The Bulletin

Regulators approve Dominion Energy’s long range plan but warn of coming costs

By: - June 27, 2019 6:00 pm
Dominion Energy's downtown Richmond building. (Ned Oliver/Virginia Mercury)

Dominion Energy, Virginia’s largest electric utility and a major U.S. energy company, is headquartered in Richmond. (Ned Oliver/Virginia Mercury)

More six months after an unprecedented rejection, Dominion Energy’s long-range plan for meeting future electric demand for its 2.6 million Virginia ratepayers was endorsed Thursday by the State Corporation Commission.

However, the approval of the utility’s integrated resource plan came with a warning:

“While the SCC said that Dominion’s revised plan met the minimum filing requirements of Virginia law, it also warned that the IRP ‘may significantly understate the costs facing Dominion’s customers,'” the commission said in news release, adding that it projects an increase of $29.37 a month for the average residential customer by Dec. 31, 2023.

The commission, fighting back against past legislative attempts to diminish its relevance, has taken a stronger stance on the company’s efforts to push through big spending on grid projects and criticized it for leaving billions in spending that was included in a presentation to Wall Street investors out of its filings with the commission.

“This information is essential to developing an accurate picture of what Dominion’s customers most likely face in terms of costs in the years to come,” the commission noted in its order published Thursday. “The cost of Dominion’s investment plans is substantially higher than even the highest cost scenario contained in its amended 2018 IRP.”

In its initial rejection, the regulators required Dominion to develop a true “least cost” scenario for meeting electric demand and model the costs of the sprawling utility overhaul legislation (SB 966) passed by the General Assembly and signed by Gov. Ralph Northam last year, which ushered in a new regulatory structure that allows the company to offset overearnings (and avoid customer refunds) on its base rates with spending on a suite of eligible projects, among other features.

The SCC largely rejected Dominion’s first pass at those spending plans in January.

“Everything that was proposed was not cost beneficial to the ratepayer. It was spending for spending’s sake,” said Will Cleveland, an attorney with the Southern Environmental Law Center in Charlottesville who works on utility cases before the commission.  “And that’s not how you want ratepayer dollars to get spent.”

For about 10 years, Dominion has filed the nonbinding plans with the commission yearly, laying out various scenarios for meeting electric demand over the next 15 years. Environmental and consumer groups have long charged that Dominion inflates its load forecast — the amount of electricity it will need to deliver — in order to justify building new electric infrastructure on which it earns a substantial return.

Beginning next year, the utility will file the plans once every three years. And the commission’s order requires Dominion to continue using the load forecasting model of PJM Interconnection, the regional transmission organization that runs the electric grid for all or parts of 13 states, including Virginia, and the District of Columbia, instead of its own, and include the energy efficiency spending requirements of SB 966, which it left out last time around.

The commission also ordered the utility to perform more detailed estimates of costs and benefits for grid spending, model its gas transportation costs, an issue that has prompted scrutiny given the company’s controversial planned Atlantic Coast Pipeline, model compliance with the Regional Greenhouse Gas Initiative, and produce a schedule of projects that contribute toward meeting renewable energy targets, among other requirements.

The combined effect, Cleveland said, is greater transparency about the total costs of operating Dominion’s electric business, which many of us in Virginia pay for.

“It’s another good job by the commission of looking out for the ratepayer and warning everyone that, if left unchecked, Dominion’s plans are going to cost people a lot of money,” he said.

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Robert Zullo
Robert Zullo

Robert spent 13 years as a reporter and editor at weekly and daily newspapers and was previously editor of the Virginia Mercury. He was a staff writer and managing editor at Worrall Community Newspapers in Union, N.J., before spending five years in south Louisiana covering hurricanes, oil spills and Good Friday crawfish boils as a reporter and city editor for the The Courier and the Daily Comet newspapers in Houma and Thibodaux. He covered Richmond city hall for the Richmond Times-Dispatch from 2012 to 2013 and worked as a general assignment and city hall reporter for the Pittsburgh Post-Gazette from 2013 to 2016. He returned to Richmond in 2016 to cover energy, environment and transportation for the Richmond Times-Dispatch. Contact him at [email protected]