The Virginia State Corporation Commission will hold a public evidentiary hearing on Virginia Electric and Power’s (Dominion) rate application on Sept. 20 either at its second floor courtroom in Richmond, Va., or by electronic means, according to an April 16 commission order.
As noted in the filing, Dominion in late March filed with the commission a triennial review of the company’s rates, terms, and conditions for the provision of generation, distribution, and transmission services.
According to the company, the commission said, the application presents three principal issues for the commission’s determination:
- Review of the company’s cost of service and earnings during the four successive 12-month periods ending Dec. 31, 2020, and a finding of whether there are any past earnings available for reinvestment or customer bill credits
- A determination of whether rates for generation and distribution services should remain stable for the upcoming triennial review period or change, taking into account earnings test results, the company’s level of investment in qualifying projects, the statutory prohibition on a rate increase in the case, and the present functional alignment of those rates
- A determination of the company’s prospective fair rate of return on common equity (ROE)
The company states that, for the combined triennial review period, it earned a 10.85% ROE on its generation and distribution operations on a Virginia jurisdictional basis, relative to the allowed ROE of 9.2% approved by the commission in a separate proceeding (Case No. PUR-2019-00050). The commission added that the company calculates $26m of revenues available for customer credit reinvestment offsets (CCROs) or customer bill credits after consideration of certain outstanding customer balances required to be forgiven under recent legislative enactments.
Dominion elects to reinvest those revenues in the Coastal Virginia Offshore Wind demonstration project (CVOW), which, according to the company, would result in $26m of the CVOW investment being recovered and written off the company’s accounting books with no further customer contribution to those amounts going forward.
According to the company, in the event that the commission reaches a different determination as to the earnings test results and calculates a higher level of available earnings, Dominion elects to apply offsetting investments in CVOW equal to such available earnings, and then to the extent necessary, to apply offsetting investments in the customer information platform, as well as in advanced metering infrastructure (AMI) equal to such remaining available earnings, up to the company’s total eligible Virginia jurisdictional CCRO investments of $309m.
The commission added that Dominion asserts that its current cost of equity falls within a range of 10.50% to 11.50%, and that the requested 10.8% falls below the midpoint of the range. The company asserts that it forecasts capital investment exceeding $28bn over the next five years, $23bn of which will be used to support such investment as customer growth, solar build out, storage deployment, nuclear subsequent license renewal, and the utility scale offshore wind project in federal waters. The commission added that the company states that its need and ability to undertake those investments is directly related to the determination of an adequate and reasonable ROE in this case. Longer-term, the company states that it anticipates investments related to compliance with the Virginia Clean Economy Act alone may approach $40bn over the next 15 years.
The commission also said that while the company does not propose an increase or decrease to overall revenues, it proposes to re-balance the rates of return between the generation and distribution functions by a revenue neutral transfer of $330m between those functions. According to the company, base distribution rates are not presently sufficient to recover distribution costs, meaning that retail choice customers are not paying rates that result in revenues sufficient to recover the distribution costs incurred to serve them. The commission added that the company states that revenue changes are allocated to the customer classes with the goal of moving each class closer to parity.
Based on the company’s analysis, its re-balancing proposal and revenue apportionment proposal would result in an 18-cent reduction in the monthly bill of a residential customer using 1,000 kWh per month. If approved, the commission added, retail choice customers, as well as customers taking service under Dominion’s market-based rate schedules, would receive an increase in base distribution revenue allocation, but would not receive a decrease in base generation charges, as retail choice customers do not take generation service from the company and the market-based rate customers take service at market-based rates for generation service.
Among other things, the commission said that Dominion is proposing a change to its tariff regarding the smart meter opt-out policy and associated fees, with the new policy to continue to permit accounts in good standing to opt out, but to impose a one-time initial fee of $52.24, as well as an ongoing monthly fee of $36.19, which the company states are intended to recover the incremental costs of a customer opting out of smart meter installation.
The commission said that the company proposes that the revised tariffs become effective for usage on and after the first day of the month that is no more than 60 days after the date of the commission’s final order in the proceeding (PUR-2021-00058), but no earlier than Jan. 1, 2022.