$7 More on Dominion Bills for Transmission

Two of seventeen towers supporting the new 500kv transmission line across the James River, paid for through Rider T on your bills. Dominion photo.

Electricity bills for Dominion Energy Virginia customers jump again in September – almost $7 monthly for a residential customer using 1000 kilowatt hours – as it begins to collect on $845 million in transmission system investments over the past year.  A similar level of investment is planned for next year.

The rate hike will appear on the bills in the transmission charge, Rider T, following approval of the annual Rider T update by the State Corporation Commission July 25.  The final order is here

Dominion plans to collect about $922 million for the transmission piece of its operations during the 12 months starting September 1.  That is almost $300 million more than it was approved to collect during the 2018-2019 cycle.  The utility brings a request for Rider T revenue requirement to the SCC every year, and part of the increase for this year is a “true-up” adjustment for the prior year.

Much of this cost is determined by the regional transmission organization PJM Interconnection LLC, which plans and operates the main grid for its member utilities and allocates costs among them.  Not all the higher charges for Rider T are for projects within Dominion’s territory.

Last year’s case was contentious, with the utility under fire at the SCC for failing to adjust its projected tax payment downward to reflect the new lower federal corporate income tax rate.  There was also a dispute as Dominion and its customers argued over how to account for certain payments back from the regional transmission organization PJM Interconnection LLC.

The SCC decided both of those disputes in the customer’s favor, and the utility abided by both of those decisions in calculating this latest version of the Rider T charge.  There were no major disputes in this case, although the Office of the Attorney General did take note of the substantial cost increase it causes and may cause again in 12 months.

“I don’t recall any cases with this Company where in a single case the residential bill of 1,000 kilowatt hours is going up almost $7 in a single filing. And as we heard from (Dominion’s witness), the … [$]845 million plant additions this year is not an aberration. He testified he expected about that much next year,” Consumer Counsel Meade Browder said at the hearing, a quote picked up by the SCC hearing examiner in his report.

The investments are outside the scope of the still-awaited utility grid modification plan and include projects to place some transmission lines underground and at least some of the cost for the new 500 kilovolt line across the James River.  So customers will start pay for its construction and use (including profit) while environmentalists and other activists fight a post-construction battle to have it dismantled.  Should that succeed, any costs for dismantling it and funding another alternative would likely fall on ratepayers, as well.

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32 responses to “$7 More on Dominion Bills for Transmission

  1. “Much of this cost is determined by the regional transmission organization PJM Interconnection LLC, which plans and operates the main grid for its member utilities and allocates costs among them. Not all the higher charges for Rider T are for projects within Dominion’s territory.”

    This could use a little elaboration. As I recall, there are transmission-related costs in which projects conducted for the benefit of the PJM system — in effect, enabling the wheeling of power across the PJM system to eliminate transmission bottlenecks and create a robust regional sharing of electricity — are shared. Virginia gets charged for a share of projects outside Virginia service territories and, likewise, non-Virginians get charged for a share of Virginia projects.

    Is this what we’re talking about in this post?

    How does this work? Who initiates the projects in question? Is PJM calling the shots here? Does the SCC have veto power?

    Further, I would like to know what the $845 million in transmission investments went to.

    • It is a massive case record, hundreds and hundreds of pages, and I could not find a list of say the five or ten largest investments. There are project numbers but often no more identifying information than that. Spending an entire day on this chair at this terminal reading through all those documents is not good for my health. Really. Feel free (or ask the utility, they return your calls…..)

      Much of this is driven by PJM’s analysis of what is required to manage the net, maintain reliability and security. The James River Surry to Skiffe’s Creek project was a line directed by PJM (it didn’t dictate the exact location, just the need to put a transmission line over to the Peninsula) because the coal-fired Yorktown plant was closed to save us from the dreaded CO2. But I can see projects on the list that are out of state, so yes, this is how we Dominion consumers pay our share of maintaining or improving the PJM grid for mutual benefit. And I suspect some of the costs are for local political decisions, such as that expensive underground line for Amazon in Northern Virginia, dictated by the General Assembly in the Ratepayer Bill Transformation Act.

