Efforts by large electricity customers to aggregate their locations into one account eligible to seek a competitive supplier suffered a setback in Monday’s ruling against one such petition. But another set of petitioners was in a State Corporation Commission hearing room Wednesday taking another crack at it.
The petition rejected Monday was from Wal-Mart and Sam’s Stores. The hearing yesterday involved 128 locations of grocery chains Kroger and Harris-Teeter, seeking to consolidate into one account in Dominion Energy Virginia territory with a peak demand of 45 megawatts. The case record had been built and was ripe for a hearing, so on it went in front of a hearing examiner.
The law has offered a limited opportunity to aggregate and leave since 2007, but it was a recent decision by the SCC to let Reynolds Metals do that with about ten megawatts of load which opened the door to these petitions. Wal-Mart, Sam’s Club, Kroger, Harris-Teeter, Costco, Target and New Albertson’s (Safeway) fired up their legal teams and rushed the goal line.
The micro argument is they represent such a small part of a giant utility, it will have no noticeable impact if they leave. The macro argument is if enough customers leave, Dominion won’t need to build the entire 3,600 megawatts of new generation contemplated in its last integrated resource plan, thus saving all customers some money.
When the SCC is sorting out rates and cost allocations in the next rate review in 2021, as planned, “the loss of the load we are here to discuss will be one minor factor,” said Kroger attorney Kurt Boehm Wednesday. The applicants told the Commission they would waive any claim they might have on a share of rate credits for utility excess profits that the SCC might dole out at the end of the case.
In its testimony Dominion estimated that the loss of this revenue would increase costs on that imaginary 1000 kWh per month residential customer by 8 cents, a nickel on base rates and 3 cents on the various rate adjustment clauses. But the base rate impact couldn’t be set until 2021, and might not happen at all. There’s plenty of slack in those base rates.
Will Reisinger, attorney for competitive supplier Calpine Energy Solutions, pointed to the 2018 and 2019 General Assembly sessions and noted with all the other things done in this area, no changes were made to the provisions governing the opportunity to aggregate demand and leave. In fact, a 2019 bill on that point was amended to ensure Dominion’s customers didn’t lose that. He read that as legislative intent in favor of at least limited customer choice.
A witness for Dominion, in his written testimony, also focused on legislative intent. Senate Bill 966 in 2018 showed the General Assembly’s “determination that utilities should significantly expand their portfolio of utility-owned and -operated resources to serve customers’ needs.” Gregory Morgan, Dominion’s Director of Rates, said legislators wouldn’t add those generating assets if its real goal was competitive choice.
Reisinger challenged whether a Dominion executive could be expounding on legislative intent, but I’ve got to stand with Morgan on that. The utility writes the bills, writes the substitutes, writes the talking point, writes the committee Q&A, writes the floor speeches, drafts answers for legislators to constituent questions, and I’m sure offers helpful notes on what the Governor might say when he signs the bill. Dominion’s wishes and legislative intent are the same thing.
Reisinger made a better point when he noted the SCC should focus on who is not participating in the case, and that would be those other customers. The Attorney General’s consumer staff did not intervene, and the SCC staff took no position on whether the petition was in the public interest. Other large customers stayed out, but then they got a little sweetener recently with a generation rate cut of their own. Residential customers? If the AG is missing and the SCC staff silent, they are not represented.
The SCC could approve one or more additional aggregation petitions, since the state law allows it to go up to one percent of Dominion’s load and Dominion has pointed to 140 megawatts as a possible cap. Exactly how much money the companies might save is usually not revealed in the record, and of course is hard to predict over time. Dominion’s rates are bound to rise with all the mandates.
Giving a few more customers that option and tracking the results would provide a useful illustration of what Virginia might look like if the generation portion of the utility monopoly disappeared, which didn’t happen 20 years ago but might work better now in this very different environment.
But nothing I saw in the record or heard during the portions of the hearing I monitored drew much of a contrast with the earlier Wal-Mart and Sam’s Club situation, where the Commission wrote:
In conclusion, given the context of a decade of rising rates and the likelihood of even higher rates in the future, we do not find it consistent with the public interest for captive customers who do not have the legal ability to obtain lower rates – predominantly residential and small business – to suffer from the cost-shifting identified herein by enabling a large-demand customer to seek its power supply elsewhere through aggregation.
It’s a court. They’re all lawyers. That reads like a precedent to me.
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