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Regulatory Matters
 12 Months Ended
Dec. 31, 2024
Regulated Operations [Abstract]  
Regulatory Matters

NOTE 13. REGULATORY MATTERS

Regulatory Matters Involving Potential Loss Contingencies

As a result of issues generated in the ordinary course of business, the Companies are involved in various regulatory matters. Certain regulatory matters may ultimately result in a loss; however, as such matters are in an initial procedural phase, involve uncertainty as to the outcome of pending reviews or orders and/or involve significant factual issues that need to be resolved, it is not possible for the Companies to estimate a range of possible loss. For regulatory matters that the Companies cannot estimate, a statement to this effect is made in the description of the matter. Other matters may have progressed sufficiently through the regulatory process such that the Companies are able to estimate a range of possible loss. For regulatory matters that the Companies are able to reasonably estimate a range of possible losses, an estimated range of possible loss is provided, in excess of the accrued liability (if any) for such matters. Any estimated range is based on currently available information, involves elements of judgment and significant uncertainties and may not represent the Companies’ maximum possible loss exposure. The circumstances of such regulatory matters will change from time to time and actual results may vary significantly from the current estimate. For current matters not specifically reported below,

management does not anticipate that the outcome from such matters would have a material effect on the Companies’ financial position, liquidity or results of operations.

Other Regulatory Matters

Virginia Regulation – Key Legislation Affecting Operations

Regulation Act and Grid Transformation and Security Act of 2018

The Regulation Act enacted in 2007 instituted a cost-of-service rate model that authorizes stand-alone rate adjustment clauses for recovery of costs for new generation projects, FERC-approved transmission costs, underground distribution lines, environmental compliance, conservation and energy efficiency programs, renewable energy programs and nuclear license renewals, and also contains statutory provisions directing Virginia Power to file annual fuel cost recovery cases with the Virginia Commission.

If the Virginia Commission’s future rate decisions, including actions relating to Virginia Power’s rate adjustment clause filings, differ materially from Virginia Power’s expectations, it may adversely affect its results of operations, financial condition and cash flows.

The GTSA reinstated base rate reviews commencing with the 2021 Triennial Review. In the triennial review proceedings, earnings that were more than 70 basis points above the utility’s authorized ROE that might have been refunded to customers and served as the basis for a reduction in future rates, could be reduced by Virginia Commission-approved investment amounts in qualifying solar or wind generation facilities or electric distribution grid transformation projects that Virginia Power elected to include in a CCRO. The legislation declared that electric distribution grid transformation projects are in the public interest and provided that the costs of such projects may be recovered through a rate adjustment clause if not the subject of a CCRO. Any costs that were the subject of a CCRO were deemed recovered in base rates during the triennial period under review and could not be included in base rates in future triennial review proceedings. In any triennial review in which the Virginia Commission determined that the utility’s earnings were more than 70 basis points above its authorized ROE, base rates were subject to reduction prospectively and customer refunds would be due unless the total CCRO elected by the utility equaled or exceeded the amount of earnings in excess of the 70 basis points. For the purposes of measuring any customer refunds or CCRO amounts utilized under the GTSA, associated income taxes were factored into the determination of such amounts. In the 2021 Triennial Review, any such rate reduction was limited to $50 million. This section of the GTSA concerning base rate reviews was amended by 2023 legislation as discussed below.

Virginia 2020 Legislation

In April 2020, the Governor of Virginia signed into law the VCEA, which along with related legislation forms a comprehensive framework affecting Virginia Power’s operations. The VCEA replaces Virginia’s voluntary renewable energy portfolio standard for Virginia Power with a mandatory program setting annual renewable energy portfolio standard requirements based on the percentage of total electric energy sold by Virginia Power, excluding existing nuclear generation and certain new carbon-free resources, reaching 100% by the end of 2045. The VCEA includes related requirements concerning deployment of wind, solar and energy storage resources, as well as provides for certain measures to increase net-metering, including an allocation for low-income customers, incentivizes energy efficiency programs and provides for cost recovery related to participation in a carbon trading program. While the legislation affects several portions of Virginia Power’s operations, key provisions of the GTSA remained in effect, including the triennial review structure and timing, the use of the CCRO and the $50 million cap on revenue reductions in the first triennial review proceeding. Key provisions of the VCEA and related legislation passed include the following:

