Dominion Grid Plan Battered in Testimony

Caroline Golin, Ph.D., witness for Appalachian Voices, SELC

Two witnesses told the State Corporation Commission Tuesday that Dominion Energy Virginia’s proposed grid transformation program will not bring the utility’s customers into the modern energy economy.

Both Scott Norwood of Texas, an expert witness often used by the Office of the Attorney General, and Caroline Golin, an expert from Georgia hired by environmental groups, paralleled their written testimony reported on in an earlier post.

The commission must agree that the company’s $917 million first phase of its plan, which includes a roll out of new automated metering technology, is reasonable and prudent before the company can proceed. Just how customers will pay for this – either through a rate adjustment clause or the use of excess profits retained by the company – is not yet before the commission. With financing costs and profits the long-term revenue requirement for all phases of the plan is estimated at $6 billion by the SCC staff.

“The company is not proposing to operate the grid in any new way,” Golin said Tuesday. If it were moving aggressively to distributed energy, to more customer-driven demand management, to time-of-day pricing, to use of storage, “then I would agree they need more control of the grid. But right now, they are not proposing any of those.”

Norwood noted that a major part of the plan’s cost will be spent to reduce average outages by a few minutes per year. “I’m skeptical most customers will notice. It’s like the break we took at midmorning.” Benefits of that kind of reliability flow to larger, commercial and industrial customers but will be paid for by the residential customers.

Golin picked up on the same point: “There is a difference between reliable and perfect” and the company is now shooting for perfect. “This is something the commission needs to be very critical of. The average customer does not require perfect power.”

Support from some of the environmental groups, and a neutral stance taken by others, was crucial to passage of the 2018 legislation. Dominion Energy packaged it to the public it as a grid modernization effort, but its final version also included major incentives and directives to build more renewable generation. Now the environmental groups are leading the charge against the grid-related element of the bill, claiming it is a lost opportunity to truly transform the utility for a renewable energy future.

Golin, who has joined Google since being retained in this case, has been involved in grid redevelopment cases around the country and has also been especially critical of Duke Energy’s North Carolina plan.  Her statement that Dominion had no plans to operate the grid differently was vigorously challenged by Dominion and even an SCC staff witness later in the hearing.

Since the first round of written testimony was filed, Dominion’s leaders have supplemented the record with rebuttal testimony, but it was picked apart at the hearing as more evidence that no real cost-benefit analysis had been done, much of the engineering work is preliminary, cost estimates have little valid basis, and some obvious grid-related issues were flat ignored.

Dorothy Jaffe of the Sierra Club used questions to a Dominion witness to point out no real plans were made for the growth of electric vehicles, and the initial $3 billion plan would have to be supplemented – perhaps at additional cost – to support that expected transformation.

The Office of the Attorney General and the SCC staff have not asked for a total rejection of the proposal, but acceptance with conditions or acceptance of only the early pieces that involve planning and engineering. 

As with most of the issues that have reached the commission growing out of that legislation, the key question is does the regulatory body have the power to say no. In some cases, such as the off-shore wind demonstration project, the legislative wording was a clear directive. In the case of the grid projects, however, the new language mandated a review for reasonableness and prudence. A separate hearing on the commission’s authority was held November 7.

“The new law does not require a single one of these projects to be implemented,” said Nate Benforado, an attorney for the Southern Environmental Law Center, who used his opening statement to dismiss the whole effort as “a plan to spend money” which “puts the customer last.”

“This is a huge issue for the coming decade,” Benforado said. Dominion really doesn’t need to build new generation. There is testimony in the current integrated resource plan case that demand is flat or dropping, with plenty of generation assets available through connection with other utilities. “Dominion is looking for ways to spend customer money and earn a rate of return.”

The decisions on this case and on the integrated resource plan will probably need to be viewed together to glimpse Virginia’s future. The IRP case appears ripe for a published opinion with no further hearings planned. The commission has until mid January to issue a decision on this matter.

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15 responses to “Dominion Grid Plan Battered in Testimony

  1. Between the Dominion bill and the defacto tax increase last 2018 GA session, it is just depressing.

    Recent article about LED lighting mentions that by 2030, LED lights will reduce US power consumption by an estimated 40%, which is astounding.
    https://cen.acs.org/materials/inorganic-chemistry/chemical-search-better-white-light/96/i46

    So obviously utilities must be worried about that, and supporting things like electric cars which will consume more electric power. And the state governments will get into the act of supporting the utilities profits, as we have seen. And presumably most of the public will support that stuff.

  2. Yes, demand really might plummet. I’m a big fan of LED’s, and they have plenty of room for growth. Other efficiency measures are coming.

