Virginia Energy Regulatory Updates (October 2022)

Below is our firm’s summary of notable energy regulatory activity at the Virginia State Corporation Commission (“SCC” or “Commission”) during October, 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. The following is presented for informational purposes only and does not constitute legal advice.

Rate cases, oversight, and resource planning:

  • SCC hearing examiner recommends rate increase for Appalachian Power; utility asserts that increase is necessary to keep West Virginia coal plants operational – Case No. PUR-2022-00001 

On March 18, Appalachian Power filed a petition to increase its cost recovery rider for environmental compliance costs. APCo requests Commission approval to increase the revenue requirement for its environmental rate adjustment clause, called the “E-RAC,” to recover $33.6 million in the next rate year. The increase, if approved, would result in a $.80 per month bill increase for a residential customer using 1,000 kWh per month. APCo’s filing requests cost recovery for several new projects, including measures at its Amos and Mountaineer coal facilities in West Virginia. APCo claims that it needs to install new pollution control equipment at these facilities in order to comply with EPA restrictions on waste water discharges.

On July 29, two intervenors filed competing expert testimony. The West Virginia Coal Association filed expert testimony supporting the proposed rate increase. Meanwhile, the Sierra Club filed testimony urging the SCC to reject the rate increase, saying the investments at the Amos and Mountaineer facilities are not in the public interest. The Sierra Club witness asserted that customers would benefit if APCo retires the units early instead of making additional capital investments.

The SCC held an evidentiary hearing on September 20. On October 18, the SCC hearing examiner assigned to this case filed his report and recommendation. The examiner recommended approval of APCo’s petition with minor modifications. The examiner recommended a rate increase of $32.7 million, which is slightly less than the amount required by APCo. The examiner’s recommendation is advisory only to the Commission. 

  • SCC approves update to Dominion’s Integrated Resource Plan; updated plan incorporates new offshore wind facility and exit from RGGI – Case No. PUR-2022-00147

On September 1, Dominion Energy filed an update to its most recent Integrated Resource Plan. In Virginia, an IRP is a document representing a utility’s plan to comply with its load obligations over the next 15 years. Dominion and Appalachian Power are required to file IRPs every three years. The utilities must file updates to their IRP in the interim years when there are significant changes to the most recent complete plan.

Dominion states that the 2022 update is “an interim update meant for use as a long-term planning document based on a “snapshot in time” of current technologies, market information, and projections, and should be viewed in that context, not as a decision to pursue any specific project or action.” Dominion also notes that the updated IRP “is being filed amidst significant disruptions in global commodity markets and supply chains across the economy, as well as significant federal tax policy changes.” Dominion’s updated IRP includes five alternative planning scenarios, including a least-cost plan and a low-carbon plan. Each alternative scenario includes 2,600 MW of offshore wind resources recently approved by the SCC. Each alternative plan also assumes that Virginia exits the Regional Greenhouse Gas Initiative before January 1, 2023. On October 31, the SCC published an order approving the updated plan.

Renewable energy, efficiency, and new energy infrastructure:

  • Virginia Attorney General and Dominion reach settlement agreement regarding consumer protections in offshore wind case – 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 SCC approved the project in its August 5 final order. The order approved the project subject to certain consumer protections, including new reporting requirements during the construction phase and a capacity factor “performance standard.” The performance standard is designed to ensure that Dominion’s ratepayers are held harmless in the event the facility does not achieve the 42% capacity factor projected by Dominion. Dominion filed a petition for reconsideration of the performance standard on August 22. In its petition, Dominion calls the performance standard “unlawful” and “untenable.” On September 20, the Attorney General’s Office, Appalachian Voices, Clean Virginia, and Walmart filed pleadings opposing Dominion’s petition.

On October 28, the Attorney General’s Office filed a proposed stipulation signed by the Attorney General, Dominion and several respondents. The agreement would define how the CVOW project’s performance would be measured. The agreement also includes capital cost sharing provisions, meaning that Dominion shareholders would be required to absorb a portion of cost overruns above a certain amount. Under the agreement, Dominion shareholders would absorb 50% of project costs between $10.3 billion and $11.3 billion and 100% of any expenses between $11.3 billion and $13.7 billion. The filing states that the signatories believe the stipulation to be “in the public interest” and “if adopted on an expedited basis, its terms will allow the CVOW Project’s development to continue on schedule.” The SCC will hold a hearing to review the proposal on November 21.

