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SCC: Dominion Must Refile Its 2018 IRP

On Friday, December 7, the Virginia State Corporation Commission (“SCC” or “Commission”) entered an order directing Dominion Energy Virginia (“Dominion”) to revise and refile its 2018 Integrated Resource Plan (“IRP”). This order is significant in that the SCC has never rejected an IRP, or required a utility to refile its plan. We discuss several takeaways from this order below.

What is an IRP?

An IRP is a utility’s plan to meet customer demand and service obligations over a 15-year planning horizon. The IRP statute, Va. Code Section 56-599, directs utilities to evaluate various options to meet forecasted demand, including building new generation; entering into power purchase agreements with third parties; purchasing energy from the PJM market; and investing in energy efficiency resources. The statute directs the Commission to review the utility’s plan and to “make a determination … as to whether [the IRP] is reasonable and is in the public interest.” It is important to note that an IRP is not binding on the Commission or the utility in any way. The Commission states that approval of an IRP does not create any presumption that any particular resources are prudent.

Before determining whether Dominion’s 2018 plan is “reasonable,” however, the Commission wants more information. In particular, the SCC wants Dominion to update several aspects of the modeling used to generate the plan. Dominion was directed to provide these new modeling results within 90 days of the order.

“True Least Cost Plan”

First, the SCC wants Dominion to provide what it calls a “true least cost plan” that will “serve as a benchmark against which to measure the costs of all other alternative plans.” The Commission wants to know what Dominion’s modeling software would select if it were permitted to choose the least-cost resources to meet the company’s forecasted demand. The Commission’s order asserts that Dominion – instead of letting the model choose the lowest-cost resources mix – actually “forced” certain resources into the IRP. The Commission referenced Dominion’s offshore wind demonstration project as a resource that was “forced” into Dominion’s alternative plans.

“SB 966 Plan”

Second, the Commission wants Dominion to file a plan that incorporates all of what the SCC calls the Senate Bill 966 (“SB 966”) “mandates.” This legislation declared that it is “in the public interest” for Virginia utilities to construct or acquire up to 5,500 MW of new renewable energy resources. The legislation also referenced certain distribution and transmission undergrounding priorities. (Note that the Commission, in this and other orders, characterizes the priorities outlined by the General Assembly as “mandates.” The use of this term, however, is misleading when applied to renewable energy. SB 966, while declaring such renewable energy projects to be “in the public interest,” does not require utilities to make these investments, nor does it require the Commission to approve them.)

By requiring both a “Least Cost Plan” and a “SB 966 Plan,” the Commission wants to estimate the incremental costs of the SB 966 investments. The SCC may want to include this estimate in its final order on Dominion’s IRP. Moreover, the Commission may choose to include this analysis in one of the written reports provided Governor and the General Assembly regarding the implementation of Virginia’s electric regulation statutes.

Anticipated load growth

Next, the SCC directed Dominion to utilize the PJM load forecast for the Dominion Zone, which has a 15-year growth rate of 0.8%, versus Dominion’s 1.4%. At the evidentiary hearing, the Commission Staff and environmental advocates argued that Dominion’s internal load growth was too high, thus overstating the for need for new generation.

Solar capacity factors

The Commission also directed Dominion to update its modeling to use a 23% capacity factor for its solar facilities. A generation plant’s capacity factor represents the amount of time it is available and generating electricity. Dominion’s IRP assumes that new solar resources will achieve capacity factors of 26%, in part due to the use of single-axis tracking facilities which follow the sun, resulting in greater production. But the Commission noted that Dominion’s “existing [solar] resources have experienced actual capacity factors of approximately 20% on average over the last five years.” Therefore, the SCC split the difference between the actual, observed capacity factors and those forecasted by Dominion. The solar industry supported Dominion’s capacity factor projections, finding them to be achievable.

