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Dominion asks to recover $73M, bury more than 400 miles of distribution lines

Dominion Energy Virginia is seeking regulatory approval to bury more than 400 miles of distribution lines and recover about $73 million from ratepayers for previous and future costs.

The Dominion Energy Inc. subsidiary on March 19 filed revisions to its rate adjustment clause, known as Rider U, with the Virginia State Corporation Commission. The rider is designed to recover costs for new underground distribution lines.

This latest filing by Dominion Energy Virginia, known legally as Virginia Electric and Power Co., includes a proposed third phase of its strategic underground program that calls for converting 416 miles of overhead tap lines to underground facilities at a capital investment of about $179 million.

The $73 million requested revenue requirement tied to Rider U for the rate year beginning Feb. 1, 2019, includes recovery of about $18.2 million for phases one and two and a revenue requirement of about $54.9 million for proposed phase three and remaining phase two costs, the filing states.

The company said it is requesting to recover phase three costs only for projects that will be completed prior to Feb. 1, 2019.

The proposed revisions to Rider U are expected to incrementally increase a residential customer's monthly bill by $1.39 over the current rider, Dominion Energy Virginia wrote in its filing. The company added that the total impact of Rider U will be $1.98 for a typical residential customer that uses 1,000 kWh of electricity per month.

The rider request was filed about 10 days after Virginia Gov. Ralph Northam signed legislation that ends the freeze on electric rate reviews for Dominion Energy Virginia and American Electric Power Co. Inc. subsidiary Appalachian Power Co., while easing regulatory approval for certain grid modernization investments including underground transmission lines.

The legislation, S.B. 966, takes effect on July 1 and amends provisions in a 2017 Virginia law designed to streamline the regulatory approval process for utilities looking to replace aging overhead electric infrastructure with underground lines. The 2017 law includes language that states there is a "rebuttable presumption" that the burying of distribution lines will provide local and systemwide benefits and be cost beneficial, with such costs "reasonably and prudently incurred."

Despite the law, the SCC in September 2017 rejected Dominion Energy Virginia's initial phase two plan to bury nearly 250 additional miles of distribution lines as "not cost beneficial" and instead approved a "more targeted, limited-scale" pilot program. Based on the newly signed legislation, Dominion Energy Virginia is now asking to recover $65.2 million of outstanding phase two costs above the $40 million pilot program for burying 249 miles of distribution lines.

In its updated filing, Dominion Energy Virginia points out that S.B. 966 "removes the rebuttable presumption" language and specifically states that the conversion of overhead tap lines to underground distribution lines on or after Sept. 1, 2016, is deemed to provide local and systemwide benefits and to be cost beneficial.

The legislation includes provisions that the SCC shall approve recovery of these proposed conversions as long as the total costs do not exceed an average cost per customer of $20,000 and an average cost per mile of $750,000, exclusive of financing costs. (SCC docket PUR-2018-00042)

Also in response to the new law, Dominion Energy Virginia reached an agreement with groups challenging its controversial transmission line that will serve an Inc. data center in northern Virginia.

The SCC in July 2017 suspended its final order approving construction and operation of the 230-kV overhead transmission line based on complaints raised by The Coalition to Protect Prince William County and the Somerset Crossing Homeowners Association. The groups advocated for a 3.2-mile portion of the line to run underground along Interstate 66 despite concerns from Dominion and state regulators about construction difficulty and delays.

The legislation directs the SCC to approve the partially underground route for the transmission line as part of a pilot program aimed at studying the reliability and cost impacts of underground lines. (Virginia docket PUE-2015-00107)