Dominion Energy submits CVOW settlement to Virginia regulators
Coastal Virginia Offshore Wind Project. Image by: Dominion Energy.
US utility Dominion Energy Inc (NYSE:D) has filed with state regulators a settlement agreement for its 2.6-GW Coastal Virginia Offshore Wind (CVOW) project that, it says, balances stakeholder interests and keeps the project on schedule and on budget.
As reported in August, the State Corporation Commission of Virginia (SCC) gave the green light to the USD-9.8-billion (EUR 9.85bn) project, affirming that it meets all Virginia statutory requirements for rider cost recovery and the issuance of a Certificate of Public Convenience and Necessity for the onshore infrastructure. However, the SCC’s final order set a performance guarantee that was protested by Dominion Energy.
The order directed that “beginning with commercial operation and extending for the life of the Project, customers shall be held harmless for any shortfall in energy production below an annual net capacity factor of 42%, as measured on a three-year rolling average.” In response, the company said that the imposition of such a performance guarantee is untenable and will prevent the project from moving forward. It asked for a limited reconsideration and added that it will be forced to cease all development and construction activities otherwise.
The settlement agreement announced on Friday is between Dominion Energy Virginia, the Office of the Attorney General, Walmart Inc (NYSE:WMT), Sierra Club and Appalachian Voices. The retail giant, which is the largest private employer in the state, had previously expressed concerns regarding the affordability of the project.
According to Dominion, the settlement provides a balanced and reasonable approach that supports continued investment in CVOW. The deal substitutes the performance guarantee with a cost-sharing approach for unforeseen costs that exceed the project budget plus enhanced Commission review of operating performance.
Dominion has voluntarily agreed that shareholders will share 50% of any costs in the USD 10.3 billion-11.3 billion range, and will be responsible for 100% of any prudently incurred costs between USD 11.3 billion and USD 13.7 billion. Above that level, no voluntary cost-sharing was agreed.
The settlement has to be approved by the SCC.
"Development of the project has continued uninterrupted to maintain the project's schedule. We expect over 90% of the project costs, excluding contingency, to be fixed by the end of the first quarter in 2023 as compared to about 75% today, further de-risking the project and its budget,” commented Bob Blue, Dominion Energy’s chair, president and CEO. The developer estimates that CVOW will save Virginia customers over USD 3 billion during its first 10 years in operation and that the sum could even double if ongoing commodity market pressure trends continue.
CVOW will be located about 27 miles (43 km) off the coast of Virginia Beach and is expected to be capable of producing electricity for up to 660,000 local homes per year with 176 Siemens Gamesa turbines. The offshore wind farm is set to become fully operational by the end of 2026.