SCC Authority Over ACP Costs Reinforced In Bill

Sit down for this shocking news, but for the first time in recent memory a key energy subcommittee at the General Assembly has voted for the ratepayers, for the authority of the State Corporation Commission, and against protecting the stockholders of Dominion Energy Virginia.

The energy subcommittee of House Commerce and Labor Committee has approved a bill from Delegate Lee Ware (R-Powhatan) that reinforces the SCC’s authority to review the construction and operation costs for the Atlantic Coast Pipeline when Dominion starts using it.  If Dominion uses gas from the line in its power plants, as expected, ratepayers will be asked to pay both the commodity cost for the gas and a share of the transportation cost of using the new pipeline.

That transportation charge will be the customers covering their share of the construction cost, financing charges, and decades of profit margin and operation cost of the new pipeline.  It will be a much higher price than the charge for using one of the existing pipelines now serving Dominion’s stable load. (You can think of the pipeline as a toll road, with older competing toll roads to the same places.)

If that ACP project falters, Ware’s change in the statute remains a good additional protection for consumers going into the future.  House Bill 1718 does not stop the pipeline project.  It simply deals with how the company recovers its costs from the ratepayers in the decades ahead.

The vote was 8-2, with five Republicans joining  the three Democrats present to support Ware’s bill.  The no votes, however, were Commerce and Labor Chairman Terry Kilgore and another senior Republican, Tim Hugo.  The vote in the full committee Tuesday afternoon bears watching.

The SCC could still approve the exact amount of cost sought by the utility.  With these rules, however, ratepayers have a bit more assurance that will be a fair decision. These decisions properly lie at the SCC.   This has been my broken record message since Dominion set about successfully pushing bills to handcuff the SCC, year after year after year.  Even strong supporters of the pipeline should want this bill passed and signed.

Ware noted the unusual political alignment behind his bill, which received testimony in support Thursday from a deputy to Attorney General Mark Herring, and was praised in a recent on-line column by former Attorney General Ken Cuccinelli.

Cuccinelli wrote the bill will “protect captive electric utility ratepayers from having to pay for natural gas pipeline capacity contracts that are not necessary for those utilities to provide electricity in Virginia. Such contracts are the epitome of crony capitalism, transferring potentially billions of ratepayer dollars to utilities.

Other speakers in favor of the bill Thursday included a spokesman for the Tea Party and lawyer-lobbyist Will Cleveland of the Southern Environmental Law Center.  Equally important, while Dominion opposed the bill, for once it stood alone.

When killing bills in that subcommittee, and it killed a bunch of them that evening (another column on another day), the Dominion lobbyist usually stands with people from Appalachian Power Company, from the electric cooperatives, and usually from their loyal lapdogs from various business groups where Dominion pays huge dues.

Former Delegate Jack Rust stood alone, arguing that the SCC already has all the authority it needs to make a proper decision and apply a fair and just share of the pipeline cost to ratepayer.  In fact, when the Sierra Club petitioned the SCC to make some decisions now, the judges’ opinion stated it was too soon but when that decision comes, there will be a heavy burden of proof on the utility.

Rust then mischaracterized the bill, claiming it sought to force an early decision by the SCC, before the pipeline is built, before all the (major) cost overruns and delays are included in the final accounting.  The bill does not alter the SCC’s position that the time to make those decisions is once the fuel is flowing into Dominion power plants and Dominion seeks an increase in the fuel factor.

Here is the heart of the bill – typical dense language, but worth plowing through:

…the Commission shall require the utility to prove by a preponderance of the evidence that, at the time the utility executed the contract giving rise to the costs for which recovery is sought, the utility had (i) identified and determined the date and amount of new fueling resource it needed; (ii) objectively studied all available alternative fueling resource options, including options other than new capacity contract or contracts to meet the identified and determined need; and (iii) determined that the pipeline capacity contract or contracts were the lowest-cost available option, taking into consideration fixed and variable costs and a reasonable projection of utilization.

