RICHMOND — Virginia’s State Corporation Commission is weighing 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 prior plan that required a performance guarantee.
“Do you see this being more or less favorable to customers than the final order, and why?” SCC Chair Jehmal Hudson asked attorneys in a hearing on the new proposal in Richmond Monday.
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 power over a three-year period, then ratepayers wouldn’t be responsible for the costs of buying replacement energy.
Dominion said the requirement made the project “untenable,” claiming that unforeseen circumstances, including weather, could impact performance. In September, the utility asked the commission to reconsider the condition.
Several environmental groups opposed the request, saying the performance standard was necessary to protect ratepayers from additional costs.
But earlier this month, the two sides reached a compromise, with Dominion, the Office of the Attorney General, the Sierra Club, Walmart and environmental nonprofit Appalachian Voices proposing a settlement agreement that would get rid of the performance standard and instead create a cost-sharing arrangement for construction cost overruns.
The agreement would require customers to still pay for any project costs up to $10.3 billion. Excess costs of $10.3 billion to $11.3 billion would be shared equally by ratepayers and the company, while those between $11.3 billion and $13.7 billion would be borne by the company.
Responsibility for any costs over that amount would require a decision from the SCC.
The agreement also calls for Dominion to explain any performance shortfalls to the commission, which will then determine who should cover the costs of any replacement energy or other expenses that result from deficiencies.
At Monday’s hearing, no party opposed 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 meaningful.” The settlement is tailored in a way that is “tenable and tolerable for the company and its investors,” he said.
Senior Assistant Attorney General Meade Browder Jr. said the agreement would incentivize Dominion to deliver the project on time and on budget. Carrie H. Grundmann, who represented Walmart, said the agreement would provide certainty that the project will move forward.
Commissioner Judith Jagdmann, who announced last week she will resign from her seat at the end of the year, asked Reid if the company would accept any economic development funding for the project that the General Assembly might find.
“The company would abide by the public policy determinations by our legislators,” Reid said.
The commissioners made no comments on when a decision will be made, but the agreement asks for “expedited consideration.”
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