SCC Agrees Dominion Must Own Most Wind, Solar

Dominion wins one for the shareholders.

By Steve Haner

The State Corporation Commission has rejected arguments that the Virginia Clean Economy Act would allow Virginia’s dominant electric utility to get more than 35% of its new wind, solar and battery power from third party suppliers. Dominion Energy Virginia is guaranteed by law (actually, required is the better word) to own 65% of those assets directly.

The ruling was issued today in the Commission’s final order on Dominion’s most recent application for additional solar and battery assets, most of which were approved.  The question has lingered through several recent cases since the General Assembly passed VCEA in 2020, with various stakeholders arguing that the third-party assets are usually cheaper for consumers and impose less risk from failure.

The lower cost of those alternative approaches was highlighted in this case and discussed earlier on Bacon’s Rebellion. Dominion had rejected several cheaper third-party choices in compiling its plan. That earlier story also touched on the dispute over whether the 35% referenced in the statute was a ceiling or a floor.  The SCC looked at the plain wording of the law in effect and declared it really is a target that cannot be ignored or exceeded. To wit:

This particular law is written as follows: “… and 35 percent of such generating capacity procured shall be from [third party-owned resources], with the remainder, in the aggregate, being from construction or acquisition by (Dominion.) As written, the above says “35%” – neither something more nor something less – “shall” be from third party-owned resources.

The opinion goes on to cite several other instances in law where the Assembly dictated this percentage or that, sometimes “a minimum,” sometimes “no less,” sometimes “no more.”

Indeed, the Commission must presume that “the General Assembly both included, and omitted, such modifiers with “equal care… Finally in this regard, the Commission recognizes that the parties’ legal briefs include explanations of particular policy virtues promoted by their positions. Those virtues, however, cannot be part of the Commission’s legal analysis herein.

The “virtues” referenced are lower cost and lower risk for consumers.

The ruling is a bit of a two-edged sword, as Dominion currently owns 100% of its planned offshore wind project, awaiting federal permits with its $10 billion cost (current estimate.) Does the law require Dominion to offload 35% of that, or ensure that any second wave include third party generators selling power by contract, so the overall balance within the offshore wind program reaches 65% company-owned and 35% outside-owned?

The legal community that hovers around these cases and, if they admit it, loves these kinds of arguments will have to chew on that. As ratepayers, you simply need to know that Dominion’s wordsmiths win again and what they persuaded the General Assembly to adopt was in the best interests of its shareholders, not its customers. The Assembly didn’t write one paragraph of that bill. Not one.

The folks responsible were just in town for a full-blown session. This dispute has raged for two years. Where was the bill to amend that part of the law to allow Dominion to pay more attention to cheaper approaches? Governor Glenn Youngkin (R) took another approach, offering new language to require competitive bidding on the upcoming second wave of offshore wind. The idea was not just rejected, it was treated with legislative contempt.

The legislators gave Dominion a guaranteed 65% share of this coming massive capital profit bonanza and were not about to retreat on that front. A lower offshore wind bid from Orsted or Avangrid that created an embarrassing comparison with Dominion’s own capital structure costs and its shifting of risk to ratepayers is not going to materialize, not on their watch.

The solo sitting SCC member, Commissioner Jehmal Hudson, was joined in this opinion by former commissioner Patricia L. West. The Assembly that left town happy with the VCEA as it is also left without filling the two vacancies on the court.