Those words add additional weight to the SCC’s quiet warning last year that for once, with this pipeline, built by another Dominion subsidiary only because Dominion Energy signed a contract for much of the gas, its stockholders have their own wallets on the line.  The SCC might say yes, but it might also say no, at least to any price that exceeds the cost of other choices.

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28 responses to “SCC Authority Over ACP Costs Reinforced In Bill”

  1. LarrytheG Avatar

    Your “reporting” is on par with or even superior to traditional media “investigative” journalism and the thing is – you are now officially “outted” as a Republican! (not that being a Republican makes one unfit to do investigative reporting but usually the media is said to be “liberal” and they get blamed for not doing “enough” investigative reporting).

    At any rate – It’s especially good to have a GOP guy ALSO helping to expose corporate sins.. Makes me pine away for the GOP of old!

    see ” Steve Haner, a former Republican Party operative and lobbyist who has pushed a broader tax reform package for the Thomas Jefferson Institute, called increasing the state’s standard deduction “the most important thing to do.”

    I have no clue what Dominions complete strategy was for their pipeline and if that strategy included the possibility of a fully-empowered SCC but I suspect we might find out when the full GA will vote on this.

    And it’s not going to be shocking if it goes down hard… we’ll see.

  2. Steve Haner Avatar
    Steve Haner

    Uh, Larry, the patron of the bill is a Republican. He voted against last year’s SB 966. The person with the partisan blinders here, stereotyping everybody, would not be me.

    1. LarrytheG Avatar

      The patron is a Republican, yes.. and he and other GOP will get “credit” for this bill – and then their brethren will summarily kick it to the curb later. Wanna bet?

  3. Kilgore equals $226,021 from Dominion and Appalachian, surprised not that the shameless ex officio member of the subcommittee voted against the bill.

  4. Good piece, Steve. The issue of how much Dominion would charge Virginia rate payers was always in the background of the ACP debate. That’s why I never got exercised by ACP foes’ charges that the pipeline was economically unjustified. I always figured that if the costs weren’t justified — if Dominion could purchase its gas cheaper from Transco or Columbia — then the SCC wouldn’t approve the full costs.

    Admittedly, the SCC will have some very complex issues to sort through when it addresses Dominion’s fuel adjustment petition (assuming the ACP gets built). Dominion’s argument is not that the transportation cost is cheaper than the alternatives, or even that the ACP allows Dominion to access cheaper gas at the wellhead, thus saving rate payers money. Dominion characterizes the ACP as a risk management tool. Gas prices fluctuate regionally, and the pipeline will allow it to buy gas from the West Virginia/Marcellus shale region or the Gulf region, depending upon which is cheaper at any given time. The pipeline also gives Dominion an alternative source of gas supply in the event of interrupted capacity on the Transco pipeline. How do you put an economic value on that?

    It’s up to Dominion to make that case during a rate hearing. In any case, I’d much rather see the SCC making these difficult judgments than having decisions made in the legislature, swayed as it is by politics, ideology, and newspaper headlines.

  5. “swayed as it is by politics, ideology, and newspaper headlines”
    You forgot MONEY!

    1. LarrytheG Avatar

      What I’d be SHOCKED at is if Dominion is not banging on virtually every elected to vote against this when it hits the floor.

      But HEY, who knows.. Somehow Mr. Northam “convinced” them to give up their coal ash fight! I sorta wonder if Dominion got something for their agreement or what. What would cause Dominion to give it up on coal ash?

  6. LarrytheG Avatar

    re: ” Dominion characterizes the ACP as a risk management tool. Gas prices fluctuate regionally, and the pipeline will allow it to buy gas from the West Virginia/Marcellus shale region or the Gulf region, depending upon which is cheaper at any given time. ”

    Yes… but other providers like Transco will ALSO get access to cheaper gas at the wellhead and transport it in already depreciated/amortized pipelines that ought to result in cheaper prices than the Dominion gas.

