Virginia’s utility regulator asked Dominion Energy to redo its integrated resource plan for the 2019 to 2033 period. It’s the first time the state’s Corporation Commission has rejected a utility plan, saying that in the plan submitted in May Dominion “failed to establish that its 2018 IRP, as currently filed, is reasonable and in the public interest.”
The State Corporation Commission (SCC) outlined several points of criticism, arguing that Dominion’s model overestimated load, which it projected to be higher than PJM Interconnection’s estimates. The order also said the integrated resource plan (IRP) did not consider the impacts of energy legislation that Virginia passed this year, the Grid Transformation and Security Act, which increases the renewables capacity considered to be in the “public interest” and mandates that Dominion spend $870 million on energy efficiency. That investment, coupled with $140 million from Appalachian Power, is likely to put further downward pressure on loads.
The SCC also said Dominion should revise down the solar capacity factor it uses for modeling and that the prices the company sets for its solar renewable energy certificates are “unreasonable.”
The order gives Dominion 90 days to remodel and resubmit its IRP. The commission said the updated plan should incorporate modeling that assesses mandates in the state’s new energy law, like energy efficiency measures and a 30-megawatt battery storage pilot. All the scenarios should be compared to a least-cost alternative.
Will Cleveland, an attorney at the Southern Environmental Law Center, said the order represents “a sea change in how Dominion is going to have to go about modeling meeting their future load.”
In addition to incorporating the provisions of the state’s new energy law, the commission also asked that Dominion include fuel transportation costs in its assessment of natural gas capacity. Dominion’s attempts to build the Atlantic Coast Pipeline remain contentious, and on Friday Dominion stopped construction on the pipeline due to a permitting issue.
While the utility has maintained it needs the pipeline to meet future demand, Cleveland said the SCC order pointing out Dominion’s load overestimate “raises serious questions about the legitimacy of any argument that Dominion needs a new pipeline.” Adding new capacity means added cost for ratepayers.
Though the commission said it “does not find bad faith on the part of [Dominion]” in missing some requirements in the IRP, the SCC also called out the utility’s consistent overestimates in load and said it harbors “considerable doubt regarding the accuracy and reasonableness” of Dominion’s load forecast.
Dominion told Greentech Media in a statement that, while the utility disagrees with some of the changes required by the order, it will make the changes within the 90-day schedule.
“We look forward to further demonstrating the benefits of grid transformation, renewable energy and energy efficiency in combination with our natural gas investments,” said spokesperson David Botkins. Dominion’s generation mix in Virginia includes 33.6 percent natural gas, 26.5 percent coal, 33.8 percent nuclear and 5.6 percent renewables.
In its 2018 IRP, Dominion said it was committed to reducing greenhouse gas emissions in line with state efforts to cap carbon emissions. But because the utility said the final form of carbon regulations remains uncertain, it proposed a range of five plans that might take shape in the future. All included at least 4,720 megawatts of added solar by 2033, while four included 7,200 megawatts added by 2043.
In revising its plan, the SCC also said Dominion should use a solar capacity factor of 23 percent, rather than the 26 percent it used in the IRP, for its models. The commission also said the utility should forecast using REC pricing “that incorporates actual observable market prices,” rather than the “unreasonable” prices Dominion used based on its forecasted energy and capacity.
The lower capacity factor could incrementally hurt the competitiveness of solar compared to other resources. The utility’s plans also include development of 3,664 megawatts of combustion gas turbine capacity by 2033 (with barely a mention of energy storage technology) and extensions of nuclear generation operating licenses. But Cleveland said he thinks even with those changes solar will fare well in the planning process.
“I hope and expect that even at a lower capacity factor, given the cost curves of utility-scale solar, solar will still do well and be selected by the model in great quantities,” he said.
Cleveland added that because “Dominion has been radically overinflating their load forecast,” it makes sense for solar to fill the growth in load “on a much smaller, [more] incremental basis as it grows.”
“That’s the beauty of solar: It’s scalable,” he said. “There are values to solar in terms of its modular nature that you don’t get with traditional gas and coal resources.”
Kevin Lucas, director of rate design for the Solar Energy Industries Association, said the organization "appreciate[s] the Commission’s request for an updated, least-cost plan that more accurately reflects today’s changing energy landscape."
Dominion’s revised IRP is due 90 days from the date of the order, issued on December 7.