      Perhaps somebody will pipe up and let me know where in the 19 different sections of the original Dominion application to search for that list…:)

      • Human psychology is a strange beast. Everyone bellows endlessly that we need ever more sustainable green energy (wind and solar), and then everyone is shocked when the bill caused by this disruption comes due to fund a redo of the entire grid to try to accommodate the enormous disruption and inefficiency that wind and solar bring to the grid every day.

        Meanwhile this disruption grows larger and more difficult to handle everyday as green energy spreads around the state and region.

        Meanwhile environmentalists and their crony capitalists allies tell us that all this massive disruption and redo is going to save us tons of money and the planet, all at the same time. And those same environmentalists attack every proven solution offered by others that fails to line their own crony pockets and cater to their own failing ideology.

        • Reed,

          I think you are misunderstanding what is driving this need for transmission.

          For example, energy efficiency and local generation (including distributed solar) on the peninsula could have avoided the need for the Surry-Skiffes Creek line, for example. This could have been accomplished with some foresight and without a charge to Dominion ratepayers.

        • Tom –

          See Steve’s 12.52 pm comment below. Electricity in great abundance is a very good thing. It keeps us out of Stone Age.

      • The PJM process is a little different than you describe, Steve. PJM did not “dictate” this line; DVP did as part of its plan to maintain reliability on the Peninsula after closing down the Yorktown units. These were not closed due to CO2, but because they could not be economically retrofitted to comply with the mercury emission standards. The CO2 abatement is just a happy ancillary.

        PJM did include the selected Surry-Skiffe’s configuration into its Regional Transmission Expansion Plan and so costs of this project will be allocated across the PJM footprint. (The other transmission alternative ran down through the Peninsula and was found by the SCC and Courts to inflict greater environmental damage).

        However, I believe the main driver of the Rider T cost increases are DVP’s many, many “supplemental” projects (i.e., not needed to enhance reliability nor reduce congestion in PJM). Now that it has guaranteed recovery of its costs, including profit, through the Rider, DVP is methodically rebuilding many transmission lines that date from the 1960s and earlier. These are utility level decisions, not dictated by PJM’s oversight processes.

        • Yes, the driver here is Dominion, not PJM. I am not familiar with Rider T but assuming it contains only “transmission” costs (no “distribution”) then it is entirely FERC-jurisdictional and the retail rider is a pass-through to the unbundled transmission charge on retail bills. PJM is involved in the planning process for grid upgrades and, for example, has been pressing Dominion and the SCC for a solution to the transmission limitations into the lower Peninsula given the Yorktown generating unit retirements / operating-restrictions, but in general PJM defers to what the transmission owners want to do, absent reliability rules violations or severe economic impacts on retail customers.

  2. In terms meeting the power needs of the Northern Peninsula, add this to the mix:

    The State Air Pollution Control Board has approved a permit for a massive new natural gas-fired power plant in Charles City County. [about 30 miles from Jamestown]

    The board voted 6-1 to approve the pollution permit for the Chickahominy Power Station after a marathon meeting Friday over calls from opponents and one board member to delay the decision. If built, the power plant, developed by Chickahominy LLC, a subsidiary of Balico, LLC, would be the largest fossil-fired power plant in Virginia.

    A second large natural gas plant is also proposed for Charles City near the Chickahominy project. [The Chickahominy Power Station is being developed by Chickahominy Power, LLC, a subsidiary of Balico, LLC, that was formed for the purpose of developing and operating the facility. Plans submitted to the State Corporation Commission and DEQ describe it as a combined-cycle natural gas generation facility with three turbines that will be capable of producing 1,650 megawatts.]

    And so the interesting thing is that not a penny of the cost will be added to customers electric bills since this power is sold to PJM on an auction basis.

    The other interesting thing is how can PJM and the SCC approve what Dominion is doing when this other company is essentially building capacity without a rider and providing more grid reliability presumably to deliver power from an on-site power plant rather than having to bring it from plants south of the James with new power lines.

