Tag Archives: smart meters

After the grid mod bill, the SCC wants to know how much authority it still has over utility spending

by
offshore wind turbines

Offshore wind turbines, Copenhagen, Denmark. Dominion Energy has asked the SCC for permission to proceed with building two wind turbines off the Virginia coast as a test project. Photo by Ivy Main.

It’s no secret the State Corporation Commission didn’t like this year’s big energy bill, the Grid Transformation and Security Act. SCC staff testified against SB 966 in committee, and their objections played a major role in amendments removing the “double dip” provision that would have let Dominion Energy Virginia double its earnings on infrastructure projects. Since passage of the bill, the SCC has raised questions about the constitutionality of the law’s provisions favoring in-state renewable energy, and its staff has issued broadsides about the costs of the legislation.

Now the SCC is mulling the question of how much authority it still has to reject Dominion’s proposals for spending under the bill. Dominion has filed for approval of a solar power purchase agreement (case number PUR-2018-00135) and two offshore wind test turbines it plans to erect in federal waters 24 nautical miles out from Virginia Beach (PUR-2018-00121). The utility has also requested permission to spend a billion dollars on grid upgrades and smart meters (PUR-2018-00100).

In an order issued September 12, the SCC asked participants in the solar and offshore wind cases to brief them on legal issues arising from the legislation. The SCC has focused in on two new sections of the Virginia Code. One is the language making it “in the public interest” for a utility to buy, build, or purchase the output of up to 5,000 megawatts (MW) of Virginia-based wind or solar by January 1, 2024. The SCC noted that subsection A of the provision says such a facility “is in the public interest, and the Commission shall so find if required to make a finding regarding whether such construction or purchase is in the public interest.”

The other new Code section gives a utility the right to petition the SCC at any time for a “prudency determination” for construction or purchase of a solar or wind project located in Virginia or off its coast, or for the purchase of the output of such a project if developed by someone else.

Together these sections give Dominion a good deal of latitude, but they don’t actually force the SCC to approve a project it thinks is a bad deal for ratepayers. In other words, wind and solar may be in the public interest, but that doesn’t mean every wind and solar project has to be approved.

The SCC asked for briefs on seven questions:

  • What are the specific elements that the utility must prove for the Commission to determine that the project is prudent under Subsection F?
  • Is the “prudency determination” in Subsection F different from the “public interest” findings mandated by Subsections A or E?
  • Do the public interest findings mandated by either Subsections A or E supersede a determination under Subsection F that a project is not prudent? If not, then what is the legal effect of either of the mandated public interest findings?
  • If the construction (or purchase or leasing) is statutorily deemed in the public interest, is there any basis upon which the Commission could determine that such action is not prudent? If so, identify such basis or bases.
  • In determining whether the project is prudent, can the Commission consider whether the project’s: (a) capacity or energy are needed; and (b) costs to customers are unreasonable or excessive in relation to capacity or energy available from other sources?
  • Do the statutorily-mandated public interest findings under either Subsections A or E override a factual finding that the project’s: (a) capacity or energy are not needed for the utility to serve its customers; and/or (b) costs to customers are unreasonable or excessive in relation to capacity or energy available from other sources, including but not limited to sources of a type similar to the proposed project?
  • Does the utility need a certificate of public convenience and necessity, or any other statutory approval from the Commission, before constructing the proposed projects?

Even if the Commission decides it has latitude in deciding which wind and solar projects to approve, that doesn’t necessarily spell disaster for the two projects at issue. The SCC could still decide they meet the standard for prudency and approve them.

Oral argument on the issues is scheduled for October 4.

Should approval of smart meters depend on how the meters will be used?

The SCC is also mulling over its authority in the grid modernization docket. One day after it asked lawyers in the solar and offshore wind cases to weigh in on the meaning of prudency, it issued a similar order asking for input on what the new law means by “reasonable and prudent” in judging spending under the grid modernization provisions. (Yes, the grid mod section of the law insists that spending be “reasonable” in addition to “prudent,” begging the question of whether spending can be prudent but not reasonable. Perhaps thankfully, the SCC order does not pursue it.)