•
Fossil Fuel Electric Generation: The legislation mandates Chesterfield Power Station Units 5 & 6 and Yorktown Power Station Unit 3 to be retired by the end of 2024, Altavista, Southampton and Hopewell to be retired by the end of 2028 and Virginia Power’s remaining fossil fuel units to be retired by the end of 2045, unless the retirement of such generating units will compromise grid reliability or security. In addition, the Virginia Commission shall determine the amortization period for recovery of any appropriate costs due to the early retirement of any electric generation facilities. Virginia Power revised the depreciable lives of Altavista, Southampton and Hopewell for the mandated retirement to the end of 2028, which did not have a material impact to Virginia Power’s results of operations or cash flows given the existing regulatory framework. This section of the VCEA concerning mandatory retirements of certain facilities by the end of 2028 was amended by 2023 legislation as discussed below. As a result, in November 2023 Virginia Power revised the depreciable lives of Altavista, Southampton and Hopewell and implemented useful life assumptions that were effective before the previous revision.
•
Renewable Generation: The legislation provides a detailed renewable energy portfolio standard to achieve 100% zero-carbon generation by the end of 2045, excluding existing nuclear generation and certain new carbon-free resources. Components include requirements to petition the Virginia Commission for approval to construct or acquire new generating capacity to reach 16.1 GW of installed solar and onshore wind by the end of 2035, which includes specific requirements for utility-scale solar of 3.0 GW by the end of 2024, up to 15.0 GW by the end of 2035 and 1.1 GW of small-scale solar by the end of 2035. The legislation deems 2.7 GW of energy storage, including up to 800 MW for any one project which may include a pumped storage facility, by the end of 2035 to be in the public interest. The legislation also deems the construction or purchase of an offshore wind facility constructed off the Virginia coast with a capacity of up to 5.2 GW before 2035 to be in the public
interest and provides certain presumptions facilitating cost recovery. The costs of such a facility constructed by the utility with a capacity between 2.5 and 3.0 GW will be presumed reasonably and prudently incurred if the Virginia Commission finds that the project meets competitive procurement requirements, the projected cost of the facility does not exceed a specified industry benchmark and the utility commences construction by the end of 2023 or has a plan for the facility to be in service by the end of 2027. Projects to meet these requirements are subject to approval by the Virginia Commission.
•
Energy Efficiency: The legislation includes an energy efficiency target of 5% energy savings, as measured from a 2019 baseline, through verifiable energy efficiency programs by the end of 2025 with future targets to be set by the Virginia Commission. Virginia Power has the opportunity to offset the lost revenues with margins on program spend if certain targets are achieved and can also seek recovery of the lost revenues associated with energy efficiency programs if such reductions are found to have caused Virginia Power to earn more than 50 basis points below a fair rate of return on its rates for generation and distribution services.
•
Carbon trading program: The legislation authorizes Virginia to participate in a market-based carbon trading program consistent with RGGI through 2050. In January 2022, the Governor of Virginia issued an executive order which put directives in place to start administrative steps to withdraw Virginia from RGGI. In December 2023, the withdrawal took effect, which remains subject to ongoing legal challenges. All costs of the carbon trading program are recoverable through an environmental rider.
•
Low-income customers: The legislation includes the establishment of a percentage of income payment program to be administered by the Virginia Department of Housing and Community Development and the Virginia Department of Social Services. To fund the program, Virginia Power will remit amounts collected from customers under a universal service fee established and set by the Virginia Commission. As such, this program will not affect Virginia Power’s results of operations, financial position or cash flows. In December 2020, the Virginia Commission issued a final order confirming a revenue requirement of $93 million related to this program. Implementation details and the effective date of the program would be established in future legislation prior to collection of fees from customers. In October 2023, the Virginia Commission approved the collection by Virginia Power of a universal service fee of $71 million from customers during the rate year beginning November 2023, including the impact on certain non-jurisdictional customers which follow Virginia Power’s jurisdictional customer rate methodology.

Virginia 2023 Legislation

In April 2023, legislation was enacted that amended several key provisions of the Regulation Act, as previously amended by the GTSA, and revised portions of the existing regulatory framework affecting Virginia Power’s operations.

The legislation resets the frequency of base rate reviews from a triennial period, as established under the GTSA, to a biennial period commencing with the 2023 Biennial Review. Such biennial reviews shall include the establishment of an authorized ROE to be utilized for base rates and riders, prospective base rates for the upcoming two-year period based on projected cost of service and a determination by the Virginia Commission as to Virginia Power’s base rate earned return for the most recently completed two-year period against the previously authorized ROE, including any potential credits to customers’ bills.

The legislation provides that the Virginia Commission will establish an authorized ROE of 9.70% for Virginia Power in the 2023 Biennial Review, reflecting the average authorized ROE of vertically integrated electric utilities by the applicable regulatory commissions in the peer group jurisdictions of Florida, Georgia, Texas, Tennessee, West Virginia, Kentucky and North Carolina. Subsequent to the 2023 Biennial Review, all provisions related to this peer group benchmarking expire and the Virginia Commission is authorized to utilize any methodology it deems to be consistent with the public interest to make future ROE determinations. In all future biennial reviews, if the Virginia Commission determines that Virginia Power’s existing base rates will, on a going-forward basis, produce revenues that are either in excess of or below its authorized rate of return, the Virginia Commission is authorized to reduce or increase such base rates, as applicable and necessary, to ensure that Virginia Power’s base rates are just and reasonable while still allowing Virginia Power to recover its costs and earn a fair rate of return. In addition, beginning with the biennial review to be filed in 2025, the Virginia Commission may, at its discretion, increase or decrease Virginia Power’s authorized ROE by up to 50 basis points based on factors that may include reliability, generating plant performance, customer service and operating efficiency, with the provisions applying to such adjustments to be determined in a future proceeding.

