Dive Brief:

• Virginia regulators on Thursday approved 11 new efficiency and demand response programs proposed by Dominion Energy Virginia, with an estimated cost of $225.6 million. The new offerings include six residential and five non-residential programs.
• In a separate docket, the Virginia State Corporation Commission (SCC) also approved an updated rate adjustment clause to cover Appalachian Power's current energy efficiency and demand response programs.
• Virginia lawmakers in 2018 approved Senate Bill 966 requiring Dominion to propose a total of $870 million in energy efficiency programs. After some debate over the intent of the law, the utility confirmed in March that it would spend that full amount.

Dive Insight:

Virginia's Grid Transformation & Security Act of 2018 included significant spending to overhaul the state's grid and reduce energy demand. The programs just approved by the SCC "are a substantial step" toward the $870 million in energy efficiency proposals envisioned in law, Dominion spokesman Rayhan Daudani told Utility Dive.

Dominion Virginia Power's mix of DR and efficiency programs will run from July 1, 2019, through June 30, 2024. Residential programs include: appliance recycling; customer engagement; an efficient products marketplace; home energy assessments; and efficiency and demand response smart thermostat programs. Non-residental efficiency programs are aimed at: lighting system and controls; heating and cooling efficiency; window film; small manufacturing; and offices buildings.

The rate adjustment clause for Appalachian Power will cover the utility's current energy efficiency and demand response programs from July 1, 2019, through June 30, 2020.

Efficiency advocates hailed the approvals. “This decision marks a genuine sea change in the use of energy efficiency and demand response in Virginia,” Harry Godfrey, executive director of the Virginia chapter of Advanced Energy Economy, said in a statement.

Godfrey added that the state has "badly underutilized" efficiency opportunities for years, which has cost Virginia families and businesses. "Today's ruling is a major step toward changing that," he said.

Regulators also directed both companies to file in future proceedings, "evidence of the actual energy savings achieved as a result of each specific program for which cost recovery is sought, along with revised cost-benefit tests that incorporate actual Virginia energy savings and cost data."

Regulators expect the information will be relevant to at least two issues. Identifying the actual cost-effectiveness of DSM programs will allow the commission to determine "which programs should be expanded in scope and budget to maximize the reductions in energy usage," and which should see budgets shifted to more effective programs, or discontinued. 

"The second issue is evaluating any claim by Dominion and Appalachian to cost recovery for lost revenues," regulators said.

Dominion had previously floated the idea of considering lost revenues as spending — a move that could have undercut the utility's promises of efficiency program development, customer advocates warned. But in March, Dominion said it would spend the full SB 966-required amount on energy efficiency programs over the next decade.

Dominion President and CEO Thomas Farrell, in a letter to Virginia Gov. Ralph Northam, D, said the company would "commit to an aggregate total of $870 million in regulated energy efficiency filings through 2028 exclusive of any lost revenues."

However, Farrell also defended the utility's proposed accounting, saying Dominion views its approach to lost revenues "as an important provision for energy efficiency at the greater scale contemplated" and that there is legal support for the idea.