The Virginia State Corporation Commission has ordered Dominion Energy Virginia to significantly cut its proposed annual revenue requirement tied to transmission costs to largely reflect savings from the lower federal income tax rate.
The commission, or SCC, in an Aug. 2 order said Dominion Energy Virginia, known legally as Virginia Electric and Power Co., should lower its recovery of transmission costs in base rates and a proposed rate adjustment clause by nearly $131 million.
The Dominion Energy Inc. subsidiary filed for approval of a total revenue requirement of about $755.5 million to be recovered through a combination of base rates and a rider beginning Sept. 1, 2018, through Aug. 31, 2019. The SCC said Dominion Energy Virginia's proposed revenue requirement represents an increase of about $145.5 million and would increase the monthly bill of a residential customer using 1,000 kWh of electricity by $4.18.
A hearing examiner in July said the record supports a revenue requirement of about $624.8 million when incorporating the benefits of federal tax reform legislation signed into law by President Donald Trump in late 2017, which lowers the federal corporate tax rate to 21% from 35%. The hearing examiner's report also recommended incorporating "generation deactivation credits" that Dominion Energy Virginia has received as part of running Yorktown coal units 1 and 2 to maintain reliability.
The SCC ruling notes that Dominion Energy Virginia proposed postponing the tax cut benefit to customers until as late as Sept. 1, 2020, "more than two years from the date the federal corporate tax cut took effect." Regulators said the tax cut benefit is about $118 million.
"Importantly, this is customers' money, not Dominion's, as Dominion's only basis to collect it is to pay its actual corporate taxes," the SCC wrote.
Regulators also agreed with the hearing examiner's recommendation that Dominion should reflect the $12.7 million in credits it is paid by the PJM Interconnection for running the Yorktown units.
The U.S. Department of Energy in the summer of 2017 and in subsequent actions has ordered Dominion to be ready to fire up its Yorktown units if PJM determines an immediate reliability risk in Virginia's eastern peninsula. Dominion is building a transmission line in the region to support its "critical" service needs. (SCC docket PUR-2018-00066)