Dominion Grid Plan Panned For Lacking Detail

The specific phrase is not used, but the general theme in testimony filed with the State Corporation Commission as it considers Dominion Energy’s massive grid modernization proposal is this plan is not ready for prime time.

That thread runs through pre-filed testimony from the Office of the Attorney General, the staff of the State Corporation Commission, and an expert hired by environmental groups.  They recommend acceptance of pieces and parts of the plan, but none support it all and all complain about the lack of detail on cost and benefits.  The SCC will hold a public hearing November 14.

About a year ago, with the 2018 General Assembly visible over the horizon, Dominion Energy started its public drumbeat for a major investment in its distribution and delivery system to improve reliability and efficiency.  Only later it became clear the plan was, at least in part, also a way for it to keep and invest substantial excess profits, preventing any effort to return those funds to its customers as rebates or lower prices.

Dominion in July filed its petition with the SCC seeking a decision on the prudence and reasonableness of its proposed Phase 1, a three-year program with a cost of $917 million, most of it for 1.4 million new internet-connected electric meters.  The SCC staff estimated the all-in lifetime cost (with financing and profit) of the first phase at $1.5 billion and the cost of the full 10-year build out at $6 billion.

“Based on my analysis, I conclude that the GT Plan is not cost-effective and will result in an economic loss for all customers,” wrote Caroline Golin, a Ph.D. engineer hired by environmental respondents.

“The Company has failed to produce the needed analysis to justify these expenditures, including those related to the supposed need for reliability improvements, integration of distributed energy resources (“DERs”), and improved situational awareness. The Company’s approach also fails to recognize how rate optionality, energy efficiency, demand response, and the utilization of DERs can improve reliability and provide cost-effective grid services. Finally, the GT Plan does not reflect any of the best practices emerging in other jurisdictions.”

Golin compared the estimated $2 billion to be spent on ways to reduce outages with the economic benefits of the small improvements to be expected.  The average customer will see 295 fewer minutes of lost power over 20 years, she said, and the entire state’s gross domestic product works out to $830,000 per minute.   “Following the Company’s logic, the Company is claiming that the value of avoiding of one minute (of) lost power is eight times greater than the entire economic activity of the Commonwealth in that minute,” she wrote.

The SCC staff spends its year evaluating utility investment plans and analyzing costs, but their complaint here is there are few firm plans or costs to analyze. “Many of the Company’s cost estimates are based on industry research, bench marking, and data from peer utilities, rather than firm Dominion-specific projections resulting from requests for proposals, competitive bidding, and formal bids from vendors,” wrote Carol B. Myers of the utility accounting division.

The SCC staff also complains that Dominion didn’t really ask its customers their opinions on how the modernized grid should be structured.  “With respect to the Customer Information Platform, any approval should require the Company to perform a formal outreach to Virginia customers to solicit and incorporate their feedback on their desired features, including self-service options, prior to rollout,” wrote the SCC’s David N. Essah.

Golan, hired by Appalachian Voices and the Southern Environmental Law Center, pointed to an existing customer interface called Green Button as the benchmark Dominion ignored.  The complaint that this plan serves the company but not the customers and could impede the spread of customer-owned generation resources was also central to a published critique which is not part of the SCC’s case record.

As always seems to be the case, key elements are kept confidential.  There are redaction’s in some testimony and entire filings which are sealed, open only to participants who have signed a non-disclosure agreement.  One redaction involves the cost of the internet-connected metering system Dominion seeks to start installing, and the $191 million stranded cost of still-viable but less advanced meters it seeks to retire.

Staff expert Myers notes that their early retirement becomes a charge against earnings, reducing funds available to a future rate rebate or reduction. Customers will pay the full cost, even though the company chose to retire them early. (This is also about to happen with entire generation plants.)

Golan recommends that the SCC accept three of the seven elements of the Dominion proposal, including roll out of the new meters, and reject the other four.   An expert hired by the Office of the Attorney General recommends that most of the plan be rejected and advised the SCC  to approve only $20 million for some security enhancements and $86 million for more detailed planning and cost-benefit analysis.

