The Virginia State Corporation Commission (SCC), in a March 27 final order, granted Virginia Electric and Power (Dominion Virginia Power) approval to build and operate the Oceana solar facility, subject to certain requirements.
As noted in the order, the company last August filed with the SCC an application for approval and a certificate of public convenience and necessity (CPCN) to build and operate the approximately 17.6-MW (nominal alternating current, or AC) utility-scale solar electric generating facility on the Naval Air Station Oceana in Virginia Beach, Va.
The company proposed to build the solar facility on about 93 acres of federal property, which is currently used for farming, on the Naval Air Station Oceana. The solar facility, as proposed, would include ground-mounted, single-axis tracking photovoltaic arrays and would interconnect using 34.5-kV distribution-level facilities, the SCC added.
The company would build and operate the project as part of a “public-private partnership,” the SCC said, noting that the electrical output of the facility would be dedicated solely to the Commonwealth of Virginia, and that Virginia would buy that electrical output at a negotiated price for a term of 25 years.
Additionally, the SCC said, the company would retire renewable energy credits in an amount equivalent to those generated by the project on Virginia’s behalf.
Dominion Virginia Power estimates the cost of the project to be about $39.6m, excluding financing costs, or about $2,252/kW at the 17.6-MW (nominal AC) rating. The SCC also said that the company is not seeking to recover the cost of the project from its Virginia jurisdictional customers through either a rate adjustment clause (RAC) or base rates. The company further states that there would be no impacts to its Virginia jurisdictional cost of service, base rates, fuel rates, or RACs as a result of the company’s ownership and operation of the project during the 25-year term of the agreement.
The SCC added that the company expects the proposed project to begin commercial operation in or around December.
In a report filed last October, the state Department of Environmental Quality (DEQ) recommended that the company, for instance, restrict the emissions of volatile organic compounds and oxides of nitrogen during construction, principally by controlling or limiting the burning of fossil fuels.
The SCC also said that a senior hearing examiner on March 3 issued a report recommending that the SCC grant the company a CPCN to build and operate the project.
Based on the record, the SCC said that it concludes that the solar facility will have no material adverse effect upon electric service reliability and is not contrary to the public interest.
The SCC concluded that the solar facility is required by the public convenience and necessity subject to the company effectively “ring-fencing” the costs of building and operating the project so that Virginia jurisdictional retail customers are held harmless from the project’s impacts. To ensure that Virginia jurisdictional customers do not subsidize the project in any respect, the company proposes to isolate the costs of building and operating the solar facility and associated interconnection facilities, such that there “will be no impacts to the Virginia jurisdiction cost of service, base rates, fuel rates, or RACs…,” the SCC said.
As indicated by regulatory staff, such a ring-fence is important because it aligns the need asserted for the facility with its cost recovery and ensures that the rates of Virginia jurisdictional customers do not reflect a facility not used to serve them, the SCC said.
Staff also recommends, and the company has agreed, as conditions to any SCC approval in the proceeding, that the company, among other things:
- Track all costs associated with the solar facility separately on its books
- Demonstrate in fuel factor and biennial review proceedings following the in-service date of the facility that Virginia jurisdictional customers were held harmless from the impacts associated with the facility and show how the company isolated all costs and revenues on its books
- Provide staff with any information regarding the company’s plans after the expiration of its initial 25-year contract with the commonwealth as such information becomes available
“Because the Oceana solar facility is not proposed for – or purported by the company to be needed for – the provision of retail electric service to Virginia jurisdictional retail customers, we find that the effective implementation of a ring-fence, to which Dominion has committed, is necessary to satisfy” certain requirements, the SCC added.
Consequently, as a condition of the approval granted in the order, the company is to take all measures necessary to implement a ring-fence for the costs of building, owning, and operating the project, including adherence to staff’s recommendations, the SCC said.
The company should comply with the DEQ report recommendations, and should obtain all necessary environmental permits and approvals that are needed to build and operate the project, the SCC said.
The SCC also said that the authority it granted in its order is to expire two “years from the date hereof if construction of the” solar facility has not started and that the company may petition the SCC for an extension for good cause shown.
Dominion Virginia Power is a subsidiary of Dominion (NYSE:D).