The SCC’s questions to the lawyers show an interest in one especially important point: Dominion wants to spend hundreds of millions of dollars of customer money on smart meters, without using them smartly. Smart meters enable time-of-use rates and customer control over energy use, and make it easier to incorporate distributed generation like rooftop solar. None of these are in Dominion’s plan. Is it reasonable and prudent for Dominion to install the meters anyway, just because they are one of the categories of spending that the law allows?

Or as the SCC put it:

If the evidence demonstrates that advanced metering infrastructure enables time-of- use (also known as real-time) rates and that such (and potentially other) rate designs advance the stated purposes of the statute, i.e., they accommodate or facilitate the integration of customer-owned renewable electric generation resources and/or promote energy efficiency and conservation, may the Commission consider the inclusion or absence of such rate designs in determining whether a plan and its projected costs are reasonable and prudent?

Reading the tea leaves at the SCC: Staff comments on Dominion’s IRP

The SCC’s question about smart meters surely indicates how the commissioners feel about the matter: they’d like to reject spending on smart meters, at least until Dominion is ready to use them smartly. If the SCC concludes it has the authority to reject this part of Dominion’s proposal as not “reasonable and prudent,” it seems likely to do so.

It is harder to know where the SCC might land on the solar and offshore wind spending. The SCC’s staff, at least, are skeptical of Dominion’s plans to build lots of new solar generation. In response to Dominion’s 2018 Integrated Resource Plan (IRP), Commission staff questioned whether Dominion was going to need any new electric generation at all, given the flattening out of demand. But if it does, according to the testimony of Associate Deputy Director Gregory Abbott, Dominion ought to consider a new combined-cycle (baseload) gas plant, not solar. (Combined-cycle gas was the one generating source Dominion almost completely ruled out.)

Abbott criticized Dominion’s presentation of the case for solar, though he took note of the technology’s dramatic cost declines. Instead of seeing that as a reason to invest, however, he suggested it would be better to wait for further cost declines, or at least leave the construction of solar to third-party developers who can provide solar power more cheaply than the utility can. Remarkably, he also suggested Dominion offer rebates to customers who install solar, urging that Dominion’s spending under the grid transformation law “is designed specifically to handle these [distributed energy resources].”

Abbott also seemed supportive of Dominion’s venture into offshore wind. The only offshore wind energy in the IRP is the 12 MW demonstration project known as CVOW, but as Abbott noted, “the Company indicated that it will pursue a much larger roll-out of utility-scale offshore wind, beginning in 2024, if the demonstration project shows it to be economic.”

This suggests staff are inclined to support Dominion’s spending on the CVOW project, but for Abbott, it was one more reason Dominion should not invest in solar. He concluded, “If the demonstration project proves that utility-scale offshore wind is economic compared to solar, then it may make sense to get the results of the CVOW demonstration project before deploying a large amount of solar.”

This post originally appeared in the Virginia Mercury on September 24.

On the heels of its big legislative win, what kind of grid does Dominion want to build for us?

by
white electric tower

Photo by Pixabay on Pexels.com

Note: This post originally appeared in the Virginia Mercury on July 23. Virginia Mercury is a nonprofit, independent online news organization that launched just this summer. Subscribe to its free daily newsletter here.

Imagine that you have hired a builder to design and build a three-story house for you. He brings you the plans for the first floor and proposes to start work right away. “These look okay,” you say, “but I need to see the plans for the whole house.”

“Don’t you worry about that,” says the builder. “I have it all figured out. I’ll show you the second floor when the first is done, and the third floor after that.”

You argue with the builder, pointing out that as it is your money, you have the right to assure yourself the result will be what you want. If you haven’t even seen the blueprint for the whole house, how can you approve the ground floor? Heck, you can’t even judge if all the stuff he wants to put in is actually needed. (It looks awfully expensive.)

“Please,” says the builder, now deeply offended. “I’m an expert. You should trust me.”

If this scenario sounds far-fetched, that’s because you don’t live in the world of Virginia utility regulation. In that world, Dominion Energy Virginia, the state’s largest utility, has just filed a plan with the State Corporation Commission (SCC) to spend almost $1 billion of its customers’ money for the first phase of what it says will be three phases of grid modernization, amounting to $3.5 billion. The company maintains that all the things it plans to do now are necessary to the overall strategy, but it isn’t saying what that strategy is.

