Notable SCC filings from Sept 4-13, 2019

Electric cases

(1) Hearing held regarding Dominion’s request for 17% increase in profit level – Case No. PUR-2019-00050

 On September 10 and 11, the SCC held an evidentiary hearing regarding Dominion’s request to increase its rate of return on common equity (“ROE”). Dominion wants to increase its current ROE (i.e., the allowed shareholder profit level) by 17%, from the current 9.2% to 10.75%. The SCC Staff calls Dominion’s proposed ROE excessive and found that current market conditions support a return of 8.6%. The SCC Staff calculated that the 155 basis points increase requested by Dominion would result in a $147 million increase to Dominion’s total revenue requirement (including both base rates and riders). The Attorney General’s expert witness testified that Dominion’s required return should be between 7.6% and 8.8%. 36 members of the Virginia General Assembly filed a letter supporting the testimony filed by the Attorney General’s expert witness.

 

Dominion argued that the proposal would have a minimal effect on customer bills, and asserted that the increased ROE would have “no impact” on customers’ base rates. The SCC Staff called this assertion “fundamentally untrue” and noted that the ROE set in this case would determine whether consumers are entitled to refunds or rate cuts following Dominion’s 2021 triennial review.  The parties will file post-hearing briefs on October 18.

 

(2) Appalachian Power files request for broadband pilot program – Case No. PUR-2019-00145

 On September 6, Appalachian Power (“APCo”) filed a petition requesting permission to provide broadband service in Grayson County, Virginia. 2019 legislation, codified in Va. Code § 56-585.1:9, authorizes APCo to offer broadband services in areas without a broadband provider. APCo provides two different scenarios, with annual costs between $1.5 and $2.5 million. The broadband service costs could be recovered through APCo’s base rates or a rate adjustment clause for “grid transformation” investments; however, the statute prevents APCo from recovering broadband service costs before July 1, 2020. The SCC has not yet established a procedural schedule for this case.

 

(3) SCC approves APCo’s voluntary rate schedule for EV owners – Case No. PUR-2019-00067

 

On September 12, the SCC approved APCo’s proposed voluntary rate schedule for residential customers who own electric vehicles. Residential customers will charge their EVs under this new rate schedule, which provides lower prices during off-peak hours. Customers would need to have smart meters and charging stations that are designed to use power during off-peak hours. APCo estimates that a typical EV owner could save $86.51 per year under this rate schedule, as opposed to charging his or her EV under normal residential rates. APCo argues that this rate schedule is in the public interest because it would support EV use and may defer the need for new generation, such as peaking resources. The SCC approved the rate schedule for four years on an experimental basis.

 

(4) Briefing schedule established regarding Dominion petition for reconsideration in coal plant environmental rider case – 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 argued that “the Commission’s finding of imprudence … is against the great weight of the evidence in this proceeding … which clearly establishes that the costs for which the Company seeks recovery in this proceeding were both necessary and prudent.” Dominion also 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. Dominion, however, argued that the SCC’s reliance on this statute to disallow costs “is an open legal question.”

Respondents may file a response to Dominion’s petition on or before September 17, and

 

Dominion may reply to the responses by September 24.

 (5) Costco withdraws appeal of aggregation decision – Case No. PUR-2018-00088

 

On September 5, Costco withdrew its notice of appeal of the Commission’s rejection of its aggregation petition. Costco requested SCC approval to aggregate the demand from several stores in Dominion’s service territory in order to reach the 5MW threshold required to shop for generation from a competitive supplier. The Commission has previously rejected several other aggregation requests, citing the potential for fixed costs to be shifted to other customer classes. Appeals of SCC decisions are “of right,” meaning parties have an automatic right to appeal all SCC decisions to the Virginia Supreme Court. Costco did not provide any explanation of why it was withdrawing it appeal.

 

(6) Parties file post-hearing briefs regarding Dominion’s proposed market-based rate schedule – PUR-2018-00192

 

On July 25, the SCC held an evidentiary hearing regarding Dominion’s request for approval of a revised market-based rate (“MBR”) tariff. The MBR tariff is designed to allow customers the option to buy energy based on PJM wholesale market prices. Dominion says the revised tariff would be an attractive alternative to purchasing energy from a competitive service provider (“CSP”). Dominion states that the revised MBR tariff contains several improvements over the existing MBR tariff, approved in 2016, that will allow more customers to participate. The new tariff also contains features that could encourage customers to reduce energy usage during peak hours.

 

Dominion and the Commission Staff entered into a partial settlement regarding disputed issues in the case. Microsoft and Direct Energy, however, did not sign onto this stipulation. Microsoft and Direct Energy challenged several aspects of the proposed tariff, including the minimum charge. Direct Energy argued that the MBR is not actually a “tariff,” since the rate option does not provide any set rates. There is no deadline for the SCC to enter a final order.

 

Natural gas cases

(1) Procedural schedule established for Columbia Gas SAVE application – Case No. PUR-2019-00132

Columbia Gas of Virginia 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. Columbia Gas wants to increase the authorized spending on its SAVE plan and incorporate additional programs. The SCC has not established a hearing schedule; comments on the proposal are due on October 7.

(2) SCC approves Roanoke Gas request to update its SAVE Rider – Case No. PUR-2019-00080

On September 11, the SCC approved Roanoke Gas’s request 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. Roanoke Gas sought permission to increase spending under the program and to undertake new projects.