    That is unless Transco decides they can increase their prices to where Dominion is and make money hand over fist and Dominion gets their rate adjustment to boot … the investors WIN both ways, right?

    Which makes me wonder – does the SCC also regulate the price of gas for Transco?

    1. Rowinguy Avatar

      The SCC does not regulate the price of natural gas moving in interstate commerce. If I’m not mistaken, neither does any Federal agency–this is an open market.

  7. Reed Fawell 3rd Avatar
    Reed Fawell 3rd

    “Sit down for this shocking news, but for the first time in recent memory a key energy subcommittee at the General Assembly has voted for the ratepayers, for the authority of the State Corporation Commission, and against protecting the stockholders of Dominion Energy Virginia.”

    Why should we here at Bacon’s Rebellion be ‘SHOCKED?”

    Our commentary had more than a little to do with that result.

    As you said month’s ago, Steve, occasionally we hit our target and smash out windows in the passing trains.

  8. Reed Fawell 3rd Avatar
    Reed Fawell 3rd

    In that regard, it’s always a good idea to follow the ups and downs over time in the popularly of certain posts and comments as the rise and fall in readership, particularly when this occurs long after they have fallen from view, off of center stage.

  9. LarrytheG Avatar

    What I suspect the GOP is doing now in Virginia – rather than squashing bills as soon as possible to demonstrate their heft and power – they are now forced into letting some of their guys that are at risk in some districts – claim that they supported some bills in committee -or even on the floor, like Mr. Hugo – with no intention of actually passing them in the full chamber.

    Talk about slimy….. The once principled GOP who were the adults and voted responsibly on a lot of issues are now reduced to smelly chicanery.

    Mr. Hugo can go back and say “I tried” with a straight face…like a car salesman.

    They’re trying to preserve their majority by bolstering the voting records of those who are in districts they might lose.

    It might be for a lost cause if the current court-order redistricting is put in place.

    What’s changed is that the GOP is losing its grip on the GA (and Congress) in Virginia and they’re moderating their votes on some positions in voting districts where they could lose. Imagine that – they really are going to actually represent the sentiments of their constituents! Shocking!

    Oh I know… the primary defense is” ” well, they (dems) do it too!

    1. Dick Hall-Sizemore Avatar
      Dick Hall-Sizemore

      First, it is true that both parties do this–try to protect their members.

      Second, is it really that bad that “they’re moderating their votes on some positions in voting districts where they could lose”? Isn’t that what a lot of people on these posts want–delegates to represent their constituencies? You can’t have it both ways–criticize them when they try to foil public sentiment and criticize them when they recognize public opinion and change their stances.

      I still like Edmund Burke’s definition of how a legislator should act: “Your representative owes you, not his industry only, but his judgment; and he betrays, instead of serving you, if he sacrifices it to your opinion”.

  10. djrippert Avatar

    I read a lot of what Ken Cuccinelli writes on his Facebook page. He seems to have adopted the stance of the pragmatic populist. This is in stark contrast to his positions as attorney general when was Tea Party all the way.

    After the Republican meltdown this November it will be time for rebuilding within the Virginia GOP (Note: I would drop the failed “RPV” brand in its entirety). Out with the fringe rural Republicans trying to cling to what’s left of the Byrd Machine. In with a new set of pragmatic populist Republicans who represent the entire state and not just Hooterville. Cuccinelli could be a key player in the Virginia Republican renaissance.

    1. LarrytheG Avatar

      I watch Cucinelli as well as well as Rick Santorum and I’ve not convinced either of them are willing to actually represent voters and that’s the problem with the GOP these days. They are stretched between allegiance to the GOP party -including the bat-crap crazy wacko birds …their own personal philosophies – and what the voters want (like health care, immigration, clean-up coal ash, less harsh drug laws, and less vote suppression, etc.

