RD282 - Status Report: Implementation of the Virginia Electric Utility Regulation Act Pursuant to § 56-596 B of the Code of Virginia – August 18, 2020
This document contains the report of the Virginia State Corporation Commission ("Commission") pursuant to § 56-596 B of the Code of Virginia ("Code"), which directs the Commission to provide an update by September 1 of each year on the status of the implementation of the Virginia Electric Utility Regulation Act, Code §§ 56-576 through 56-596.3 ("Regulation Act").
Key highlights from the report include:
• Dominion Energy Virginia's ("DEV" or "Dominion") typical(*1) residential bill has increased $26.10 (28.81%) from July 1, 2007, to July 1, 2020, to $116.69.
• Appalachian Power Company's ("APCo") typical residential bill has increased $42.42 (63.68%) from July 1, 2007, to July 1, 2020, to $109.03.
• In response to a Commission directive in Dominion's 2020 Integrated Resource Plan ("2020 IRP") proceeding, Dominion quantified the typical residential bill impact of the Virginia Clean Economy Act ("VCEA") and additional legislation passed by the 2020 General Assembly to be between $52.40 and $55.02 per month by 2030 (or an estimated annual increase of $628.80 to $660.24).
• In a presentation to investors in May 2020, Dominion Energy, Inc., identified total potential DEV capital investments of $50 to $59 billion through 2035, including investments in solar, wind, energy storage, nuclear relicensing, transmission, distribution undergrounding, distribution grid modernization, and renewable-enabling quick start generation. Dominion's rate base is $24 billion on a total system basis as of December 31, 2019.
• As reported by Dominion, DEV's base rate financial results for calendar year 2019 reflect an actual earned return on equity ("ROE") of 8.03%, combined for generation and distribution. This earned ROE is below the 9.20% base ROE approved to apply to the earnings test in DEV's 2021 triennial review, as shown in the following table in percentage points and revenue dollars:
2019 Earnings Above Authorized Levels
Percentage Points: -1.17%
• As reported by Dominion, DEV's combined base rate financial results for calendar years 2017 through 2019 reflect an actual earned ROE of 11.79%. This earned ROE is above the 9.20% base ROE approved to apply to the earnings test in DEV's 2021 triennial review, as shown in the following table in percentage points and revenue dollars:
2017–2019 Earnings Above Authorized Levels
2017 -- Earned ROE: 13.84%, Revenues in Excess of a 9.20% ROE: $300.8 million
Combined 2017-2019 -- Earned ROE: 11.79%, Revenues in Excess of a 9.20% ROE: $502.7 million
• As of June 30, 2020, DEV has made $199.9 million of Virginia jurisdictional investments in wind and distribution grid transformation projects that it states are eligible for use as a potential customer credit reinvestment offset pursuant to Code § 56-585.1 A 8.
• While Dominion's 2020 base rate financial results are not yet known, DEV recorded significant costs totaling $630.7 million on a Virginia jurisdictional basis in the first quarter of 2020 associated with the announced early retirement of Chesterfield Power Station Units 5 and 6 and Yorktown Power Station Unit 3. These significant charges could reduce DEV's 2020 earned ROE by more than 9 percentage points and the combined earned ROE for 2017-2020 by more than 2 percentage points.