The legislation directs that if the Virginia Commission determines as part of the 2023 Biennial Review that Virginia Power has earned more than 70 basis points above its authorized ROE of 9.35% established in the 2021 Triennial Review that 85% of the amount of such earnings above this level be credited to customers’ bills. In future biennial reviews, beginning with the biennial review to be filed in 2025, 85% of any earnings determined by the Virginia Commission to be up to 150 basis points above Virginia Power’s authorized ROE shall be credited to customers’ bills as well as 100% of any earnings that are more than 150 basis points above Virginia Power’s authorized ROE. For the purposes of measuring any bill credits due to customers, associated income taxes are factored into the determination of such amounts. In addition, the legislation eliminates Virginia Power’s ability to utilize Virginia

Commission-approved investment amounts in qualifying solar or wind generation facilities or electric distribution grid transformation projects as a CCRO to reduce or offset any earnings otherwise eligible for customer credits as previously permitted under the GTSA.

In addition to the biennial review mechanisms discussed above, the legislation also includes provisions related to other aspects of Virginia Power’s ratemaking framework.

•
Riders into base rates: Virginia Power is required to combine certain riders with an aggregate annual revenue requirement of at least $350 million with its base rates effective July 2023. After such riders are combined, they will be considered as part of base rates for the purposes of the biennial review proceedings. The inclusion of such riders cannot serve as the basis for an increase in base rates as part of the 2023 Biennial Review.
•
Rider consolidation: Upon determination by the Virginia Commission, certain riders, while remaining separate from base rates, may be consolidated for cost recovery and review purposes.
•
Capitalization ratio: The legislation establishes that Virginia Power is required to undertake reasonable efforts to maintain a common equity capitalization to total capitalization ratio through December 2024 of 52.10%.
•
Fuel cost securitization: Virginia Power is authorized, on or before July 2024, to petition the Virginia Commission for approval of a financing order for certain deferred fuel costs. Virginia Power is required to permit certain retail customers to opt out of any such deferred fuel cost securitization.
•
Electric generation plant retirements: The Virginia Commission shall provide to the Virginia General Assembly, on an annual basis, a report that includes information concerning the reliability impacts of generation unit additions and retirement determinations, along with the potential impact on the purchase of power from generation assets outside of the Virginia jurisdiction, the result of which could impact the depreciable lives of Virginia Power’s electric generation facilities in future periods.

In addition, in May 2023 legislation was enacted that amended certain portions of the VCEA to qualify generation produced by Virginia Power’s biomass electric generating stations as renewable energy and eliminate the mandated retirement of such facilities by the end of 2028.

Virginia Power is incurring and expects to incur significant costs, including capital expenditures, to comply with the legislative requirements discussed above. The legislation allows for cost recovery under the existing or modified regulatory framework through rate adjustment clauses, rates for generation and distribution services or Virginia Power’s fuel factor, as approved by the Virginia Commission. Costs allocated to the North Carolina jurisdiction will be recovered, subject to approval by the North Carolina Commission, in accordance with the existing regulatory framework.

Virginia Regulation – Key Developments

2023 Biennial Review

In July 2023, Virginia Power filed its base rate case and accompanying schedules in support of the 2023 Biennial Review in accordance with legislation enacted in Virginia in April 2023 as discussed above. Virginia Power’s earnings test analysis, as filed, demonstrated it earned a combined ROE of 9.04% on its generation and distribution services for the test period, within 70 basis points of its authorized ROE of 9.35% established in the 2021 Triennial Review. Virginia Power did not request an increase in base rates for generation and distribution services and proposed that base rates remain at their existing level utilizing an ROE of 9.70% for the prospective test periods and a common equity capitalization to total capitalization ratio of 52.10%. Virginia Power noted that while its prospective test periods would result in a revenue deficiency, it did not request an increase to base rates given that the combination of certain riders with an aggregate annual revenue requirement of at least $350 million into base rates effective July 2023 cannot serve as the basis for an increase in base rates as part of the 2023 Biennial Review.

