On April 4, 2007, the General Assembly of Virginia ("General Assembly") enacted House Bill 3068 and Senate Bill 1416, which became Chapters 888 and 933 of the 2007 Acts of Assembly (collectively, "Chapter 933"). The Seventh Enactment Clause of Chapter 933 ("the Clause"), among other things, directs the State Corporation Commission ("Commission" or "SCC"), in consultation with the Office of Attorney General, to conduct a five-year assessment of "the rates and terms and conditions of incumbent electric utilities in the Commonwealth" including analysis of "the amount, reliability and type of generation facilities needed to serve Virginia native load compared to that available to serve such load." The following report ("Report") provides the Commission's updated assessment on the referenced matters, involving principally Dominion Energy Virginia ("DEV" or "Dominion"), Appalachian Power Company ("APCo"), and the electric cooperatives.

Rate Assessment

• DEV's residential bill for 1,000 kilowatt-hours ("kWh") of energy usage per month, which was $90.59 as of July 1, 2007, increased by $46.34 (51.15%) to $136.93(*1) per month as of July 1, 2022.

• The increase in the rate adjustment clause ("RACs") component of DEV's bill was the largest. This component accounts for $30.92 of the total bill increase since July 1, 2007.

• The fuel factor component increased by $13.06, while the base rates component increased by $2.36.

• APCo's residential bill for 1,000 kWh per month was $66.61 as of July 1, 2007. APCo's residential bill increased by $55.64 (83.53%) to $122.25 per month as of July 1, 2022.

• The majority of APCo's residential bill increase is attributable to the RAC component, which increased by $35.13 over this period.

• The fuel factor component increased by $9.88,(*2) while the base rates component increased by $10.63.

• The range of the increases experienced by the electric cooperatives over this period extends from a low of 7.89% to a high of 86.95%.

Reliability and Needed Generating Facilities

• DEV, APCo, and the electric cooperatives are, either directly or indirectly through purchased power agreements ("PPAs"), members of the PJM(*3) regional transmission organization ("RTO") whose primary mission is to ensure the safety, reliability, and security of the bulk electric power system.

• DEV relies on its generating resources, PPAs, demand-side management ("DSM") initiatives, and short-term energy purchases for satisfying its load serving obligations to customers. In April 2021, DEV announced that it would elect to procure its capacity through the Fixed Resource Requirement alternative to the PJM capacity market auction.(*4) By electing to participate in this alternative, DEV will be unable to participate in the capacity market that PJM coordinates and will instead be required to meet any forecasted capacity needs through construction of additional capacity resources, bilateral contracts with other utilities and merchant generators, or a combination of the two.

• Since October of 2017, DEV has purchased, developed, or entered into PPAs with approximately 340 megawatts ("MW") of solar resources, some of which were built for current or future compliance with the requirements of the Grid Transformation and Security Act ("GTSA")(*5) and the Virginia Clean Economy Act ("VCEA").(*6)

• The Commission has also determined that DEV's purchasing, developing, or entering PPAs for 914 MW of solar resources and 103 MW of energy storage resources with expected commercial operation dates of 2022 and 2023 were prudent, and some of these projects, if applicable, received certificates of public convenience and necessity ("CPCNs") permitting their construction.(*7) Through its approved offshore wind pilot project, DEV also developed two 6 MW wind turbines in 2020 off the shoreline of Virginia Beach, Virginia.(*8)

• The Commission granted DEV's request for approval of a rate adjustment clause, designated Rider SNA, for costs associated with preparing Petitions for Subsequent License Renewal to the Nuclear Regulatory Commission to extend the operating licenses of, and the projects reasonably appropriate to upgrade or replace systems and equipment deemed to be necessary to operate safely and reliability, Dominion's Surry Units 1 and 2 and North Anna Units 1 and 2 in an extended period of operation.(*9)

• DEV's 2022 Update to its 2020 IRP(*10) anticipates adding approximately 13,692 MW of solar, 2,600 MW of off-shore wind, 2,620 MW of storage, and retiring approximately 2,561 MW of generating resources over the next 15 years, based on its VCEA-compliant IRP plan.(*11)

• APCo, as a PJM member, has elected to rely on its generating resources, PPAs, DSM initiatives, and short-term energy purchases to satisfy its load-serving obligations to customers.