    So how can the SCC know about this and still approve the rider?

    And would these new gas plants actually negate the need for new power lines – and the costs put on customers bills from those new power lines but no costs from the new gas plants?

    I think what Steve’s reporting has done is inform us more and at the same time show just how complex and arcane this whole process is – and finally, how customers are basically being screwed over by a company who is driven by profits even if they come from building stuff that is not needed and even if it was in prior years – it did not result in separate riders to pay for it.

    Oh… and do the customers of Virginia’s REC also “pay” for this?

    • Larry, you say, “the interesting thing is that not a penny of the cost will be added to customers electric bills since this power is sold to PJM on an auction basis.” Well, that’s true assuming none of these independent generators’ energy output is purchased by Dominion’s LSE unit. But of course some of it will be, through the PJM energy market; the new NGCC unit will tend to drive down regional energy market prices and Dominion retail customers will benefit from that. Dominion’s retail customers will NOT see any benefit from the increased competition in the PJM capacity market because they are locked in to Dominion’s own fleet of generators to satisfy their PJM capacity requirement.

      In fairness to Dominion, let’s point out that while its customers won’t benefit from the capacity sales competition in the marketplace, they have a pretty good deal on the current price paid for capacity that’s included in those Dominion generation riders they pay. I don’t like the risks that are shifted to Dominion retail customers through those riders, but the current costs may be reasonable as found by the Commission.

    • Let me address some of your questions, Larry. First, the SCC does “know about” the Chickahominy and C4GT plants? Yes, the Commission issued construction certificates for both of them. Neither of them have been built and there is some chance that one or the other may never be built.

      “How can the SCC know about this and still approve the rider?” State law requires the Commission to approve the rider. All costs incurred by DVP are determined by law to be “just and reasonable,” and therefore must be recovered in retail rates. Note that DVP has an obligation to provide electric service all customers in its service territory, while Chickahominy and C4GT have no obligation to serve anyone. Part of that duty of service is the transmission and delivery of electricity. The rider recovers the transmission cost component of such service.

      “And would these new gas plants actually negate the need for new power lines–and costs put on customers bills from those nuew power lines bu no costs for the new gas plants?” It is potentially possible that these plants could impact need for new power lines in the future, if the plants are built and run as projected. Neither of these plants eliminate the present day need for continuing reliable delivery of electricity via any now-existing power line.

      REC customers will see some impact to their bills because REC is a transmission customer of DVP.

  3. “Still, for some residents, the proposed Chickahominy Power Station is only the tip of the iceberg.

    The project is the third major energy generator proposed for the county in the span of four years. In 2015, the Board of Supervisors approved a special use permit for the C4GT power station, another natural gas facility that Michigan-based NOVI Energy says it plans to develop on 88 acres less than a mile from the Chickahominy facility.

    The C4GT facility, which has not begun construction (earlier this month, the SCC granted its certificate of public convenience and necessity a two-year extension), has a planned capacity of 1,060 megawatts.

    Finally, this spring, the board is considering ambitious plans by Utah-based sPower to construct a 340-megawatt solar farm on more than 2,000 acres of land previously used for timber. While that project has not yet received the special use permit it needs to move forward in the county, the Charles City Planning Commission showed little opposition to it, voting 5-1-1 to recommend its approval.

    If all three facilities are built, Charles City County will become one of Virginia’s biggest power producers, according to data collected by DEQ.

    “Geography has dictated this sudden surge of interest in Charles City County,” Coada said.

    Balico director of development Jef Freeman, Jr., said growth in Virginia’s data centers is a primary driver of Balico’s interest in the Chickahominy project.

    “It’s really driven by the economic activity that’s going on in the region,” he said. “Data centers themselves require significant amounts of energy to support what they do and very reliable power.” ”

    https://www.virginiamercury.com/2019/03/19/comment-closes-wednesday-on-permit-for-new-natural-gas-power-plant-in-charles-city/ (March 19, 2019)

  4. Good news for the county – and good news for the peninsula and good news for the existing customers of electricity – who won’t have to pay for an additional $7 a month “rider” to finance it.