In November 2023, Virginia Power, the Virginia Commission staff and other parties filed a comprehensive settlement agreement with the Virginia Commission for approval. The comprehensive settlement agreement indicates that Virginia Power demonstrated it earned a combined ROE of 9.05% on its generation and distribution services for the test period, requires previously unrecovered severe weather event costs of $45 million to be recovered through base rates during the 2023-2024 biennial period, with carrying costs, and provides for $15 million in one-time credits to customers by September 2024.

In February 2024, the Virginia Commission approved the comprehensive settlement agreement and issued its order in this matter. In doing so, the Virginia Commission determined that Virginia Power’s earnings for the test period, considered as a whole, were within 70 basis points above or below its authorized ROE of 9.35%. The Virginia Commission also authorized an ROE of 9.70%, as directed by legislation enacted in Virginia in April 2023, for Virginia Power that will be applied to Virginia Power’s riders prospectively and that will also be utilized to measure base rate earnings for the 2025 Biennial Review. In connection with the order, Virginia Power recorded a net benefit of $17 million ($12 million after-tax) in the first quarter of 2024 within impairment of assets and other charges in its Consolidated Statements of Income (reflected in the Corporate and Other segment) for a regulatory asset for previously unrecovered severe weather event costs, which were amortized by the end of 2024.

Virginia Fuel Expenses

In May 2023, Virginia Power filed its annual fuel factor filing with the Virginia Commission to recover an estimated $2.3 billion in Virginia jurisdictional projected fuel expense for the rate year beginning July 1, 2023 and a projected $1.3 billion under-recovered balance as of June 30, 2023. Virginia Power proposed two alternatives to recover these under-collected fuel costs, including an option based on an anticipated securitization of up to $1.3 billion under-recovered balance as of June 30, 2023 as permitted under legislation enacted in Virginia in April 2023, with such securitization approved by the Virginia Commission in November 2023 and completed by Virginia Power in February 2024. In March 2024, the Virginia Commission approved Virginia Power’s annual fuel factor based on the securitization option, which results in a net decrease in Virginia Power’s fuel revenues for the rate year of approximately $541 million. In addition, the Virginia Commission approved Virginia Power’s proposal to alter the order in which revenue from certain customers who elect to pay market-based rates would be allocated between base rates and fuel, which results in a reduction to fuel revenue of $13 million.

In May 2024, Virginia Power filed its annual fuel factor with the Virginia Commission to recover an estimated $2.2 billion in Virginia jurisdictional projected fuel expenses for the rate year beginning July 1, 2024 and to return an estimated $266 million net over-recovered balance through June 30, 2024. Virginia Power’s proposed fuel rate represents a fuel revenue decrease of $636 million when applied to projected kilowatt-hour sales for the rate year beginning July 1, 2024. In May 2024, the Virginia Commission ordered that Virginia Power’s proposed total fuel factor rate be placed into effect on an interim basis for usage on and after July 1, 2024. In January 2025, the Virginia Commission approved the filing.

Renewable Generation Projects

In October 2023, Virginia Power filed a petition with the Virginia Commission for CPCNs to construct or acquire and operate four utility-scale projects totaling approximately 329 MW of solar generation as part of its efforts to meet the renewable generation development targets under the VCEA. The projects, as of October 2023, are expected to cost approximately $850 million in the aggregate, excluding financing costs, and be placed into service between 2024 and 2026. In March 2024, the Virginia Commission approved the petition.

In October 2024, Virginia Power filed a petition with the Virginia Commission for CPCNs to construct or acquire and operate two utility-scale projects totaling approximately 208 MW of solar generation as part of its efforts to meet the renewable generation development targets under the VCEA. The projects, as of October 2024, are expected to cost approximately $605 million in the aggregate, excluding financing costs, and be placed into service between 2026 and 2028. This matter is pending.

Virginia LNG Storage Facility

In June 2024, Virginia Power filed a petition with the Virginia Commission to amend the CPCNs for Brunswick County and Greensville County to construct and operate an LNG production, storage and regasification facility and related transmission facilities adjacent to Greensville County. When complete, the facility will store the liquefied equivalent of approximately 2.0 bcf and would be able to regasify approximately 25% of its storage capacity per day and liquefy from the pipeline less than 1% of its equivalent storage capacity per day. The facility will serve as a backup fuel source for Brunswick County and Greensville County to support operations and improve system reliability. The facility is expected to cost approximately $550 million, excluding financing costs, and be placed into service by the end of 2027. In February 2025, the Virginia Commission approved the petition.

