SCC Considers Whether CVOW Costs Are Reasonable
Construction of the Coastal Virginia Offshore Wind facility, owned by Dominion Energy, is currently underway. The facility will power over half a million homes.
In a hearing, the SCC is currently deciding whether the project’s $9.65 billion cost is “reasonable and prudent.”
A number of stakeholders have raised concerns over the fact that ratepayers are responsible for the cost of the project, especially considering Dominion has a history of overcharging ratepayers.
Capable of producing enough electricity to power up to 660,000 homes, Dominion Energy is in the process of constructing its Coastal Virginia Offshore Wind facility 27 miles off the coast of Virginia Beach. A total of 176 wind turbines will each tower 837 feet above the ocean surface when blades are at the highest point once the project is complete. But with $9.65 billion in costs that will fall on ratepayers, the SCC is considering in a hearing that started last week whether Dominion’s plans for CVOW are “reasonable and prudent.”
During the hearing, Dominion representatives testified that the project is not expected to exceed current cost estimates, and the reduction in carbon emissions as a result of over half a million homes being powered by wind makes the project worth nearly $10 billion. Dominion also cited the Virginia Clean Economy Act, which declared that it would be “in the public interest” for Dominion to develop an offshore wind facility with a capacity of between 2.5 and 3 GW. The facility is also expected to create over a thousand jobs in the Hampton Roads area and bring in millions in revenue for state and local government. A wind turbine production industry is already beginning to take shape in the Hampton Roads region thanks to its close proximity to CVOW.
While there is little opposition to the completion of the facility, a diverse cohort of stakeholders remains concerned about the impact of project costs on Dominion’s ratepayers. Unlike other offshore wind facilities, CVOW is utility owned, meaning that Virginia ratepayers are responsible for the costs. CVOW is expected to raise rates for Virginians by $1.45 per month. Meanwhile, other offshore wind facilities around the country leave the responsibility of costs to investors, such as the Block Island Wind Farm off the coast of Rhode Island.
It’s right to be hesitant about Dominion asking state regulators for permission to increase customer rates to fund an expensive project. The investor-owned utility has a reputation for overcharging customers, and earlier this month asked the SCC permission to raise rates by $9 to account for rising fuel costs. Even once CVOW is complete, ratepayers will still be responsible for covering Dominion’s fuel costs needed to keep the utility’s natural gas generation fleet running. CVOW also appears to be more expensive than other offshore wind farms; whereas the facility is expected to cost $87 per MWh, offshore wind farms in Europe average about $67 per MWh.
While the development of renewable energy, including offshore wind, is certainly in the public interest, it’s vital that residential electric customers in Virginia are protected from exorbitant rate increases. The SCC needs to ensure Dominion’s CVOW’s costs stay on budget in order to protect Virginia ratepayers. Additionally, the SCC should consider whether a public utility, with costs falling on ratepayers, is the best entity to bring offshore wind to Virginia.
You can provide public comment to the SCC to help ensure Virginia ratepayers are protected as Dominion moves forward with its offshore wind facility.