    It’s pretty clear, Dominion is in the business of making profits (just like other companies) but unlike these independent companies who impose no additional costs on ratepayers AND to provide power to data centers without all this folderal that Dominion is making a big stink about AND without charging folks an additional $7 a month for something that apparently will not be needed if we have new power plants north of the James (to replace that nasty old Yorktown plant).

    We do get LOTS of Dominion-specific info here in BR – but sometimes it’s not easy to really understand it in a larger context that includes PJM, RECs and independent power producers. It’s apparently all about Dominion and the other stuff is just “out there”.

  5. Yep. Plenty of other counties would love to have these projects. They do demonstrate that generation needs for now and well into the future can be provided by merchant companies and do not need to be foisted on the ratepayers in the utility rate base. Certainly their locations are factored in as the grid’s future shape is determined. But none are on the Peninsula so they wouldn’t remove the need for some kind of transmission upgrade to that side of the James, and the Yorktown plant is now fully closed I think.

    • re: but none are on the peninsula

      Steve – These gas plants are NORTH of the James and just 30 miles west of where the power lines cross the James. Are they not sufficient to provide power to the Peninsula?

    • Larry, they will be where you say, 30 miles away geographically — but what counts is where the transmission bottleneck is currently. I believe these plants will be built west of the Chickahominy River. Remember, Dominion’s Plan B to solve the Peninsula transmission contraints was to extend transmission across the Chickahominy swamp from the Richmond area and down the Peninsula, but there were too many obstacles to building in the swamp and due to historical sites in the path. So the Commission rejected Plan B (which several intervenors pushed for), and the James River crossing was Plan A.

  6. Steve- when you say jump “again” $7/month please advise me if possible the rolling total. I need to start saving my bills so I can calc cents/kWhr since I’ve lived here…probably I lost a lot of the data.

    • The last time I saw a full chart it put the April 1, 2019 cost of 1,000 kwh at about $120 or $121 per month. It did not reflect the 2019 Rider T (actually I guess it’s T1) so I assume it adds on to that. There are fluctuations in several of the bill elements, moving peas under the walnuts, that make it hard to track. Not an accident.

  7. Tom – you insert a new comment way up the string and there’s a chance I may miss it. Gotta throw a flag on that one. Um, the biggest users on the Peninsula are Newport News Shipbuilding, the Jefferson Labs research facility and NASA. No way in hell they can be sustained during a transmission disruption by solar panels and conservation progress. They don’t run, thousands of people don’t get paid. So yes the new line was very, very necessary. No question, at the yard we pushed hard for it. Sorry. That claim is just not credible.

    • Steve,

      I don’t think you fully read what I said. I also mentioned local generation. All of the industries that you mentioned would be good candidates for adding some combined heat and power installations. The small to medium-sized modular units generate electricity and capture much of the waste heat. This allows them to utilize about 80% of the energy value of the fuel. Modern combustion turbines are about 35% efficient and the new combined cycle units are in the 50%+ range.

      The waste heat can be used for low temperature process heating, space heating, water heating and air conditioning. The modular design allows the company to match its generation to different levels of demand during the day and week. An arrangement could probably also be made with the utility to release excess generation to the grid, if needed.

      These types of installations are being used throughout the world. The leading manufacturer in the U.S. was started by Paul Allen, a co-founder of Microsoft.

      I was raised in the utility culture of reliable supplies of electricity first, even if you have to pay a premium for it. Unfortunately, a slow to change industry has constructed an increasingly brittle grid that has shunned new methods of generation and energy savings because it threatens its outmoded business model. Removing some of the local demand would reduce the chances of sagging and overheating of the existing transmission line and improve its ability to serve the area.

