Utility plan overstates costs and misses opportunity to deliver more savings for customers

RICHMOND, May 5, 2020 — Today, business group Virginia Advanced Energy Economy (Virginia AEE) reacted to the Integrated Resource Plan (IRP, Docket PUR 2020-00035)* filed by Dominion Energy (as Virginia Electric and Power Company) late Friday. The plan comes three weeks after Governor Northam signed the historic Virginia Clean Economy Act (VCEA), legislation that requires Dominion Energy meet the Commonwealth’s energy demand it serves with 100% clean energy by 2045.

“When compared with prior IRPs, this Dominion Energy plan presents a step forward, with real plans for the deployment of solar, onshore and offshore wind, and energy storage. That’s a credit to the work of lawmakers and advocates for advanced energy,” said Harry Godfrey, Executive Director of Virginia AEE. “Unfortunately, this plan also projects higher costs for customers, few of which are attributable to the VCEA. By double-counting investments already made or committed to and failing to maximize customer cost savings from energy efficiency, Dominion presents an energy future that looks more expensive than it needs to be.” 

“This plan overestimates the cost of energy efficiency investment and shortchanges the savings customers could get from ongoing programs, especially considering the unusually high residential and commercial electricity consumption in Virginia,” said Godfrey. “Instead of comparing inflated projections of future costs to an unrealistic ‘baseline’ of business-as-usual investment in conventional power sources, the costs of which are only growing and becoming more volatile, Dominion should be planning for the lowest-cost ways of fulfilling the VCEA’s clean energy mandate.” 

Specific points from Dominion’s IRP: 

• Residential Bill Impacts: Dominion breaks out the cost drivers of the IRP, with 62% a result of investments already locked into and those resulting from previous legislation. Only 38% of investments are attributable to VCEA (a negligible 1.1% annual increase, or $1.34/month). (See p. 33.)

• Artificially Low Baseline: Dominion notes that its baseline for cost comparison (Scenario A) does not include any "new regulations or restrictions on CO2 emissions.” (See p. 3.) Given that, in February, the General Assembly voted for Virginia to join the Regional Greenhouse Gas Initiative, which is designed to reduce CO2 emissions from the electric power sector, it would be more appropriate to calculate a rising cost for investing in conventional generation compared with making the switch to cleaner resources. 

• Giving Up on Efficiency: In its demand-side management (DSM) analysis, Dominion assumes the utility hits VCEA-mandated targets through 2025, spending about $870M by 2028. (See p.50.) However, the VCEA is designed to drive continued growth inefficiency programs over time, investing in the most cost-effective energy resource – efficiency – and providing ongoing savings for customers.

• Inflated Costs: The analysis is based on a badly flawed assumption that new energy efficiency programs will cost $200 per MWh (p. 50). That's far more than most established energy efficiency programs  so deserves better data.(See table on p. 115.)
• Missed Opportunity: Other states, like Michigan, show you can do far more with EE than Virginia's currently undertaking. This IRP itself shows there's lots of opportunity for energy savings given unusually high residential and commercial consumption. (See charts p. 111 and 112.) 

*AEE offers free, complimentary access to its PowerSuite online platform tracking all federal and state energy legislation and regulatory filings to credentialed media. Sign up for a free trial and contact Monique Hanis (mhanis@aee.net) for permanent access.

About AEE and Virginia AEE
In Virginia, Advanced Energy Economy (AEE) operates as Virginia Advanced Energy Economy (Virginia AEE), a group of businesses that are making the energy we use secure, clean, and affordable. Virginia AEE seeks to drive the development of advanced energy to boost the state’s economy and competitiveness by working to remove policy barriers, identify market growth opportunities, encourage market-based policies, establish public and private partnerships, and serve as the voice for companies innovating in the advanced energy sector. Track industry news @AEEnet and @VA_AEE.