Virginia regulators approve Dominion investment on security; do not allow spending on AMI, other proposals

The Virginia State Corporation Commission, in a Jan. 17 final order, approved reasonable spending by Virginia Electric and Power (Dominion Energy Virginia) related to cyber and physical security, including telecommunications investment, but did not find other proposals put forth by the company involving advanced metering infrastructure (AMI), for instance, to be reasonable and prudent.

As noted in the final order, Dominion Energy Virginia in July 2018 filed with the commission a petition requesting approval of a plan for electric distribution grid transformation projects.

Specifically, the commission sought approval of the first three years – Phase I – of a 10-year plan. The commission added that the company stated that Phase I includes:

  • AMI
  • Customer information platform (CIP)
  • Reliability and resilience measures that include intelligent grid devices, operations and automated control systems, and grid hardening
  • Telecommunications infrastructure
  • Cyber and physical security
  • Predictive analysis
  • Emerging technology

Company’s July 2018 filing

As noted in the company’s July 2018 filing, the Grid Transformation (GT) Plan filing was authorized by the Grid Transformation and Security Act of 2018 (GTSA), which was signed into law in March 2018 by Virginia Gov. Ralph Northam.

The GTSA represents an important policy statement by Virginia by recognizing the importance of transformational change in the electric distribution system, identifying investments in such transformational changes as being in the public interest, and requiring electric utilities to seek commission approval for any plans to do so, the company said.

The company said that its plan calls for more than 1.4 million smart meters to be installed during Phase I – 2019-2021 – with more than 600,000 installed during 2022-2023.

Of the CIP, the company said, in part, that the new CIP would provide customers with access to detailed energy usage information based on data gathered from smart meters.

On improving grid reliability and resiliency, the company said that the GT Plan includes programs to promote a stronger, more reliable, and more resilient distribution grid, which includes deployment of digital intelligent grid devices, such as line sensors and digital relays, as well as automated control systems that include an advanced distribution management system, an outage management system, and a distributed energy resources management system.

The company also noted that the GT Plan would further increase the grid’s physical and cyber security by, for instance, identifying specific substations requiring security improvements and by the company continuing to implement strict cyber security standards for all intelligent devices and automated control systems installed, replaced, or upgraded under the plan.

Among other things, the company said that it estimates the proposed total capital investment in Phase I of the GT Plan would be about $816.3m, and the proposed operations and maintenance expenses would be about $101.5m. The company said that it is seeking approval of only Phase I of the plan, covering investments for the period 2019-2021.

“The company believes the measures put in place during Phase I will enhance the reliability and security of the grid, meet the rising needs and expectations of our customers, and help protect the environment by supporting the integration of units powered by emissions-free renewable energy, including [distributed energy resources, or] DER,” the company said.

Commission’s Jan. 17 final order

In its final order, the commission said: “Dominion’s proposed plan is expensive, so it is important that Dominion’s customers receive adequate benefit for the costs they will bear in their monthly bills. If the total plan were approved, the cost to customers – the lifetime revenue requirement of these investments – will be approximately $6.0 billion, including financing costs, to be recovered from customers over the lives of the various components that range from five to 55 years.”

Noting that the plan is large and multi-faceted, the commission said that it considers the plan’s elements in four major categories of related elements:

  • Cyber and physical security and telecommunications – total costs: $910.3m; Phase I costs: $154.5m
  • AMI and related elements – total costs: $1.3bn; Phase I costs: $696.8m
  • Intelligent grid devices, operations and automated control systems, and emerging technology – total costs: $776m; Phase I costs: $157.5m
  • Grid hardening – total costs: $3bn; Phase I costs: $486.1m

The commission said that it finds that Dominion has proven that the costs of the elements in the cyber and physical security category are reasonable and prudent, and are approved, as well as some of the telecommunications elements.

The commission also said, however, that it finds that Dominion has not proven that the costs for the plan elements in the AMI, intelligent grid devices, and grid hardening categories are reasonable and prudent.

Those parts of the plan are not approved, the commission said, adding, “This disapproval is without prejudice and Dominion may re-file for approval of certain elements in a future proposed plan that complies with” certain requirements.

The commission continued, “While we find the plan elements related to cyber and physical security are well-conceived, well-supported and cost-effective, we find that the remaining plan elements, which will cost customers hundreds of millions of dollars, are not.”

The proposal is lacking in detailed cost information with respect to many AMI-related components of the plan, the commission said, adding, for instance, that the record reflects that the company has not yet selected specific vendors for the CIP and that the company plans to, but has not yet, issued “numerous” requests for proposals regarding the CIP.

If Dominion chooses to proceed with a proposal for full deployment of AMI, its next proposal should be supported by a detailed and comprehensive plan for evaluation that addresses, at a minimum, such elements as analysis of how any plan promotes demand response, energy efficiency, and conservation, the commission said.

Among other things, the commission discussed the company’s grid hardening proposal, saying that the record reflects that, while the company identifies five subcomponents of that proposal, it has not yet identified what portion of the requested spending will relate to each subcomponent, nor has it identified the number of miles of main feeders that it proposes to underground, an investment that the company asserts costs, on average, $2.5m per mile.

“[W]e agree that smart meters and other grid enhancements hold the promise for a true transformation of the grid and for the more efficient consumption of electricity, but spending billions of dollars of customers’ money on full deployment is reasonable and prudent only if the expenditure is accompanied by a sound and well-crafted plan to fulfill the promise that smart meter technology and other grid enhancements offer,” the commission said. “Our ruling allows Dominion to propose such a plan in the future.”

Company’s response to order

In a statement provided on Jan. 17 to TransmissionHub, Ed Baine, senior vice president, electric distribution, with Dominion Energy, said that the commission has “authorized important upgrades to the cyber and physical security, as well as telecommunications elements of Dominion Energy’s plan to transform Virginia’s energy grid. However we’re disappointed they denied significant, foundational elements of our plans, including a new customer information platform and smart meters which would be paid for through existing base rates. We remain committed to building a smarter, stronger, and greener grid for our customers and will use the guidance provided by the commission as a framework to refile our next plan.”

About Corina Rivera-Linares 3058 Articles
Corina Rivera-Linares, chief editor for TransmissionHub, has covered the U.S. power industry for the past 15 years. Before joining TransmissionHub, Corina covered renewable energy and environmental issues, as well as transmission, generation, regulation, legislation and ISO/RTO matters at SNL Financial. She has also covered such topics as health, politics, and education for weekly newspapers and national magazines. She can be reached at clinares@endeavorb2b.com.