      I very much want our utilities to succeed, but in a way that also serves their customers. They are going to have to accept some changes in order to do that. Giving customers and communities a variety of choices about how to meet their energy needs does not have to mean that utilities fail to receive a fair return for their shareholders. Thinking of balancing our energy system needs only through additions in supply is an old approach. It will still have value, but not exclusively. Changing demand to match available supply might be a much cheaper way of doing things.

    • Looks like there IS sufficient gas on the north side of the James to power a 1500 mwatt gas plant – which would provide equivalent power that Dominion is proposing to bring north across the James.

      If there is sufficient gas for a power plant and that plant will operate independently without a rider cost to ratepayers – then why not?

      It looks like there IS sufficient gas to power a gas plant NORTH of the James and quite close to where Dominion is proposing to charge ratepayers $7 a month to do – what a private company can do with no cost to ratepayer

      Why do we say that a gas power plant north of the James cannot provide power to the peninsula?

      • The gas power plants you are referring to cannot supply power to customers on the Peninsula today, tomorrow or for years to come–they don’t yet exist. Customers needs electricity every single second of every single day. DVP’s Surry-Skiffe’s line was supposed to be built back in 2015. Only the intervention of the state’s DEQ and the U.S Department of Energy permitted the emergency continued operation of the Yorktown plant while the federal permitting for the line dragged on and on. That emergency alternative is no longer available–the units are now closed.

  8. Nice try but no cigar. None of those energy-hungry major users are candidates for combined heat and power in my opinion. And Navy frowns on running the ship reactors at power in the dock. 🙂 I know first hand the yard very much wants reliable and if that means a bit redundant, so be it. All for CHP, where it works. (I always wondered if they could find a PV material for those 5-acre flight decks….)

  9. I won’t address the substance of these projects, but let’s be clear about one thing: PJM does not approve Dominion’s transmission rates. Transmission facilities are under the jurisdiction of the FERC and Dominion has to get FERC approval to raise transmission rates. How Dominion passes those through to retail customers, i.e., as a “Rider T” or in any other fashion, with or without some sort of markup, is entirely up to the SCC. PJM does, however, get involved in approving transmission projects (for compatibility with, or to meet requirements of, the grid).

    • Yes, I was sloppy and too quick in reviewing all this, and got PJM and FERC roles confused a bit….

    • FERC has “approved” wholesale transmission rates by approval of a formula whereby transmission owners merely plug in costs (including a FERC-approved return on investment) and the rate drops out. That is what the Dominion LSE pays for the service it receives from Dominion transmission as billecby PJM.

      DVP’s Rider T (Va. Code 56-585.1 A 4) then passes the lion’s share of these costs through to DVP retail customers. Some of the Dominion transmission costs are paid by other customers, including the cooperatives, municipals and Dominion North Carolina customers.

  10. Steve,

    You know much more about the industries in that region than I do. The ones you mentioned do sound like very large enterprises. The solution I mentioned is better suited to small to medium-sized ones.

    If enough small to medium-sized businesses reduced their demand through some form of self-generation and energy efficiency, the amount of energy that would need to be imported to the region during extreme conditions would be reduced and the capacity of the existing transmission would be sufficient to assure reliable supplies of electricity to the area at all times.

    The reliability of the existing transmission was insufficient only during brief periods of excessive temperature, not on a regular basis, according to the reports I read.

    This would be a solution that would cost ratepayers nothing and would reduce the energy costs to the businesses that made the improvements. Whether the solution I suggested or some other combination of technology was used, it would very likely cost less than the $435 million spent by Dominion. Ratepayers will have to repay over $1.6 billion for this project (non-discounted) and Dominion will receive over $800 million in profit for it.

    It seems that there were many possibilities that went unexplored in the evaluation of alternatives. The utility went to the old historical response that yielded the highest profit and a regulatory authority unfamiliar with energy issues settled for what the utility told them must be done. This was a failure of imagination and a blight on our historic viewscape. We have to develop a scheme that allows for reliable supplies of electricity without continuing to throw expensive transmission lines and new power plants at the problem. That is a brute force, unsophisticated response.