“During Phase 1 of the Plan,” writes Dominion Energy Senior Vice President Edward Baine, “the Company will focus on installing the foundational infrastructure that will enable all other components of the Grid Transformation Plan.” That sounds like it ought to lead into a discussion of what the grid of the future will look like, but sadly, the other “components” turn out to be just more spending.

That might in fact be the whole plan: spend money, lots of it. Baine explains the “drivers” of the plan, like recognizing threats to the grid, and he describes how it will “enable” things like new rate structures and integrating renewable energy. But new rate structures and renewable energy integration aren’t actually part of the plan Dominion wants the SCC to approve.

This will make it very hard for the SCC to judge whether the investments are “reasonable and prudent,” as Virginia law requires. Knowing this, Baine argues the SCC shouldn’t impose a cost-benefit test on its plans. Already that position has drawn sharp criticism even from supporters of the legislation that authorized the spending.

Take smart meters, also known as “advanced metering infrastructure” (AMI). Smart meters don’t just measure electricity use, but do so on an hourly or more frequent basis, and they provide two-way communication instead of just one-way reporting to the utility.

Properly designed and deployed, smart meters are central to the grid of the future. Dominion proposes to spend over $500 million to provide all its customers with this advanced technology during Phase 1. Unfortunately, that doesn’t include making full use of their potential.

Where ordinary electric meters mostly just tell the utility how much electricity a customer has used, smart meters provide detailed information that can be used to help pinpoint power outages and spikes in demand. That’s helpful for the utility, but just using them that way, as Dominion proposes, leaves most of the benefits of smart meters untapped.

Justifying the expense of smart meters requires using them to allow customers to control how and when they use electricity, as well as to make the most efficient rate designs and determine how to get the most benefit from solar panels, batteries and electric vehicle charging. That only happens where a utility offers time-of-use rates and other incentives to change behavior and prompt investments by consumers.

Using smart meters this way would result in lower energy use, more customer-investments in solar and batteries, and savings for everyone. But time-of-use rates and similar incentives aren’t in Phase 1, and they don’t look to be part of Phases 2 or 3 either.

Dominion seems to think it can get approval to spend money on smart meters based on how they could be used, rather than on how the company actually plans to use them. Baine notes that smart meters can tell customers how much electricity they’re using in any 30-minute period. “Customers will be able to choose their preferred mode of communication,” writes Baine, “and then receive high usage alerts when their energy usage exceeds a certain level.”

Yes, and then what? Baine doesn’t say.

It’s not just a matter of wanting to take it slow. Since 2009, 400,000 of its customers have received smart meters, Dominion tells us, giving it ample time to try out all these features. It hasn’t.

Merely installing another 1.4 million smart meters isn’t going to lead to grid nirvana.

Grid “hardening” is another example. Physical upgrades in the name of security and resilience make up more than $1.5 billion of Dominion’s proposed spending. This is not grid transformation, it’s the opposite: beefing up the old grid. Most of the proposed investments are the same kind of capital investments Dominion makes routinely, with nothing modernized about it. Unfortunately, Dominion wrote the law to give itself permission to use customer money for grid hardening, so all the SCC can do is ask whether the specific spending proposals are reasonable and prudent.

Again, since Dominion isn’t telling us what kind of grid it is building for us, there is no way to know whether any given project will contribute to it, or even be necessary at all. If the grid of the future will be based on distributed energy, microgrids, and consumer control, we might not need the substation Dominion wants to make into an impregnable fortress. Modern solutions like solar-plus-storage, demand response, and energy efficiency could provide greater resiliency and security at a lower cost.

Of course, we have every reason to suspect Dominion is not interested in building a grid that empowers consumers, lowers energy use and spurs private investment in solar and storage. Its business model depends on keeping control over the grid and getting people to use more energy rather than less. If it can’t do that, it figures, the next best thing is to find ways to spend our money.

The amount of customer money at stake makes the SCC’s oversight role very important. It can insist Dominion lay out its full vision for the grid, demonstrate how each spending item fits that vision, and prove it meets a consumer cost-benefit test. With a little dose of courage, it could even go further, and insist on seeing a plan that makes full use of smart meters, including time-of-use rates and other incentives for efficiency, solar and storage.

The General Assembly, too, has a role to play, by filling a vacancy on the SCC this summer. If legislators are unhappy with Dominion’s cavalier approach to spending, they have one last chance to appoint a commissioner who will side with consumers, and send Dominion back to the drawing board.