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VA - Dominion, Ratepayer Advocates Propose Settlement Over Potential Wind Project Costs

RICHMOND — Dominion Energy and groups advocating for ratepayers announced a settlement agreement Friday on who will bear responsibility for any increased costs associated with the Coastal Virginia Offshore Wind project.

The agreement, which was reached between Dominion Energy, the Office of the Attorney General, Walmart, the Sierra Club and environmental nonprofit Appalachian Voices, protects ratepayers from some increases in construction costs while removing a performance guarantee Dominion had criticized.

The Office of the Attorney General called the agreement “both a landmark and commonsense framework for balancing the need to build innovative, renewable energy projects with strong consumer protections.”

The Coastal Virginia Offshore Wind project is a key part of Dominion’s plans to achieve a zero-carbon grid by 2050, as required under the Virginia Clean Economy Act.

The State Corporation Commission, which oversees Virginia’s public utilities, greenlit the $9.8 billion project in August but included a performance standard as a condition of its approval.

The standard required the company to cover the costs of replacement energy if the wind farm didn’t produce 42% of the energy it is capable of producing. Performance would have been measured on a three-year rolling basis.

Dominion had previously requested that the performance standard be removed, claiming it would make the project “untenable” and reliant on factors out of its control, such as weather.

But while the SCC approval included ratepayer protections for underperformance, it didn’t provide protection for construction cost overruns, said Will Cleveland, an attorney with the Southern Environmental Law Center who represented Appalachian Voices in negotiations.

Cleveland said the deal was a “substantial improvement” over what existing law allows.

Under state code, Dominion is allowed to recover construction cost overruns from customers up to a certain dollar amount as long as the increased costs are determined to be reasonable and prudently incurred.

But under the settlement agreement, customers only have to cover project costs of up to $10.3 billion.

If costs are between $10.3 billion and $11.3 billion, customers and Dominion will share responsibility for overruns equally.

If costs rise to between $11.3 billion and $13.7 billion, responsibility for overruns will be borne entirely by the company. Any expenses that run over $13.7 billion will require a future commission proceeding to determine how to recover costs.

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