• In 2018, APCo entered into a PPA for a 120 MW wind farm located in Indiana.(*12) Since October of 2017, APCo has entered into 55 MW of solar PPAs. APCo also has a portfolio of 630 MW of PPAs consisting of five wind farms, one hydroelectric facility, and three solar facilities expected to come online in 2022.(*13)

• Over the next 15 years, APCo anticipates that 1,785 MW of nameplate capacity solar, 1,154 MW of nameplate capacity wind, and 400 MW of energy storage will be added to its portfolio.(*14) During this same time, wind contracts of approximately 375 MW (nameplate) will expire.(*15)

• In Case No. PUR-2020-00015,16 the Commission required APCo to perform a unit-by-unit retirement analysis for the Amos and Mountaineer coal units located in West Virginia and provide that analysis in APCo's 2022 IRP, which is currently pending before the Commission. (*17) APCo is also separately seeking Commission approval for investments at Amos and Mountaineer, which is currently pending before the Commission.(*18)

• APCo's internal capacity (owned capacity, capacity acquired through long-term non-utility generation PPAs, and DSM reductions) is projected to be sufficient for meeting its capacity obligations through 2036.(*19) APCo plans to continue purchasing energy, as is needed and economical, from the PJM market.

Peer Group Comparison

• The Clause requires the Commission to report every five years on a comparison of Virginia IOUs to those in their peer groups that meet the criteria of Code § 56-585.1 A 2. The Commission, through its Staff ("Staff"), developed several rate comparisons that utilize information from various Edison Electric Institute ("EEI") publications to assess the competitiveness of DEV's and APCo's rates as compared to those of the statutorily defined peer groups. This data can be found in Appendices 4, 5, and 6.

• Out of the 11 companies in the peer group, DEV is ranked 4th in the category of annualized residential rates, 3rd for annualized commercial rates, and 5th for annualized industrial rates.(*20)

• APCo is 6th in annualized residential, commercial, and industrial rates.

