Last week lawmakers friendly to Dominion Energy Virginia introduced sweeping legislation, The Grid Transformation and Security Act of 2018, which would increase investment in Virginia’s electric grid with the goals of increasing renewable energy, reducing power outages, and guarding against cyber-sabotage. Backers say the three-bill package also would restore rate-setting oversight by the State Corporation Commission after three years of a rate freeze, and return a cumulative $1 billion in refunds and rate reductions to customers over eight years.
The response from some of Dominion’s traditional foes was negative. Critics suggested that the legislation would neuter the SCC’s oversight powers even while nominally restoring them, thus allowing the utility to keep hundreds of millions of dollars due the rate payers.
“This bill is bad policy and dangerous, giving Dominion even more power over our lives and our future,” responded Tom Cormons, executive director of Appalachian Voices, a group that has helped lead the fight against Dominion’s Atlantic Coast Pipeline project, in a press release. “For far too long, the legislature has gone along with the monopoly’s plans, and it’s high time for our elected representatives to finally say ‘no’ to Dominion.”
In a Washington Post op-ed, Stephen D. Haner, a lobbyist representing the Virginia Poverty Law Center (and a frequent contributor to this blog), described the proposals as a “preemptive attack” on the SCC’s independence. “The outcome Virginia consumers should be hoping for is a return to full SCC authority and an almost immediate rate case to review the earnings during the recent regulatory holiday.”
However, environmental groups such as the Virginia Chapter of the Sierra Club, the Southern Environmental Law Center, and the Chesapeake Climate Action Network, which have combated Dominion over the pipeline, solar power, and coal ash disposal, have refrained so far from blasting the bill — at least in official statements. By packing environmental desiderata such as renewable power, energy conservation, electric vehicles, energy storage systems and microgrids into the bill, Dominion may have disarmed some of its critics.
The most comprehensive description of the package comes from Dominion. The summary that follows comes from an “overview” prepared by the company’s communications team.
Refunds and rate reductions. Refunds and rate reductions for rate payers totaling more than $1 billion over the next eight years include:
- $133 million in one-time credits.
- $740 million in rate reductions achieved through elimination of the biomass rider and other riders.
- $100 million annually from lower taxes resulting from the recently enacted federal tax reform.
State Corporation Commission oversight. The legislation restores SCC review of Dominion base rates but reviews base rates every three years instead of every two years, as it did before the freeze. The bill also adds SCC reviews before and after grid transformation investments are undertaken.
The legislation will reduce future riders (also called RACs, or Rate Adjustment Clauses), which are surcharges for new projects. States the Dominion summary: Before future riders can be added for new investments, the SCC will determine if there were overearnings. If there are overearnings, SCC will use them to offset the cost of future riders.
Grid transformation investments
The package allows for investments to build a more sustainable and resilient grid. These investments, summarizes the Dominion outline, aim to “reduce outages or restoration times, secure energy assets, enhance tools available to customers, and increase investments in renewable generation.” The investments can be grouped as follows:
Reliability investments
- Automatically reporting of outages when they occur.
- Prediction of certain outages before they occur so crews can be dispatched to equipment nearing failure.
- Isolation of outages so fewer customers are impacted.
- Reduction of voltage fluctuations to improve power quality for industrial and other customers.
- Dispatch of crews more precisely to restore power more quickly.
- Automated routing and restoration of service.
- Better integration of renewable generation.
- Installation of energy storage systems and microgrids
- Strategic undergrounding of outage-prone lines.
Security investments
- Cyber-security measures
- Physical security and grid-hardening measures
Efficiency investments
- Energy-efficiency and conservation tools, paired with smart meters, allowing customers to understand and manage energy use
- Extension of the EnergyShare program through 2028, providing bill-payment assistance and energy upgrades to homes of low-income Virginians, the elderly, the disabled, and veterans.
- Infrastructure for electric vehicles
- Conversions of streetlights to LED lighting
Renewable investments
- Utility-scale and small-scale solar, including expansion of rooftop leasing solar program
- Large-scale wind projects
- An energy storage pilot program
- Pumped hydroelectric storage facilities
These descriptions are not specific and, as the saying goes, the devil is in the details. There is no indication of how aggressively Dominion will pursue these investments, and Dominion provides no estimate of how much they would cost.
“The legislation envisions that a large portion of the financial support for grid modernization and renewable energy development would come from rates already paid by Virginia electric customers,” writes Robert M. Blue, CEO of the Dominion Energy Power Delivery Group, in an op-ed in the Richmond Times-Dispatch today. But the column provided no supporting detail.
An obvious question: Dominion has deferred action on large-scale offshore wind projects due to the high cost of building two test turbines off Virginia Beach needed to determine how well the windmills hold up under severe weather conditions in the Atlantic Coean. Would the proposed bills declare construction of the test turbines at a cost of several hundred million dollars to be in the “public interest,” thus overriding the skepticism of SCC staff?
Another: Dominion has sought SCC approval for multi-hundred million-dollar investments to bury distribution lines prone to outages during storms. While the commission has approved limited investments, it has rejected the utility’s more ambitious plans on the grounds that it had not documented that the benefits were worth the cost to customers. Would this legislation override previous SCC rulings?
And one more: Environmentalists have long sought legislation that would make it more lucrative for homeowners and businesses to install rooftop solar. Dominion and other electric utilities have insisted that any such law require them to pay a grid-access fee to help cover the cost of maintaining the electric grid. Failure to resolve this fundamental disagreement has stymied efforts to promote rooftop solar. What would this legislation package do that previous bills did not?
Bacon’s bottom line: It strikes me that it is way too early for anyone to declare themselves for or against this legislation. Too many questions need to be answered. Hopefully, members of the General Assembly will trouble themselves to find answers before declaring their support of or opposition to the bills on a purely partisan or ideological basis.