Riders

Significant riders associated with various Virginia Power projects are as follows:

Rider Name

 

Application Date

 

Approval Date

 

Rate Year
Beginning

 

Total Revenue Requirement (millions)(1)

 

 

Increase (Decrease) Over Previous Year (millions)

 

Rider BW(2)

 

October 2021

 

May 2022

 

September 2023

 

$

120

 

 

$

(25

)

Rider CCR

 

March 2024

 

November 2024

 

December 2024

 

 

103

 

 

 

(91

)

Rider CE(3)

 

October 2023

 

March 2024

 

May 2024

 

 

133

 

 

 

44

 

Rider CE(4)

 

October 2024

 

Pending

 

May 2025

 

 

182

 

 

 

49

 

Rider DIST(5)

 

August 2024

 

Pending

 

June 2025

 

 

269

 

 

N/A

 

Rider E

 

January 2024

 

September 2024

 

November 2024

 

 

72

 

 

 

(37

)

Rider E

 

January 2025

 

Pending

 

November 2025

 

 

37

 

 

 

(35

)

Rider GEN(2)

 

June 2024

 

Pending

 

April 2025

 

 

438

 

 

N/A

 

Rider GEN

 

June 2024

 

Pending

 

April 2026

 

 

311

 

 

 

(127

)

Rider GT(5)

 

August 2023

 

May 2024

 

June 2024

 

 

145

 

 

 

131

 

Rider GV(2)

 

June 2023

 

February 2024

 

April 2024

 

 

132

 

 

 

5

 

Rider GV(2)

 

June 2023

 

February 2024

 

April 2025

 

 

135

 

 

 

3

 

Rider OSW

 

November 2023

 

July 2024

 

September 2024

 

 

486

 

 

 

215

 

Rider OSW(6)

 

November 2024

 

Pending

 

September 2025

 

 

640

 

 

 

154

 

Rider RPS

 

December 2023(12)

 

August 2024

 

September 2024

 

 

358

 

 

 

262

 

Rider RPS

 

December 2024

 

Pending

 

September 2025

 

 

609

 

 

 

251

 

Rider SNA

 

October 2023

 

June 2024

 

September 2024

 

 

69

 

 

 

19

 

Rider SNA(7)

 

October 2024

 

Pending

 

September 2025

 

 

207

 

 

 

138

 

Rider T1(8)

 

May 2024

 

July 2024

 

September 2024

 

 

1,170

 

 

 

291

 

Rider U(5)(9)

 

October 2023

 

July 2024

 

August 2024

 

 

150

 

 

 

76

 

DSM Riders(10)

 

December 2023

 

July 2024

 

September 2024

 

 

86

 

 

 

(21

)

DSM Riders(11)

 

December 2024

 

Pending

 

September 2025

 

 

97

 

 

 

11

 
(1)
In addition, Virginia Power has various riders associated with other projects with an aggregate total annual revenue requirement of approximately $18 million as of December 31, 2024. There are various pending applications associated with such riders, which if approved, would result in a net increase of approximately $24 million.
(2)
Rider GEN includes $348 million in total revenue requirement related to the consolidation of Riders BW, GV and four other riders associated with generation facilities, ceasing the separate collection of rates under these riders effective April 1, 2025 and the extension of existing rates for Rider BW through March 2025. In addition, Virginia Power also requests approval to recover costs associated with the Virginia LNG Storage Facility described above.
(3)
The Virginia Commission approved four solar generation projects and 13 power purchase agreements in addition to previously approved Rider CE projects. In addition, the approved total revenue requirement includes amounts which had previously been collected under a separate rider.
(4)
Associated with two solar generation projects, two small-scale solar projects and 24 power purchase agreements in addition to previously approved Rider CE projects and power purchase agreements.
(5)
Rider DIST consists of $103 million in total revenue requirement for certain previously approved electric distribution grid transformation projects and $166 million for previously approved phases and proposed phase eight of certain new underground distribution facilities. If approved, would result in the consolidation of Riders GT and U and cease the separate collection of rates under these riders effective June 1, 2025.
(6)
Includes a proposal for Virginia Power to establish a decommissioning trust fund associated with the CVOW Commercial Project. If approved, the applicable amount included within the total revenue requirement would be allocated for such purposes.
(7)
Virginia Power also requested approval of cost recovery of approximately $1.7 billion through Rider SNA for the second phase of nuclear life extension program which includes investments for calendar years 2025 through 2027.
(8)
Consists of $532 million for the transmission component of Virginia Power’s base rates and $638 million for Rider T1.
(9)
Consists of $72 million for previously approved phases and $78 million for phase seven costs for Rider U. In addition, the Virginia Commission approved Virginia Power’s request to extend existing rates for Rider U through July 2024.
(10)
Associated with an additional three new energy efficiency programs and one new demand response program with a $102 million cost cap, with the ability to exceed the cost cap by no more than 15%.
(11)
Associated with three redesigned energy efficiency programs, one new and two redesigned demand response program and one demand response pilot with a $222 million cost cap, with the ability to exceed the cost cap by no more than 15%.
(12)
Virginia Power amended its application in February 2024.

In June 2024, the Virginia Commission approved Virginia Power’s request, filed in May 2024, to cease Rider RGGI effective July 2024.