A summary of his testimony concludes:  “(Scott Norwood) recommends that the Company be required in a future GT Plan filing to provide additional analyses supporting each of the major initiatives in the Phase I Plan, and that the Company survey its customers to explain its proposed plan for GT deployment, the associated rate impacts and estimated outage time reduction benefits of this plan, and to solicit customer input and willingness to pay for major GT initiatives.”

“Dominion did not perform a cost/benefit analysis for any of the projects included in the proposed Grid Transformation Plan (“Plan”),” wrote SCC witness Mark Carsley.  “A properly performed cost/benefit analysis would provide a systematic means of analysis to compare potential costs and benefits of the proposed Plan over time and would assist the Commission in determining whether the Company’s proposed Grid Transformation Plan, or any of its component projects, is reasonable and prudent.”

He concluded:  “Dominion’s estimates of quantifiable benefits related to the Grid Transformation Plan appear to be unsupported to some degree and/or overstated.”

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12 responses to “Dominion Grid Plan Panned For Lacking Detail”

  1. LarrytheG Avatar

    re: ” new internet-connected electric meters. ”

    Does that mean anyone who has electricity can get internet even if they living in rural areas?

    I would think a proposal from Dominion LIKE THAT would be the kind of “modernization” that would be very popular!

    Also – Steve – I have a question. What is the legal basis for “hearings”?

    Are they just pro-forma or is there a Constitutional requirement?

    I hear this all the time at the local BOS… their Lawyer will tell them – “you have to have a hearing on such proposals, you just can’t vote them”.

  2. This is what we have been saying all along, including in comments to the SCC and regarding the state energy plan. It is nice to see that the SCC staff and other parties are contributing useful information.

    It is apparent that Dominion’s proposals are not in the interests of their customers. Even some that might be, are not described in enough detail or with supporting cost/benefit information to make that determination.

    Dominion is asking for an increase in revenues and profits for projects that do not have a commensurate benefit to their customers. That is not fair.

    It is also not fair to compensate the utility only for building more and spending more. That is not fair either. The utilities need a way to continue to prosper in an era of flat load growth and customer-sited resources.

    We can squabble about the shortcomings in the latest energy bill and the deficiencies in Dominion’s proposals. But the solution lies in re-imagining the role of our energy companies and the ways our utilities our paid. We must find a better way to align the interests of the shareholders with the interests of the customers. This will require a lengthy period of intense collaboration between many stakeholders – something we have not yet seen in Virginia.

    1. Steve Haner Avatar
      Steve Haner

      The utilities would have to see it as a win for their stockholders or I doubt they would engage….

  3. Steve Haner Avatar
    Steve Haner

    I probably should have said interconnected meters. The technology sounds like it’s internet-based to me (or perhaps more properly an intranet), but I have no idea if that it means people can use the power lines for broader connections going forward…..

    The SCC is a court of record, and models its procedures on Virginia’s rules for civil courts. There is no requirement in the Virginia Constitution but I suspect there are Virginia Code sections that dictate its process and require the hearings in certain matters. The hearings provide an opportunity for public/citizen comment from non-participants and also provide the participants a chance to cross examine (under oath) the utility and each other. They provide the record for any appeal. Sometimes the SCC judges are on the bench but they also have a group of hearing examiners.

  4. LarrytheG Avatar

    Broadband on electric lines is not viable at this point from what I understand but even then the fact that the electric resides on existing infrastructure makes me wonder why we can’t deploy broadband to anyone who is already using electricity. Such a proposal from Dominion would garner widespread support from a lot of different constituencies except the current internet providers.

    In terms of “hearings” I know the given reasons for having them. What I don’t understand is why some things REQUIRE hearings and others do not. No one seems to know the answer. Some things DON’T require hearings so somewhere there must be something that requires them only for specified things…

    1. Steve Haner Avatar
      Steve Haner

      I’m not going to dig into the rules of procedure to find out :). The SCC Clerk, Joel Peck, is a nice fellow – give him a call!

  5. The smart meters usually gather and report information using a cellular mesh system. An upgrade to 5G will make such systems faster and more reliable. They often have frequent dropouts.

