SCC Examiner Says No to Dominion Gas Plans

By Steve Haner

A hearing examiner at the Virginia State Corporation Commission has recommended rejection of Dominion Virginia Energy’s plan to maintain and add to its fleet of fossil fuel generators. It failed to overcome the presumption in state law that all such plants must go away, she wrote.

In her extensive report following the months-long regulatory battle, Ann Berkebile notes that the Commission itself (still hobbled with only one full member and a retired commissioner sitting in) may reach a different conclusion. And the pending case, Dominion’s Integrated Resource Plan (IRP), does not actually involve final decisions on what power plants to add or delete from its assets in coming years.

But Dominion was looking for a blessing from the Commission on its proposal to maintain most of its natural gas plants and even add one, a 1,000 megawatt facility it wants to place in Chesterfield County. The 2020 Virginia Clean Economy Act has set a schedule for their retirement, with all fossil fuel generation expected to be gone in about 20 years. Dominion’s announcement last May that it was seeking to keep and add to its natural gas plants was immediately denounced by environmental advocates.

The 2020 legislation included a provision to allow the SCC to approve an additional fossil fuel plant if a utility demonstrates “that it has already met the energy savings goals identified in § 56-596.2 and that the identified need cannot be met more affordably through the deployment or utilization of demand-side resources or energy storage resources and that it has considered and weighed alternative options, including third-party market alternatives, in its selection process.”

Berkebile noted that the new language has not been addressed by the Commission or any other Virginia court so far. She wrote:

Given the 2023 IRP’s focus upon the imminent addition of new natural gas CTs, and because the Company failed to provide more comprehensive information and/or analysis with the 2023 IRP concerning its ability to overcome…the Code’s presumption against new carbon-generating unit approvals, I find Dominion failed to establish the 2023 IRP is reasonable and in the public interest.

In a footnote she added:

As explained herein, however, I also recognize that the Commission has not yet specifically considered the implications of § 56-585.1 A 5 of the Code in the context of an IRP and could, in the exercise of its discretion and authority, reach a different conclusion…

In the years since the passage of the VCEA, concerns have grown that the rapid retirement of reliable, steady coal and natural gas power plants, and their replacement with intermittent and unpredictable wind and solar generation, creates major risk of power shortages. Dominion has consistently warned of the risk, including in IRP filings before this one, but hadn’t acted on those concerns until this proposal.

In her extensive summary of the case, Berkebile noted testimony filed by the Thomas Jefferson Institute for Public Policy, previously reported here. Nothing in its written comments was original to the organization, but it wanted to make sure there was judicial notice of the reliability warnings coming from the PJM regional transmission organization. Virginia is part of PJM.

A few days after the Jefferson Institute’s comments were posted, Virginia’s Department of Energy filed a letter urging the SCC to place a high priority on maintaining reliability, also highlighting PJM’s warnings.

The full hearing examiner’s report approaches 200 pages and was split into two documents (here and here.) The overall record on the review, which as noted actually has no impact on what is or isn’t built or what customers pay, is gigantic, another bonanza for lawyers and consultants. Dominion files a new IRP in less than six months, so the real impact may be to force it to amend that.

The General Assembly could provide further clarity on what would be required to overcome the VCEA’s mandate that all coal, gas or oil generation in Virginia cease. The return of full Democratic control over both chambers, however, probably means a more aggressive schedule of fossil retirements and faster buildouts for wind and solar. The new majorities won’t vote to keep natural gas in the mix in the 2040s and 50s.

The new majorities will now be able to fill both vacant seats on the Commission, perhaps returning a former commissioner who was one of the principal authors of the VCEA. Three Democratic appointees will hear the next IRP and any applications for new generation.

Faced with these stronger headwinds, it will be interesting to see if Dominion continues to press forward with its proposed additional gas generation. Preliminary permit applications are underway but no full application for permission to build it and charge ratepayers for it is filed at the SCC yet.

The company is caught in a dilemma. For several years now it has become a major cheerleader for the transition to wind, solar and battery power, and it strongly supported all the spending and plant retirement mandates in the VCEA. In order to make the case now for maintaining some or all of its reliable fossil plants, it will need to reverse course and loudly and clearly speak the actual truth: wind and solar by themselves will never power a modern Virginia economy. Absolutely never.