Pipeline and fuel costs

Finally, the Commission’s order does not address the proposed Atlantic Coast Pipeline (“ACP”), which would be constructed by affiliates of Dominion and may serve some of the company’s gas generation facilities. The SCC previously declined to review the ACP fuel supply contracts under the Virginia Affiliates Act, a statute which directs the Commission to approve any contracts entered into between public utilities and their affiliates.

The Commission did direct Dominion, in a footnote, to “include a reasonable estimate of fuel transportation costs … associated with natural gas generation facilities.” This could be an indication that the Commission does not believe Dominion’s forecasted gas costs are reasonable. Elsewhere in its order, however, the Commission seemed to express concern that “[Dominion’s] modeling was not permitted to select highly-efficient natural gas-fired combined-cycle facilities” and as a result Dominion’s modeling “forces in higher-cost resources [while] excluding other lower-cost resources [which] results in a more expensive plan.”

The SCC’s Order and other documents for this case are available online in Docket No. PUR-2018-00065. GreeneHurlocker represented the Solar Energy Industries Association in the evidentiary hearing at the SCC.

Should you have any questions about this case, please contact one of our energy regulatory attorneys.

Renewable Energy Down South

Later today, we will be heading to Atlanta for the Southeast Renewable Energy conference being held at the Westin Atlanta Perimeter Hotel. We’re going to this networking event where the entire southeast renewable energy community gathers to get the latest insights into the market and to meet key players as well as clients and colleagues.

In the sessions on Thursday and Friday, we hope to learn about the key trends impacting renewable energy project development, finance and investment; meet with utility procurement managers; and engage in networking with the decision-makers who are driving the industry forward. If you are planning to attend, please look for me and let’s talk about renewable energy in Virginia and the Mid-Atlantic.

If you have questions about or issues in renewable energy, just contact any of our renewable energy lawyers.

Client Alert: Dominion In the Market for Solar, Wind

On October 24, 2018, Dominion Energy Virginia (Dominion) announced and issued an RFP seeking 500 MW of solar and on-shore wind generation. Projects must be at least 5 MW. Interested bidders can propose to either sell Dominion the project development assets or sell energy to Dominion under a Power Purchase Agreement. Projects must be located in the Commonwealth of Virginia to be eligible.

The RFP schedule is as follows:

Intent to Bid forms due: This Friday, November 2, 2018
Proposals to sell development assets due: December 13, 2018
Proposals to sell energy (PPA) due: March 14, 2019
RFP concludes: Second Quarter 2019

Dominion has pledged to have 3,000 megawatts of new solar and/or wind energy under development or in operation by early 2022. Dominion also announced that it will issue formal RFPs on an annual basis until the 3,000 MW target is met.

If your company has questions or would like any additional information regarding the Dominion RFP, please contact one of our renewable energy attorneys or utility attorneys.

We Shed Some Light on Solar PPAs in Fairfax

We were pleased to be involved in the Sierra Club’s presentation organized for local governments in the Northern Virginia area last month, as we detailed here. Afterward, the Sierra Club said:

“This briefing was sponsored by the Great Falls Group and held at the Fairfax County Government Center to educate the participants on the budget-neutral tools of solar Power Purchase Agreements (PPA) and Energy Savings Performance Contracts (ESPC). Presentation and handout information is available on the GFG website and the video recording is here.

Debra Jacobson had a lot of positive feedback from this event. There will be an article on this event for the next GFG Cascade.”

Here are a few pictures of the audience at the Government Center and Eric Hurlocker opening the panel.

If you want to know more about this meeting, Power Purchase Agreements, Energy Savings Performance contracts, or other issues in the renewable energy field, contact any of our energy lawyers.

Heading North for the Sierra Club

I am excited to have been invited by the Great Falls Group of the Sierra Club to join in the “Clean Energy Financing Workshop for Local Governments” that will be held this Friday (September 7) from noon to 1:30 p.m. at the Fairfax County Government Center. I’ll be talking about one of our favorite topics: solar power purchase agreements (SPPA), an accessible way for financing renewable energy projects that local governments can use.

