Category Archives: Utilities

“Strong Words” In Bills Give SCC Power On Rates

From Energy Burden Coalition flyer mailed to legislators.

By Steve Haner

One sentence, if it is the right sentence, can upset the machinations of the powerful. Two bills pending in the 2023 Virginia General Assembly contain such a sentence, and it could upset the plans of Dominion Energy Virginia.

Here is the sentence at the heart of both bills:

…if the (State Corporation) Commission determines in its sole discretion that the utility’s existing base rates will, on a going-forward basis, produce unreasonable revenues in excess of the utility’s authorized rate of return, then, notwithstanding any provisions of subsection A 8 of § 56-585.1, the Commission may order any reductions to such base rates that it deems appropriate to ensure the resulting base rates (i) are just and reasonable and (ii) provide the utility an opportunity to recover its costs and earn a fair rate of return.

The House version of the bill, House Bill 1604, has bipartisan sponsorship. The Senate version, Senate Bill 1321 has three Democrats listed as sponsors. It is the Senate version which at least has been aired in an open Senate subcommittee meeting, and the leading Dominion lobbyist in the room was not coy about his concerns. So far, the House version slumbers and has not been heard.

During the Senate discussion, William Murray, the firm’s senior vice president for corporate affairs, noted the presence in the bill of “strong words,” which he said included “notwithstanding” and “any.” He warned the legislators in the meeting that “our concern would be if you just mooted everything you did in Senator Saslaw’s bill.” The Richard Saslaw-sponsored bill he referred to is Dominion’s main effort to recast its regulatory environment, which had just been discussed in the same meeting on January 18. It was first reported here. Continue reading

Is Unnamed Partner on Wind Project Driving This New Dominion Regulation Rewrite?

The late Lt. Gov. Henry Howell (D) and Virginia’s most famous campaign slogan.

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

Consumers Be Wary When Energy Elephants Dance

By Steve Haner

First published this morning  by the Thomas Jefferson Institute for Public Policy. 

The Virginia House of Delegates is expected to vote this week to exempt certain Virginia manufacturers, which ones to be determined later, from the coming wave of energy costs created by Virginia’s rapid transition to unreliable forms of power generation. Continue reading

Dominion Wants To Rewrite Its Own Rules Again

by Steve Haner

First published today by the Thomas Jefferson Institute for Public Policy.

The headlines in the coming General Assembly may be captured by fights over abortion and taxes, but the deepest reach into your pockets will involve your energy bills. The state’s dominant electric utility appears to once again be seeking to amend Virginia’s regulatory and ratemaking process to its benefit. Continue reading

The Big Christmas Chill Was a Wakeup Call

by Bill O’Keefe

As temperatures dropped dramatically over the Christmas weekend, Dominion Energy’s advice to its customers — those who still had power — was to turn down their thermostats. Virginia was not alone. PJM, the regional grid management organization covering 13 states and the District of Columbia, made the same request because its gas plants couldn’t get enough fuel to meet the demand for home heating.

According to The Wall Street Journal, rolling blackouts were averted because PJM ordered some businesses to curtail power while switching some generators to oil. The large regions served by both the Tennessee Valley Authority and Duke Energy experienced rolling blackouts. And for the second year in a row, Texas faced a grid problem as wind power plunged and demand doubled.

The Wall Street Journal also noted that, “While there wasn’t a single cause for the power shortages, government policies to boost renewable energy snowballed and created problems that cascaded through the grid. There have been warnings about grid vulnerability for years but this Christmas proves that these warnings have not been taken seriously. The climate lobby blames climate change and greedy energy companies for this year’s problems but there have been colder Christmases — 1980 and 1983 for example. And, there have been colder Decembers that were survived without a grid breakdown or near breakdown.

The problems faced by utilities should be a warning and a reason for reassessment. Will Dominion heed that warning or will it continue on its present course? How will it prevent more serious problems as the demand for electrical power continues to increase and electric heat pumps are promoted and subsidized as responsible replacements for gas- and oil-fired furnaces?

That Dominion had to urge its customers to turn down their thermostats indicates that it did not have sufficient surge capacity to meet the demand caused by low temperatures. We need to know why. It could be the result of the 2019 decision to shutter all of its coal-fired capacity as part of its Net-Zero 2050 commitment and the General Assembly mandate to do so by 2024.
Continue reading

SCC Drops Wind Energy Performance Standard

The 14.7 megawatt turbines to be used in CVOW. Click for larger view.

by Steve Haner

The Virginia State Corporation Commission (SCC) has abandoned its push for an offshore wind performance standard fiercely opposed by Dominion Energy Virginia. It agreed instead to some capital cost limitations for its project that the utility has endorsed . 

