Regulators question decision-making power for fossil fuel plant closures

The State Corporation Commission is asking the General Assembly to consider granting it more power over decisions related to the retirement of fossil fuel plants, a move some environmental lawyers say isn’t a pressing priority.

In an annual report to legislators,  the commission highlighted what it called its “lack of proactive authority, under current law, to protect reliability and security of electric service resulting from (Virginia Clean Economy Act)-directed retirements unless there is a request by the utility.”

The commission further wrote that “an after-the-fact review or finding of harm to reliability and/or security of electric service would leave the commission with few options to protect customers.” 

Under the 2020 Virginia Clean Economy Act, the state’s two largest electric utilities, Dominion Energy and Appalachian Power, must retire their fossil fuel plants by 2045 as part of the legislation’s goal to decarbonize the power grid by midcentury. 

However, the VCEA allows utilities to petition the SCC to keep those plants open longer if they believe closing them could negatively affect reliability. Fossil fuel plants continue to be used as power generation backups for emerging renewable energy sources. 

“If the General Assembly intends to leave this discretion solely in the hands of utilities, that is what the current law accomplishes,” the judges wrote. “The General Assembly may wish to consider a required update or analysis from the Commission in close proximity and prior to unit closure.”

While agreeing with a broader need to restore authority to the SCC, Southern Environmental Law Center attorney Will Cleveland said retirement decisions aren’t an imminent concern, since the deadline for these facilities’ closures isn’t for another 23 years. 

“There are far more pressing matters,” said Cleveland, who has lobbied for major reforms to the state’s system of reviewing electric utility rates.

Cleveland also noted the SCC has other tools at its disposal to oversee the utilities’ energy transitions, including reviews of the integrated resource plans Dominion and Appalachian Power are required to file with regulators every three years. 

House Bill 528, signed into law in 2020, additionally allows the SCC to set the time period for the utilities to pay off the remaining costs of retired facilities, which ratepayers can continue to pay for after they shut down.

Natural Resources Defense Council Virginia Policy Director Walton Shepherd said concerns over reliability being impacted by fossil fuel plant retirements are a “scare tactic” against the renewable energy movement.

The regional electric grid of which Virginia is a part, PJM Interconnection, provides reliability oversight, Shepherd added, as does the North American Electric Reliability Council, or NERC.

“It’s just completely disingenuous,” Shepherd said of the SCC’s comments in the report.

Requests for comment from leadership in both chambers of the General Assembly were unsuccessful Friday. Lawmakers are set to vote on a third SCC judge Wednesday when the legislature reconvenes in Richmond. Appointment of judges to the SCC has been a discussion point among the legislature for years. 

Appalachian Power Company declined to comment. A Dominion spokesperson stated, “As we transition to renewables and meet the requirements of the VCEA, we remain laser-focused on delivering reliable service to our customers. We will continue working with regulators and policymakers to make sure we have the necessary tools.”