This brown bag lunch event is free, but registration is required as space is limited. If you can’t make it on Friday, I understand you can register as a virtual attendee and get access to the video after the session. Maybe I will see you there. If we miss each other, I can answer any questions about this topic or renewable energy development here, or just contact one of our renewable energy lawyers.

SCC Sets Procedural Schedule for Dominion Grid Application

On July 24, 2018, Dominion Energy Virginia (“Dominion”) filed a Grid Transformation Plan with the Virginia State Corporation Commission (“Commission” or “SCC”). The SCC has entered a procedural schedule for this case and set an evidentiary hearing for November 15, 2018.

Dominion’s grid plan proposes to invest approximately $816 million in projects designed “to enhance the reliability, resiliency and security of the electric distribution grid.” Dominion also states that the plan will “facilitate the integration of distributed energy resources, such as solar or battery storage, into the system.” Dominion proposes to make the $816 million in investments over a three-year period, between 2019 and 2021. In particular, the utility wants to install approximately 1.4 million smart meters throughout its service territory between 2019 and 2021. There is more about the request here.

The filing also outlines the utility’s longer-term grid transformation priorities. Over 10 years, Dominion proposes to invest over $3.1 billion in grid transformation investments. These investments would include additional smart meters and other “advanced metering infrastructure” as well as reliability improvements and “grid hardening” projects. Dominion’s plan includes proposals to replace certain aging distribution facilities and increase the company’s physical and cyber security capabilities.

The application is filed pursuant to recently enacted legislation, Senate Bill 966, passed by the General Assembly and signed by Governor Northam earlier this year. Dominion’s petition requests the SCC to find that the plan is “reasonable and prudent.” The legislation provides that “grid transformation projects” are “in the public interest.” However, the law does not require the Commission to approve any of the proposed investments.

Dominion does not request cost recovery in its filing or explain whether the spending plan would result in rate increases for customers. This case has been docketed as Case Number PUR-2018-00100. Interested parties have until September 11, 2018, to intervene in this case.

If you want to know more about how this filing may affect energy markets in Virginia or have a legal issue in the energy field, please contact any of our renewable energy lawyers.

Solar and Wind Take Center Stage at the 2018 Virginia Energy Conference

wind turbines and solar arraysRenewable energy development, driven by rising corporate demand, was a central theme of Wednesday’s 2018 Virginia Energy Conference, hosted by the Virginia Chamber of Commerce. Garret Bean, Vice President of Development for sPower and one of the keynote speakers at the conference, discussed his company’s proposed 500-megawatt facility in Spotsylvania County, which will serve corporate customers in Virginia. Microsoft announced that it will purchase 315 MW of energy from sPower’s 500 MW project as part of its sustainability goal of 60 percent renewable energy by early 2020. In addition to Microsoft, major global companies including Google, Apple, Facebook, and Walmart have joined together to commit to 100% renewable power as a part of the RE100 initiative.

In his keynote, Bean explained that rapid data center development in Virginia, sustaining 70 percent of the world’s internet traffic, coupled with customer demand for cloud services powered by clean energy sources, presents a significant opportunity for growth in Virginia’s renewable energy sector. However, with the growth of renewable energy, developers are facing siting, permitting, and interconnection challenges that will have to be overcome.

Delegate Terry Kilgore, Senator Frank Wagner, and Secretary of Natural Resources Matt Strickler also discussed the opportunities and challenges of Virginia’s renewable energy industry. Senator Wagner voiced concerns about Virginia’s proposed regulations to link to the Regional Greenhouse Gas Initiative (RGGI) and participate in its regional greenhouse gas emissions cap-and-trade program. However, with the passage of SB 966 this session, paving the way for 5,000 megawatts of solar and wind energy in Virginia, and Governor Northam’s announcement that the Virginia Department of Mines, Minerals and Energy has posted a Request for Proposals for contracts to help strengthen Virginia’s offshore wind supply chain and service industry, the future for Virginia’s renewable energy industry is looking bright.

