Dominion Energy has agreed to implement several consumer protections in connection with its massive offshore wind project in a proposed agreement with the office of the Virginia attorney general and other parties released Friday.
The proposed agreement includes performance reporting requirements and provisions laying out a degree of construction cost sharing. It is still subject to approval by the State Corporation Commission, according to WTVR.com.
In early August this year, state regulators approved an application from Dominion Energy Virginia to build the offshore wind farm off the coast of Virginia Beach, and recover the cost from ratepayers.
The State Corporation Commission noted that the 176-turbine Coastal Virginia Offshore Wind Project will likely be the single largest project in Dominion’s history and said that because of its size, complexity, and location, it faces an array of challenges. The commission included in its order three “consumer protections,” including a performance standard.
At that time, Robert Blue, Dominion Energy’s president, and CEO said in a statement that the company was pleased with the approval but was reviewing the specifics of the order, “particularly the performance requirement.”
The SCC order said that over the wind farm’s projected 35-year lifetime, including the construction and its 30-year projected useful life, a typical residential customer is expected to see an average monthly bill increase of $4.72, with a peak monthly bill increase of $14.22 in 2027.
“To be clear, total Project costs, including financing costs, less investment tax credits, are estimated to be approximately $21.5 billion on a Virginia-jurisdictional basis, assuming such costs are reasonable and prudent. And all of these costs … will find their way into ratepayers’ electric bills in some manner,” the order said.
The consumer protections in the commission’s order include a requirement that Dominion file a notice within 30 calendar days if it finds that the total project costs are expected to exceed the current estimate or if the final turbine installation is expected to be delayed beyond Feb. 4, 2027. Annual filings will also have to address “any material changes” to the project and explain any cost overruns.
The SCC also ordered that beginning with the commercial operation and extending through the life of the project, customers will be “held harmless” for any shortfall in energy production below a certain threshold.
Dominion reaches an agreement on consumer protections
At first, there was strenuous disagreement over the consumer protections by Dominion, but the parties to Friday’s proposal said they had conferred since then and reached the terms of the proposed agreement.
The proposed agreement calls for a cost-sharing arrangement for any overruns beyond the estimated $9.8 billion price tag. The company would cover 50 percent of construction costs between the range of $10.3-$11.3 billion and 100 percent of costs between $11.3-$13.7 billion. If construction costs were to exceed $13.7 billion, the issue would go back to the commission.
Dominion will have to report average net capacity factors annually and “provide a detailed explanation of the factors contributing to any deficiency.”
“I appreciate the thoughtful effort of all parties in reaching a constructive agreement to allow the project to continue moving forward,” said Bob Blue, Dominion Energy chair, president & and chief executive officer in a press release.
“Since the August Order, we have further mitigated some of the project’s development risks that strengthen our confidence in remaining on time and on budget.”
Coastal Virginia Offshore Wind (CVOW) project
The 2.6-gigawatt Coastal Virginia Offshore Wind (CVOW) project is to be constructed 27 miles off the coast of Virginia Beach. CVOW’s schedule calls for construction to be completed in late 2026 when it can generate enough clean energy to power up to 660,000 homes.
The wind farm will eventually consist of 176 -14.7 MW wind turbines standing slightly more than 800 feet tall, three offshore substations to collect and bundle the clean energy, undersea cables to get it ashore, and new onshore transmission infrastructure to deliver the clean energy onto the broader electric grid to serve homes and businesses.
By harnessing the power of the wind, CVOW will avoid or displace as much as 5 million metric tons of carbon dioxide emissions annually, which is the carbon equivalent of removing 1 million non-electric cars from the road each year.
