The Virginia State Corporation Commission just approved Dominion Energy's massive grid transformation plan with some modifications. The final price tag is $9.8 billion over 10 years, down from the original $11.2 billion request. Most of the cost recovery will come through a new "Grid Transformation Charge" starting at $3.50/month for residential customers and scaling up for commercial accounts. Large industrial customers over 5MW will see charges of $200-500/month depending on their rate schedule. The SCC also required Dominion to establish performance metrics and potential penalties if modernization benefits don't materialize. This is going to impact every customer in Virginia starting January 2022.
Virginia SCC Approves Dominion's $9.8B Grid Transformation Plan
PPL went through something similar when they were still serving Virginia customers before the Dominion acquisition. The challenge with these grid modernization programs is proving actual customer benefits. Half the promised savings come from "avoided outage costs" which are basically theoretical numbers the utility makes up. The SCC was smart to require performance metrics, but enforcement is always the weak link.
Avista went through a similar process in Washington but on a much smaller scale - only $400 million over 5 years. The key difference is our UTC required detailed cost-benefit analysis for every project over $10 million. Dominion's plan seems to bundle everything together, making it harder to challenge specific investments. Virginia's regulatory process isn't as thorough as some other states.
Georgia Power's grid modernization program was approved at $2.2 billion back in 2019 and we're already seeing issues. Smart meter deployment was delayed by 18 months, automation projects are over budget, and customer benefits are minimal so far. The monthly charges keep going up but reliability improvements are marginal at best. Dominion customers should expect similar problems - these utility mega-projects rarely deliver on their promises.
The first bills with the new Grid Transformation Charge showed up this week. My manufacturing client in Newport News is seeing an additional $340/month on their Schedule GS-3 account. That's actually lower than we expected based on the tariff filings. The good news is Dominion has to file annual reports showing progress on all the performance metrics. If they miss targets by more than 20%, the SCC can reduce future charges.
Alaska Electric Light & Power tried to get approval for a similar program up here but the RCA shot it down. The commissioners said utilities need to prove existing infrastructure is inadequate before spending billions on "transformation." It sounds like Virginia's regulators were more willing to accept Dominion's arguments about grid modernization necessity. Regional regulatory philosophy makes a huge difference in these cases.