  • Dominion files 2022 VCEA RPS Development Plan; requests approval of new solar and storage projects – Case No. PUR-2022-00124

On October 14, Dominion filed a petition requesting approval of numerous new clean energy resources. Dominion’s filing also includes an updated renewable portfolio standard (“RPS”) development plan. The petition requests approval to construct and operate 474 MW of utility-scale solar resources and 15.7 MW of battery storage, as well as four smaller-scale solar facilities. The utility requests approval to recover the costs of the new facilities through a rate adjustment clause designated “Rider CE.” Dominion also requests approval to enter into 13 power purchase agreements (“PPAs”) with solar and storage owners. If approved as filed, Rider CE would recover approximately $89 million from customers during the next rate year, increasing the monthly bill for a residential customer using 1,000 kWh by $0.38.

The Virginia RPS requires Dominion and Appalachian Power to meet an increasing percentage of their electricity sales from clean energy resources. Both utilities must file updated VCEA plans each year. The SCC will hold an evidentiary hearing on January 30.  

  • SCC publishes order on reconsideration regarding minimum bill for Dominion shared solar program; reaffirms findings in final order – Case No. PUR-2020-00125

On July 23, 2021, the SCC established a procedural schedule to review Dominion’s minimum bill proposal for the shared solar program established by 2020 legislation. The legislation requires the SCC to promulgate regulations allowing customers of Dominion to participate in a solar subscription program. This program will allow the customers (“subscribers”) to purchase the output from a solar facility or facilities up to 5 MW in size owned by a third party. Per the statute, the minimum bill is “an amount… that subscribers are required to, at a minimum, pay on their utility bill each month after accounting for any bill credits.” The minimum bill is intended to ensure that subscribers still pay necessary costs to maintain the electric distribution system.

On July 7, the SCC published a final order approving a minimum bill calculation proposed by the SCC Staff. Solar advocates filed a petition for reconsideration of this aspect of the final order, arguing that the Staff’s proposal was not supported by the evidence and would prevent the shared solar program from functioning as intended. On October 13, the SCC issued an order on reconsideration that rejected the petition for reconsideration and affirmed its final order. The SCC also confirmed that low-income customers are exempt from the entire minimum bill.

  • SCC publishes final order regarding administrative charges for Dominion multi-family shared solar program – Case No. PUR-2020-00124

In 2020, the General Assembly passed legislation requiring the SCC to promulgate regulations for a shared solar program specifically designed for customers living in multi-family housing facilities. Under the Dominion shared solar program, customers will be permitted to purchase – or “subscribe to” – a portion of a qualifying solar facility. The customer would thereafter receive a bill credit corresponding to the output from the facility. The multi-family shared solar program directives are codified in Va. Code § 56-585.1:12. The statute allows utilities to recover “reasonable costs of administering the program.” The administrative charge is a basic service fee that all participating customers must pay. The SCC held an evidentiary hearing on March 25 regarding the administrative charge.

The SCC published a final order on October 13. The SCC approved an administrative charge calculation that would require participating customers to pay $13.40 each month, plus all of Dominion’s non-bypassable charges. The administrative bill structure for the multi-family shared solar program is significantly different than the minimum bill approved for the shared solar program in Case No. PUR-2020-00125.

 Competitive market activity

  • SCC Staff files report and recommendations regarding continued operation of Dominion renewable energy tariff – 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”). The SCC approved Rider TRG in July 2020. 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 states that, as of June 15, 2022, there were 3,481 residential customers and 82 commercial customers enrolled in Rider TRG.

On September 28, a group of competitive energy advocates filed comments objecting to continued operation of Rider TRG. In its comments, the Retail Advancement League (“REAL”) argued that the Rider TRG rate no longer represents the market value for renewable energy. REAL requested an order from the SCC that Rider TRG should be closed to future customers. The group also argued that the tariff should not prevent customers from purchasing generation from competitive suppliers. Under current law, if a utility offers an SCC-approved renewable energy tariff, most customers lose their rights to shop for electricity.

On October 11, the SCC Staff filed a report with recommendations for the Commission. Like the REAL, the Staff noted that the Rider TRG rate no longer reflects the price of PJM renewable energy certificates. The Staff report states that the SCC could either allow Dominion to continue charging the tariff price, or the SCC could order Dominion to update its tariff to reflect current REC prices.