Dive Brief:

• The Virginia State Corporation Commission in a Monday order questioned whether a recent legislative overhaul of utility rates violates the United States Constitution because of limits on out-of-state renewables projects. 
• In the decision, the SCC denied  a request by Appalachian Power Co. to raise rates in order to purchase out-of-state renewable generation. The utility was looking at wind generation in Virginia and Ohio.
• Last month, Virginia Gov. Ralph Northam (D) signed Senate Bill 966, essentially unfreezing Dominion Energy's rates while also aiming to spur investment in renewable. But regulators question whether some requirements will hold up to scrutiny.

Dive Insight:

Appalachian Power last summer asked regulators to approve a rate adjustment clause to recover costs associated with acquiring the Beech Ridge wind farm in Virginia and Hardin facility in Ohio. Regulators have rejected the request but used the order to open up discussion of other issues.

At the time, regulators wrote that APCo didn't need the capacity and energy from those sources, finding it "neither reasonable nor prudent" to allow the utility to recover those costs from consumers. 

However, the ACC went on to note Virginia's recent rate overhaul that also included provisions aimed at boosting renewable energy in the state. Regulators note that the legislation includes a predetermination that the construction or purchase of power generated from solar or wind generating facilities up to certain quantities is "in the public interest."

SB 966 goes into effect this July, sparing regulators the need to consider it. But they pondered in their order, given the new provisions, whether the commission will be mandated to approve renewable energy "regardless of any finding as to need."

Additionally, they questioned whether language that restricts the benefit of the solar and wind mandate only to in-state facilities "represents a violation of the United States Constitution" under the United States Supreme Court's dormant Commerce Clause holdings. Neither of these issues were litigated," regulators noted in their order. The dormant commerce clause theory holds states cannot pass legislation restricting interstate commerce.

Renewable energy advocates say the bill is expected to support $1 billion in efficiency investment and 5,000 MW of new wind and solar in Virginia over the next 10 years.

Dominion Energy's rates were frozen in 2015 to protect customers from potential rate hikes related to the Obama administration's Clean Power Plan. As Trump has worked to dismantle many of Obama's environmental and energy regulations, withdrawing the Clean Power Plan, lawmakers unfroze the utility's rates and directed $200 million in customer refunds.