RD390 - Status Report: Implementation of the Virginia Electric Utility Regulation Act Pursuant to § 56-596 B of the Code of Virginia – September 1, 2021
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"). The Regulation Act has expanded in recent years with new programs and requirements that fall within the Commission's purview. This report summarizes the Commission's efforts to implement the Regulation Act for incumbent electric utilities(*1) as well as the electric cooperatives.
Key highlights from the report include:
A. Current Status of the Regulation Act
• Over the last three years, the Regulation Act has 17 new or expanded programs and rulemakings that apply to two of the Commonwealth's incumbent electric utilities and two new programs that apply to the Commonwealth's electric cooperatives. These programs include the requirements of the Virginia Clean Economy Act ("VCEA"),(*2) which establishes a new Renewable Energy Portfolio Standard ("RPS") and Energy Efficiency Resource Standard ("EERS"). The relevant Commission dockets to implement these programs, as well as the dockets that continue to provide oversight of the utility's existing operations, are summarized in Section IV, below.
• According to its 2020 RPS Plan, Dominion Energy Virginia ("DEV" or "Dominion") estimates that by 2045, it may have 28,433 megawatts ("MW") of solar resources, 5,112 MW of offshore wind resources, and 316 MW of hydroelectric resources that it will use toward meeting its capacity obligations in the PJM Interconnection, L.L.C. regional transmission organization ("PJM").(*3) DEV also anticipates developing 2,730 MW of energy storage through a mix of company-owned and third party power purchase agreements ("PPAs") by 2035.(*4) On April 30, 2021, the Commission found DEV's RPS Plan reasonable and prudent for the limited purpose of its first annual plan, approved 498 MW of new renewable generation capacity in the Commonwealth, and approved a rate adjustment clause ("RAC") for cost recovery associated with approved company-owned solar facilities. Among other things, as part of its Order, the Commission required DEV to file a least cost plan that meets applicable carbon regulations and the mandatory RPS Program requirements of the VCEA in future RPS Plans.(*5)
• According to its 2020 RPS Plan, Appalachian Power Company ("APCo") anticipates adding, through a mix of company-owned resources and PPAs, 3,452 MW of solar, 2,200 MW of onshore wind, and 400 MW of energy storage to meet the requirements of the VCEA through 2050.(*6) On April 30, 2021, the Commission found that for purposes of filing its first annual plan, APCo's RPS Plan is reasonable and prudent. APCo did not request approval of any generation capacity or recovery of costs.(*7) Among other things, as part of its Order, the Commission also required APCo to file a least cost plan that meets applicable carbon regulations and the mandatory RPS Program requirements of the VCEA in future RPS Plans.(*8)
• The VCEA also established a mandatory EERS. On July 29, 2021, the Commission approved APCo's application for approval of five new energy efficiency programs and one new energy efficiency pilot, and for continuance of one demand response program and one energy efficiency program.(*9) DEV seeks approval of 11 new energy efficiency and demand response programs, expansion and modification of certain existing programs, and approval of cost recovery through associated RACs.(*10) A Commission decision on this application is due by September 7, 2021.
B. Rate and Capital Outlook
• DEV's typical(*11) residential bill has increased by $30.69 to $121.28 (a 33.88% increase) from July 1, 2007,(*12) to July 1, 2021.
• In DEV's 2020 Integrated Resource Plan ("2020 IRP") proceeding, DEV quantified the typical residential bill impact of the 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 between $628.80 to $660.24). The Commission found that it could not conclude, based on the record in the proceeding, that Dominion's 2020 IRP, as filed, was reasonable and in the public interest for purposes of a planning document.(*13) The Commission further found Dominion's proposal to include in future IRPs and updates a least cost VCEA plan that would meet (i) applicable carbon regulations, and (ii) the mandatory RPS Program requirements of the VCEA, to be reasonable.(*14) The Commission has directed DEV to file additional updated billing analyses in future proceedings as well. (*15) The Commission also found that DEV should address environmental justice in future IRPs and updates, as appropriate.(*16)
• DEV has filed its first triennial review application, which is currently pending before the Commission.(*17) The Commission will report on its determinations resulting from its review of this filing in next year's report.
• The Commission's 2020 report included an account of anticipated growth capital investment as identified by Dominion Energy, Inc. ("DEI") in a May 2020 presentation to investors. In a subsequent February 2021 presentation to investors, DEI identified DEV capital investments of approximately $24 billion for the five-year period 2021 – 2025 including investments in wind and solar generation, energy storage, nuclear facility relicensing, transmission, distribution undergrounding, grid transformation and renewable enabling combustion turbines ("CTs"). These investments would reflect an 80% increase in DEV's rate base by 2025, with 63% being recovered from customers through RACs.
• The February 2021 presentation also forecasted DEI potential environmental capital investments of $72 billion through 2035. While DEV-specific investment for this period was not shown as a separate number, applying the same ratio of DEV to consolidated DEI five-year growth capital investments results in DEV potential environmental capital investments of $53 billion through 2035. This is within the range of total potential DEV capital investments of $50-$59 billion through 2035 identified in a presentation to investors in May 2020.
• APCO's typical residential bill has increased by $50.48 to $117.09 (a 75.79% increase) from July 1, 2007, to July 1, 2021.
• The Commission issued a Final Order in APCo's first triennial review, covering the period 2017 – 2019. The Commission found APCo earned a return on common equity ("ROE") of 9.48%, which is six basis points ($1.99 million in revenue) above the authorized ROE of 9.42%.(*18) Both APCo and the Office of the Attorney General, Division of Consumer Counsel ("Consumer Counsel"), have appealed the Commission's decision to the Supreme Court of Virginia.
• As reported by APCo, its base rate financial results for 2020 reflect an actual earned ROE of 4.76%, which is below its authorized ROE of 9.20%.(*19) APCo's 2020 financial results will be audited as part of its next triennial review, which will be filed in 2023 and will cover the period 2020 – 2022.
• APCo did not file an IRP in 2020 or 2021. In keeping with Code § 56-599, APCo's next IRP will be due by May 1, 2022. The Commission directed APCo to file its own revised bill analysis as part of its 2021 RPS Plan(*20) and in its next IRP.(*21)