    The testimony IMHO has been devastating. What D has proposed is half-baked at best. The environmentalists have a better vision for what is possible and should be developed. And much of the huge expense is for tiny, marginal improvements in reliability that nobody will really notice. The smart grid and smart meter technology should be the emphasis.

    • Dominion could simply trim trees like most electric utilities do. Branches and tree limbs have this funny way of coming down on electric lines during storms.

  3. The utilities are going to support whatever allows them to sell more electricity – it’s as simple as that.

    That’s a fundamental conflict with the interests of consumers.

    And it’s not going to change under the current circumstances.

    Don’t expect Dominion to propose anything that will reduce the demand for electricity or it’s cost – it’s not what they do.

    • No, a subtle difference but an important one – the company makes money on its equity, it’s invested capital. It makes no profit on the energy sold, but on the infrastructure that makes and distributes it. It makes money on its power plants, towers, and will make a bundle on rolling out millions of new meters. Done right, it makes money while we save money. That’s the goal we all should agree on – they make money while we save money.

  4. re: ” That’s the goal we all should agree on – they make money while we save money.”

    Oh I do agree but I want to see the numbers that say we “save” not what they are going to do supposedly to result in that.

    That’s the problem. You can spend money on a bunch of stuff and claim it benefits ratepayers but I’m not seeing the “benefit” quantified .. just “stuff done”.

    If that’s all Dominion is going to do and nothing more.. then what do we do about it? I say don’t let them do anything at all unless and until they show real and quantifiable benefits – validated by others not them.

    • The hearing has been continuing today, but that’s been a key point – the lack of real cost-benefit evidence on many of these proposed expenses, and absent that its hard to decide if an investment is prudent. SCC might not go along with all this.

  5. Most of the provisions of 2018 energy bill provided more profit to the utilities at the expense of their customers. Fortunately, the SCC is identifying that most of these schemes don’t make sense and do little to move us towards a modern energy system. It is disappointing to see Dominion’s lack of foresight.

    But you identified the essential point. We must revise our regulatory scheme so that our utilities can make money doing what is good for their customers. Otherwise, we will just get more of the same old responses. Today, the legislative process is being used to extract money from the families and businesses in Virginia to prop up utilities whose revenues are flat, rather than prepare us for a 21st century economy.

    We can do so much better than this. There are innovative, talented people in our utilities and energy companies. We need to find a way to unleash their talents in a way that serves us as well as their shareholders.

    We must develop an energy system that is good for utilities, independent providers, and their customers. Many different solutions are being investigated in other states. We are falling further behind in Virginia by relying on expensive solutions that sound good in press releases but deliver little value to people and businesses in our state.

    • If one had a lot of disposable cash one could start an advertising campaign that is nominally aimed at persuading Amazon to reconsider its planned HQ2 divided by two. But the campaign would be really aimed at embarrassing Dominion and the Governor. The ads would show all the stupid things being done with energy policy in Virginia.

  6. Oh, TMT, I think in the fullness of time it will be clear that Amazon was inspired by Dominion’s example, and will plow the same fertile ground in Richmond time and time again. To coin a phrase, you ain’t seen nuttin’ yet.

  7. Good post Steve. This “battered testimony” hearing highlights the growing importance of highly efficient change management in the areas of public utilities in the country.

    High tech is moving so fast, it is hard to keep track of, much less manage. An important corollary here is how do you collect, assess, analyze, and synthesize, and test this explosion of high tech information relevant to growth management, deployment and operation of public energy utilities?

    It appears likely that Dominion and State Corporation Commission have very tough jobs here, trying to ride a tiger, while fending off ideas and claims from all directions, stuff that easily could spin out of control. Prudence here is key. Margins for error remain thin. Black Swan events lurk everywhere. Beware of the General Assembly. Virginia is not good at this stuff typically, too loosely goose.

  8. So … it’s now clear that we don’t need more generation … LOL

    Then …why are we allowing Dominion to spend our money building that D*** pipeline?

    Here are a few other ways they could spend our monies …
    Ways that will reduce demand and cause trouble for monopoly profits …
    • OnBill financing of efficient building ‘stuff’; lights and windows and storage and HVACs, and down the road in just a few years, for rooftop solar and storage.
    • PACE loans and other innovation to make cash flow positive, retrofit monies as available as credit card monies.
    • Grid software to increase demand response and the ability to add more intermittent generation and to shift demand away from peak.
    • Grid software to increase ability to coordinate a variety of generation owners.

    Here is a way to serve corporate requirements for renewable generation
    • Offshore Wind – Prices are dropping fast in NE. We should be planning and doing the complicated pre-build work now

    Here is way to actually increase generation demand
    • Build fast charge public stations for EVs.

    Any of this sound so bad?

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