI” to $0.00/kWh. The Rider was established to recover the costs of Dominion’s participation in the Regional Greenhouse Gas Initiative. The petition states that in 2022, at the direction of Governor Youngkin, the Virginia Department of Environmental Quality began the regulatory process to remove Virginia from RGGI. Dominion also states that, effective December 31, 2023, the company is no longer accruing RGGI compliance costs. The petition estimates that removing the RGGI rider from customer bills will reduce the monthly bill for a typical residential customer using 1,000 kWh by $4.43.

The SCC approved Dominion’s petition in a June 3 order.  

Renewable energy, efficiency, and new energy infrastructure:

  • Dominion Energy proposes experimental “carbon-free” energy tariff for commercial and industrial customers – Case No. PUR-2024-00114

On June 25, Dominion Energy Virginia filed an application for approval of a voluntary carbon-free tariff option for non-residential customers. The tariff, designated “Carbon-Free or Renewable Generation Supply Service” or “Schedule CFG” would allow participating customers to enter contracts to purchase the output from specific renewable or carbon-free generation facilities. Dominion states that “Schedule CFG is a unique product in the sense that it allows individual customers to contract for carbon-free or renewable generation from facilities that meet their specific needs and then receive the costs and benefits for that on their bill from the Company.” Dominion states that its “other renewable offerings are more uniform in their application, and the Company or a third-party provider controls the facility selection. By contrast, Schedule CFG will allow the customer to select the type and location of the facility.” Dominion also states that carbon-free energy could include nuclear or clean hydrogen facilities.

Dominion requests approval of the CFG tariff as a “experimental rate” pursuant to Va. Code Section 56-234(B). This Code section allows the SCC to approve special tariffs and rate design experiments if they would allow the utility “to acquire information that is or may be in furtherance of the public interest.” The SCC has not yet established a procedural schedule for this case.

  • SCC hearing examiner recommends approval of Dominion efficiency programs; finds that the utility fell short of 2022 statutory energy savings targets – Case No. PUR-2023-00217

On December 11, 2023, Dominion Energy Virginia filed its 2023 demand-side management (“DSM”) update. Dominion’s application requests approval to continue cost recovery for previously approved DSM programs. Dominion also requests approval to offer several new programs, designated the “Phase XII” programs. The Phase XII measures 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. Several parties, including the Southern Environmental Law Center and the Attorney General’s Office, filed responses in opposition to Dominion’s legal memorandum.

The SCC held an evidentiary hearing before a hearing examiner on May 21. The hearing examiner filed her report and recommendation on June 26. The examiner recommended approval of the proposed Phase XII programs. The examiner also determined that net savings is the appropriate way to measure compliance with the statutory savings targets. The examiner concluded that, using net savings, Dominion “fell short” of its statutory targets for 2022. The law requires Dominion to demonstrate that it achieved savings equal to at least 1.25% of 2019 energy sales. The examiner concluded, however, that Dominion only achieved savings of 1.23%. The hearing examiner’s findings and recommendations are advisory only to the Commission.

  • Electric utilities submit energy efficiency savings proposals; Dominion, citing declining savings potential, urges SCC to reduce VCEA targets – Case No. PUR-2023-00227

On January 5, the SCC established 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. For 2025, the statute directs APCo to implement energy efficiency measures designed to achieve annual energy savings equal to “at least 2.0 percent of the average annual energy jurisdictional retail sales by that utility in 2019.” Dominion’s statutory target for 2025 is 5.0% of the utility’s retail sales in 2019. The statute, at Va. Code § 56-596.2(B)(3), provides that “[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 SCC’s procedural order directed Dominion and APCo to file energy savings proposals on June 12. APCo’s proposal urges the Commission “to establish energy efficiency savings targets for the period 2026 to 2028 to remain at 2.0% of the Company’s 2019 average annual energy jurisdictional retail sales, which is equivalent to Appalachian’s total annual energy savings amount for calendar year 2025.” Dominion’s proposal recommends that the Commission decrease its savings target to between 2.09% and 2.72%, on a net savings basis, between 2026 and 2028. Dominion states that its energy efficiency potential studies “have shown declining savings potential.”

Interested parties may file comments regarding the utilities’ proposals on or before September 16. The deadline to request an evidentiary hearing is August 12.

  • SCC hearing examiner recommends approval of Appalachian Power energy efficiency

investment plan – Case No. PUR-2023-00169

On November 30, 2023, Appalachian Power Company filed a petition requesting approval to “continue and enhance” certain energy efficiency programs and for approval to offer two new residential efficiency programs. The petition also requests approval to continue recovering energy efficiency costs through a rate adjustment clause. The petition states that the energy efficiency rider, as adjusted, would increase the monthly bill of a residential customer using 1,000 kilowatt hours per month by approximately $1.29. The SCC held an evidentiary hearing on May 21.

On June 17, the SCC hearing examiner assigned to this case filed his report and recommendation. The examiner recommended approval of a total rider revenue requirement of $29.5 million for the next rate year. This amount includes a $1.44 million “performance incentive.” The examiner determined that APCo is eligible for a performance incentive, or bonus, due to the fact that the utility satisfied its most recent energy savings target identified in Va. Code § 56-596.2. The examiner’s findings and recommendations are advisory only to the Commission.

  • SCC hearing examiner recommends approval of Appalachian Power battery storage proposal – Case No. PUR-2024-00001

On January 18, Appalachian Power Company 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. APCo proposes to seek cost recovery for the project in a subsequent VCEA proceeding. APCo states that “the first year rate impact for residential customers is 0.36 percent.”  

The SCC held an evidentiary hearing before a hearing examiner on June 11. The examiner recommended approval of the application in a report and recommendation filed on July 3. The examiner concluded that the project is “a reasonable, cost-effective proposal to meet the requirements of the VCEA and address the reliability concerns [in the region].” The examiner’s recommendation is advisory only to the commissioners.

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