August 8, 2022
By Ethan Howland
The SCC (click here) last week approved a rate rider for recovering the cost of Dominion’s $9.8 billion offshore wind project and related onshore transmission facilities.
The commission ordered Dominion Energy Virginia’s customers to be held harmless for any shortfall in energy production below the project’s expected 42% annual net capacity factor, measured on a three-year rolling average.
“Meaning, of course, that roughly half the time, it would be above that level and half below,” Blue said. “Effectively, such a guarantee would require [Dominion Energy Virginia] to financially guarantee the weather, among other factors beyond its control, for the life of the project.”
The performance guarantee creates an unprecedented layer of financial one-way risk for the utility and is “inconsistent with the utility risk profile” expected by investors, Blue said.
“There are obviously factors that can affect the output of any generation facility, notwithstanding the reasonable and prudent actions of the operator, including natural disasters, acts of war or terrorism, changes in law or policy, regional transmission constraints or a host of other uncontrollable circumstances,” Blue said....
The SCC (click here) last week approved a rate rider for recovering the cost of Dominion’s $9.8 billion offshore wind project and related onshore transmission facilities.
The commission ordered Dominion Energy Virginia’s customers to be held harmless for any shortfall in energy production below the project’s expected 42% annual net capacity factor, measured on a three-year rolling average.
“Meaning, of course, that roughly half the time, it would be above that level and half below,” Blue said. “Effectively, such a guarantee would require [Dominion Energy Virginia] to financially guarantee the weather, among other factors beyond its control, for the life of the project.”
The performance guarantee creates an unprecedented layer of financial one-way risk for the utility and is “inconsistent with the utility risk profile” expected by investors, Blue said.
“There are obviously factors that can affect the output of any generation facility, notwithstanding the reasonable and prudent actions of the operator, including natural disasters, acts of war or terrorism, changes in law or policy, regional transmission constraints or a host of other uncontrollable circumstances,” Blue said....
