For the three-year period of 2015-2017, Virginia Electric and Power d/b/a Dominion Virginia Power anticipates capital investments of about $8.5 billion, including $2.3 billion for transmission, $4.1 billion for generation and $2.1 billion for distribution, Dominion Virginia Power President Robert Blue said on March 31.
Those investments are necessary in order to continue to provide reliable, cost-effective and environmentally responsible service to customers, he said in the company’s March 31 application for the Virginia State Corporation Commission’s (SCC) biennial review of its rates, terms and conditions for the provision of generation, distribution and transmission services.
Since 2008, the company has made more than $17.4 billion in capital investments in new and existing generation, transmission and distribution assets, according to TransmissionHub.
Under the provisions of the 2007 Electric Utility Regulation Act, the SCC has approved the addition of more than 4,000 MW of new generating capacity to the company’s fleet serving Virginia customers.
Blue added that once all of those additions are operational, the facilities will be able to produce enough electricity to meet the peak electrical needs of one million homes.
The company is also expanding and strengthening its transmission and distribution systems. In addition to building and rebuilding transmission lines to meet growing customer needs, Dominion Virginia Power is also making significant investments to meet federal reliability standards, including standards on cyber security and physical security. For the distribution system, Blue added, the company is rebuilding lines and making equipment improvements and has proposed placing underground about 4,000 miles of lines over the next 10 years.
PJM Interconnection has identified the Dominion Zone as one of the fastest growing areas within PJM’s footprint, with peak load projected to increase by more than 4,100 MW by 2029. The company’s forecasts predict nearly 180,000 new connections over the next five years and an annual growth of about 9.5 percent through the end of 2019 in data center electricity use, Blue added.
“Such growth requires that we maintain and operate our system to the highest standards, and we believe the record in this case will indicate we have met this goal,” he said.
He noted, for instance, that since 2007, the average annual number of minutes out per customer – excluding major storms – has declined 26 percent.
On how the company’s level of capital investment has affected customers’ rates, Blue said in direct testimony that the company’s base rates have not changed since 1999, and have not been increased since 1992. In July 2008, the typical bill for a 1,000 kWh per month residential customer was $107.20, and as of April 1, 2015, the same typical bill was to be $109.48.
Discussing the legal basis for the filing, the company noted that it filed in March 2009 an application for SCC review of its rates, terms and conditions for the provision of generation, distribution and transmission service. Following an evidentiary hearing, all parties to that review agreed to a stipulation and addendum, which, for instance, provided for about $726 million in credits and refunds to customers beginning in 2010.
In March 2011, the company filed an application for its first biennial review of its rates, terms and conditions for the provision of generation, distribution and transmission services. Under the terms of the stipulation and addendum, the 2011 biennial review proceeding was limited to a review of the company’s earnings from the combined 2009 and 2010 12-month test periods, and a determination of the prospective fair ROE. The SCC issued a final order in November 2011.
The company also noted that it filed in March 2013 an application for its second biennial review. The SCC issued its final order in November 2013, in which it established an authorized ROE of 10.0 percent for the company, and ruled that this ROE would be used to measure earnings in the 2015 biennial review.
During its 2015 session, the state General Assembly passed Senate Bill 1349, which Virginia Gov. Terry McAuliffe signed into law on Feb. 24, and will take effect on July 1. That bill, among other things, directs that the scope of the 2015 biennial review is to be solely a review of the utility’s earnings on its rates for generation and distribution services for the two 12-month test periods ending Dec. 31, 2014, and a determination of whether any credits to customers are due for such test periods.
The company said that its earnings test analysis demonstrates that it had an earned return of 10.13 percent on its generation and distribution services for the two combined test periods of 2013 and 2014, which is within the SCC-authorized ROE earnings band of 9.30 percent to 10.70 percent, established in the 2013 biennial review.
The company also said that no base rate increase is being requested given the earnings test results and, as well, no base rate adjustment would be allowed in the proceeding under the provisions of Senate Bill 1349.
While its presently authorized ROE will not be changed as a result of the proceeding, the company said that the evidence supports an ROE of 10.75 percent compared to the currently authorized ROE Of 10.0 percent, consistent with the company’s exceptional level of performance.
Among other things, the company said that it proposes that the rate year associated with the proceeding begin on Jan. 1, 2016, noting that a rate year beginning on that date is more appropriate than Dec. 1, 2015, as currently required. A rate year beginning on Jan. 1 corresponds with its forecasting periods, which generally occur on a January calendar-year cycle, the company said.