Press "Enter" to skip to content

Virginia Regulators Reject Key Parts of Dominion’s Grid Upgrade Plan

Virginia utility regulators once again rejected large parts of utility Dominion Energy’s grid modernization plans, including $752 million of proposed investment to deploy smart meters over the next decade. The move underscores the increased scrutiny state regulators are directing at utility plans, particularly those that can’t clearly show how they will lead to helping customers or reducing costs in the long run.   

Thursday’s order from the Virginia State Corporation Commission (SCC) marks the second time Dominion, the state’s biggest utility, has seen major grid modernization and smart metering plans turned back due to cost concerns. In January 2019, the SCC rejected Dominion’s 10-year, $7 billion grid modernization plan, which included $1.3 billion for advanced metering equipment; $776 million for intelligent grid devices and automated control systems and emerging technologies; and $3 billion for grid hardening. 

In its latest decision, the SCC cited many of the same problems in Dominion’s amended plan, despite its significantly lower costs compared to its original proposal. Those included the company’s failure to “justify what would be gained by the projected level of investment,” according to Thursday’s statement.

Out of the $838 million that Dominion had requested for the first phase of its plan, the SCC approved only $212 million in spending. 

The rationale for rejecting smart meters and grid modernization 

The rejected portions of the plan included a systemwide smart meter deployment expected to cost $304 million in its first phase and $752 million over 10 years. Last year’s rejection called for Dominion to pair its smart meter rollout with a plan to pair its 15-minute energy usage data with rates that could allow customers to earn money by shifting energy use to different times of the day and reduce overall energy and grid costs. 

But according to the SCC, Dominion’s new plan “again 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.” 

The SCC also rejected Dominion’s plan for “self-healing grid” automation technologies, expected to cost $241.5 million in the first phase and $2.1 billion over 10 years, stating that the utility failed to provide evidence of the reliability improvements that could come from such an “expensive and sweeping” deployment. 

Also rejected was one of the most expensive parts of Dominion’s grid-hardening plan, which would have directed $70 million in its first phase and $1.2 billion over the next 10 years to perform “proactive” upgrades of substation and service transformers identified as being at risk of failure or overloading.

An increasingly tough climate for projects that lack clear benefits

Dominion and other U.S. utilities are having a tougher time proving the costs are justified in their expensive grid modernization and smart meter plans. 

Last year, Duke Energy saw the North Carolina Utilities Commission reject its original 10-year, $7.8 billion Power/Forward Carolinas Initiative, a sprawling grid modernization plan, and then reject a scaled-down three-year, $2.4 billion plan. Duke has yet to resubmit its grid modernization plan. 

While the NCUC did approve Duke’s smart meter rollout, other state regulators have rejected similar utility proposals, citing concerns that they don’t include plans to make use of the data collection and customer communications capabilities that smart meter networks can provide. 

Massachusetts regulators denied the state’s utilities’ advanced metering infrastructure plans in 2018, ordering them to improve their strategies for managing and making use of the data to be gleaned from the devices. And New Mexico regulators rejected Public Service Company of New Mexico’s 500,000-meter rollout on the grounds that it failed to “take advantage of possible energy-efficiency measures, identify sufficient operational benefits, or provide meaningful opt-out opportunities.”

Dominion’s wins 

The SCC did approve parts of Dominion’s plan, including cybersecurity protections expected to cost $10.4 million in the first phase and $18 million over 10 years, as well as a customer information software platform to cost $36.5 million in the first phase and $668.9 million overall. 

The SCC also approved a distributed energy resources hosting capacity analysis and pilot programs for microgrids and smart electric vehicle charging that will cost $34.8 million in the first phase and $65.9 million overall. Virginia passed a law in March setting its major utilities on a path to 100 percent carbon-free electricity by 2045, along with a big expansion in energy efficiency, energy storage, offshore wind farms and solar power at distributed and utility scale. 

The SCC will also allow Dominion to move ahead on some grid-hardening projects, including targeted work on identifying and clearing dying trees and overgrowth on key transmission corridors, to cost $12.5 million in the first phase and $37.4 million over 10 years, and a “voltage island mitigation” program to cost $15.7 million in the first phase and $143.6 million over 10 years. 

And Dominion’s single largest grid-hardening project, its main feeder hardening program, won approval for a first-phase “pilot-type program” at a cost of $112.4 million because it targets circuits with worse-than-average reliability and includes specific improvement metrics to judge its success, the SCC wrote. But the commission withheld approval of the program’s full 10-year, $1.6 billion implementation pending annual reports from Dominion on the success of its first phase.  

Source: Greentech Media