RD203 - Report of the State Corporation Commission to the Commission on Electric Utility Regulation of the Virginia General Assembly - Status Report: Implementation of the Virginia Electric Utility Regulation Act - September 1, 2015


Executive Summary:
Section 56-596 B of the Code of Virginia ("Code") directs the State Corporation Commission ("Commission") to provide an annual update on the status of the implementation of the Virginia Electric Utility Regulation Act, §§ 56-576 through 56-596 of the Code ("Regulation Act") and to offer recommendations for any actions by the Virginia General Assembly ("General Assembly") or others that the Commission considers to be in the public interest. This report is responsive to that directive. Since the Commission's last report, presented on September 1, 2014, the following activities occurred:

• The "Virginia Energy Sense" ("VES ") program, which is designed to fulfill the requirements of §§ 56-592 and 56-592.1 of the Code, continued to enhance features to the program designed to stress the value of energy conservation and efficiency. Key efforts in the past year have included a targeted radio advertising campaign in major regions of the state, community outreach, new middle school educational activities, digital and social media outreach, public relations and updated market research. The Commission also completed a solicitation in early 2015 to establish a new contract for communications support to extend the VES program for an additional three-and-one-half years, maintaining the current scope and approach to the campaign.

• The Commission is considering Virginia Electric and Power Company's d/b/a Dominion Virginia Power ("DVP," "Dominion," or "Dominion Virginia Power") applications to construct and operate a 20 megawatt ("MW") Remington Solar Facility in Fauquier County and a nominal 1,600 MW natural gas-fired combined-cycle facility in Greensville County. With respect to generation additions approved prior to this year:

* Dominion's 1,300 MW natural gas combined-cycle facility in Warren County was completed and entered into commercial operation on December 10, 2014;

* Dominion's 1,358 MW natural gas combined-cycle facility in Brunswick County is under construction and expected to begin commercial operation in the summer of 2016;

* Natural gas conversion of Appalachian Power Company's ("APCo") Clinch River Units 1 and 2 is underway and is expected to be completed in early 2016 and mid-2016, respectively; and

* Green Energy Partners/Stonewall LLC's 778 MW natural gas-fired, combined-cycle merchant generator in Loudoun County is under construction and expected to be in operation during the fall of 2017.

• The 2015 Session of the Virginia General Assembly enacted legislation amending the integrated resource plan ("IRP") statutes that were signed into law by the Governor and became effective on July 1, 2015. The 2015 Amendments now require each electric utility to file IRPs annually, by July 1, 2015, and thereafter by May 1. The 2015 Amendments also require the IRPs to evaluate the effect of current and pending environmental regulations on the continued operation of existing electric generation facilities or options for construction of new electric generation facilities and the most cost-effective means of complying with current and pending environmental regulations. Additionally, the 2015 Amendments require that IRPs address options for maintaining and enhancing rate stability, energy independence, and economic development including retention and expansion of energy-intensive industries and service reliability.

• APCo and Dominion have met their 2014 renewable energy portfolio standard ("RPS") goals pursuant to§ 56-585.2 of the Code.

• APCo and Dominion continue to develop and expand approved renewable generation programs and pilot programs.

• The Commission approved two new residential demand-side management ("DSM") programs for Dominion Virginia Power and seven new residential DSM programs for APCo.

• The Commission found, among other things, that a 10.9% return on equity ("ROE") was reasonable for APCo's 2012-13 biennial review period, resulting in $5.8 million in refunds being credited to customers' bills. The Commission is currently performing its biennial review of Dominion Virginia Power for the 2013-14 time period.

• APCo's and DVP's 2014-15 electricity rates appear to be competitive with their peer utilities that meet the criteria of § 56-585.1 A 2 of the Code, although pending rate requests could impact the competitiveness of electricity rates in the future.

• The Commission continues to participate in and monitor several proceedings at the Federal Energy Regulatory Commission ("FERC") involving PJM Interconnection, LLC ("PJM").