Dive Brief:

• Dominion Energy will spend $870 million on energy efficiency programs over the next decade the utility said this week, backtracking on a controversial idea to consider lost revenues as spending — a move that could have substantially undercut the utility's promises, said customer advocates and critics of the utility.
• Dominion last year committed to the hefty efficiency spending in order to garner support for Senate Bill 966, which unfroze the utility's rates and made it easier to invest in renewables, efficiency and other grid modernization activities.
• Following outcry over Dominon's lower efficiency spending proposal, Virginia Gov. Ralph Northam, D, pressed the utility to "fully act" on its efficiency spending commitment. The utility agreed, but the debate could lead to greater scrutiny of how the utility lives up to its commitments.

Dive Insight:

When Virginia regulators rejected Dominion Energy's long-term Integrated Resource Plan in December, they noted that the utility had failed to meet multiple requirements of SB 966, including modeling hundreds of millions it had committed to spend on energy efficiency.

Dominion ultimately asked regulators if lost revenues that resulted from the efficiency programs could be considered as part of its spending. But that generated outcry from customer advocates and lawmakers, pressing Northam to take up the cause. Dominion ultimately capitulated.

In a March 26 letter to Northam, Dominion President and CEO Thomas Farrell said the company would "commit to an aggregate total of $870 million in regulated energy efficiency filings through 2028 exclusive of any lost revenues."

However, Farrell also defended the utility's proposed accounting, saying Dominion views its approach to lost revenues "as an important provision for energy efficiency at the greater scale contemplated" and that there is legal support for the idea.

That explanation has not gone over well with some state lawmakers.

Del. Jennifer Carroll Foy, D, warned that Dominion's attempt to spend less than the full amount could lead to greater oversight. In a blog post to the web site Blue Virginia, the lawmaker said Dominion's proposal "calls into question their ability to negotiate in good faith."

Foy did not support SB 966, but in the March 28 post, she pledged to "support changes to the law next session to ensure Dominion cannot reverse its commitment to improve energy efficiency and to low-income, elderly and disabled Virginians."

For its part, Dominion says it wasn't trying to avoid investing in efficiency, but needed to understand how the new law would address lost revenues and program costs. Dominion has twice before filed to include lost revenues in program costs, but was denied, a spokesman said.

The State Corporation Commission (SCC) held a hearing last week, and a decision on whether SB 966 allows lost revenues to be included in program costs is still pending. Regardless, Dominion says it is committed to proposing a least $870 million in efficiency spending.

"We are committed to expanding our portfolio of energy efficiency programs," the utility said. "We will follow the law as enacted by the General Assembly and interpreted by the SCC. We will continue to work with stakeholders to identify the full range of programs that make sense for our customers."

Dominion has been working make its system cleaner and more efficient. This week the utility confirmed it had made a final decision to permanently shutter 10 older and less-efficient generating units.

The utility currently has almost 2,000 MW of renewables generation. Nuclear and natural gas each make up a third of the utility's power mix, while coal composes 25%.