State Corporation Commission rejects billions in Dominion grid spending

The State Corporation Commission
The State Corporation Commission regulates Virginia electric utilities. (Ned Oliver/ Virginia Mercury)

Proving it still has some teeth left despite the General Assembly’s best efforts, the State Corporation Commission has rejected billions in proposed spending by Dominion Energy it had sought permission to recover from its customers under the sweeping utility regulations signed into law last year.

Though the commission did approve about $155 million in spending on security features, including cyber security and conventional security measures like barriers at distribution substations, it rejected other proposed projects, including smart meters, grid hardening, “intelligent grid devices” and emerging technology, that would have cost a total of more than $5 billion including financing costs.

“Dominion’s proposed plan is expensive, so it is important that Dominion’s customers receive adequate benefit for the costs they will bear in their monthly bills,” the commission wrote in an order.

“While we find the plan elements related to cyber and physical security are well-conceived, well-supported and cost-effective, we find that the remaining plan elements, which will cost customers hundreds of millions of dollars, are not.”

The commission agreed with arguments by environmental groups and the Virginia Attorney General’s Office of Consumer Counsel, which said the company’s plan was “significantly lacking in detail” and would “result in a significant economic loss for all customers.”

More than $1.2 billion in spending on smart meters, which enable remote, two-way communication between the utility and the meter via a secure cellular network, and other “advanced metering infrastructure” was denied.

“While supportive of the goals of AMI technology, the Sierra Club, environmental respondents and consumer counsel all oppose Dominion’s AMI proposal as not adequately developed and therefore neither reasonable nor prudent as to costs and benefits,” the order says, quoting one witness for the opponents who testified that the technologies are “beneficial and cost-effective only to the extent the company utilizes them to maximize the potential gains of rate optionality, energy efficiency, demand response and DERs [distributed energy resources]” like rooftop solar.

“Smart meters are costly, but money spent on smart meters — if spent wisely and effectively — is money spent to enable customers to save money by reducing energy usage at peak times (demand response) and reducing overall usage (energy efficiency and conservation),” the order says.

“Cost-effective spending on smart meters can also support other goals of a sound grid transformation plan, including greater deployment and integration of DERs such as rooftop solar and system-wide reductions of carbon emissions.”

Plans to maximize the potential of the expensive equipment, however, were missing, the commission found.

“Dominion promises to do so in the future, but it asks us to approve hundreds of millions of dollars in spending on smart meters now, money Dominion will
ultimately seek to recover from its customers in one form or another,” the order says. “This we will not do.”

Other rejected elements of the plan included, among other things, grid hardening provisions which involved replacing and rebuilding certain primary electricity line segments, intelligent grid devices to improve reliability and resiliency “while supporting distributed energy resources integration.”

However, the commission noted that since customer-sited and utility scale solar are less than 1 percent of peak load and that less than 1 percent of customers have distributed energy resources, those investments are premature and run the risk of obsolescence.

“In summary, we agree that smart meters and other grid enhancements hold the promise for a true transformation of the grid and for the more efficient consumption of electricity, but spending billions of dollars of customers’ money on full deployment is reasonable and prudent only if the expenditure is accompanied by a sound and well-crafted plan to fulfill the promise that smart meter technology and other grid enhancements offer,” the judges wrote.

The commission’s denial of certain elements of the plan was “without prejudice,” meaning Dominion can file for “an amended or better supported plan in the future if the company chooses to do so,” the commission said in a news release.

A Dominion spokesman did not immediately respond to a request for comment.