      The Dems have got their own wild-assed radicals too but on balance – they find it easier to represent what most voters want – while riling up conservative voters.

      1. TooManyTaxes Avatar

        Interestingly, some new members of Congress, including Jennifer Wexton, have signed a letter to Pelosi calling for increased border security and a need to stop the flow of people who are coming for economic reasons. If you want to come for economic reasons, you need to stand in line. My son’s girlfriend’s family came from Korea 15 plus years ago and followed the rules. I guess they were stupid. But then, so was I when my wife and I followed all the rules to bring our two kids from Korea. Ditto for my brother, my cousin and two friends who grew up next door to me.

        1. LarrytheG Avatar

          I think I read that 2/3 of illegals come here on an airplane. no?

  11. The new bill does reinforce the powers that the SCC already has, although it does make some items more specific, as quoted in the article. Dominion Energy Virginia (the utility) has already admitted to the SCC, in IRP hearings, that it has not conducted studies regarding the need for a new pipeline in Virginia. It will be difficult for the utility to prove that it:

    1. Determined the date and amount of fueling resources it needed
    2. Objectively studied alternative fueling options
    3. Determined that the ACP contract was the lowest cost option

    These were precisely the questions that intervenors asked FERC to consider. No such information is on the record from Dominion in the FERC proceeding, even though these are basic questions in the approval of any new energy project.

    These are also the issues that I recommended that the SCC give some preliminary guidance to Dominion about before investments were made in the project, so that the project could be canceled if it was recognized that recovery of its costs from ratepayers would not occur.

    All of Dominion’s major gas-consuming power plants have long-term transportation contracts with existing pipelines. They plan to build no more plants of this type. Based on information filed in previous Fuel Factor cases, these existing pipelines transport gas several times more cheaply than would the ACP. The existing contracts would have to be paid in full, even if some gas was delivered using the ACP.

    The cost of the ACP is in addition to the costs that are already being incurred, not instead of them. Based on the current rate for the capacity reservation signed with the ACP by Virginia Power Energy Services, a wholly owned subsidiary of Dominion Energy Virginia, the price of the contract is more than $4 billion over 20 years. Dominion has said that it expects to pass the full cost of this contract on to its ratepayers regardless of how much capacity might actually be used.

    Gas is purchased separately from the cost of pipeline transportation. Gas prices have equalized between Dominion’s proposed supply point in West Virginia and other supply points available to existing pipelines.

    Jim’s interviews with Dominion reveal that they no longer claim that the ACP will provide access to cheaper gas, nor will it transport the gas less expensively than existing options (in fact using the ACP costs several times more than other options). The benefit of the ACP is now claimed by its lead developer to be as a “risk management tool”.

    Jim asks “How do you put an economic value on that?”

    First, I am not aware of another power plant in the U.S. that is required to connect to more than one pipeline. It is just too expensive and unnecessary for reliable operation. The existing pipelines serving Virginia’s current power plants have access to gas supplies in West Virginia, northeastern Pennsylvania, and the Gulf Coast. The ACP provides access only to West Virginia, which is already available to the existing pipelines that have reliably served Virginia and the Carolinas for decades. In 2018, these existing pipelines expanded in capacity by an amount significantly greater than what is being offered several years from now by the ACP.

    The economic cost to ratepayers in Virginia and North Carolina for this “risk management” is $20 billion (based on current rates) for just the next 20 years. The latest estimate of the cost for the ACP is 40% higher than the value used to calculate the current transportation rates, and rising. It appears impossible to see how a cost this high would provide a benefit to anyone other than the pipeline owners.

    The pipeline owners could be harmed if the costs of the transportation contracts could not be recovered from utility ratepayers. My concern about the present situation is that there is growing evidence that such recovery would not be justified by any rational regulatory review. That would leave utilities in Virginia and North Carolina with a $20 billion obligation to their parent companies with no revenues to pay for it.