In a decision released today, the two commissioners accepted in full a stipulation put forward several weeks ago by Dominion, Virginia Attorney General Jason Miyares, Walmart and several environmental groups. Should the capital costs of the project and related transmission lines exceed $10.3 billion, customers will only have to finance a portion of the excess. Beyond $11.3 billion the utility will finance the excess. Continue reading

RGGI Tax, On Path to Repeal, Reaches $524 Million

Virginia’s two year take of carbon taxes under RGGI. RGGI table.

by Steve Haner

First published this morning by the Thomas Jefferson Institute for Public Policy.

The tax on each ton of carbon dioxide emitted by Virginia electricity plants dropped to below $13 a ton in the most recent sale of CO2 allowances conducted by the Regional Greenhouse Gas Initiative (RGGI). That meant Virginia collected only $71 million in tax revenue for the fourth quarter, the lowest amount of the four auctions in 2022. Continue reading

Why Does Dominion Fear a Wind Output Promise?

SG 14-222 DD test installation at a Siemens Gamesa land facility. Company photo. Click for closer view and perspective of this giant machine we’re buying.

By Steve Haner

While we await a decision by the State Corporation Commission on competing approaches for protecting consumers from unexpected offshore wind costs, some additional relevant information is worthy of notice. Two items call into question Dominion Energy Virginia’s refusal to assume financial risk for poor turbine performance. Continue reading

Feds: Whales Must Be Protected from Turbines

Two right whales photographed off the Virginia coast last month on their way south toward the calving grounds. U.S. Navy Photo

by Steve Haner

First published this morning by the Thomas Jefferson Institute for Public Policy.

Soon after a group of opponents to proposed East Coast offshore wind projects hired a law firm with environmental regulation expertise, the federal Bureau of Ocean Energy Management (BOEM) announced a new plan to protect North Atlantic Right Whales and put it out for public comment.

The opponents, with Thomas Jefferson Institute for Public Policy as part of the coalition, had been pointing to the impact of the project on the whales for months and this protection and mitigation plan admits the problem is significant.

One apparent result of the announcement will be a major delay in publication of the draft environmental impact statement (EIS) on Dominion Energy Virginia’s Coastal Virginia Offshore Wind (CVOW) project off Virginia Beach.  The EIS was supposed to be available this past August, and once published is expected to be the focus of extended comments and perhaps litigation from opponents.

The ongoing debate at the Virginia State Corporation Commission over consumer price protections (a decision should come soon) is not the last hurdle to construction of the $10 billion project, with a much higher cost now under discussion.  That EIS clock is not even running yet. Continue reading

Batting Zero on Virginia Energy Policy Reset

by Steve Haner

One year later, a series of energy policy goals for Virginia proposed by the Thomas Jefferson Institute for Public Policy remains just as valid and also remain unaccomplished. Gridlock has favored the flawed status quo.

Compared to a year ago, more Virginians have awakened to the reality that they will soon be forced into electric vehicles they may not want. They may be prevented from using reliable and efficient natural gas in a furnace or stove. Their monthly electric bill is growing with charges for unreliable solar and wind projects that do not work more hours than they do.

And despite all that, the weather will remain as it is, and the millennia-long relative sea level rise will stay its inexorable course. Our self-imposed energy poverty won’t stop any of that. We can rush toward that stark future or change course, the sooner the better. The checklist remains the same.

The opening paragraph of the document a year ago noted that Dominion Energy Virginia had just admitted its 176-turbine offshore wind project was going up in cost to almost $10 billion. Debate over the project and possible forms of consumer protection continues, but the dollar figures under discussion have risen again. Consumers may now be on the hook now for a share of $11.3 billion or more, amortized over decades. A total project cost of almost $14 billion is now hinted at. Continue reading

SCC Urged To Focus on Wind Construction Risk

by Steve Haner

Advocates made their case Monday for a proposed settlement that offers Virginia consumers some protection from construction cost overruns on Dominion Energy Virginia’s proposed offshore wind project. Not everybody said it was superior to an earlier proposal that protected consumers from future operational failures, but all saw it as unlikely to kill the project.

The earlier approach, placing the risk of operational failure over 30 years on the utility, was going to kill the project, the utility claimed. The utility stood by that threat in the hearing in front of the Virginia State Corporation Commission. But the company is willing to risk its shareholders’ money on its ability to complete the project on time and on budget, its attorney told the Commission.

