SCC Weekly Energy Activity 7.29.2019 - 8.3.2019

Electric cases

 

(1) Kentucky Utilities files request for 21.4% rate increase – Case No. PUR-2019-00060

Kentucky Utilities, doing business as Old Dominion Power, (“KU/ODP”) is requesting a $12.7 million increase in revenues, which would increase a typical residential customer’s bill by 21.4%. KU/ODP is an investor-owned utility serving about 30,000 customers in Scott, Lee, and Wise Counties in far southwest Virginia. KU/ODP says it needs a base rate increase due to increased environmental regulatory costs. The utility also says that lower electricity sales means it is not recovering its authorized rate of return. KU/ODP, unlike Dominion and Appalachian Power Company, is regulated under Chapter 10 of Title 56 of the Code of Virginia. Because KU/ODP is not subject to the ratemaking laws found in Chapter 23 of Title 56, the SCC will be permitted to set the utility’s rates and its rate of return at levels the Commission finds to be just and reasonable.

A public hearing is scheduled for October 2 in Norton, Virginia. The SCC will hold an evidentiary hearing on January 22, 2020.

 

(2) SCC Staff files Staff Report regarding APCo’s pending Electric Vehicle tariff – Case No. PUR-2019-00067

 

APCo is requesting approval of a new voluntary rate schedule for residential customers who own electric vehicles. The new rate schedule would allow residential customers to charge their EVs using charging stations that consume power during off-peak hours. Customers would need to have both smart meters and charging stations in order to participate. 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 while potentially deferring the need for new generation, such as peaking resources.

 

Sierra Club and the Southern Environmental Law Center filed comments that were generally supportive of the proposed tariff. The SCC Staff filed its Staff Report on July 31. The Staff Report does not recommend approval or denial of the tariff, but suggested that the SCC may mwsh to approve the EV tariff on an experimental, four-year basis. There is no deadline for the SCC to enter a final order.

 

(3) Dominion files response to injunction motions from competitive service providers – Case Nos. PUR-2019-00117 and PUR-2019-00118

 Dominion has filed a request for a declaratory judgment alleging that Direct Energy and Calpine Energy Solutions, two competitive service providers (“CSPs”), are not providing full renewable energy service to their customers. Dominion claims that the CSPs do not control sufficient renewable energy resources or capacity to provide actual renewable energy service. Direct Energy and Calpine are attempting to serve 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 has filed a request for approval of a 100% renewable tariff, which is currently pending before the SCC). Dominion alleges that, under the CSPs’ interpretation of the statute, CSPs would be able to serve customers “merely by entering into financial transactions whereby they purchase renewable energy generated, for example, only during the night by excess wind or run-of-river hydro generation.”

 While this case is pending, Dominion is refusing to enroll customers of Direct Energy and Calpine. The two CSPs filed motions for injunctions asking the SCC to compel Dominion to enroll customers.

 Several parties have intervened in the case as interested parties. Replies to Dominion’s responsive pleading are due on August 6. The SCC will hold oral arguments on the motions for injunction on August 7.

 

(4) SCC Staff files testimony regarding Dominion’s request for 17% increase in profit level – Case No. PUR-2019-00050

 On August 2, the SCC Staff filed testimony 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%. Staff calls Dominion’s proposed ROE excessive and found that current market conditions support a return of 8.6%. After applying the peer group formula found in the statute, Staff recommended that the SCC authorize a return of 8.75%-8.97%. Staff’s recommended return is below the ROEs recommended by VPLC, the Attorney General, and the Navy due to Staff’s inclusion of South Carolina Gas & Electric in the peer group.

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 difference between Staff’s recommended ROE floor (8.75%) and Dominion’s requested ROE (10.75%) equates to a $190 million difference in revenue requirement.

Dominion will file rebuttal testimony on August 16. The SCC will hold an evidentiary hearing on September 10.

 

Natural gas cases

 

(1) Roanoke Gas and SCC Staff dispute recovery of 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.” Comments are due on August 13. Public witness testimony will be allowed at evidentiary hearing will on August 14.