Virginia’s expensive, decade-plus experiment under Dominion “re-regulation” hit an ignominious milestone today, raising anew questions of whether the Commonwealth should return to the normal, good-old-fashioned monopoly regulation we enjoyed before.
Dominion’s putative regulators at the State Corporation Commission (SCC) today commenced review of the Company’s latest annual energy efficiency package. Such a proceeding would normally be a humdrum, nothing-to-see-here affair, as energy efficiency is so commonsense and good for lowering customer bills (and climate pollution) that lately there’s been nothing to contest.
This proceeding is a striking one, however. At the very moment Dominion should be doubling down and proposing its largest energy efficiency proposal yet, to tackle its excessive rates that are now higher than any vertically-integrated utility in every neighboring regulated state, apparently it’s opposite day over at Dominion:
Despite high rates and the opportunity to help struggling Virginians navigate inflated electric bills soon to be in the Top 5 highest in America, Dominion turned in their smallest efficiency proposal ever made by the Company, on a dollar-for-dollar, program-by-program basis (that is, 11 “demand side management” programs, divided by a total of $162 million that discontinue after five years). Such an underwhelming filing makes it clear that Dominion is officially slow-walking deployment of customer-friendly efficiency. Why? To avoid interfering with its pitch to the Wall Street shareholders that own the monopoly that Dominion can deliver billions worth of more costly but lucrative new steel-in-the ground. In other words, why help Joan or Johnny Virginia insulate their home, when you can build a new power plant to pump out juice to heat the drafty old place!
This paltry efficiency filing is particularly telling, as the first substantive test of Dominion’s sincerity in being a truly “clean energy company. So far, Dominion is flunking the sincerity test, as efficiency is the cleanest energy of them all. As it crowed to Wall Street, Dominion apparently only sees Virginia as “the largest regulated decarbonization investment opportunity in the country.” Treating Virginia as a cash cow and shirking efficiency in favor of new power plant “investment opportunities” will drive rates and bills even higher, while also missing out on Virginia’s single best and easiest decarbonization opportunity.
Dominion’s slow-walking of efficiency comes into focus when looking at just how few customers have actually been reached by its efficiency programs: less than 4% of Dominion’s customers in 2019 (or just 85,000 customers of Dominion’ well over 2 million Virginia customers).
And unfortunately, I am one of over 96 out of 100 Dominion customers who has not been reached by one single Dominion efficiency program: despite my completely electric house (i.e. no fossil fuels, like fracked methane or liquid fuel oil for heating or cooking), and therefore a myriad of options to make my home cheaper and more efficient with better HVAC, hot water, insulation, kitchen appliances, lighting, and thermostats, Dominion has not managed contact me a single time (ideally through my monthly bill) to take part in their too-modest offerings. So instead, like most Joan and Johnny Virginias, my home is less efficient, as are 96 of 100 Dominion customers, and as a result, we Virginians pay higher rates and bills than elsewhere.
The Good News
The SCC can thankfully fix this Dominion underinvestment problem, without legislative involvement, by simply eliminating Dominion’s reliance on wholly unnecessary and nonsensical budget limits on efficiency programs, which only serve to kneecap Dominion’s efficiency programs in their infancy. Currently, Dominion proposes good, commonsense efficiency measures, but in the same breath “caps” every single one of them by limiting the investment to a very low amount of funding (indeed, in this case the lowest per program amount ever).
As explained in NRDC’s comments and testimony to the Commission, here’s why budget caps on efficiency programs are nonsensical: pre-determining random budget limits for cost-effective efficiency programs is like building a high-performance sportscar from scratch, sinking labor, material, design, and fabrication costs to roll it off the assembly line, only to randomly limit the car to drive 55 mph max, only providing enough gasoline to drive just 10,000 miles, and then scrapping it at the junkyard. A lot of work, minimal reward.
Put another way, Dominion’s low budget ceilings on efficiency is like building a dispatchable electric generating unit, at a cost of $1 billion ratepayer dollars, but then only allowing it to run 50% of the year, and then junking it after just five years of service, regardless of how well it could have kept performing.
Rather than knee-capping their own programs, and thus slow walk efficiency in Virginia in favor of Dominion’s more expensive, lucrative steel in the ground, the SCC should require Dominion simply do what utilities do in most normal regulated states: plan to capture all cost-effective savings from each efficiency measure across as many customers as possible, as determined through straightforward “potential studies,” and then design each program to tap that full savings potential, regardless of arbitrary cost limits or 5-year cliffs. After those efficiency programs have ramped up, simply use “evaluation and verification” data (the topic of another important proceeding at the SCC), to confirm the programs are delivering as designed, and if not, adjust accordingly. It just ain’t rocket science, and in fact it’s what all those utilities with lower rates in surrounding regulated states do, to keep their rates lower than Dominion.
If the SCC required Dominion to do so, you can bet your bottom dollar (hopefully one saved through a Dominion efficiency program!) that Dominion will serve far more than just 3 out of a hundred of its customers with good, bill-lowering efficiency programs. And maybe, just maybe, Dominion’s excessively high rates will start to come down as well.
Here’s to hoping the Commission abandons in this proceeding its antiquated and harmful reliance on arbitrary cost ceilings (which, for the record, began at the Commission’s behest over a decade ago, and with which Dominion is apparently only too happy to acquiesce).
If it doesn’t, and Dominion continues to shortchange efficiency in service to its Wall Street shareholder owners, rather than serving Joan and Johnny Virginia, it may well be nigh time to consider the wisdom of returning Virginia back to traditional monopoly regulation and its rightsized electric bills.