Offshore

Dominion grumbles over performance standard for its offshore wind project

Dominion grumbles over performance standard for its offshore wind project
(Courtesy: Dominion Energy)

Dominion’s CEO termed a performance standard set by Virginia regulators as a condition for approving a 2.6 GW offshore wind project as “untenable” and suggested the utility might appeal the August 5 decision.

The final order from the Virginia State Corporation Commission affirmed that the Coastal Virginia Offshore Wind project met all statutory requirements for rider cost recovery and the issuance of a Certificate of Public Convenience and Necessity for the offshore infrastructure. The order also emphasized that the regulatory decision largely was determined by the Virginia Clean Economy Act, which became law in July 2020.

And the order included a project performance standard, as reported by Renewable Energy World. Beginning with the project’s commercial operation, Dominion would be required to maintain a 42% net capacity factor. Ratepayers would be “held harmless for any shortfall in energy production,” measured on a three-year rolling average, the commissioners ordered.

The Virginia Consumer Counsel, Walmart, Clean Virginia, the Virginia Department of Energy, and Appalachian Voices all called on the commission to adopt a performance standard for the project.

Dominion had said that it should not be put at risk if it failed to meet the 42% capacity factor it used to justify the project, the commissioners wrote in their 45-page final ruling. “We disagree. This particular risk for this particular project should not fall on the company’s customers.”

During an August 8 quarterly earnings conference call, Dominion CEO Robert Blue said the company was considering appealing the decision. He said the performance standard would require the utility to financially guarantee a host of factors out of its control “for the life of the project.” He said the level of risk was inconsistent with what investors expect of utilities.

The regulatory decision said that throughout the proceeding, Dominion used a 42% capacity factor as the basis for its cost-benefit analysis and leveled cost of energy estimate. It said Dominion “continued to affirm its high level of confidence in relying upon a 42% capacity factor” for the project.

The order said the performance standard would not bar the company from collecting its “reasonably and prudently” incurred costs. And it pointed out that consumers are not protected from what regulators called the project’s “most significant risks,” namely, a construction and ownership model that places most of the risk on consumers.

The performance guarantee would protect consumers from also paying for replacement power if the project did not generate the amount of electricity that Dominion used in its cost projections.

Regulators approved CVOW’s schedule calls for construction to be complete in 2026, when it can generate enough clean energy to power up to 660,000 homes. The final order from the SCC affirms that CVOW meets all Virginia statutory requirements for rider cost recovery and the issuance of a Certificate of Public Convenience and Necessity for the onshore infrastructure. 

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