By Steve Haner
Without fanfare and without awakening the drowsy Capitol press corps, Dominion Energy Virginia dropped in legislation last week to set up a partnership on its most massive capital investment, the Coastal Virginia Offshore Wind project.
Just who that partner might be, what if any benefits that provides to Dominion’s 2.6 million Virginia customers, or whether it instead adds cost and risk for them, remains unexplained. The bill does describe the equity investor as “non-controlling,” leaving the utility in charge.
Suddenly, many elements of the company’s other significant bill for 2023 make more sense. The most recent iteration is a pending substitute. In this other, wind-only bill, sponsored by Senator Lynwood Lewis, D-Accomac, the State Corporation Commission is instructed to disregard the capital structure of the partner, its debt to equity ratio, when determining the price to consumers.
That ratio is usually a key element when the regulators are deciding how much a utility can charge for a project, because only equity is allowed to earn profit. In the longer bill, which has been previously discussed, Dominion is also asking the legislature to mandate how the SCC accounts for the debt and equity in its rate calculation.
The unnamed partner, perhaps already known to Dominion, may also have an interest in the debate over how a future SCC calculates the utility’s allowed return on that equity. It is equity this partner will be contributing, after all. Virginia is the only state that sets utility return on equity by making comparisons to so-called “peer” utilities. The more complex bill changes the rules on that, too, and further limits SCC discretion. Continue reading