Notable SCC filings from Sept 16-20, 2019

Electric cases

 (1) SCC dismisses Dominion’s request to impose additional conditions on renewable energy sales – Case Nos. PUR-2019-00117 and PUR-2019-00118

 

On September 18, the SCC entered a final order denying Dominion’s attempts to impose new requirements on competitive renewable energy suppliers. Dominion filed requests for declaratory judgment alleging that Direct Energy and Calpine Energy Solutions, two competitive service providers (“CSPs”), were not providing full renewable energy service to their customers. Dominion’s argument was based on a claim that these CSPs do not have “control” of sufficient renewable energy resources in order to provide “24/7” or “around the clock” service. Direct Energy and Calpine are serving customers pursuant to Va. Code § 56-577 A 5, which allows CSPs to provide 100% renewable energy service to customers if the incumbent utility does not offer an approved 100% renewable energy tariff. (Dominion requested approval of what it characterizes as a 100% renewable tariff, which is currently pending before the SCC. This tariff includes energy generated at several facilities that are currently in Dominion’s portfolio, including solar, hydroelectric, and biomass facilities as well as the Virginia City coal plant.) 

 The SCC rejected Dominion’s arguments, stating that it “continues to find” that it is reasonable for a CSP to match customer load with renewable energy on a monthly basis. The SCC also stated that Dominion’s proposed standard, if accepted, “would represent the most stringent matching requirement of any renewable energy market in the country.” Finally, the Commission noted that Dominion was not able to settle on any single definition of “100% renewable energy”; instead, its attorneys and witnesses advanced more than 10 different proposed standards throughout the course of the proceeding.

 

(2) SCC finds Dominion’s IRP update filing to be “legally sufficient” – Case No. PUR-2019-00141

 

On August 30, Dominion filed its 2019 IRP update. The purpose of IRP “update” filings is to notify the Commission of any major changes in the utility’s planning that occur between the years when full IRPs are filed. Dominion stated that its objective in its 2019 IRP update “is to provide a discussion of significant events requiring a major revision to the [2018 IRP].” Dominion also notes that it recently “committed to an 80% reduction in greenhouse gas emissions by 2050.” The Company also put forth a five-year plan that includes development of offshore wind, a new pumped hydroelectric storage facility, additional solar photovoltaic resources, and distribution system modernization.” Nonetheless, the IRP update still includes 2,400 MW of new gas-fired combustion turbine generating facilities between 2019 and 2044. Nor does the IRP update address Dominion Energy’s continued investment in the Atlantic Coast Pipeline, which will supply existing and new natural gas generation facilities.

 On September 20, in a two-page order, the SCC found the filing to be “legally sufficient.” The SCC, however, noted that its finding “does not express approval of the magnitude or specifics of Dominion's future spending plans, the costs of which will significantly impact millions of residential and business customers in the monthly bills they must pay for power.”

 

(3) Sierra Club and Attorney General file Responses in Opposition to Dominion’s petition for reconsideration regarding disallowance of coal plant expenditures – Case No. PUR-2018-00195

 

In late 2018, Dominion applied for SCC approval for a RAC to recover the costs for new coal ash ponds and treatment facilities. On August 5, the SCC entered a Final Order approving most of the request, but disallowing $18.4 million of investments made at Chesterfield Units 3 and 4. These coal units are now retired and are not being used to serve customers. The Commission noted that Dominion decided to make these investments in June of 2015, recently after the Clean Power Plan carbon regulation was announced. Therefore, the Commission found, it was not reasonable to make continued investments in units that Dominion should have known would soon be retired. 

 On August 23, Dominion filed a Petition for Reconsideration of this disallowance. Dominion claims that the SCC’s decision “is inconsistent with the historic application of any prudence standard and otherwise contrary to the principle of reasonable discretion being afforded to utility decision-making.” In its decision, the SCC relied in part on Va. Code § 56-585.1 D. This statute provides that the SCC has the authority to determine the “reasonableness and prudence” of any cost sought to be recovered pursuant to a proceeding brought under Va. Code § 56-585.1, including environmental RAC proceedings.

 On September 17, Sierra Club and the Attorney General’s Division of Consumer Counsel filed responses in opposition to Dominion’s Petition. The Attorney General noted that a utility always bears the burden to prove that its spending is reasonable before recovering costs from customers. The Attorney General argued that Dominion advances an “illogical argument that would thwart the Commission’s ability to protect ratepayers from imprudent utility expenditures.” The Attorney General also argued (after noting that the statute only allows utilities to charge ratepayers for expenses that are “necessary”) that “common sense dictates that environmental compliance [incurred] to keep an electric generation facility in operation are not ‘necessary’ if the prudent course of action is instead to avoid the capital expense and simply retire the units.”  Dominion may file a reply to the responses by September 24.

 

(4) Virginia solar developer files testimony criticizing Appalachian Power’s 2019 Integrated Resource Plan – Case No. PUR-2019-00058

 On May 1, 2019, Appalachian Power Company (“APCo”) filed its first Integrated Resource Plan (“IRP”) since the enactment of 2018 Senate Bill 966, the Grid Transformation and Security Act.  An IRP is not a commitment to pursue any particular resource or course of action, but represents a utility’s plan for meeting customer demand over the next 15 years. The State Corporation Commission (“SCC”) must review the utility’s IRP and determine whether the plan is “reasonable and in the public interest.”  The IRP includes a Preferred Plan, which forecasts utility scale solar additions of 450 MW by 2023 and 1,500 MW by 2033. APCo’s IRP includes only 10 MW of battery storage over the entire planning period. APCo does not model or discuss renewable energy paired with battery storage as a resource at all.

 On September 18, a Charlottesville based solar developer, Sun Tribe Solar, filed direct testimony criticizing APCo’s failure to model solar plus storage resources during the 2019-2033 planning period. Sun Tribe Solar cited the rapid development of this technology and the fact that other utilities are utilizing solar plus storage as an alternative to gas peakers. Sun Tribe Solar also recommended that APCo invest in more solar in the near term because of the coming reductions in federal investment tax credit benefits. Finally, Sun Tribe Solar urged the Commission to require APCo, in future IRPs, to demonstrate how the utility is complying with the Code’s requirement to “utilize goods or services sourced” from Virginia businesses in all renewable energy construction or procurement activities.  An evidentiary hearing is scheduled for November 5, and comments are due by October 29.

 

Natural gas cases

 (1) Hearing Examiner files report and recommendation regarding Washington Gas Light base rate increase request – Case No. PUR-2019-00080

 On September 16, an SCC hearing examiner filed a report and recommendation regarding numerous disputed issues in Washington Gas Light’s (“WGL”) request for a base rate increase. WGL is requesting a rate increase of roughly $33 million, including a 10.3% rate of return on equity.

 

(2) SCC Staff recommends licensure of new competitive gas provider – Case No. PUR-2019-00135

On September 16, the SCC Staff filed a report recommending licensure of a new competitive gas provider, Nordic Energy Services. Unlike electric generation service, natural gas supply service is deregulated in Virginia. The SCC maintains a listing of all competitive service providers licensed to sell electricity and/or natural gas in Virginia

 

(3) Procedural schedule established for Washington Gas SAVE application – Case No. PUR-2019-00142

Washington Gas Light (“WGL”) is seeking SCC approval to update its Steps to Advance Virginia’s Energy Plan (“SAVE”) rider. The SAVE statute, § 56-603, allows gas distribution companies to seek rider recovery for costs to replace aging infrastructure, increase safety and efficiency, and decrease emissions. WGL wants to increase the authorized spending on its SAVE plan and incorporate additional programs.