Electric Transmission Projects

Significant Virginia Power electric transmission projects approved or applied for are as follows:

Description and Location
of Project

 

Application
Date

 

Approval
Date

 

Type of
Line

 

Miles of
Lines

 

Cost Estimate
(millions)(1)

 

Construct new Germanna substation, transmission
  line and related projects in Culpeper County,
  Virginia

 

November 2023

 

August 2024

 

230 kV

 

2

 

$

55

 

Construct Daves Store transmission line extension
  in Prince William County, Virginia

 

February 2024

 

October 2024

 

230 kV

 

3

 

 

70

 

Construct new Aspen and Golden substations,
  transmission lines and related projects in Loudoun
  County, Virginia

 

March 2024

 

February 2025

 

500-
230 kV

 

10

 

 

705

 

Partial rebuild Fredericksburg-Aquia Harbour
  transmission lines and related projects in Stafford
  County and the City of Fredericksburg, Virginia

 

March 2024

 

February 2025

 

230-
115 kV

 

24

 

 

135

 

Construct new Apollo-Twin Creek transmission lines,
  new substations and related projects in Loudoun
  County, Virginia

 

March 2024

 

February 2025

 

230 kV

 

2

 

 

285

 

Rebuild Dooms-Harrisonburg transmission lines
  and related projects in the Counties of Augusta
  and Rockingham and the Town of Grottoes, Virginia

 

April 2024

 

February 2025

 

230 kV

 

22

 

 

60

 

Rebuild and construct new Fentress-Yadkin
  transmission lines and related projects in the
  City of Chesapeake, Virginia

 

June 2024

 

Pending

 

500 kV

 

14

 

 

205

 

Partial rebuild, reconductor and construct new
  Network Takeoff transmission lines and related
  projects in the Counties of Fairfax and Loudoun,
  Virginia

 

July 2024

 

Pending

 

230 kV

 

6

 

 

170

 

Rebuild Aquia Harbor-Possum Point transmission
  lines and related projects in the Counties of
  Stafford and Prince William and the City of
  Fredericksburg, Virginia

 

August 2024

 

Pending

 

500-
230 kV

 

32

 

 

210

 

Partial rebuild, reconductor and construct new
  New Post transmission lines and related projects
  in the Counties of Caroline and Spotsylvania,
  Virginia

 

August 2024

 

Pending

 

230 kV

 

38

 

 

120

 

Construct new Centreport transmission line,
  substation and related projects in Stafford County,
  Virginia

 

September 2024

 

Pending

 

230 kV

 

3

 

 

55

 

Partial rebuild and construct new Meadowville
  transmission lines, substations and related projects
  in Chesterfield County, Virginia

 

October 2024

 

Pending

 

230 kV

 

11

 

 

190

 

Construct new Carmel Church and Ruther Glen
  transmission lines, substations and related projects
  in Caroline County, Virginia

 

December 2024

 

Pending

 

230 kV

 

7

 

 

85

 

Construct new Nebula transmission lines,
  substation and related projects in Mecklenburg
  County, Virginia

 

January 2025

 

Pending

 

230 kV

 

15

 

 

130

 

Construct new Culpeper Technology transmission
  lines, substations and related projects in the Counties
  of Culpeper, Orange and Fauquier and the Town of
  Culpeper, Virginia

 

February 2025

 

Pending

 

230 kV

 

13

 

 

255

 
(1)
Represents the cost estimate included in the application except as updated in the approval if applicable. In addition, Virginia Power had various other transmission projects approved during 2024 and early 2025 or applied for and currently pending approval with aggregate cost estimates of approximately $145 million and $65 million, respectively.

In November 2013, the Virginia Commission issued an order granting Virginia Power a CPCN to construct approximately 7 miles of new overhead 500 kV transmission line from the existing Surry switching station in Surry County to a new Skiffes Creek switching

station in James City County, and approximately 20 miles of new 230 kV transmission line in James City County, York County and the City of Newport News from the proposed new Skiffes Creek switching station to Virginia Power’s existing Whealton substation in the City of Hampton. In February 2019, the transmission line project was placed into service. In March 2019, the U.S. Court of Appeals for the D.C. Circuit issued an order vacating the permit from the U.S. Army Corps of Engineers issued in July 2017 and ordered the U.S. Army Corps of Engineers to do a full environmental impact study of the project. In April 2019, Virginia Power and the U.S. Army Corps of Engineers filed petitions for rehearing with the U.S. Court of Appeals for the D.C. Circuit, asking that the permit from the U.S. Army Corps of Engineers remain in effect while an environmental impact study is performed. In May 2019, the U.S. Court of Appeals for the D.C. Circuit denied the request for rehearing and ordered the U.S. District Court for the D.C. Circuit to consider and issue a ruling on whether the permit should be vacated during the U.S. Army Corps of Engineers’ preparation of an environmental impact statement. In November 2019, the U.S. District Court for the D.C. Circuit issued an order allowing the permit to remain in effect while an environmental impact statement is prepared. In November 2020, the U.S. Army Corps of Engineers issued a draft environmental impact statement noting there is no better alternative. This matter is pending.

