Amid the push for “green energy” has been a growing concern that the costs often fall onto consumers. In particular, new technologies and projects are often begun with high hopes but over time the expenses are higher and returns are lower than expected. For this reason, Virginia’s Attorney General Jason Miyares (R), the first Hispanic to hold that position, announced ground-breaking protections for Old Dominion consumers as wind farms off the east coast of Virginia are launched.
Miyares today announced a historic agreement on the $9.8 billion Coastal Virginia Offshore Wind project in a public filing made with the Virginia State Corporation Commission (SCC). This hard-fought agreement includes unprecedented consumer protections for Virginians.
Traditionally, Virginia consumers have paid for all of the costs of utility projects. Today’s agreement changes that in the event of cost overruns. Dominion Energy has agreed to cost sharing and a cost cap on construction expenses, after which it will be responsible for all cost overruns. The agreement also includes a performance standard designed to ensure that the project produces the energy promised.
“I am pleased that we have achieved consumer protections never seen before in modern Virginia history,” said Attorney General Miyares. “For the first time Dominion has significant skin in the game to ensure that the project is delivered on budget. Should the project run materially over budget, it will come out of Dominion’s pocket, not consumers’. If approved by the State Corporation Commission, this agreement provides first-of-its-kind protections for Virginia consumers. A wide range of stakeholders support this agreement. I especially want to thank the Sierra Club and Appalachian Voices for joining, as well as Virginia’s largest private employer, Walmart. This landmark agreement means that Virginia will be a national leader in offshore renewable energy for years to come and most importantly in a fiscally responsible way.”
The agreement provides for initial cost sharing between customers and Dominion up to $11.3 billion. If the construction costs fall between $10.3 billion and $11.3 billion, Dominion and consumers will share those additional costs evenly. If the construction costs of the project exceed $11.3 billion, Dominion is required to pay those additional costs in full.
In the unlikely event that the project’s construction costs exceeds $13.7 billion, the project will be put back before the SCC for a further determination of viability and/or cost allocation. This feature of the agreement protects all stakeholders from catastrophic cost overruns.
This cost sharing and cost cap agreement means that Dominion will potentially have to pay almost $3 billion if the project runs over budget. Ensuring that the project remains on budget is crucial to ensuring it is also built on time.
Today’s agreement is both a landmark and commonsense framework for balancing the need to build innovative, renewable energy projects with strong consumer protections. The joint proposed stipulation and recommendation was filed this afternoon with the SCC, and is subject to final approval by the Commission. This agreement addresses issues identified by the SCC in its August 5, 2022 Order.
The filing can be accessed HERE.
