By Steve Haner

Several of the technology giants that own data centers in Virginia and are planning many more have settled their internal dispute over Dominion Energy Virginia’s proposal about how to charge them for electricity. The document laying out their new favored compromise was being prepared just as Bacon’s Rebellion last week highlighted their broad differences. 

That is the risk when writing about an active dispute in the energy regulatory world. Things change rapidly. The document was filed with the State Corporation Commission at the end of Friday just before the holiday weekend, one business day before a hearing opened Tuesday.

Amazon Data Services, Google, Microsoft Corporation, the Data Center Coalition and the coalition for Virginia’s large industrial users – which are not data centers – all signed on to the proposal. Another heavy hitter, Wal-Mart, took a position of “not opposing.” During this week’s ongoing hearing on Dominion’s pending base rate application, proponents told the SCC judges they wanted to “make your jobs easier.”

The reaction from Dominion was highly negative, complaining both that the move is outside the normal SCC process, and it was wrong to label the document a “stipulation.” It was only a stipulation among the willing, and apparently other parties saw it first when it dropped.

An editorial aside is called for here, because the tactic of dropping an entirely new proposal on the table near the end or at the end of the review process is exactly how Dominion often acts at the General Assembly. The technology companies are being more fair, bringing in their version of a “substitute bill” when there is plenty of time for all to react and respond. When it happens in Senate Commerce and Labor at the bill action deadline, the opponents are flat out of luck.  

For the giant and influential data centers to go from fighting among themselves to presenting a solid front will change the process and strengthen their hand. According to one of their lawyers, Dominion had in its testimony highlighted the wide disparity in the industry positions and used that to argue it showed how reasonable its ideas were. 

Neither the Office of the Attorney General nor the staff of the State Corporation Commission have taken a position on the record on the industry proposal. Both have their own big bats to swing. Whether Dominion likes it or not, the industry agreement will now be compared directly with the company’s plan throughout what remains of this review. 

The framework of the industry proposal mirrors the utility’s approach but changes several details. It accepts creation of a new GS-5 customer class for the largest users but seeks to define those as customers with a contracted energy demand of 50 megawatts, not the 25 megawatts the company proposed. That will reduce the number of customers affected, potentially removing many traditional manufacturers.

Along with setting a higher threshold, the proposal provides more exemptions for existing high-load customers already in operation when these new rules kick in next year. The coalition has agreed to accept fixed minimum charges on the distribution and transmission portions of their bills, but a fixed minimum for generation costs would be lower than Dominion proposed and would not apply to any customer buying electricity from a competitive supplier.

As the hearing proceeds, all the many provisions of the three-page compromise will be explored and if there is a settlement in the case – a true stipulation – it will be yet another combination of provisions. Reading the document is a good introduction to the issues on the table and their complexity.  

The underlying dispute at the SCC also involves Dominion seeking to include the cost of its capacity contract through the PJM Interconnection as part of its fuel costs, rather than a part of its base rates. And the SCC will set a going-forward profit margin for the utility. It is now 9.7%, a figure dictated by the General Assembly, and the utility wants it higher.