• At this time, APCO's and DEV's electricity rates appear to be competitive with their peer utilities, although pending and future rate requests, with a specific regard to fuel factor cases, could impact the competitiveness of electricity rates in the future.
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(*1) The July 1, 2022, monthly bill amount includes an increase to DEV's fuel factor, which was effective July 1, 2022. The change in the fuel factor increased the total monthly bill of a residential customer using 1,000 kWh by $14.93. See Application of Virginia Electric and Power Company to revise its fuel factor pursuant to § 56-249.6 of the Code of Virginia, Case No. PUR-2022-00064, Doc. Con. Cen. No. 220820050, Order Establishing 2022-2023 Fuel Factor (September 16, 2022).
(*2) APCo filed an application to increase its fuel factor on September 15, 2022, in Case No. PUR-2022-00139. In its application, APCo proposes to increase its fuel factor from 2.300 cents per kilowatt-hour ("¢/kWh") to 4.319 ¢/kWh, effective on an interim basis November 1, 2022, subject to modification. The rate impact of this request is an increase of approximately $20.19 on a monthly residential bill of 1,000 kWh.
(*3) PJM Interconnection, LLC ("PJM").
(*4) To elect this alternative, DEV was required by PJM to demonstrate that it has sufficient resources to meet the reliability requirement for its service area. DEV must maintain this alternative for a minimum of five consecutive years beginning June 1, 2022. See Commonwealth of Virginia, ex rel. State Corporation Commission, In re: Virginia Electric and Power Company's 2021 Update to its Integrated Resource Plan pursuant to Va. Code 56-597 et seq. Case No. PUR-2021-00201, Doc. Con. Cen. No. 210910060, 2021 Update to the 2020 IRP (September 1, 2021) ("2021 DEV IRP Update") at 10-11.
(*5) 2018 Va. Acts, ch. 296 (Senate Bill 966), entitled the Grid Transformation and Security Act in the Act's 24th enactment clause.
(*6) 2020 Va. Acts, chs. 1193 (HB 1526) and 1194 (SB 851). See Code § 56-585.5.
(*7) See Petition of Virginia Electric and Power Company, For approval of its 2021 RPS Development Plan under § 56-585.5 D 4 of the Code of Virginia, Case No. PUR-2021-00146, Doc. Con. Cen. No. 220320113, Final Order (March 15, 2022).
(*8) Petition of Virginia Electric and Power Company, For a prudency determination with respect to the Coastal Virginia Offshore Wind Project pursuant to Virginia Code § 56-585.1:4 F, Case No. PUR-2018-00121, 2018 S.C.C. Ann. Rept. 491, Final Order (November 2, 2018).
(*9) Petition of Virginia Electric and Power Company, For approval of a rate adjustment clause, designated Rider SNA under § 56-585.1 A 6 of the Code of Virginia, Case No. PUR-2021-00229, Doc. Con. Cen. No. 220710001, Final Order (July 1, 2022).
(*10) Commonwealth of Virginia, ex rel. State Corporation Commission, In re: Virginia Electric and Power Company's 2022 Update to the 2020 Integrated Resource Plan pursuant to Va. Code 56-597 et seq. Case No. PUR-2022-00147, Doc. Con. Cen. No. 220910018, 2022 Update to the 2020 IRP (September 1, 2022) ("2022 DEV IRP Update").
(*11) The VCEA compliant plan is referred to as Plan B in the 2022 DEV IRP Update. This plan was filed on September 1, 2022, for informational purposes only and has not been evaluated by the Commission. See id. at 2-4.
(*12) Although located in Indiana, this plant's output is reserved for APCo's Virginia jurisdiction.
(*13) Commonwealth of Virginia, ex rel., State Corporation Commission, In re: Appalachian Power Company's Integrated Resource Plan filing pursuant to Va. Code § 56-597 et seq., Case No. PUR-2022-00051, Doc. Con. Cen. No. 220440132 ("2022 APCo IRP") at ES-1.
(*14) These values are based on APCo's Hybrid Plan which APCo states is VCEA compliant. Id. at ES-4.
(*15) Id. at ES-2.
(*16) Appalachian Power Company Application For A 2020 Triennial Review Of Rates, Terms, and Conditions for Provisions Of Generation, Distribution, and Transmission Services, Case No. PUR-2020-00015, 2020 S.C.C. Ann. Rept. 435, Final Order (December 15, 2020) ("2020 APCo Triennial Review").
(*17) 2022 APCo IRP at 85-87.
(*18) Petition of Appalachian Power Company For approval of a rate adjustment clause, the E-RAC, for costs to comply with state and federal environmental regulations pursuant to § 56-585.1 A 5 E of the Code of Virginia, Case No. PUR2022-00001, Doc. Con. Cen. No. 220420263, Order for Notice and Hearing (April 21, 2022). In the previous E-RAC Proceeding in 2021, APCo was denied recovery by the Commission of capital costs pertaining to upgrades related to the requirements of the Environmental Protection Agency's Steam Electric Effluent Limitation Guidelines. Petition of Appalachian Power Company For approval of a rate adjustment clause, the E-RAC, for costs to comply with state and federal environmental regulations pursuant to § 56-585.1 A 5 E of the Code of Virginia, Case No. PUR-2020-00258, 2021 S.C.C. Ann. Rept. 330, Order Granting Rate Adjustment Clause (August 23, 2021).
(*19) For purposes of this expectation, APCo assumes the continued availability of the capacity and energy produced by the Amos and Mountaineer coal generation facilities.
(*20) This calculation was made by averaging individual customer class rates and ranking the composite averages.