Will Dominion Appeal Latest Loss At SCC?

Daily Press photo of Yorktown Power Station

Michael Martz has a good report in this morning’s Times-Dispatch on the State Corporation Commission’s opinion trimming Dominion Energy Virginia’s proposed transmission charge.  The SCC ordered the proposed Rider T going into effect next month reduced to reflect the lower federal income tax rates.  It also rejected the utility’s argument that a payment it was receiving from the PJM regional transmission entity was a generation cost it should be allowed to book against base rates instead of against Rider T.  Booking it against base rates would in effect make it profit.

The payments are made because PJM asked Dominion to continue operating its Yorktown plant for reliability reasons.  The SCC wrote: “Legally, these payments are part of the PJM Transmission Tariff, which explicitly states that — in this particular instance — the generator is providing a “transmission service” for which PJM is assessing “an additional transmission charge” of $12.7 million. Accordingly, the Commission finds that both (1) the charges assessed, and (2) the payments made, by PJM under the PJM Transmission Tariff for this transmission service shall be reflected in the Subsection A 4 revenue requirement.”

As the biggest beneficiary of that increased reliability, Dominion is actually providing about half of the money to PJM which is then repaid to Dominion.  How does it collect its share?  In Rider T.  These are all transmission dollars.

The adjustments ordered by the SCC will save more than $2 per month on the mythical 1,000 kwh residential customer bill.  The question now is, will Dominion appeal the decision to the friendly Supreme Court of Virginia?  In its final written arguments to the Commission it pointed to the legislative provision (which of course it wrote) that these costs are on their face “reasonable and prudent.”  Reading the SCC opinion (not yet up on its website) it is obviously laying the groundwork for its argument in any possible appeal.

If the appeal is filed it will have little to do with this issue and a great deal to do with the battles to come over Dominion’s massive grid investment plan, just getting underway.   The tax issue involved more money, but the argument over the payment from PJM for maintaining operations at the Yorktown power plant goes right to the heart of the legislative declaration of “reasonable and prudent” and the utility’s game of moving costs back and forth between base rates and rate adjustment clauses when it improves its bottom line.

Previous Bacon’s Rebellion posts on this issue can be found here and here.

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8 responses to “Will Dominion Appeal Latest Loss At SCC?”

  1. LarrytheG Avatar

    Looks like Dominion would prefer to have the GA neuter the SCC and get them out of their hair, eh?

    And the SCC looks like they are doubling down on holding Dominions feet to the fire!

    I really don’t blame any company from doing everything they can to protect their interests – whether financial or regulatory or competition but you gotta
    give Dominion credit – they take it to a whole higher level! They going to do everything they can – legally and legislatively to neuter the SCC!!!

  2. I’m sorry, but I can’t give Dominion credit for their approach to this. When a utility is granted a monopoly, they accept the “utility compact.” This agreement says that in return for the grant of a monopoly they accept regulatory oversight to set fair rates for customers and fair returns for shareholders.

    The proposed energy policies and political influence being exerted to get them accepted is coming from Dominion Energy, the unregulated parent company, not from the regulated utility.

    As with any for-profit company they can advocate and influence policies that improve their profits when their customers have a choice whether to continue to do business with them. Such a choice does not exist with utility customers.

    Dominion wants the best of both worlds. They want the freedom to move the levers of government and the protection of a monopoly. It shouldn’t work that way. The legislators and regulators have an obligation to also protect the interests of the citizens of Virginia.

    I am concerned that this one-way street is becoming so tilted in favor of the energy companies that it will result in a second-tier state economy and, ultimately, financially hobbled utilities. A company cannot set the interests of its owners against the interests of its customer for long without consequences.

    Other states are finding ways to revise the roles of their utilities to give them a sound financial future doing things that serve their customers. We can find the right way to do that in Virginia too. But the longer we wait, the harder it will get. And the farther behind we be of those neighboring states (especially Maryland, they reduced their rates last year) that have embarked on modernizing their energy system.

    The present energy bill is a revenue enhancement bill to increase the utility’s profits at the expense of its customers and could last for the next 10 years. This is not to be applauded. It won’t be good for anyone in the long run. If that’s the Virginia Way, it’s a foolish way.

  3. I’m not certain of the retail details of this case, given the convoluted factual circumstances and all the riders involved — but it seems to me the Commission is exactly right to have overruled the Hearing Examiner for the reasons you lay out here. Running a generator out of economic dispatch order in a transmission-constrained region in order to prevent a transmission line from overloading is, in fact, a system operational cost, a transmission-substitute cost, not a generation cost. The Yorktown generator’s retirement was postponed and since then it has been run solely because the Surry to Skiffes Creek line has not yet been built, due to years of regulatory delay. Dominion Energy’s generating subsidiary did not keep that unit on-line and is not running it today because it’s profitable to generate that way but because it has been ordered to do so as a transmission substitute, by PJM pursuant to NERC system reliability standards and FERC rules. Dominion would violate transmission reliability standards if it did not either provide generation in this constrained area on its system or curtail load. The compensation DE is being paid for this is not determined by the market but by PJM in its role as regional grid operator pursuant to FERC rules. The cost of this is borne by the network transmission service customers on the grid, primarily the network transmission customer which takes deliveries from the grid in the transmission-constrained area, which is Dominion Virginia Power. It’s quite logical and fair, therefore, that the cost of this to Dominion Virginia Power flows through Dominion’s retail tariffs as a transmission cost.

    Yes, it’s complicated. That is precisely why we need the hearings and written evidence and preliminary opinion of the Hearing Examiner and review by the judges of the SCC to sort it out — not some sweeping special statute written by Dominion lobbyists and passed after a half hour of discussion in a legislative committee hearing.

    1. Steve Haner Avatar
      Steve Haner

      The commission actually agreed with the hearing examiner on all points, agreeing with consumer advocates that the PJM payment was a transmission payment that should be credited to ratepayers benefit in the Rider T .

  4. LarrytheG Avatar

    Dominion knows it’s “complicated” and for that reason – they’re counting on the public having no clue what is going on – and their primary focus seems to be to do whatever they can legally and legislatively to neuter the regulators and get the GA to fix the law to allow them to basically do what they want and really you can’t blame that sentiment – I bet most companies and corporations would love less oversight and govt “interference”… Lobbying as an avocation is alive and well and Chutzpah is oozing throughout the electricity business in Virginia!

    It won’t change until the folks in Richmond change – and the folks in Richmond won’t change if they are not replaced at elections – and if the ordinary folks who vote don’t know – then we’re kind of in a rut…. eh?

    1. Steve Haner Avatar
      Steve Haner

      Somebody should make the effort to tell them. Somebody who knows how to package political messages.

  5. […] a ruling earlier this year the SCC denied a Dominion Energy Virginia request to continue using the old, […]

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