Virginia Regulation – Key Developments Affecting 2022

Virginia Fuel Expenses

In May 2022, Virginia Power filed its annual fuel factor filing with the Virginia Commission to recover an estimated $2.3 billion in Virginia jurisdictional projected fuel expense for the rate year beginning July 1, 2022 and a projected $1.0 billion under-recovered balance as of June 30, 2022. Virginia Power’s proposed fuel rate represents a fuel revenue increase of $1.8 billion when applied to projected kilowatt-hour sales for that period. Virginia Power also proposed alternatives to recover this under-collected balance over a two- or three-year period. Under these alternatives, Virginia Power’s fuel revenues for the rate year would increase by $1.3 billion or $1.2 billion, respectively. In addition, Virginia Power proposed a change in the timing of fuel cost recovery for certain customers who elect market-based rates that would consider those customers’ portion of the projected under-recovered balance to have been recovered as of June 30, 2022. In July 2022, Virginia Power, the Virginia Commission staff and another party filed a comprehensive settlement agreement with the Virginia Commission for approval. The comprehensive settlement agreement provides for the collection of the requested under-recovered projected fuel expense over a three-year period beginning July 1, 2022 and that Virginia Power will exclude from recovery through base rates one half of the related financing costs over the three-year period. In addition, the proposed settlement agreement affirmed Virginia Power’s proposal regarding fuel cost recovery for market-based rate customers. As a result, Virginia Power recorded a $191 million ($142 million after-tax) charge in the second quarter of 2022 within impairment of assets and other charges in its Consolidated Statement of Income (reflected in the Corporate and Other segment). In September 2022, the Virginia Commission approved the comprehensive settlement agreement.

Rider RGGI

In May 2022, Virginia Power filed a petition with the Virginia Commission requesting suspension of Rider RGGI approved in August 2021. Virginia Power also requested that RGGI compliance costs incurred and unrecovered through July 2022 be recovered through existing base rates in effect during the period incurred. The Virginia Commission approved the request in June 2022. In the second quarter of 2022, Virginia Power recorded a charge of $180 million ($134 million after-tax) in impairment of assets and other charges (reflected in the Corporate and Other segment) for the amount deemed recovered through base rates through June 30, 2022, including the impact of certain non-jurisdictional customers which follow Virginia Power’s jurisdictional rate methodology. Virginia Power recorded $33 million ($25 million after-tax) in depreciation and amortization in the third quarter of 2022.

North Carolina Regulation

Virginia Power Base Rate Case

In March 2024, Virginia Power filed its base rate case and schedules with the North Carolina Commission. Virginia Power proposed a non-fuel, base rate increase of $57 million effective November 1, 2024 on an interim basis subject to refund, with any permanent rates ordered by the North Carolina Commission effective February 1, 2025. The base rate increase was proposed to recover the significant investments in generation, transmission and distribution infrastructure for the benefit of North Carolina customers. Virginia Power presented an earned return of 5.01% based upon a fully-adjusted test period, compared to its authorized 9.75% return, and proposed a 10.60% ROE.

In October 2024, Virginia Power, the North Carolina public staff and other parties of record filed a settlement agreement with the North Carolina Commission for approval. The settlement agreement provides for a non-fuel, base rate increase of $37 million effective November 1, 2024 on an interim basis subject to refund, with any permanent rates ordered by the North Carolina Commission effective February 1, 2025, and an authorized ROE of 9.95%. In addition, the settlement agreement provides that Virginia Power may file with the North Carolina Commission an application for an annual rider to seek recovery of incurred North Carolina jurisdictional CCR expenses, with the first such rider, if approved by the North Carolina Commission, covering costs for the period July 1, 2024 through December 31, 2024. In January 2025, the North Carolina Commission approved the settlement agreement.

In February 2025, the North Carolina Commission approved Virginia Power’s request to recover $6 million in CCR expenses through a CCR rider on an interim basis, with rates effective March 2025.

Virginia Power Fuel Filing

In August 2024, Virginia Power submitted its annual filing to the North Carolina Commission to adjust the fuel component of its electric rates. As subsequently updated in October 2024, Virginia Power proposed a total $107 million decrease to the fuel component of its electric rates for the rate year beginning February 1, 2025. In addition, Virginia Power proposed the implementation of a three-month decrement rider effective November 1, 2024 to reduce the over-recovery of the fuel component of its electric rates during the current rate year. In January 2025, the North Carolina Commission approved the filing.

