Below is our firm’s summary of notable energy regulatory activity at the Virginia State Corporation Commission (“SCC” or “Commission”) during May, 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 publishes order for notice and comment regarding Appalachian Power PIPP fee – Case No. PUR-2020-00117
On May 1, the SCC published an order for notice and comment regarding Appalachian Power Company’s (“APCo”) proposed universal service fee to fund its Percentage of Income Payment Plan (“PIPP”). The SCC explained that “thePIPP was established as part of the 2020 Virginia Clean Economy Act as a mechanism designed to limit the electric utility payments of persons or households participating in certain, specified public assistance programs, based upon a percentage of their income, for customers of Virginia Electric and Power Company and APCo.” The law allows APCo to charge a service fee to fund the PIPP. APCo states that its proposed universal service fee, if approved, will result in a monthly charge of $1.28 for a typical residential customer using 1,000 kWh per month. The utility also requests clarification regarding whether participating in energy efficiency and weatherization programs is mandatory for PIPP customers.
Interested parties can file comments and/or request an evidentiary hearing on or before June 5.
- SCC schedules hearing to review Dominion’s request to decrease fuel cost recovery rider – Case No. PUR-2024-00078
On May 1, Dominion Energy Virginia (“Dominion”) filed an application to decrease its fuel recovery rider, designated the “fuel factor,” based on lower fuel prices. Dominion explains that the decrease in the company’s actual and projected fuel expense is driven primarily by a decline in natural gas prices. The proposed decrease is also due to the fact that the company recently received approval to finance $1.3 billion of outstanding fuel costs. In Case No. PUR-2023-00112, the SCC approved Dominion’s proposal to finance its then-current outstanding fuel balance. In that case, Dominion received SCC approval to establish a special purpose entity to issue “Deferred Fuel Cost Bonds” with a term of 7.25 years. The interest associated with those bonds will be recovered through a separate rider charge on customers’ bills.
Dominion states that the fuel rider decrease, if approved, would reduce the monthly bill of a typical residential customer using 1,000 kWh by $7.85. The SCC will hold an evidentiary hearing on October 3.
- SCC approves reduction to Appalachian Power’s fuel recovery rider – Case No. PUR-2023-00156
On September 14, 2023, Appalachian Power Company filed an application to decrease its fuel recovery rider, effective for service beginning on November 1, 2023. The utility cited declining natural gas prices as a reason for the proposed fuel factor decrease. APCo also requested authority to recover a deferred fuel balance of $273 million over 2 years.
The SCC published an order approving the fuel rider adjustment on May 21. The order also approved APCo’s proposal to recover its outstanding fuel balance over a two-year period. In its application, APCo requested SCC authority to recover “carrying charges” on the deferred fuel balance. The utility proposed carrying charges at a rate equal to its SCC-approved weighted average cost of capital. In its final order, the SCC determined that the “the level of carrying charge to be applied to APCo’s extended recovery of its deferral balance should be determined in its biennial review.” APCo’s 2024 biennial review is currently pending in docket number PUR-2024-00024. The SCC’s order states that, as revised, “the fuel factor is projected to result in a decrease of $1.80 to the monthly bill of a residential customer using 1,000 kWh of electricity.”
- SCC schedules hearing regarding Kentucky Utilities rate increase request; utility seeks 13% increase in revenues – Case No. PUR-2024-00052
On April 30, Kentucky Utilities Company, doing business as Old Dominion Power (“KU-ODP”), filed an application to increase its base rate for electric service. KU-ODP, based in Louisville, Kentucky, provides electric service in Dickenson, Lee, Russell, Scott, and Wise Counties. KU-ODP states that it requires a $9.4 million increase in annual revenues. The utility states that this revenue increase equates to a 12.7% increase in annual operating revenues. KU-ODP states that it requires a rate increase in order to make necessary investments in its transmission and distribution system and to provide additional services for low-income customers.
KU-ODP also claims that it requires an increase to its current rate of return on common equity. In its last base rate case, the SCC found an ROE range of 9.0%-10.0% to be reasonable for earnings test purposes. The utility requests a going-forward ROE of 10.5%. KU-ODP reports that, during the 2023 test year, it only earned 7.5%. KU-ODP estimates that the rate increase, if approved, will increase the monthly bill of a typical residential customer using 1,000 kWh by $19.46. The SCC will hold an evidentiary hearing on November 13. Interested parties can intervene in this case on or before August 9.
- SCC hearing examiner recommends increase to Dominion’s renewable portfolio standard rider – Case No. PUR-2023-00221
On December 8, Dominion Energy Virginia filed a petition to increase the rate adjustment clause for its 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 $3.37 compared to the current Rider RPS.” The SCC published a procedural order on January 5. The SCC held an evidentiary hearing before a hearing examiner on May 14. On May 28, the hearing examiner assigned to this case filed her report and recommendation. The hearing examiner recommended approval of Dominion’s proposed revenue requirement and rider increase. The hearing examiner’s recommendations are advisory only to the Commission.
