Dominion Energy has bowed to pressure from Virginia Gov. Ralph Northam and others and has agreed to spend $870 million on energy efficiency programs over the next decade.
CEO Tom Farrell told Northam about the company's plans in a letter sent Tuesday, reversing the company's previous position that its energy efficiency spending should be significantly less.
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Dominion pushed through a major overhaul of electric utilities in 2018 that could lead to substantial increases in customers' bills. Those changes also gave the company new flexibility in accounting for costs that virtually guarantee its rates can't go down.
To get some skeptical groups and lawmakers to support or at least drop opposition to the legislation, Dominion also committed to submitting $870 million in proposed energy efficiency programs to state regulators over the next decade.
Advocates of increased energy efficiency spending, which can include swapping out old incandescent lightbulbs for LEDs, said it helps ratepayers and the environment by reducing the need to produce and distribute electricity.
Dominion often touted the $870 million figure in public statements when promoting the law, without indicating that actual spending on energy efficiency programs could be significantly lower.
But at a recent hearing before state regulators, Dominion argued that the $870 million should include any lost revenue it would incur because of decreased electric usage. If approved, that could have effectively reduced actual spending on energy efficiency programs by about a 40 percent or more.
Dominion's position faced pushback from the Northam administration, lawmakers and others who said the company was not living up to a deal it struck last year. Critics ranged from Walmart to Clean Virginia, an advocacy group funded by wealthy environmentalist Michael Bills.
Advocates for the environment and low-income Dominion customers said their groups would have actively opposed last year's legislation if it included lost revenues in energy efficiency spending.
At a hearing last week before the State Corporation Commission, Dominion said it is trying to follow the law as written and seeking "clarity" from regulators about energy efficiency costs. Farrell said in his letter to Northam that Dominion views lost revenues "as an important provision for energy efficiency at the greater scale contemplated and note that this concept has long been recognized" in state law.
"However, we commit to an aggregate total of $870 million in regulated energy efficiency filings through 2028 exclusive of any lost revenues," Farrell said.
Dominion spokesman Rayhan Daudani declined to comment on what prompted the company's change of heart.
Will Cleveland, a staff attorney at the Southern Environmental Law Center, said it was clear both in the law and to all parties who negotiated the law that lost revenues were not be counted as part of the $870 million. He said Dominion was set to lose both in the court of public opinion and before the commission.
"I don't see how they had any other option," Cleveland said.