Dive Brief:

• Dominion Energy seeks to recover $302.4 million from its Virginia ratepayers for upgrading three coal plants and corresponding ash ponds, according to the utility's Friday filing with the State Corporation Commission (SCC).
• Dominion's proposal would increase customer bills about $2.15 starting November 2019 to carry out projects "necessary to comply" with state and federal regulations in Virginia and West Virginia. Average households across Virginia could see bills raise by $3.30 a month for 20 years, according to an SCC deputy director, as reported by the Richmond Times Dispatch.
• Most of the costs would go to update the Chesterfield coal-fired station to the requirements set by the Environmental Protection Agency (EPA) and Virginia Waste Management Board. Earlier this month, regulators rejected Dominion's long-term Integrated Resource Plan for having unrealistically-high forecasts.

Dive Insight:

Despite the utility's increasing investment in clean emission resources, "coal remains an important element of Dominion Energy's diverse mix of power generation resources," according to the application.

Virginia's largest utility plans to build a new, sophisticated landfill, sedimentation ponds and water treatment facilities for the toxic residuals of coal generation in order to comply with the EPA's Coal Combustion Residuals (CCR) rule. 

Work is currently underway at a trio of plants including one in West Virginia:

Dominion had confirmed that two wet ash ponds at Chesterfield were leaking into the groundwater and that existing sedimentation ponds at Clover and Mount Storm did not meet CCR requirements.

The status of the federal CCR rule is in limbo and is likely to end up being litigated. This July, the EPA announced plans to replace the regulation with a less stringent one in spite of conflicting with a D.C. Circuit Court of Appeals ruling that called for stronger coal ash protections. The court said the original CCR rule established by the Obama Administration was not protective enough of public health.

Changes to CCR could affect the affordability of coal plants, as the cost of managing coal ash "is of course going to have to factor into ... modernizing coal plants or whether [operators] want to go in another direction," according to Christopher Ellinghaus, senior equity utility analyst at The Williams Capital Group.

"Regulation determines how much money you have to spend on whatever environmental issue it might be, so whatever the EPA or any regulatory body does to modify standards is going to lead to a change in the cost profile," Ellinghaus told Utility Dive.

However, the utility is counting on the EPA's intended rollbacks to have no impact on the current ongoing projects.

"It's not going to affect us at all because Virginia did not implement those rules," Dominion spokesperson Dan Genest told Utility Dive.

Before the investor-owned utility can begin to recover the cost of the projects and an additional 9.2% return, the SCC will need to approve its plan. The decision also hinges on the state legislature's decision whether or not to close the ponds. The legislature begins its 2019 session in January.