- SCC publishes order for notice and comment regarding Dominion PIPP fee – Case No. PUR-2024-00081
On May 23, the SCC published an order for notice and comment regarding Dominion’s universal service fee to fund its Percentage of Income Payment Plan (“PIPP”). The SCC explained that “thePIPP was established as part of the 2020 Virginia Clean Economy Act as a mechanism designed to limit the electric utility payments of persons or households participating in certain, specified public assistance programs, based upon a percentage of their income, for customers of Dominion and Appalachian Power Company.” The law allows Dominion to charge a universal service fee to fund the PIPP. Dominion proposes to revise its universal service fee to be $0.00 for service between November 1, 2024, and October 31, 2025. Dominion states that it is proposing a zero rate “because the Company projects that revenues collected through October 31, 2024, from the currently approved [fee] will be sufficient to fund the PIPP through the end of October 2024.”
Dominion estimates that “the proposed zero rate for the Rate Year would result in a bill decrease of approximately $0.73 cents per month” for a residential customer using 1,000 kWh. Interested parties can file comments and/or request an evidentiary hearing on or before July 15.
Renewable energy, efficiency, and new energy infrastructure:
- SCC directs Dominion Energy Virginia and Appalachian Power Company to file net metering proposals Case No. PUR-2024-00047
On May 6, the SCC published an order directing Appalachian Power Company and Dominion Energy Virginia to file net metering proposals. The law, at Va. Code § 56-594(E), requires the SCC to conduct hearings to establish the net metering credit rates for each utility. In particular, the law requires the SCC to “evaluate and establish (a) an amount customers shall pay on their utility bills each month for the costs of using the utility’s infrastructure; (b) an amount the utility shall pay to appropriately compensate the customer, as determined by the Commission, for the total benefits such facilities provide; (c) the direct and indirect economic impact of net metering to the Commonwealth; and (d) any other information the Commission deems relevant.” The law also requires the SCC to “make all reasonable efforts to ensure that the net energy metering program does not result in unreasonable cost-shifting to nonparticipating electric utility customers.”
The SCC’s order directs APCo to file its net metering proposal by September 2. Dominion is directed to file its proposal on or before May 1, 2025.
- SCC schedules hearing regarding Appalachian Power’s 2024 RPS development plan – Case No. PUR-2024-00020
On April 25, Appalachian Power Company (“APCo”) filed its annual Virginia Clean Economy Act (“VCEA”) Renewable Portfolio Standard (“RPS”) development plan. The VCEA requires APCo to meet an increasing clean energy resource standard. The law, at Va. Code § 56-585.5(D), requires APCo to file an annual plan explaining its proposal to satisfy the VCEA’s renewable energy procurement requirements. APCo’s plan includes five alternative modeling scenarios. The alternative scenarios assume different levels of solar, wind, natural gas, and capacity market resources. APCo also requests cost recovery for certain solar projects that were abandoned due to escalating costs. The application states that, if approved, APCo’s RPS rider would increase by approximately $0.05 per month for a residential customer using 1,000 kWh. On May 30, the utility filed a motion for protective ruling to protect the confidentiality of certain “contracts and prices” that may be disclosed during the case. Among other things, the utility claims that it should be permitted to keep confidential “competitively negotiated contract terms and prices, and information derived therefrom, with vendors, customers, or other market participants.”
The SCC will hold an evidentiary hearing on July 25. Interested parties may intervene in this case on or before June 25.
- SCC approves Dominion Energy battery storage investments – Case No. PUR-2023-00162
On September 18, 2023, Dominion Energy Virginia filed an application for approval of additional battery storage resources pursuant to the 2018 Grid Transformation and Security Act (“GTSA”). The 2018 law states that such projects are “in the public interest.” The Commission has already approved three projects under the pilot program. Dominion states that the additional projects, if approved, “will bring the aggregate capacity of all Pilot Program projects approved by the Commission for the utility to 28.34 MW.” In its application, Dominion requests approval of “three projects for deployment of battery energy storage systems (“BESS”) as part of the Pilot Program: BESS-4: Evaluation of Two Co-Located Nonlithium-Ion Technologies; BESS-5: Outage Mitigation and Grid Support Through a Microgrid Capable BESS; and BESS-6: Long Duration Energy Storage in a Behind-the-Meter Application.”
The SCC held an evidentiary hearing on January 24. The hearing examiner assigned to this case filed a report and recommendation on February 12. The examiner concluded that, “based upon applicable law, the weight of the evidence supports a finding that the proposed projects are in the public interest and should be approved.” The SCC approved Dominion’s application in a May 6 final order.
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