Comprehensive legislation that ends the freeze on electric rate reviews for Dominion Energy Virginia and Appalachian Power Co. could soon become law, after the Virginia House of Delegates voted 65-30 on Feb. 26 to pass Senate Bill 966.
The vote comes soon after lawmakers in the House of Delegates and Virginia Senate signaled plans to align their separate versions of regulatory reform legislation. The House substitute version of S.B. 966 approved by lawmakers appears to adopt language similar to an amended version of H.B. 1558 that cleared the House on Feb. 13 and is designed to prevent the utilities from "double dipping" or overcharging customers for certain investments.
The new language prevents the Dominion Energy Inc. and American Electric Power Co. Inc. subsidiaries 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.
The bills allow utility spending on distribution grid improvements or renewable generation projects to reduce or "cancel out refunds otherwise due to customers" following a base rate review conducted by the State Corporation Commission. The original legislation allowed the utilities to recover these investments, despite the customer credit offset, through rates throughout the life of the facilities and to include these costs in future rate reviews.
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 February 2015 in an effort to counteract compliance costs with federal environmental regulations.
The bills passed in the House of Delegates and state Senate reinstate rate reviews for Appalachian Power in 2020 for the 2017, 2018 and 2019 test periods. These reviews would be implemented on a "triennial" basis going forward. A triennial rate review for Dominion Energy Virginia would be conducted in 2021 and include the 2017, 2018, 2019 and 2020 test periods.
Under a compromise lawmakers reached with Gov. Ralph 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.
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 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 SCC approval, to "construct or acquire" 200 MW of new solar capacity by July 1, 2028.
In addition, Dominion will reduce rates by $125 million and Appalachian Power will cut its rates by $50 million on an interim basis as the SCC weighs the proper rate reductions tied to the federal corporate tax cut enacted in December 2017.
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 planned and controversial 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.