RD507 - Assessing the Updated Integrated Resource Plan of Any Investor-owned Incumbent Electric Utility as Required by Chapter 6 of the 2015 Virginia Acts of Assembly

Executive Summary:
In accordance with Chapter 6 of the 2015 Virginia Acts of Assembly ("Chapter 611”), the State Corporation Commission ("Commission") is pleased to provide a report to the Governor and the General Assembly outlining the Commission's assessments of integrated resource plans ("IRP") filed annually by investor-owned electric utilities and the impact of the U.S. Environmental Protection Agency's ("EPA") Final Rule under § 111(d) of the Federal Clean Air Act ("Final Rule"). The EPA issued its Final Rule on August 3, 2015,(*1) which included significant modifications to the EPA's proposed rules that were issued in 2014. On February 9, 2016, the U.S. Supreme Court granted a stay of the regulation until it has been reviewed by the D.C. Circuit and then subsequently either reviewed or denied review by the Supreme Court. Oral argument at the D.C. Circuit began on September 27, 2016, and the matter remains pending before the Court. Accordingly, the full impact of the Final Rule on Virginia, if implemented, cannot be determined at this time.

The most recent IRPs submitted by Virginia's electric utilities, Virginia Electric and Power Company d/b/a Dominion Virginia Power ("DVP"), Appalachian Power Company (''APCo") and Kentucky Utilities Company d/b/a Old Dominion Power Company ("KU"), were filed on May 1, 2016. The 2016 IRPs generally indicate that compliance with the Final Rule can be achieved and that the impacts on unit retirements and rates will vary significantly depending on how the Final Rule is implemented in Virginia and the surrounding region.

At this point in time, the broad range of possible compliance pathways associated with the Final Rule in Virginia and other states where generating facilities serving Virginia are located make it impossible to predict with any degree of certainty the generating unit retirements or utility rate impacts that could potentially result from the Final Rule. Pending legal challenges to the Final Rule and the upcoming change in the federal administration add even greater uncertainty regarding § 111(d) of the federal Clean Air Act. Each of Virginia's utilities has estimated the costs and rate impacts of the Final Rule, as described herein; however, there remain many contingencies that could substantially affect those estimates. The Commission will continue to assess the Final Rule and related developments as part of an ongoing effort to better assess the ultimate implications of the Final Rule.
(*1) The Final Rule was published in the Federal Register on October 23, 2015. Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units, 80 Fed. Reg. 64,662, Final Rule (Oct. 23, 2015).