There was no indication during the hearing when a decision would come. The two judges could leave their original order unchanged or issue a new one based on the proposed agreement between Dominion, Attorney General Jason Miyares (R), two environmental groups and Walmart, one of Dominion’s largest commercial customers.

Other parties, including representatives for major industry and the SCC staff, didn’t sign the stipulation. Nor did they oppose it, and Commissioner Judith Jagdmann polled them one by one.

Two conclusions are evident from the hearing. First, all the parties to the new approach took Dominion’s threat to kill the project at face value and that is what backed them down, including Miyares. He had Deputy Attorney General Steven Popps appear at the hearing, not just consumer section chief Meade Browder, to emphasize his (Miyares’) desire to save the project in a closing statement. Continue reading

East Coast Ocean Wind Projects Faltering

Not an offshore wind project. Just a cool picture from Germany last week.

by Steve Haner

In recent days several proposed offshore wind projects, which unlike Virginia’s are not guaranteed by captive ratepayers, are showing cracks in their pylons.

Multinational developer Avangrid recently told Massachusetts regulators that its proposed 1.2 gigawatt Commonwealth Wind project is no longer economically viable. It seems to be seeking to renegotiate the power purchase agreement for more money because the electricity price it promised in the contract is being eroded by rising costs and interest rates.

Then the developer of a smaller Massachusetts project, 400 megawatt Mayflower Wind, made a similar announcement. An EE News Energy Wire story on both can be found here and included this:

Avangrid’s warning — echoed in part days later by Mayflower Wind, the developer of the state’s other upcoming offshore wind project — is the strongest signal yet that a chilling trend on renewable energy projects may migrate into the offshore wind sector.

Continue reading

Miyares Retreats from Wind Performance Standard

Dominion’s proposed wind project off Virginia Beach.. Scale is correct and a second tranche is planned.

by Steve Haner

First published this morning by the Thomas Jefferson Institute for Public Policy.

The big risk with Dominion Energy Virginia’s planned offshore wind extravaganza has always been that either the wind out in the Atlantic blows too little or it blows too much. Too little and the ratepayers are paying an inordinate amount for intermittent electricity; too much (a major hurricane say) and the turbines could be damaged or destroyed.

Because the monopoly utility will own the project, not a third party energy developer, all that risk lands on its ratepayers. The State Corporation Commission sought to protect Virginia ratepayers from the risk. That was the point of its imposition of a performance standard on the project tied to its overall energy output.

That is the risk Dominion’s leadership refused to accept, threatening to kill the $9.8 billion project entirely. It was not an idle threat.

Now Virginia Attorney General Jason Miyares (R) has a new proposal which protects Dominion and its shareholders from that risk after all, putting it back squarely on the utility’s 2.5 million customers. Instead, the person charged by law as the protector of Virginia consumers is focused on the risk of construction cost overruns. Continue reading

Good Energy Plan But It Needs to Pass

The energy cliff created if Virginia actually closes all its natural gas plants as the current law requires. Source: Youngkin’s Energy Plan using Dominion Energy data.  Click for larger view.

by Steve Haner

First published this morning by Thomas Jefferson Institute for Public Policy.

In his newly released energy plan, Governor Glenn Youngkin (R) makes it clear he sees the economic abyss created by the unrealistic and ideological green utopia demanded by his predecessor. Seeing a looming disaster and stopping it are two different things.

The new document is not a full 180-degree change from the previous plan concocted by former Governor Ralph Northam (D). For example, Youngkin is not reversing his previous endorsement of Dominion Energy Virginia’s planned $10 billion offshore wind project, a central part of the Northam plan. Also, Youngkin apparently is sufficiently convinced that carbon dioxide is harmful that he wants to spend your money on carbon capture and storage.

Nor does Youngkin call for outright repeal of the 2020 Virginia Clean Economy Act (VCEA), but rather he endorses removing its rigid mandates as to how rapidly to retire fossil fuel energy generation, and its mandatory replacement with wind, solar and related battery technology. The problem is that even tweaks require amending state law, and previous efforts to do that were thwarted by the Democrats who still control the Virginia Senate and who still accept the Green New Deal catechism in full. Continue reading

Legislators MIA on Wind Performance Standard

Del. Kaye Kory, D-Fairfax

by Steve Haner

In the ongoing debate over Dominion Energy Virginia’s proposed $10 billion offshore wind project, focus should remain on the people truly responsible for undercutting State Corporation Commission authority to protect consumers: the legislators who passed provisions in the code the utility interprets as a rubber stamp for its proposals.  Continue reading