    At some time we have to begin acting as if we live in the 21st century. Think of the few decades before and after the turn of the 20th century. We invented the radio, the phonograph, motion pictures, the telephone, automobiles, airplanes, the lightbulb and widespread electrical service. Today, we are still developing our electrical system using technology that Edison would recognize. We can do better than this.

    It seems that today we believe that the most money is made by standing still. Not by investing in better ways of doing things but by buying back our company’s stock to make earnings look better. If we examine the history of our national economy, it is innovation that propels us forward and increases our wealth. Why should the citizens and the economy of Virginia be held hostage by the economic interests of a few energy companies?

  11. Tom, I have been on that river. The new power line is within sight of the ugly rusting hulks of the ghost fleet. It’s a working, industrial river. The power line is hurting nobody, nothing, and is one of many crossings up and down the James. Sure, some people hate seeing the blinking lights on top at night. So what. On the great scale of environmental affronts, this is nothing and the complaints have always fallen on deaf ears with me. Did they overpay? Wouldn’t be surprised, but others who know more than I do made the case for the alternatives, and this route was approved. Plenty of folks wanted a far more expensive buried line.

    • I too have been on that River AND I agree with Steve on the visual – but there were other places around that bend to where the visual was already affected and one more would not have changed much whereas upstream – it would be an impact to a view not yet impacted.

      Even that is not the problem. There are existing power lines that cross at the Rt 17 bridge – why not there – an upgrade?

      why not add power lines down the peninsula from where those new gas plants will be built in Charles City? The cynic in me says that neither of those options would have allowed them to charge a rider because to this point, as far as I know, they never had riders before for specific power line upgrades.

      So a question – does Dominion typically ask for and get riders for when they upgrade the transmission lines elsewhere in their system? Are we going to see more “riders” whenever they have to upgrade the network? Is that what the grid transformation law is essentially permitting?

      It could be – seriously. If Dominion cannot stop others from building generation, that utilizes THEIR grid, perhaps this is their strategy for recovering those costs since their generation of electricity may be flat or static.

      What we see on the regulatory and Va law side is what Dominion wants – what we don’t see is why – do these actions reflect a strategy? (dumb question!)?

    • In general I think the use of riders (as opposed to rolling costs into base rates) is a bad practice. The costs may be fully defensible to experts at the Commmission, but the loss of tranparency, the difficulty any retail customer faces trying to figure out what the total breakdown of costs really is, is indefensible. Riders should be limited to adjusting the difference between what is already in base rates and costs incurred before the next base rate case — mainly for variable costs like fuel and interchange, and for cost adjustments due to additions to plant in service and due to retirements. These permanent riders for new generation and distribution improvements that clutter all Dominion’s retail bills are opaque, and an insult to clarity.

      • I couldn’t agree more, AC, that the use of riders is a bad practice; nevertheless, it is the law presently. The Commission has very little ratemaking discretion now compared to what it had prior to, or even during, “deregulation.”

        The rider practice is particularly egregious where it comes to transmission. The FERC doesn’t look at costs of individual projects; nor does PJM. The General Assembly decided notwithstanding this, all those incurred costs were “just and reasonable” and to be passed through to DVP and Apco customers without any further scrutiny. Consequently, DVP has a license to rebuild everything on its system.

  12. There is one rider on the bill, reviewed adjusted annually (can go up or down) for all the transmission projects and operating costs. As Rowinguy corrected me above, and I really screwed up this initial post, most are decisions made by the utility. Based on the comments in this case, another major tranche of projects is on the way so this part of the bill will likely jump again in 12 months. And frankly it seems a reasonable way to do this.

    There are also riders for individual generation plants, one for the fuel and purchased power used (it really fluctuates), and a host of others. Knock yourself out:

    https://www.dominionenergy.com/home-and-small-business/rates-and-regulation/residential-rates

    As to the Surry-Skiffes Creek line, lots of alternatives were considered and an overland route – longer- also had major potential environmental impacts. The decision is still being second- or third-guessed so maybe the courts will force us all to pay for something else. Goody.

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