Regulators open up applications for electricity aggregation experiment

(Ned Oliver/ Virginia Mercury)

After a compromise struck late and quietly in the 2020 General Assembly, Virginia is embarking on a limited-scale experiment that will let some large corporate customers of Dominion Energy with multiple facilities in the commonwealth sidestep the requirement to buy electricity from the utility.

On Tuesday afternoon, state regulators issued an order opening up the application pipeline for an electricity aggregation pilot program passed by the General Assembly this March and set to go into effect July 1. 

“Aggregation” in the utility world refers to the practice of a company with multiple sites in a given utility territory combining the electric load of each site into one large load.

Why does the General Assembly care about this? Because major corporations like Walmart and Costco have been battling with Dominion before State Corporation Commission judges for more than a year over the companies’ right to aggregate their loads.

State law requires customers to get electric service from the utility with a monopoly on the territory where the customer is located, with three exceptions. One of those exceptions is when the customer has multiple sites — like different neighborhood Krogers — that, when combined, use more than five megawatts of energy and regulators determine that allowing it to leave the utility’s pool of customers won’t harm others. 

The “harm” piece is what until recently has hamstrung large corporations from getting what they want (electric service from someone other than Dominion, at a cheaper cost). Because Virginia utilities, as regulated monopolies, are legally allowed to recoup their costs from customers, regulators have been loath to let large ones leave the pool for fear of driving up everyone else’s bills. 

Dominion played up those fears during the 2020 legislative session, warning legislators that aggregation and other related proposals were the first steps toward deregulation. All of the proposals were killed, only to be unexpectedly resurrected in milder form

The new pilot, authorized by HB 868 sponsored by Del. Mike Mullin, D-Newport News, is one such program. Instead of expanding all eligible companies’ right to aggregate their loads, the final version allows aggregation only up to 200 megawatts and limits participants to those corporations that had already sought to aggregate by Feb. 25, 2019.