SCC Approves Coastal Virginia Offshore Wind Project

RICHMOND – The State Corporation Commission (SCC) has approved an application by Dominion Energy Virginia for cost recovery associated with its proposed Coastal Virginia Offshore Wind Project (CVOW). The project consists of 176 wind turbines, each designed to generate 14.7 megawatts, to be located approximately 27 miles off the coast of Virginia Beach. The project is expected to have a capital cost of $9.8 billion and will likely be the largest capital investment, and single largest project, in the history of Dominion Energy Virginia.

The Commission also approved the electric interconnection and transmission facilities to connect CVOW reliably with the existing transmission system.

The Commission approved a revenue requirement of $78.702 million for the rate year of September 1, 2022, to August 31, 2023, to be recovered through a new rate adjustment clause (Rider OSW). Over the projected 35-year lifetime of the project, for a residential customer using 1,000 kilowatt-hours of electricity per month, Rider OSW is projected to result in an average monthly bill increase of $4.72 and a peak monthly bill increase of $14.22 in 2027. The rate adjustment clause is effective for usage on and after September 1, 2022.

In 2020, the Virginia General Assembly enacted the Virginia Clean Economy Act (VCEA) that declared in order to meet the Commonwealth’s clean energy goals prior to December 31, 2034, the construction or purchase by a public utility of one or more wind generation facilities off the state’s Atlantic shoreline is in the public interest.

Following a full proceeding, the Commission found, as directed by the General Assembly, that construction of CVOW is in the public interest.

In its final order, the SCC stated: “In so finding that these costs must be recovered from customers, the Commission is also keenly aware of the ongoing rise in gas prices, inflation, and other economic pressures that are impacting all utility customers. This is a prescriptive statute, and we applied it based on the record in this case.”

The Commission further stated that significant concerns were raised throughout the proceeding regarding the affordability of the project and the financial risk to ratepayers. With a project of this magnitude, the SCC ordered the following consumer protections:

• Dominion shall file a notice with the SCC within 30 calendar days if it determines that the total project costs are expected to exceed the current estimate, or if the final turbine installation is expected to be delayed beyond February 4, 2027.
• Each annual Rider OSW update application filed by Dominion prior to the project’s commercial operation shall include any material changes to the project, the most recent biannual project update, and a written explanation as to the reason for any cost overruns above the most recent estimate provided by the company to include the reasonableness and prudence of the additional costs.
• Beginning with the commercial operation and extending for the life of the project, customers shall be held harmless for any shortfall in energy production below an annual net capacity factor of 42 percent, as measured on a three-year rolling average.

In a concurring opinion, Commissioner Jagdmann wrote that she agrees with the Final Order in all respects. She emphasized:

• This is a legislatively favored Project. If the elements of Code § 56 585.1:11 are met, the costs of the Project are presumed "reasonable and prudent" – which means, in effect, "ratepayers pay." While no case participants oppose this Project – most urge the Commission to enact ratepayer protections given the high cost of this Project and its significant risk.... [T]he Commission has added specific protections – those being a requirement for regular reporting and a requirement (referred to as the "performance standard") that Dominion fund the cost of replacement power if the Project doesn't run or produce the quantity of power projected in the Company's analysis. But these protections do not address the Project's already high projected cost or the fact that the projected price could well [increase].... These protections also do not completely address potential Project abandonment risks. Importantly, the General Assembly has effectively maintained its ability to implement additional protections – for example through funding mechanisms such as general fund appropriation or other means, such as implementing new legislation designating the consumer-funded proceeds from Dominion's participation in the Regional Greenhouse Gas Initiative ("RGGI") be used to lessen the cost of the CVOW Project.... Such action may be appropriate given the public policy support for and economic development aspects of this Project.

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Contact: Andy Farmer or Ford Carson, 804-371-9141

Case Number PUR-2021-00142 – Application of Dominion Energy Virginia for approval and certification of the Coastal Virginia Offshore Wind Commercial Project and Rider Offshore Wind
View Final Order