RICHMOND, Va. (WRIC) — In a regulatory conflict over who should bear the costs of a proposed offshore wind farm in Virginia, the Youngkin Administration and environmental groups have found themselves on the same side, calling for action to limit Dominion’s profits from the project.
In an August ruling that will be finalized later this month, the Virginia State Corporation Commission (SCC) ordered limited consumer protections on the project, while rejecting the more aggressive controls requested by the Youngkin administration and environmental groups like Clean Virginia.
Plans for Dominion’s 176-turbine, 2,567 Megawatt project were spurred on by the passage of the Virginia Clean Economy Act (VCEA) in 2020, under then-governor Ralph Northam and Democrats in the state Senate and House of Delegates.
That bill requires Dominion to phase out fossil fuels by 2045, a goal which will require massive investments in renewable energy sources such as wind, solar and nuclear.
Governor Glenn Youngkin sought to roll back large portions of that legislation, drawing the ire of environmental groups and the opposition of the majority of Virginia voters. That effort has so far been unsuccessful, as Democrats retained control of the Virginia Senate.
But as Dominion went before the SCC to seek a permit to begin work on the wind farm, which will stand nearly 30 miles off the coast of Virginia Beach, several groups raised concerns over the direction and scope of the project, which Dominion predicts will cost $9.8 billion.
Because Dominion isn’t a public utility, but rather a state-sanctioned monopoly beholden to private investors, the company will be allowed to offset the cost of the project by increasing rates for Virginia residents, with the caveat that the SCC – and legislators – can limit those increases if they believe Dominion is overcharging.
Dominion was ordered to pay back residents over $330 million last year in one such case, with lawmakers across the political spectrum calling for stronger oversight of the company.
That was the position of the Youngkin administration, through Attorney General Jason Miyares’ consumer protection division — but it was also the position of Clean Virginia, an organization that lobbies to limit dominion’s profits and remove their influence from Virginia politics, but was also strongly in favor of the transition to clean energy.
Scott Norwood, a private energy consultant hired by the Attorney General’s office to evaluate the project, testified to the SCC that Dominion should be “required to file periodic status reports … that address the performance and cost of the Project through the construction period and for at least the first year of commercial operations.”
Norwood also raised concerns that Dominion underestimated the increase in rates the project could incur, claiming the actual increase could reach $20 a month for the average consumer, much higher than the predicted $4.57 increase cited by Dominion.
Likewise, Maximilian Chang, a consultant who provided testimony on behalf of Clean Virginia, told the commission that they should “require Dominion to provide regular project status reports that should, at a minimum, identify critical path items that could delay the project.”
Clean Virginia went much further than the Youngkin Administration, recommending that the commission make Dominion liable for any cost overruns and evaluate whether it might be better to enter a power-purchase agreement instead of allowing Dominion to run the wind farm themselves.
Dominion broadly rejected the characterizations of both parties, with a Dominion official writing that Norwood fundamentally misunderstood how rate increases were calculated. Essentially, he said that Norwood cited the predicted cost increase associated with the project, without including the impact of cheaper energy, increased capacity and renewable energy credits that would reduce the burden on consumers.
The company also dismissed Chang’s recommendation of alternative ownership of the project out of hand.
“Mr. Chang’s recommendations are not relevant to the case currently before the Commission,” a company official said. “If the Company seeks approval to construct and operate additional offshore wind generation resources in the future, parties will have an opportunity to raise concerns about alternative procurement options at that time.”
Even in their shared opposition to Dominion, however, Clean Virginia and the Youngkin Administration were fundamentally opposed to one another on other aspects of the project.
“The $9.8 billion CVOW Project is not needed to serve the Company’s system capacity requirement through at least 2035,” Norwood said, adding, “[Dominion]’s forecasted economic benefits of the Project are based on a CBA that overstates the benefits.”
Clean Virginia, on the other hand, said in a statement following the project’s approval that they welcomed “the necessary shift to clean electricity generation in Virginia.”
In an order dated Aug. 5, the commission enacted some limited protections for residents, requiring Dominion to provide yearly updates to the rate increase and justify any cost overruns in writing to the commission. The commission also shielded residents from extra costs incurred as a result of underperformance by the project, in the case that the turbines don’t produce as much energy as expected.
But the commission declined to cap the costs of the project that could be passed on by Dominion, writing that “cost increases could occur that are not the result of unreasonable or imprudent action by the Company” and therefore “these cost overruns would be borne by customers, not the Company.”
Judith Jagdmann, a commissioner with the SCC, concurred with the decision but added that in the future it would fall to the General Assembly to enact further protections for consumers.
“The General Assembly has effectively maintained its ability to implement additional protections,” she wrote. “For example through funding mechanisms such as general fund appropriation or other means.”
While that order was entered, it was almost immediately followed by a motion for reconsideration by Dominion, which sought to loosen what few restrictions were placed on it by the commission.
The Office of the Attorney General also requested an updated final order to provide clarification to some aspects of the consumer protections, while Clean Energy called generally for more stringent protections.
“It needs strict consumer protection mechanisms in place to ensure that the clean energy transition does not create additional financial burdens for Virginia families,” said Brenann Gilmore, Clean Virginia’s Executive Director.
The reconsideration is now underway, with the deadline for filings set for Sept. 22. A final decision is likely to be issued shortly thereafter.