RD262 - Combined Reports: Status Report: Implementation of the Virginia Electric Utility Regulation Act, Report on Distributed Solar Generation, and Report Assessing the Updated Integrated Resource Plans of Investor-owned Incumbent Electric Utilities
This document contains the combined reports of the Virginia State Corporation Commission pursuant to the following legislative directives:
• Section 56-596 B of the Code of Virginia directs the State Corporation Commission ("Commission") to provide an update, on or before September 1 of each year, concerning the status of the implementation of the Virginia Electric Utility Regulation Act, §§ 56-576 through 56-596 of the Code of Virginia, and to offer recommendations for any actions by the Virginia General Assembly or others that the Commission considers to be in the public interest.
• Chapter 771 of the 2011 Virginia Acts of Assembly directs the Commission to consider for approval petitions filed by a utility to construct and operate distributed solar generation facilities and to offer special tariffs to facilitate customer-owned distributed solar generation. It also requires the Commission to report annually on any demonstration programs approved pursuant thereto.
• Pursuant to Chapter 382 of the 2013 Virginia Acts of Assembly and Chapter 803 of the 2017 Virginia Acts of Assembly, the Commission currently conducts renewable energy pilot programs for third-party power purchase agreements within the certificated service territories of Virginia Electric and Power Company d/b/a Dominion Energy Virginia ("Dominion Energy Virginia") and Appalachian Power Company.(*2) Under the pilot programs, a person who owns or operates a solar-powered or wind-powered electric generation facility that is located on premises owned or leased by an eligible customer-generator may sell the electricity generated from such facility exclusively to such eligible customer-generator under a third-party power purchase agreement.
• In accordance with Chapter 6 of the 2015 Virginia Acts of Assembly, on or before December 1 of each year the Commission is to report on its assessments of integrated resource plans filed annually by investor-owned electric utilities and the impact upon electric rates in Virginia of the U.S. Environmental Protection Agency's Final Rule under § 111(d) of the Federal Clean Air Act.
For reference, information concerning distributed solar generation and third-party power purchase agreements for renewable solar and wind generation may be found on pages 39-46 of this annual report. The Commission's assessment of investor-owned electric utility integrated resource plans is located on pages 47-54 of this report. The remainder of the report is devoted to a discussion of the implementation of the Virginia Electric Utility Regulation Act.
Highlights of these updates since September 1, 2016, include the following:
• On May 1 and June 30, 2017, Dominion Energy Virginia provided analyses of its combined generation and distribution base rate financial results for calendar year 2016 reflecting an earned return on common equity for calendar year 2016 of 12.87%. The earned return on equity of 12.87% exceeds the 9.60% return on equity approved by the Commission for Dominion Energy Virginia's rate adjustment clauses during 2016 by 3.27 percentage points, or approximately $251.9 million in revenues. The earned return on equity of 12.87% also exceeds the 10.00% return on equity approved by the Commission in Dominion Energy Virginia's last biennial review in 2013 by 2.87 percentage points, or approximately $221.1 million in revenues.
• On May 31, 2017, Appalachian Power Company provided an analysis of its base rate financial results for calendar year 2016 reflecting an earned return on common equity for calendar year 2016 of 11.09%. The earned return on equity of 11.09% exceeds the 9.40% return on equity most recently approved by the Commission for Appalachian Power Company's rate adjustment clauses by 1.69 percentage points, or approximately $27.98 million of revenues. The earned return on equity of 11.09% also exceeds the 9.70% return on equity approved by the Commission in Appalachian Power Company's most recent biennial review in 2014 by 1.39 percentage points, or approximately $22.66 million of revenues.
• In 2016 Appalachian Power Company filed its application pursuant to § 56-585.1:1 of the Code of Virginia for a Commission determination of a fair return on equity to be applied to rate adjustment clauses approved under §§ 56-585.1 A 5 and A 6 of the Code of Virginia. The Commission awarded a return on equity of 9.40%.
• Dominion Energy Virginia filed its application pursuant to § 56-585.1: 1 of the Code of Virginia for a Commission determination of a fair return on equity to be applied to rate adjustment clauses approved under §§ 56-585.1 A 5 and A 6 of the Code of Virginia. A hearing is scheduled for September 2017.
• Rappahannock Electric Cooperative filed an application to increase its electric rates and charges by approximately $22 million for bills rendered on and after January 1, 2018, representing an overall increase of 6.2%. The case is pending before the Commission.
• The Commission approved certificates of public convenience and necessity for several new generating facilities, including Dominion Energy Virginia's 20 megawatt Remington Solar Facility in Fauquier County, Dominion Energy Virginia's 17.6 megawatt solar facility on the Naval Air Station Oceana in Virginia Beach, and C4GT, LLC's 1,060 megawatt natural gas combined cycle electric generating facility in Charles City County.
• The Commission approved interim or final fuel factor increases for customers of Dominion Energy Virginia and Kentucky Utilities Company d/b/a Old Dominion Power Company.
• The Commission continues to follow developments concerning the U.S. Environmental Protection Agency's Clean Power Plan, which has been stayed by the U.S. Supreme Court.
• The Commission received integrated resource plan filings from Dominion Energy Virginia, Appalachian Power Company, and Kentucky Utilities Company d/b/a Old Dominion Power Company, all of which are currently under review. These plans generally indicate that the companies believe compliance with the Final Rule under § 111(d) of the federal Clean Air Act can be achieved and that the impacts on generating unit operations and customer rates will vary significantly depending on how the Final Rule is implemented in Virginia and surrounding regions.
• Dominion Energy Virginia, Appalachian Power Company, and some Virginia electric cooperatives continue to offer demand-side management and energy efficiency programs.
• Dominion Energy Virginia and Appalachian Power Company continue to offer opportunities for customers to support renewable energy, and the companies continue to meet voluntary renewable portfolio standard program goals.
• The Commission's consumer education program, “Virginia Energy Sense," continues to enhance program features to stress the value of energy conservation and efficiency. “Virginia Energy Sense" received the U.S. Environmental Protection Agency's ENERGY STAR® Excellence Award in ENERGY STAR Promotion for its outstanding efforts to promote energy efficiency in April 2017.
• Dominion Energy Virginia's and Appalachian Power Company's electricity rates for 2016-2017 appear to be competitive with their peer utilities, though pending rate requests could impact the competitiveness of electric rates in the future.
(*2) The Commission's guidelines for implementing these pilot programs may be found at: http://www.scc.virginia.gov/pur/ppa/guide_clean.pdf.