    Companies important for reliable energy service in two states would now be hobbled with billions of dollars in obligations that they either would attempt to recover in other ways or would have to curtail investment in important projects to free up the necessary cash. That is a bad outcome for everyone.

    FERC should have done its job to identify the ACP as unnecessary and a bad deal for ratepayers. It failed in its responsibility.

    Policymakers and institutional investors should now have some serious discussions with Dominion before they further harm themselves and their utility customers with continued investment in this project. Even if this bill doesn’t pass, it is an indication of the risks that investors and bankers are taking in financing an unnecessary pipeline project.

    Let’s get our attention back on what really matters and give our utilities a way to earn money by doing what truly serves us.

    1. Rowinguy Avatar

      Tom–Be curious as to your thoughts on Dominion’s acquisition of SCANA as a means to shore up the need for the ACP. After all, that nuclear plant will not be finished and presumably the power it was to deliver will have to come from some new source. Could that source be a couple of shiny new natural gas combined cycle units, needing a steady supply of Marcellus shale gas?

  12. Acquiring SCANA doesn’t really shore up the need for the ACP. Most of the growth in demand in South Carolina is as illusory as it is in Virginia and North Carolina. Even if some additional gas generation is needed in the future in SC, the Transco pipeline that serves most of South Carolina has already expanded in capacity by an amount greater than what the ACP would offer. The cost of transporting Marcellus gas on Transco is several times less than using the ACP.

    The Dominion-owned gas transmission system in South Carolina is already connected to Transco. If needed, additional connections could be made to Transco much less expensively than the cost of using the ACP.

    The ACP would offer no benefit to customers in SC in terms of added capacity or transportation costs that couldn’t be obtained more quickly and at a lower cost using Transco.

    Dominion’s plan appears to be (but not officially announced) to extend the ACP 12 miles over the border from NC to Dominion’s system in SC and eventually use the connection to the Elba Island LNG export facility in Georgia to export gas.

    Growth in domestic gas usage is expected to increase slightly, then stabilize. Over 80% of increased gas sales in the US is projected to come from exports. This will raise domestic gas prices faster than what would occur without exports.

    As many of the power plants that were said to need the ACP (they really didn’t) were canceled in Virginia and North Carolina, perhaps Dominion thought they could use SCANA as a new captive utility whose ratepayers could be used to pay the higher price of using the ACP and provide more profit to the parent company.

    However, the SC PSC seems to have awoken from the trance they were in when they approved the Summer nuclear plant and it might be difficult to pass the higher costs of the ACP onto ratepayers in SC just as it will be in VA and NC.

    Dominion also inherits Public Service Company of North Carolina, a gas distribution company, as part of the SCANA deal. PSNC has signed an agreement with the MVP for an allocation of pipeline capacity (300,000 Dth/d) that is equal to what Dominion had reserved in Virginia from the ACP. This is more than what the new Greensville plant will use (250,000 Dth/d). It is not clear what a small-moderate size gas distributor that is not experiencing huge growth would need this much additional supply for.

    The FERC application says part of the MVP extension is intended to supply an industrial park that has been proposed in Southside Virginia, but if this is an actual need, it too could be served more quickly and much more cheaply by connecting to the nearby Transco corridor.

    Dominion/PSNC’s allocation from the MVP is equal to the amount reserved by Con Ed, an owner of the MVP. The NY utility has informed its state regulator that its capacity on the MVP has no value to its customers.

    EQT, the primary owner and shipper on the MVP, has informed the SEC that it might not have enough money to build the MVP. There is some speculation that the ACP might abandon plans in Virginia and use (or buy) a portion of the MVP, which has no real customers other than Roanoke Gas. The MVP connects to Transco where the connection to the Brunswick and Greensville plants exists. Somehow, via an additional connection over the existing Transco right-of-way, additional gas supply might be brought to southeast Virginia. But this would be at least as expensive to Virginia Natural Gas customers as using the ACP.

