by Steve Haner
Acting on its own initiative, the State Corporation Commission has established a docket to consider the coming application from Dominion Energy Virginia for its massive offshore wind proposal, the centerpiece of Virginia Democrats’ plan to save us all from catastrophic climate change.
Earlier this month, the utility started the federal review process with a notice of intent to prepare an environmental impact statement for the project. The clock on the first round of comments to the Bureau of Ocean Energy Management runs out August 2.
If Dominion builds all future planned phases, a full 5,200 megawatts, the sticker price is more than $17 billion, which with profit and financing costs will ding customers in total $37 billion over a few decades.
In its July 26 order establishing the case, the SCC outlined a series of questions the utility will need to answer in its application when it comes. The questions provide just a glimpse into the issues that will develop in what may soon be recognized as the Second Battle of the Virginia Capes.
Cost is front and center:
What is the total cost and the lifetime revenue requirement of the transmission necessary to bring the energy generated by the OSW Project to shore? Of this total lifetime revenue requirement, how much is investment, and how much is the Company’s projected return on equity? Identify the rate recovery mechanism(s) Dominion proposes or will propose to use to recover such costs from eligible customers….
(The Virginia Clean Economy Act) states that in acting upon a request from Dominion for recovery of costs associated with the OSW Project, “the Commission shall determine the reasonableness and prudence of any such costs, provided that such costs shall be presumed to be reasonably and prudently incurred if the Commission determines that… the utility has commenced construction of such facilities for U.S. income taxation purposes prior to January 1, 2024, or has a plan for such facility or facilities to be in service prior to January 1, 2028.”
Note: “…shall be presumed to be reasonably and prudently incurred” is the key phrase there.
With this provision in mind:
- Where in the PJM Interconnection, L.L.C. (“PJM”) generation interconnection queue is the OSW Project?
- Could any PJM queue backlog impact costs to consumers in Virginia? If so, in what ways? As an increase or decrease to such costs?
What’s next? Not everybody has to pay!
(The Virginia Clean Economy Act) exempts (i) Percentage of Income Payment Program eligible utility customers, (ii) advanced clean energy buyers, and (iii) qualifying large general service customers from any non-bypassable rate adjustment clause (“RAC”) approved for the OSW Project.
(Note: “Non-bypassable” means even customers in its territory able to use a supplier other than Dominion must pay for the offshore wind. Only some Virginians, those with no or with ineffective lobbyists, will actually pay for all this.)
- When does Dominion expect to have such customers identified?
- How will eligible customers achieve an exempt status? Will customers be required to request an exemption from Dominion?
- How does Dominion expect the number of exempt customers to change over time? In Dominion’s view, are the charges non-bypassable only when the customer is actively in one of the exempt statuses? If so, explain how (and how frequently) Dominion will monitor the customer’s on-going exemption status.
- Explain the measures Dominion will take to ensure these customers are not billed any OSW Project RAC and associated transmission and distribution costs. Also explain and quantify projected implications of the exemption on non-exempt customers.
Note: Count the electric coops among those with effective lobbyists who kept them out of this.
(The Virginia Clean Economy Act) also requires that “[n]o electric cooperative customer of the utility shall be assigned, nor shall the utility collect from any such cooperative, any of the costs of such facilities, including electrical transmission or distribution facilities associated therewith for interconnection.”
- How will Dominion ensure that it does not collect from its electric cooperative customers the costs of the OSW Project?
- How will Federal Energy Regulatory Commission jurisdictional transmission costs be allocated and recovered from non-exempt customers?
- Are transmission or distribution upgrades throughout the electric grid necessitated by the interconnection of the OSW Project “facilities associated therewith” per (the statute)?
- What measures (accounting or otherwise) will Dominion implement to separate OSW Project costs from those costs for which Dominion does bill its electric cooperative customers?
And now a question the obligatory equity and local pork barrel elements.
The Plan must include: “(i) options for utilizing local workers; (ii) the economic development benefits of the [OSW Project] for the Commonwealth, including capital investments and job creation; (iii) consultation with the Commonwealth’s Chief Workforce Development Officer, the Chief Diversity, Equity, and Inclusion Officer, and the Virginia Economic Development Partnership on opportunities to advance the Commonwealth’s workforce and economic development goals, including furtherance of apprenticeship and other workforce training programs; and (iv) giving priority to the hiring, apprenticeship, and training of veterans, as that term is defined ….and workers from historically economically disadvantaged communities…..
- Should the Commission find that the Plan is not in keeping with the full requirements of the law, what if any effect should such a finding have on the OSW Project filing?
Not to derail it, certainly! Dominion’s answer to that will be, well, you must approve this gigantic investment because the General Assembly has blessed it all as “in the public interest.” Should the SCC disagree, Dominion will be back before the General Assembly as quickly as possible with the necessary tweaks to the law it basically wrote in the first place.
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