    One of the major criticisms to the smart meter rollout is that the utility gets the advantages of it and the customers pay the price. Real-time access to usage information is not being offered to customers at this time (only text alerts that allow the utility to shift load to its advantage). That data could feed home energy networks and other technologies that would allow for customer optimization of their energy use and lower their bills. Paying for the new meters will increase bills without a customer benefit.

    The smart meters will report outages more quickly and more accurately, saving the utilities money in dispatching crews. Save money ending and initiating new service. They will also save on meter reading costs, and give utilities more detailed information that will help lower their costs.

    Unfortunately, in Virginia, these costs are baked into the current rates that will not be reviewed for years. That means the utilities will still recover funds from ratepayers based on the old assumptions. Any savings that will accrue from the new meters (that will be paid for by the customers) will benefit only the utility and its shareholders.

    This is not exactly the “fair rates” for a “fair return” that has been part of the utility compact for over 100 years. The supposedly “balanced” teeter totter is strongly tilted in favor of the utilities in Virginia.

    1. TooManyTaxes Avatar

      “[T]hese costs are baked into the current rates that will not be reviewed for years.”

      This means that a complaint against Dominion should be filed with the VSCC.

      1. The latest energy bill passed by the GA has taken the VSCC out of the game. At least for three more years, and with the manipulation of how the excess charges are spent, perhaps until 2028.

        This goes against the fundamental principles of the “utility compact” that have been around for 100 years. The standard utility business model is under stress because of changes in our use of electricity and customer-sited opportunities for new technology.

        We need an adjustment in the role of our utilities and the way they are paid. Handing them all of the revenues and profits they desire without a commensurate benefit to their customers is not the way to do it. This will harm families and businesses throughout Virginia.

        For a regulated business – a fair return to shareholders in exchange for fair prices to customers is still the way to do it. Things are tilted far in favor of the utilities at the moment ( and I have worked for utilities in other states). We need to modernize things here in Virginia. There are win-win solutions that are still possible.

  6. Jane Twitmyer Avatar
    Jane Twitmyer

    Yes, these complaints have been written about on Bacon’s, and yes, it is nice to see them on the SCC record. They are very real and now maybe will be incorporated into statewide thinking. My problem is … as the new grid is developed around the country will the info and results make it to Virginia and when will that happen?

    Looking at Dominion’s plans they are avoiding anything that will make a substantial dent in their ability to build and control generation … the antithesis of the NEW Grid which will be a platform for integrating and managing distributed energy resources (DERs) from many owners into a virtual power plants. (VPPs) (Microgrid Knowledge report … Creating the 21st Century Grid with DERMs and VPPs)

    The old utility would have to fire up large and less efficient power plants to grapple with small gaps in demand. … “maybe deploy a 600-MW gas plant when only 5 MW is needed. With a virtual power plant, when the operator asks for 5 MW, the virtual plant will do two things. It will look for places to reduce load, so the system may not need all of the 5 MW. But it can also look for places where it can self-generate electricity by discharging batteries, or dispatching hydropower, wind or solar facilities.”

    Navigant Research defines a VPP as “a system that relies upon software and a smart grid to remotely and automatically dispatch and optimize DERs via an aggregation and optimization platform linking retail to wholesale markets.” Looking at Dominion’s plans I don’t see anything that looks like it is going in that direction. Lots of smart meters will enable the old system of switching demand time at the customer level but cannot enable a rapid response that will keep today’s evolving grid stable and balanced. VPPs can perform this critical function. … “Think of VPPs and DERMS platforms as network orchestrators.”

    Here is what I am looking for …
    *** “What if, instead of building new peaker plants, the industry could meet our energy needs by making hundreds or thousands of DERs work together to create VPPs?”

    *** “What if we could create a VPP-driven “Internet of Energy” — a web of inter-connected solar panels, battery storage, wind farms, combined heat and power units, flexible process loads, fly wheels and other energy resources — that can be flexibly and reliably dispatched as needed?”

  7. […] 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 Bacon’s Rebellion post. […]

  8. […] with the criticism of the plan that surfaced during the discovery and hearing process.  The SCC staff complained about the lack of detail in the application, and those complaints were repeated at a hearing in […]

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