    Maybe they are also planning to use the MVP-Southgate extension to PSNC to get into North Carolina or Hampton Roads.

    None of this makes much sense from an energy system point of view, but it never did. New pipelines are far too expensive. The existing system has the capacity we need and will be much cheaper to use. Southeast Virginia still needs a solution, though. but the ACP isn’t it.

    I don’t know if all of this rambling answers your question. To me it seems to be grasping at straws to save face or in hopes of more profits for the parent companies at ratepayers’ expense.

    1. Rowinguy Avatar

      Thanks, Tom. I really should have said “putative need for the ACP.” It’s hard to find a need for domestic generation usage anywhere with demand growth so flat.

      I admit I had not thought at all about extending it to Elba Island. Good point.

  13. LarrytheG Avatar

    Once again, thank you guys for your insight and knowledge.

    I never saw Dominion as a corporation that did not manage itself conservatively on it’s ventures and the ACP seemingly is much more risky unless Dominion had counted on the GA to neuter the SCC as well as counted
    on FERC to do what they did.

    Makes me wonder if Dominion calculated that even if they could not sell that gas for electricity that there were other viable markets – i.e. Plan B.

    The other thing that strikes me as odd is that Transco is an existing provider and also has it’s own expansion plans and Dominions plans has to be competition and yet rather than the two acting like they are competitors – they are actually coordinating with each other as Transco supplies gas to their plants and is also working on the interconnection between the ACA and the Transco lines.

    The ACP took a LOT of up-front money – and the prospectus to investors had to include all these risks as well as how they intended to deal with them.

    So I am guessing that if the SCC gums up the works for the power plants and/or new hook-ups to new plants never materializes that Dominion still has a game plan they will pursue the other parts of.

  14. In the SCANA case in South Carolina, Transco filed information with the SC Public Service Commission that said the ACP duplicates the infrastructure that Transco already has in place and that the ACP has no value to ratepayers. That was the first time I had ever seen a company oppose another’s pipeline project. But the ACP has aggressively invaded territory that has been well-served by Transco since the 1950s.

    With domestic gas demand stabilizing, the ACP would take away from Transco’s revenues. Earlier, everyone thought that we needed more pipelines everywhere (although we had several times more pipeline capacity than was needed to meet peak demand). FERC was giving every developer their own pipeline. Now, except for exports, new pipelines steal business from existing ones, even though the new ones cost more.

    The pipeline owners sign up their captive utilities and the ratepayers pay billions more as a result. Sabal Trail owned by NextEra and Duke, among others, is a prime example of that. All of Sabal Trail’s initial volume was taken from existing pipelines. NextEra’s Florida utility’s customers will pay $9 billion over 25 years for capacity they were already getting at a fraction of the cost. That same utility told the state regulator that it expected total gas use in the state (including for generating electricity) to decline by 4% a year.

    My concern is that the utility subsidiaries of the pipeline owners in Virginia and North Carolina are already contractually obligated to pay over $20 billion for 20 years. They can assign some or all of their capacity to others, but who will want to pay such a premium price for the ACP when Transco and other existing pipelines can transport gas for export (Transco connects to Elba Island, Cove Point, and the Gulf Coast LNG terminals) and domestic uses much cheaper than can the ACP (or MVP). Remember existing pipelines serving Virginia and the Carolinas have already expanded in capacity by an amount greater than the ACP and MVP combined.

    Our energy sector is presuming that gas demand will continue to rise and that we will need more pipelines, LNG facilities (42 are planned), etc. This totally ignores the more efficient use of energy that we have seen in the last 10 years. and discounts the possibility of an economic downturn here or elsewhere.

    We cannot export gas that competes with prices in Europe. Poland is willing to pay more for US LNG to avoid dealing with Russia, but others will likely continue to choose the lowest price. No one has realistically planned for a scenario where the pie stays about the same size and pipelines begin fairly competing for customers.

