Virginia Gov. Ralph Northam on March 9 signed a bill that ends the freeze on electric rate reviews for Dominion Energy Virginia and Appalachian Power Co., while ramping up investments in clean energy and grid modernization.
Senate Bill 966 reinstates rate reviews for Appalachian Power in 2020 and Dominion Energy Virginia in 2021.
The freeze on biennial reviews for Dominion Energy Virginia, known legally as Virginia Electric and Power Co., and Appalachian Power was signed into law in 2015 by then-Gov. Terry McAuliffe in an effort to counteract compliance costs with federal environmental regulations.
Under S.B. 966, rate reviews for American Electric Power Co. Inc. subsidiary Appalachian Power will resume in 2020 for the 2017, 2018 and 2019 test periods. A rate review for Dominion Energy Virginia would be conducted in 2021 and include the 2017, 2018, 2019 and 2020 test periods. These reviews will be conducted on a "triennial" basis going forward.
Under a compromise lawmakers reached with Northam, both utilities will provide rate credits to customers and increase investments in clean energy and energy efficiency. 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 nonrecovery of fuel costs.
The Dominion Energy Inc. subsidiary 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 legislation 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 approval by the State Corporation Commission, 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.
The legislation directs the SCC to approve a partially underground route for Dominion's controversial 230-kV transmission line in northern Virginia as part of a pilot program aimed at studying the reliability and cost impacts of underground lines.
The measure is designed to prevent the utilities from "double dipping" or overcharging customers for certain investments. Language added by a House committee prevents Dominion Energy Virginia and Appalachian Power from recovering investments in solar, wind or electric distribution grid projects from customers through their rates if these investments are already used to offset customer credits.
In addition, Dominion will reduce rates by $125 million and Appalachian Power will cut its rates by $50 million on an interim basis, effective July 1, as the SCC weighs the proper rate reductions tied to federal tax reform.
"We appreciate the hard work put in by the broad coalition of supporters, the governor's office, and lawmakers on both sides of the aisle to reach consensus on creating a smarter, stronger, greener electric grid with tremendous customer benefits," Dominion Energy spokesman Rayhan Daudani said in an email.
"With the legislation signed into law, we believe Appalachian Power customers will see our company's commitment to safe and reliable service at a reasonable price continuing far into the future," Appalachian Power spokesman John Shepelwich said.
Clean energy advocates also applauded the governor's action.
"The solar industry commends Governor Northam's leadership in convening stakeholders around Virginia's energy future," Sean Gallagher, vice president of state affairs for the Solar Energy Industries Association, said in a written statement. "However, we must ensure the grid modernization process that this bill initiates is data-driven, solicits the public's input, and is not a blank check for a utility to spend consumers' money with little accountability."
