Virginia SCC Reluctantly Nods to Offshore Wind Demo

The State Corporation Commission (SCC) of Virginia has approved a prudency petition from Dominion Energy Virginia related to the 12MW Coastal Virginia Offshore Wind demonstrator project (CVOW).

The offshore wind project, located nearly 27 miles off the coast of Virginia Beach, consists of two Siemens Gamesa 6MW wind turbines to be built by Dominion, in cooperation with Ørsted, that would begin operating in December 2020.

In its factual findings, the commission determined that the company’s proposal puts “essentially all” of the risk of the project, including cost overruns, production and performance failures, on Dominion’s customers. Currently, the estimated cost of the project is at least USD 300 million, excluding financing costs, SCC said.

The commission found that the offshore wind project was not the result of a competitive bidding process to purchase power from third-party developers of offshore wind. Doing so would likely have put all or some of the risks on developers as has been done with other offshore wind projects along the East Coast of the United States. The commission also found that any “economic benefits specific to [the project] are speculative, whereas the risks and excessive costs are definite and will be borne by Dominion’s customers.”

The commission concluded that the offshore wind project “would not be deemed prudent [under this Commission’s] long history of utility regulation or under any common application of the term.” However, the commission ruled, as a matter of law, that recent amendments to Virginia laws that mandate that such a project be found to be “in the public interest” make it clear that certain factual findings must be subordinated to the clear legislative intent expressed in the laws governing the petition.