Dominion Energy Virginia will provide $200 million in rate credits to customers and together with Appalachian Power Co. will increase investments in clean energy and energy efficiency under a legislative compromise with Virginia's governor.
Gov. Ralph Northam on Feb. 5 announced the compromise on comprehensive legislation designed to end the state's electric rate freeze while easing regulatory approval and cost recovery for investments in grid modernization, clean energy and battery storage.
"This compromise puts more money in ratepayers' pockets, ensures real oversight of utility rates, paves the way for significant upgrades to Virginia's electrical grid, and mandates historic investments in energy efficiency and clean power," Northam said in a news release.
The proposed changes, hammered out by a diverse group of consumer and industry advocates, are outlined in a substitute version of S.B. 966 that cleared the Virginia Senate Committee on Commerce and Labor on Feb. 5 and is headed to the Senate floor.
The bill repeals the freeze on biennial rate reviews for Dominion Energy Virginia and Appalachian Power signed into law in February 2015 in an effort to counteract compliance costs tied to the U.S. Environmental Protection Agency's proposed Clean Power Plan. These planned environmental regulations are now likely headed toward repeal.
Rate reviews for Appalachian Power will still resume in 2020 and include the 2018 and 2019 test periods, but these reviews would be implemented on a "triennial" basis going forward. A triennial rate review for Dominion Energy Virginia, known legally as Virginia Electric and Power Co., would be conducted in 2021 and include 2018, 2019 and 2020 test periods. Under the rate freeze, the Dominion Energy Inc. utility's rate reviews are set to resume in 2022 and include the 2020 and 2021 test periods.
Dominion will return $133 million to its electric customers in 2018 and an additional $67 million in 2019 through bill credits, while Appalachian Power will return $10 million to its customers through bill credits tied to fuel costs.
In addition, Dominion will reduce rates by $125 million and the American Electric Power Co. Inc. subsidiary will cut its rates by $50 million on an interim basis as the State Corporation Commission weighs the proper rate reductions tied to the federal corporate tax cut enacted in December 2017. The Tax Cuts and Jobs Act of 2017 reduced the corporate income tax rate to 21% from 35%, with utilities expected to pass these savings on to customers.
The bipartisan proposal also is designed to support "electric distribution grid transformation projects" as part of efforts to enhance electric grid reliability, security and efficiency.
These projects include data analytics, cybersecurity measures, advanced two-way meters, infrastructure for electric vehicle charging stations, pumped hydroelectricity generation and storage facilities as well as the replacement of overhead distribution lines with underground facilities.
Under the compromise, Dominion and Appalachian Power will be required to make more than $1 billion in investments in energy efficiency and energy assistance programs over the next decade. The Senate bill also supports the integration of 5,000 MW of new solar generation, including rooftop solar and storage installations with an aggregate capacity of 50 MW, and 16 MW of offshore wind generation.
Appalachian Power would be held to a separate commitment, subject to SCC approval, to "construct or acquire" 200 MW of new solar capacity by July 1, 2028.
The legislation also establishes pilot programs aimed at electricity storage through battery deployment. The pilots would last for five years and allow Dominion to install batteries with up to 30 MW of capacity and Appalachian Power to install batteries up to 10 MW of capacity.
Dominion's controversial, planned 230-kV transmission line designed to serve an Amazon.com Inc. data center in northern Virginia would be approved as part of a pilot program aimed at studying the reliability and cost impacts of underground lines.
The SCC in July 2017 suspended its final order that approved construction and operation of the 5.1-mile overhead transmission line based on complaints raised by The Coalition to Protect Prince William County and the Somerset Crossing Homeowners Association. The Senate bill authorizes the construction using an alternative preferred by local politicians and residents that will place a 3.2-mile portion of the line underground adjacent to an interstate highway.
