By Steve Haner

Virginia Governor Glenn Youngkin (R) in his State of the Commonwealth Address last week described the Virginia Clean Economy Act as a โquagmire.โย Later that same day, the director of his Department of Energy warned that the stateโs premier electric utility might soon begin making โdeficiency payments,โ in effect paying fines for failing to comply with VCEA. ย
In testimony to a Virginia Senate committee, Director Glenn Davis claimed Dominion Energy Virginia has โbudgetedโ up to $450 million to make such deficiency payments for 2025 and also forecasts deficiency payments in 2026 and 2027.ย Should such payments be made, the utility would just pass the cost along to its ratepayers.
Deficiency payments in these earliest years of VCEA were not anticipated, but it may be true they are about to start. A deep dive into the companyโs October 2024 VCEA compliance filing, pending at the State Corporation Commission, failed to turn up that specific number of $450 million. (Not all of the many hundreds of pages were examined.) However, there was this in one Dominion executiveโs testimony:
โฆit is possible the Company will have to start paying the deficiency payment as early as next year (2025) to satisfy its compliance for calendar year 2024. The Company is currently one of the largest purchasers of RECs (renewable energy certificates) in PJM where the demand for RECs continues to increase. While the Companyโs VCEA requirements are contributing to the increasing demand, REC supply is not increasing at the same pace.
As a result, REC prices in PJM continue to increase and are currently $39 per REC for PJM Tier I. Further, beginning in 2025, 75% of the RECs the Company retires for RPS Program compliance must come from sources within the Commonwealth, which will greatly restrict the Companyโs supply.
Indeed, 2025 will be a key and difficult year for Dominion in seeking to comply with the 2020 green energy mandates, first because of the move to requiring 75% of RECs be from Virginia energy sources but also because the required target for using non-carbon emitting energy sources jumps to 26%. It could also be a year when energy demand exceeds the forecasts because of this cold winter and because of the exponential data center growth.ย
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