SCC rejects large portion of Dominion’s grid upgrade plan

State rejects "proposed heavy costs to customers without adequate benefits."

Published March 26, 2020 by Richard Foster

UPDATED MARCH 27, 10 A.M.

The Virginia State Corporation Commission (SCC) on Thursday put the brakes on a major portion of Dominion Energy Inc.’s proposed $7 billion, 10-year plan for electrical grid upgrades, saying it was “due to the projected heavy costs to customers without adequate benefits.”

The SCC approved some parts of the plan’s initial phase, estimated to cost at least $212 million, including strengthening cybersecurity  protections, improving service reliability
through grid hardening and launching a new computer platform to support customer service. Any costs exceeding the estimate provided by Dominion must be validated by the SCC before the commission will allow Dominion to recover the costs from its customers.

“The approval of a new customer information platform and investments in targeted grid improvements will allow us to give our customers more options to access their energy usage information and bills while we provide even more dependable service,” said Dominion spokesperson Rayhan Daudani.

However, the state regulatory agency rejected Dominion’s initial-phase plan to spend $752 million installing “smart meter technology” and related upgrades because Dominion “failed to justify what would be gained by the projected level of investment,” the SCC said in statement. Dominion has gradually installed 485,000 smart meters in Virginia, but wanted the SCC to allow it to seek cost recovery in the form of additional rate increases to expand the technology to all of its 2.3 million Virginia customers.

In its plan submitted to the SCC, Dominion had said that electric customers who declined the smart meter installation would have had to pay a one-time $84.53 opt-out fee as well as an ongoing $29.20 monthly fee for not having the smart meter. The fees were intended to recover costs associated with maintaining the older meters, the company said.

If Dominion’s grid-upgrade plan had been approved in its entirety, the rollout would have cost Dominion customers almost $7 billion over 10 years, according to the SCC.

“It is profoundly disappointing that the SCC failed to support the benefits that can only be made possible by full deployment of the proven, industry-standard smart meter technology now used by all customers in North Carolina, D.C. and Maryland. In addition, intelligent grid devices enable the effective integration of renewables and further support reliability improvement for our customers. We are reviewing the [SCC’s] final order to determine our next steps and remain committed to the future and a transformed grid benefiting our customers across the commonwealth.”

Speaking about the decision, the SCC said, “We recognize the importance of the plan’s overall objectives. We have approved those elements in which the heavy costs to customers have been adequately justified by the overall benefits to customers, and we have denied approval to those elements whose heavy costs were not justified by the overall benefits to customers.”

The SCC found that Dominion “failed to justify its smart meter proposal with a plan, including a well-crafted rate design, that could maximize the potential for benefits to customers through energy efficiency and demand response pricing (time of use rates).”