SCC activity from Sept 30th - Oct 4, 2019

Electric cases

 (1) SCC enters procedural schedule for review of Dominion’s updated grid transformation plan – Case No. PUR-2019-00094

 On September 30, Dominion filed a request for approval of an updated grid transformation spending plan. The plan proposes additional investments in several areas, including advanced metering infrastructure (“AMI”), cyber security, “grid hardening,” and customer data exchange platforms designed to facilitate new rate structures such as time-varying rates. Dominion also states that its grid hardening and grid technology spending will improve reliability while allowing the utility to incorporate more customer-owned solar generation and electric vehicle load.

 Dominion proposes to invest $600 million over the next three years, including $517 million in capital costs and $83 million in operations and maintenance expenses. Dominion’s application is filed pursuant to Va. Code § 56-585.1 A 6, which allows the utility to recover grid transformation spending through a rate rider called a rate adjustment clause (“RAC”). Dominion’s application does not state whether the utility will seek to recover the grid transformation spending through a new rate increase or through existing base rates. The SCC recently published a report stating that – based on unaudited information submitted by Dominion’s accountants – that Dominion’s base rates produced excess revenues of $277 million during 2018.

 Interested parties may participate in this case by filing a notice of participation on or before November 12, 2019. A public hearing will be held on January 28, 2020.

(2) Dominion files rebuttal testimony regarding its request for approval of a new solar power purchase agreement – Case No. PUR-2019-00133

Dominion is requesting SCC approval to enter into a PPA with a third-party generator to purchase the output from a 20 MW solar facility in Westmoreland County. Dominion’s application notes that the General Assembly, pursuant to the 2018 Grid Transformation and Security Act, found that it is “in the public interest” for utilities to construct or purchase up to 5,000 MW of new solar and wind generation by 2028. Dominion states that it will recover the costs of the PPA through its base rates and fuel clause. The Commission has previously expressed its preference for Dominion to enter into PPAs for renewable energy as opposed to building and owning generation. (See Case No. PUR-2018-00135).

The SCC Staff filed rebuttal testimony stating that the evidence submitted by Dominion would support a finding of prudence. The Staff found, among other things, that the PPA would support the Commonwealth’s goal of having utilities purchase or construct at least 5,000 MW of new wind and solar generation by 2028. The Staff also found that the solar purchase could result in fuel cost savings and may help the Commonwealth comply with the Regional Greenhouse Gas Initiative emissions limitations. There are two major disputes between Dominion and the Staff, however. The first disagreement concerns whether the solar PPA is needed to serve any forecasted capacity needs. Dominion asserts that it is needed due to capacity deficits forecasted by the company’s 2018 Integrated Resource Plan. Staff also disagrees with Dominion’s proposed methodology for allocating the costs of the PPA to customers. Dominion is proposing to allocate costs of the PPA based on forecasted energy, capacity, and REC values as opposed to actual observed market prices. A hearing on the application will be held on October 8.

SCC Staff files testimony regarding 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.

The SCC Staff criticized APCo for failing to model third-party renewable energy purchases, noting that “wind and solar PPAs represent a reasonable resource that is price competitive to Company-owned projects, and as such, it is likely that the costs of the Company’s portfolios presented in its IRP are overstated.” Staff also recommended that APCo be directed, in future IRPs, to include customer bill impacts associated with the investments in the IRP plans. Staff finds APCo’s load forecast to be reasonable, but is “wary of the assumptions underlying the Company’s forecast of its wind and solar capacity factors, natural gas prices, and power market prices.”

An evidentiary hearing is scheduled for November 5, and comments are due by October 29.

Parties conduct discovery and prepare testimony regarding Dominion’s “100% renewable energy” tariff application – Case No. PUR-2019-00094

On June 20, the SCC entered a procedural schedule for the review of Dominion’s 100% renewable energy proposal, Rider TRG. Rider TRG would reallocate the energy generated from several renewable energy facilities that are either in Dominion’s rate base or from which Dominion currently purchases power. Rider TRG customers would pay a premium of 0.421 cents per megawatt-hour to purchase this energy, which would increase a 1,000 kWh monthly bill by $4.21. The premium is a “proxy” for the 2018 market value of RECs generated from the TRG portfolio.

The generation for Rider TRG would be sourced from solar, hydroelectric, and biomass generation facilities as well as from Dominion’s Virginia City coal plant. (Dominion estimates that the coal mixture burned at this plant will consist of 90% coal and 10% biomass wood waste by 2023.) Dominion asserts that Rider TRG, if approved, would constitute a 100% renewable option under Va. Code § 56-577 A 5. If the SCC approves Rider TRG – and finds that it constitutes a 100% renewable energy tariff pursuant to this Code Section – Dominion customers would no longer have the option to purchase renewable generation from competitive suppliers.

Several parties, including renewable energy advocates, competitive service providers, and environmental advocates have intervened in this case. These parties are expected to oppose the application because it would eliminate customer choice for renewable energy; because it would not support the development of any resources not already in Dominion’s portfolio; and because it would force customers to subsidize Dominion’s Virginia City coal plant. Attorney General Mark Herring intervened in this case on July 2, but has not yet indicated whether his office will take a position on behalf of consumers.

Parties will file direct testimony on October 17. An evidentiary hearing is scheduled for November 21.

Natural gas cases

(1) SCC Staff and Sierra Club file briefs opposing Roanoke Gas efforts to recover MVP-related costs in rate case – Case No. PUR-2018-00013

Roanoke Gas, a gas distribution company with 61,000 customers in western Virginia, is seeking a $10.5 million rate increase. One issue in dispute concerns the utility’s proposal to recover a portion of MVP-related costs from its general ratepayers. An affiliate of Roanoke Gas owns a 1% stake in the Mountain Valley Pipeline project. Roanoke Gas has already entered into a 20-year purchase agreement with MVP. The SCC Staff has questioned the need for the capacity provided by the MVP.

Roanoke Gas is also requesting to recover additional attorneys’ fees and rate case expenses from customers due to this issue, “given [the] additional expense that the Company anticipates incurring related to litigating the Staff’s unprecedented and unsupported recommendation to disallow the Company’s expenses related to the MVP.” The Staff previously testified that while demand for gas has risen in other areas of the Commonwealth, demand in Roanoke Gas’s service territory “has remained relatively stable.” Sierra Club argued that there is no need for the MVP capacity, pointing out the surplus of capacity available to the on the highest-demand days in recent years. For this reason, Sierra Club argued that customers should not be charged for any MVP-related construction or spending by Roanoke Gas. There is no deadline for the SCC to enter a final order on the rate increase request.