While the matter may ultimately be decided by the Virginia Supreme Court, the Virginia State Corporation Commission on Nov. 18 did reject three appeals of its Aug. 2 order approving the 1,358-MW (nominal), gas-fired Brunswick County project.
The project, which went into construction right after the approval, is backed by Virginia Electric and Power d/b/a Dominion Virginia Power, which is a unit of Dominion Resources (NYSE:D).
The PJM Power Providers Group and the Electric Power Supply Association (collectively called “P3), the Office of the Attorney General’s Division of Consumer Counsel and independent power producer Doswell LP then filed motions for reconsideration.
In the meantime, on Aug. 30, the Consumer Counsel filed a notice of appeal to the Supreme Court of Virginia. On Sept. 3, P3 filed its own notice with the high court.
P3, among other things, alleged that the commission violated its prior precedent, arguing that “the Commission cannot approve Dominion’s Application unless Dominion meets its burden of proving ‘that there are no suitable alternatives to the proposed construction….”
P3 also contended that the commission did “not address the arguments of P3 and other respondents…that Dominion has failed to consider third party market alternatives,” and that it “is not clear from the Final Order what facts regarding alternatives justify approval of the Project.”
Said the commission’s Nov. 18 order: “Contrary to P3’s allegation, the Final Order does not conclude that Dominion failed to consider alternative.” The commission said the final order specifies that Dominion did not actively solicit actual third-party alternatives and explains that relevant statutes do not require the company to consider alternative options by issuing third-party solicitations or requests for proposals, and that the commission has explicitly rejected requests to mandate such a requirement.
Indeed, the commission noted that it discussed two prior cases where the utility did not perform an actual third-party solicitation, and refused to consider certain actual third-party alternatives, but where, as here, the commission found that the facts supporting a certificate of public convenience and necessity (CPCN) still satisfied statutory requirements.
P3 clarified that “it has not suggested that a formal solicitation is the only means by which a utility could consider market alternatives.” P3, however, argued that “Dominion’s Application should be denied not because it failed to conduct a formal market solicitation, but because it failed to consider alternatives in any meaningful way at all.”
The commission pointed out that its final order expressly states that “[w]hile more evidence on market alternatives would have improved the record, we do not view the record as legally deficient without a capacity solicitation based upon the overall evidence presented.” Thus, the commission said the final order does not rely on any one single action by Dominion but, rather, reaches this conclusion based on the record as a whole, including consideration of respondents’ objections.
Commission rejects attempts to set tighter mandates in future cases
Also, P3 asked the commission to initiate a rulemaking proceeding to enable interested parties to provide input on the scope of evidence that will be required in future CPCN applications for generation facilities. “We will not initiate a rulemaking at this time for purposes of this new statutory provision,” the commission ruled. “We understand the desire for certainty as to the future application of any new statute. This statutory provision, however, is a new requirement placed on the utility, and it requires a fact-based review that will have to be made by the Commission in each case.”
The Consumer Counsel expressed a valid concern regarding the potential cost of applying an enhanced return on equity (ROE) to the significant infrastructure that may be needed for new nuclear or offshore wind facilities, the commission wrote. “This concern, however, which is entirely appropriate, does not change the plain meaning of the statute. Rather, in considering a proposed generation project under the Code, the Commission must analyze, among other things, the ‘public convenience and necessity’ and ‘public interest’ attendant to the proposed project. For example, as part of such analysis in the instant case, the Commission considered the estimated capital costs of the natural gas-fired, combined-cycle Brunswick facility, including the costs of infrastructure and any return required thereon, in determining whether to approve the proposed Project. Similarly, such considerations also would be relevant to any future requests under Subsection A for new generation projects.”
It added: “Indeed, one of the examples used by Consumer Counsel – an offshore wind generation facility – illustrates how Consumer Counsel’s interpretation is contrary to the clear purpose of the statute. While a future proceeding for an offshore wind facility will obviously come with its own set of facts and will be judged on its own record, Consumer Counsel’s example posits that ‘associated transmission infrastructure would represent a very significant cost component’ of an offshore wind facility. Consumer Counsel’s example illustrates why it neither comports with the plain meaning nor effectuates the purpose of the statute to conclude that the General Assembly adopted a mechanism expressly intended to encourage the construction of offshore wind farms that excludes substantial and essential associated infrastructure costs of such a project from that very incentive.”
Said Dominion in its Nov. 5 Form 10-Q report about this matter: “In August 2013, three motions for reconsideration were filed with the Virginia Commission, asking that it reconsider its August 2013 final order approving a CPCN for construction of Brunswick County. In August 2013, the Virginia Commission granted the motions for the purpose of continuing its jurisdiction over these matters. Also in August 2013, two notices were filed to appeal the Virginia Commission’s final order to the Supreme Court of Virginia. In September 2013, Virginia Power filed its notices of intent to participate in both appeals as an appellee. These matters are pending.”