    If the ACP cannot find new buyers for Plan B, our utilities will be stuck with a huge obligation. Investors, ratepayers, or both could be harmed as a result, as well as the companies themselves.

    A responsible regulator is supposed to evaluate the need for a new project, and analyze the risk if that does not materialize. FERC failed to do this.

    It would be best if a court ruling made it obvious that the ACP should be abandoned and the owners could save face with investors. The CEOs have spent too many years touting the earnings advantages that the pipeline will bring to the parent companies to easily back away on their own.

    The SEC filings have contained the usual warnings about potential risks of the project not going as planned, but they have repeated that every year, so analysts and investors usually pay it little attention. It is time to begin asking management some tougher questions about scenarios that are becoming much more likely to occur.

  15. Dick Hall-Sizemore Avatar
    Dick Hall-Sizemore

    I am new to this whole world and, like Larry, I am grateful for the thorough, cogent analysis I have found on this blog. I wonder how much of this information and analysis has been presented to the GA.

    Tom, you allude to a court ruling being the best hope of having the ACP abandoned on the grounds of need. Is there a route to get a court to consider such a question and who would have standing?

  16. I don’t how much of this information is widely known throughout the GA. Authors of the various energy/utility bills have researched the issues but it appears to me that a GA session is a whirlwind of activity that makes it difficult for members to be well educated on the wide variety of issues they are confronted with.

    There are several court cases that are underway relating to the ACP. Two come to mind that might have terminal consequences if the ruling goes against the pipeline. The first relates to the approval for the ACP to cross the Appalachian Trail. Dominion thought it had found a loophole that would allow it to do that. The 4th District ruled that only the National Park Service can approve the crossing with Congressional approval. If this opinion survives appeals, etc., it might require a major reconfiguration of the route or an act of Congress to keep the current plan moving forward.

    The DC District Court will soon hear a challenge to the entire FERC certificate for the project. If the certificate is overturned because of flaws in the FERC process, there would no longer be an approval for the project and it would have to be reconsidered in some fashion depending on the court’s decision.

    Parties that were intervenors in the original FERC process that brought the suits in court are those that have standing. In addition to the Southern Environmental Law Center, the North Carolina Utility Commission is also challenging the certificate. There might be some amicus briefs presented as well.

    1. Dick Hall-Sizemore Avatar
      Dick Hall-Sizemore

      Thanks for the information. I was aware of the court action regarding the Appalachian Trail. That is essentially an environmental case, but, if ACP loses, it would have major ramifications for the pipeline.

      The DC Circuit case is more basic, and, to my mind, the most important. It gets at the need for the pipeline at all.

    2. TomH, I agree with you and Dick about the importance of the DC Cir case against the FERC, which has severely restricted the scope of its own review of pipeline certificate applications based on its own precedent as to what constitutes the “need” for new pipeline capacity, going back decades, not on the plain words of the statute, which have been very interpreted differently by other agencies in parallel contexts. Clearly FERC leans heavily on the willingness of the proposal’s financial backers to put their money at risk to build it as a kind of proof of the “need.” And here, how much risk is there?

      But going back to the original point of this post, the GA here is fighting over a statutory addition to the ratemaking framework in which the SCC operates which, as far as I can see, is already the established rule before most utility ratemaking agencies (including the FERC when wearing its electric ratemaking hat). It should not be necessary to pass this law for the SCC to do its job and disallow this contract cost for Dominion ratemaking purposes, especially a cost from an affiliated company, if there were cheaper alternatives available at the time or if there was no need for the commitment at all. That said, I don’t blame the SCC for wanting such a law on the books to give themselves a little backbone. My fear is that in the process of getting this passed, some sort of “compromise” will be reached in the GA which in fact limits the SCC’s ratemaking powers to something less than what they already possess here.

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