Virginia rejects Dominion's $752M smart meter plan, other grid mod proposals

Dive Brief:

The Virginia State Corporation Commission approved a final order on Thursday rejecting the vast majority of Dominion's grid modernization plan, while approving some cybersecurity and reliability provisions.
According to regulators, Dominion failed to justify that the most expensive part of its plan, the smart meter proposal, would have "overall benefits to customers" without a comprehensive proposal for time of use (TOU) ratesetting. Implementing the 10-year grid modernization plan fully would cost customers nearly $7 billion, with AMI costing $752.5 million total. Of the first $838 million investment required by the plan, of which nearly $304 million was designated for smart meters, regulators approved only $212 million.
Regulators agreed that Dominion demonstrated grid hardening improvements, cybersecurity measures and a new computer platform to support customer service would benefit the customer base. The SCC will have to approve any rate recovery for costs that exceed those estimates.

Dive Insight:

Dominion's AMI proposal represented a significantly pared back estimate from its $1.49 billion 2018 grid modernization proposal, which the SCC rejected in January 2019.

Regulators at the time invited the utility to resubmit a proposal with a plan for time-varying rates, to further access energy efficiency and demand response benefits.

"AMI is necessary to implement such rate design, and without TOU rates, one of the most significant benefits of AMI is lost to customers," regulators determined in 2019, asking for deployment of the rates at the same time as a smart meter rollout.

"While Dominion wants approval to collect from its customers the substantial costs of full deployment of AMI technology, it has failed to submit a comprehensive proposal to roll out TOU rate design across its entire territory and make such rates available to all its customers," the SCC's final order said.

Dominion submitted to Virginia regulators in December and January a separate stand-alone proposal for a TOU rate pilot, for 10,000 of the utility's 2.5 million Virginia customers. The SCC previously approved three other TOU rate pilot offerings paired with three AMI demonstration pilots.

"It is profoundly disappointing that the SCC failed to support the benefits that can only be made possible by full deployment of the proven, industry-standard smart meter technology now used by all customers in North Carolina, DC and Maryland," Rayhan Daudani, a Dominion spokesperson, said in an email.

While other nearby areas are carrying out smart meter deployment, other regulators have questioned full AMI rollouts based on the high cost of the technology since the SCC first rejected Dominion's grid proposal.

Since Dominion's 2018 proposal was rejected, the utility added a cost-benefit analysis and "extensive customer feedback," Dominion told Utility Dive earlier this year.

"[I]ntelligent grid devices enable the effective integration of renewables and further support reliability improvement for our customers," Daudani said.

Dominion's grid modernization plan included:

$7.2 million, or $186.6 million over a decade, to deploy cybersecurity protections;
$36.5 million, or $668.9 million over a decade, to deploy a customer information platform, which would replace the way the company handles metering, billing, credit, services orders and revenue reporting;
$34.8 million, or $65.9 million over a decade, on program pilots for a smart charging program to further electric vehicle integration, a microgrid in Petersburg, Virginia, and a smart hosting capacity analysis to define how much distributed resources can be connected to the grid;
$210.8 million, and approximately $2.9 billion over its lifetime for grid hardening to increase resilience, targeting customers most vulnerable to outages — regulators did not agree to all components;
$241.5 million, or $2.1 billion over a decade, to deploy self-healing grid technology, which did not receive staff support; and
$3.2 million, or $11.1 million over a decade, to work on stakeholder engagement and customer education through grid modernization workshops.

The customer information platform and funding for grid improvements will enable Dominion "to give our customers more options to access their energy usage information and bills while we provide even more dependable service," Daudani said.

The utility is reviewing the final order to determine next steps.