State Corporation Commission weighs new offshore wind settlement

Virginia’s State Corporation Commission is considering whether a proposed new agreement between Dominion Energy and consumer and environmental advocates over the utility’s massive offshore wind project is more favorable to ratepayers than a previous plan that required a performance guarantee.

Do you see this as more or less favorable to customers than the final order, and why?” SCC Chairman Jehmal Hudson asked attorneys at a hearing on the new proposal Monday in Richmond.

In August, regulators approved Dominion’s plans for its $9.8 billion Coastal Virginia offshore wind project, along with a performance guarantee. The guarantee ensured that if the project produced less than a certain threshold of electricity over a three-year period, tariff payers would not be responsible for the cost of purchasing backup power.

Dominion said the requirement made the project “unsustainable” and claimed that unforeseen circumstances, including weather, could affect performance. In September, the utility asked the commission to reconsider the condition.

Several environmental groups opposed the requestand said the benefit standard was necessary to protect tariff payers from additional costs.

Dominion, Ratepayer proponents propose settlement over potential wind project costs

But earlier this month, the two sides reached a compromise in which Dominion, the attorney general’s office, the Sierra Club, Walmart and nonprofit environmental organization Appalachian Voices proposed a settlement agreement this would abolish the performance standard and instead create a cost sharing for construction cost overruns.

The agreement provides that customers will continue to pay for all project costs of up to $10.3 billion. Excess costs of $10.3 billion to $11.3 billion would be shared equally between taxpayers and the company, while costs between $11.3 billion and $13.7 billion would be borne by the company.

Responsibility for any costs in excess of this amount would require a decision by the SCC.

The agreement also provides that Dominion will explain any performance deficiencies to the Commission, which will then determine who should bear the cost of replacement power or other costs resulting from the deficiencies.

At Monday’s hearing, neither party objected to the agreement.

McGuireWoods attorney Joseph Reid, representing Dominion, said that while “no settlement is perfect,” the agreement’s efforts to mitigate construction cost increases and delays are “very significant.” The settlement was tailored to be “durable and viable for the company and its investors,” he said.

Assistant Attorney General Meade Browder Jr. said the agreement would encourage Dominion to deliver the project on time and on budget. Carrie H. Grundmann, representing Walmart, said the agreement provides assurance that the project will move forward.

Commissioner Judith Jagdmann announced this last week she will quit Reid asked from her seat late in the year if the company would accept any economic development funding for the project that the general assembly could find.

“The company would comply with the public policy requirements of our legislature,” Reid said.

The commissioners did not comment on when a decision would be made, but the agreement calls for an “accelerated review”.