If you have questions about Virginia’s renewable energy industry, legislation, or regulatory structure, please contact one of GreeneHurlocker’s energy and regulatory lawyers.

Dominion Proposes Significant New Solar and Gas-Fired Generation

On May 1, Dominion Energy Virginia (“Dominion”) filed its 2018 Integrated Resource Plan (“IRP”) at the State Corporation Commission (“SCC”). In Virginia, an IRP is a utility’s proposal for meeting customer demand over the next 15 years. An IRP is a planning document and does not represent a commitment to pursue any particular course of action. Instead, it is the utility’s best assessment, at a particular point in time, regarding which resources it will deploy over the planning horizon.

The SCC must review Dominion’s IRP and decide whether the plan is “reasonable and in the public interest.” Generally, interested parties are able to present arguments and testimony regarding the reasonableness of the plan.

Dominion’s 2018 filing includes five alternative scenarios. The key variable in the alternative plans is carbon regulation. For example, the IRP includes different modeling based on whether a carbon tax is imposed at the federal or state level, or whether the Commonwealth joins the Regional Greenhouse Gas Initiative.

In each alternative plan, Dominion proposes to add at least 4,700 MW of new solar capacity in the next 15 years. Dominion also proposes to add between 3,700 and 5,200 MW of new gas-fired generation. Dominion suggests that these new gas facilities will be used as “peaking resources,” which run when necessary during periods of increased demand, such as on hot summer days when there is greater need for air conditioning. The also IRP assumes that Dominion’s peak demand will increase 1.4% each year.

The IRP indicates that the proposed Atlantic Coast Pipeline (“ACP”) will be a supply source for the new gas facilities. Dominion states that it has already signed an agreement to “secure firm transportation services on the Atlantic Coast Pipeline.” Dominion’s parent company, Dominion Energy, is one of the developers of the ACP.

Finally, the IRP assumes that Dominion’s four nuclear reactors will receive federal approval to remain operational throughout the planning period. However, Dominion says that it will “pause material development activities for North Anna 3,” a third nuclear reactor that the company was planning to construct at its nuclear facility in central Virginia.

The IRP notes that Senate Bill 966, which was enacted by General Assembly earlier this year, will become effective on July 1 of this year. This legislation is intended to encourage investments in renewable energy and “grid transformation” projects. The legislation requires Dominion to propose at least $870 million in energy efficiency programs over the next 10 years.

Dominion states that it “has begun the initial planning associated with a transformational grid modernization effort.” These “grid transformation” efforts will include investments in smart meter technology, distribution substation automation, “replacing aging infrastructure,” and an “enhanced customer information platform” to allow customers to manage their energy consumption. Although the IRP notes that Senate Bill 966 requires the company to propose $870 million in efficiency programs over the next 10 years, the IRP does not identify what type investments might be made.

We expect the SCC will enter an order for notice and hearing in the coming weeks. The SCC’s order will include deadlines for intervention, expert witness testimony submissions, and a date for the evidentiary hearing.

If you have any questions about Dominion’s IRP, or other electric energy matters, please contact one of GreenHurlockler’s renewable energy or regulatory lawyers.

Panelist Reisinger and Solar Energy in Virginia

Will Reisinger and other panelists for the rginia Renewable Energy Alliance LEAD conferenceWill Reisinger was a panelist at the Virginia Renewable Energy Alliance’s Leadership in Energy Advancement and Development conference on April 26 at the McGuireWoods law firm in Richmond. The panel discussed the status of Virginia’s energy market and recent legislation intended to encourage solar energy development. Will highlighted some of the opportunities for expanded renewable energy investments in Virginia, as well as several remaining legal and regulatory obstacles.

If you would like to know more about the state of solar energy in Virginia or the legislative environment, contact Will or any of our GreeneHurlocker energy lawyers.