Virginia regulators OK Dominion’s planned offshore wind farm

Offshore Wind Virginia (Copyright 2020 The Associated Press. All rights reserved)

Offshore Wind Virginia (Copyright 2020 The Associated Press. All rights reserved)

State regulators on Friday approved an application by Dominion Energy Virginia to build a huge offshore wind farm off the coast of Virginia Beach and cover the cost from taxpayers.

No parties in the months-long procedure had opposed the approval of the project, which will help the utility increase the share of its generation that comes from renewable resources. But many had raised concerns about affordability and possible risk to the utility’s captive ratepayers.

In its Friday order, the State Corporation Commission noted that the 176-turbine Coastal Virginia Offshore Wind Project is likely to be the largest single project in the Dominion’s history, saying that because of its size, complexity and location, it faces a number of challenges. The commission included in its order three “consumer protections,” including a performance standard.

The commission’s order also approved facilities to connect the wind farm to the existing transmission system.

Robert Blue, Dominion Energy’s president and CEO, said in a statement that the company was pleased with the approval but was reviewing the details of the order, “particularly the performance requirement.”

The project, which will be located about 27 miles offshore, has an expected capital cost of $9.8 billion and has received broad support from local officials, politicians, business groups and labor unions, who say it will help fight climate change and create jobs. Backers quickly celebrated the commission’s decision.

“We applaud the SCC for green-lighting new offshore wind power in Virginia. As the largest offshore wind project in the nation, this project is a critical part of our clean energy transition because it complements solar power by generating power at night when the sun is not shining,” said Will Cleveland, senior attorney for the Southern Environmental Law Center, said in a statement.

As for costs, the SCC order said that over the wind farm’s projected 35-year life, including construction and its 30-year projected life, a typical residential customer is expected to see an average monthly bill increase of $4.72, with a peak monthly bill increase of $14 .22 in 2027.

“To be clear, total project costs, including financing costs, less investment tax credits, are estimated to be approximately $21.5 billion on a Virginia jurisdictional basis, assuming such costs are reasonable and justifiable. And all of those costs … will find their way to the taxpayers’ electricity bills in one way or another, the order states.

Dominion said in a news release that because offshore wind turbines have no fuel costs, the project is expected to save Virginia customers more than $3 billion over the first 10 years of operation.

The consumer protections in the commission’s order include a requirement that Dominion file a notice within 30 calendar days if it finds that total project costs are expected to exceed the current estimate or if final turbine installation is expected to be delayed beyond February 4, 2027. Annual filings will also be required address “any material change” in the project and explain any cost overruns.

The SCC also ordered that beginning with commercial operation and extending through the life of the project, customers will be held “harmless” for any shortfall in energy production below a certain threshold.

Such a performance standard would protect customers paying for the project “from also having to pay for replacement energy if the project does not generate the amount of electricity upon which Dominion bases its request and cost estimates,” the order states.

The order goes on to warn that the performance standard, however, will not protect customers from cost overruns or if the project is abandoned.

Commissioner Judith Jagdmann emphasized in a contemporaneous opinion that the project was “legislatively favored.”

The Virginia Clean Economy Act of 2020, a sweeping overhaul of the state’s energy policy passed by Democrats, included a series of renewable energy mandates intended to help address the threats of climate change and paved the way for the project.

The General Assembly, Jagdmann wrote, could consider implementing additional consumer protections.

Friday’s decision came after months of extensive filings in the case and a multi-day evidentiary hearing in May.

The company already has a pilot project with two turbines underway. The 2.6 gigawatt utility-scale project calls for construction to be completed in 2026. Dominion expects the project to generate enough clean energy to power up to 660,000 homes.

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