PSNC Customer Usage Tracker

PSNC utilizes a customer usage tracker, a decoupling mechanism, which allows it to adjust its base rates semi-annually for residential and commercial customers based on average per customer consumption. In March 2024, PSNC submitted a filing with the North Carolina Commission for a $31 million decrease relating to the customer usage tracker. The North Carolina Commission approved the filing in March 2024 with rates effective April 2024.

South Carolina Regulation

Electric Base Rate Case

In March 2024, DESC filed its retail electric base rate case and schedules with the South Carolina Commission. DESC proposed a non-fuel, base rate increase of $295 million, partially offset by a net decrease in storm damage and DSM components of $4 million. If approved, the overall proposed rate increase of $291 million, or 12.59%, would be effective on and after the first billing cycle of September 2024. The base rate increase was proposed to recover the significant investment in assets and operating resources required to serve an expanding customer base, maintain the safety, reliability and efficiency of DESC’s system and meet increasingly stringent reliability, security and environmental requirements for the benefit of South Carolina customers. DESC presented an earned ROE of 4.32% based upon a fully-adjusted test period. The proposed rates would provide for an earned ROE of 10.60% compared to the currently authorized ROE of 9.50%.

In July 2024, DESC, the South Carolina Office of Regulatory Staff and other parties of record filed a comprehensive settlement agreement with the South Carolina Commission for approval. The comprehensive settlement agreement provides for a non-fuel, base rate increase of $219 million prior to the effect of South Carolina Commission-ordered DSM reductions commencing with service rendered on September 1, 2024 and an authorized ROE of 9.94%. In addition, the comprehensive settlement agreement includes that DESC would provide a one-time bill credit in 2024 of approximately $7 million primarily to residential customers. In August 2024, the South Carolina Commission voted to approve the settlement agreement.

In connection with this matter, in the third quarter of 2024 Dominion Energy recorded a charge of $58 million ($44 million after tax) (reflected within the Corporate and Other segment), including $50 million to write down certain materials and supplies inventory presented within impairment of assets and other charges.

Cost of Fuel

DESC’s retail electric rates include a cost of fuel component approved by the South Carolina Commission which may be adjusted periodically to reflect changes in the price of fuel purchased by DESC. In February 2024, DESC filed with the South Carolina Commission a proposal to decrease the total fuel cost component of retail electric rates. DESC’s proposed adjustment is designed to recover DESC’s current base fuel costs, including its existing under-collected balance, over the 12-month period beginning with the first billing cycle of May 2024. In addition, DESC proposed an increase to its variable environmental and avoided capacity cost component. The net effect is a proposed annual decrease of $315 million. In March 2024, DESC, the South Carolina Office of Regulatory Staff and another party of record filed a settlement agreement with the South Carolina Commission for approval to make certain adjustments to the February 2024 filing that would result in a net annual decrease of $316 million. In April 2024, the South Carolina Commission voted to approve the settlement agreement, with rates effective May 2024.

In February 2025, DESC filed with the South Carolina Commission a proposal to increase the total fuel cost component of retail electric rates. DESC’s proposed adjustment is designed to recover DESC’s current base fuel costs, including its existing under-collected balance, over the 12-month period beginning with the first billing cycle of May 2025. In addition, DESC proposed an increase to its variable environmental and avoided capacity cost component. The net effect is a proposed annual increase of $154 million. This matter is pending.

Electric DSM Programs

DESC has approval for a DSM rider through which it recovers expenditures related to its electric DSM programs. In January 2024, DESC filed an application with the South Carolina Commission seeking approval to recover $47 million of costs and net lost revenues associated with these programs, along with an incentive to invest in such programs. DESC requested that rates be effective with the

first billing cycle of May 2024. In April 2024, the South Carolina Commission approved the request, effective with the first billing cycle of May 2024.

In January 2025, DESC filed an application with the South Carolina Commission seeking approval to recover $46 million of costs and net lost revenues associated with these programs, along with an incentive to invest in such programs. DESC requested that rates be effective with the first billing cycle of May 2025. This matter is pending.

Electric - Transmission Projects

In March 2024, DESC filed an application with the South Carolina Commission requesting approval of a CPCN to construct and operate the Church Creek - Charleston Transmission Line, comprised of a 7-mile 230 kV transmission line and associated facilities in Charleston County, South Carolina with an estimated total project cost of $40 million. In July 2024, the South Carolina Commission approved the application.

In December 2024, DESC filed an application with the South Carolina Commission requesting approval of a CPCN to construct and operate the Ritter - Yemassee Transmission Line #2, comprised of a 17-mile 230 kV transmission line and associated facilities in Colleton and Hampton Counties, South Carolina with an estimated total project cost of $55 million. This matter is pending.