- Proposed agreement balances stakeholder interests; keeps the
project on schedule, on budget
- If approved, significant customer benefits include
protection from unforeseen increases in construction costs above
the project's budget & enhanced SCC review of performance in
lieu of a performance guarantee
- Customer-focused regulated utility framework allows Dominion
Energy to prioritize reliability, affordability for customers while
making investments in clean, fuel-free energy projects
RICHMOND, Va., Oct. 28,
2022 /PRNewswire/ -- Dominion Energy Virginia, the
Office of the Attorney General, Walmart, Sierra Club and
Appalachian Voices today filed a settlement agreement in the
company's pending petition to the State Corporation Commission of
Virginia (SCC) to reconsider the
performance guarantee included in the Final Order approving the
development of the 2.6-gigawatt Coastal Virginia Offshore Wind
(CVOW) project to be constructed 27 miles off the coast of
Virginia Beach. If approved by the
SCC, the agreement would resolve the pending petition and provide
significant customer benefits.
The settlement agreement provides a balanced and reasonable
approach that supports continued investment in CVOW to meet the
Commonwealth's public policy and economic development priorities
and the needs of Dominion Energy Virginia's 2.7 million customers
representing more than 5 million people and businesses.
CVOW's schedule calls for construction to be completed in late
2026, when it can generate enough clean energy to power up to
660,000 homes. The August 5, 2022
Order from the SCC affirmed that CVOW meets all Virginia statutory requirements for rider cost
recovery and the issuance of a Certificate of Public Convenience
and Necessity for the onshore infrastructure. The settlement
agreement substitutes the previously ordered performance guarantee
with a cost-sharing approach for unforeseen costs that exceed the
project budget, as well as enhanced Commission review of operating
performance.
The settlement agreement aligns with the customer-focused,
state regulated utility framework in Virginia. That
framework has resulted in nation-leading
decarbonization goals, customer rates lower than national
and relevant regional averages, and high levels of reliability
for customers, made possible by a state regulatory model that
embraces long-term planning, a diversity of generation sources, and
resiliency safeguards.
"I appreciate the thoughtful effort of all parties in reaching a
constructive agreement to allow the project to continue moving
forward," said Bob Blue, Dominion
Energy chair, president & and chief executive officer.
"Since the August Order, we have further mitigated some of the
project's development risks that strengthen our confidence of
remaining on-time and on-budget. We have:
- Continued to work closely with Bureau of Ocean Energy
Management and other stakeholders to support the project's
timeline;
- Advanced engineering and design in preparation of immediate
release of major equipment for fabrication;
- Advanced procurement and other pre-construction activities for
the onshore scope of work; and
- Completed independent project review and construction readiness
assessment, along with a comprehensive assessment of schedule and
cost.
"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.
"We have a lot of work ahead as we continue to build on our long
record of completing projects on-time and on-budget while safely
delivering affordable, reliable, and clean energy to our customers.
Offshore wind is expected to alleviate pressure on customer
fuel rates for 30 years once the project is in-service. Our
customers expect reliable, affordable energy – and offshore wind is
key for accomplishing that mission."
The company has previously announced its third-quarter 2022
earnings call will take place at 10 a.m. ET
on Friday Nov. 4, 2022. Management will discuss
matters of interest to financial and other stakeholders, including
recent financial results and the settlement agreement for CVOW.
CVOW represents a clean-energy investment of approximately
$9.8 billion and is good for energy
diversity, the environment and is transformational for Virginia's economy, particularly in
Hampton Roads.
As a renewable energy resource, offshore wind turbines have no
fuel costs, which is especially beneficial considering the recent
rise in fuel costs across the country. The project is expected to
save Virginia customers more than
$3 billion during its first 10 years
in operation. However, if ongoing commodity market pressure trends
continue, those savings could total up to nearly $6 billion – almost double the savings.
Offshore wind's economic development and jobs benefits are
transformative for Hampton Roads
and the Commonwealth, including in its diverse communities. CVOW
could create over 2,000 direct and indirect jobs during
construction and operations, while attracting companies to make
investments in Virginia making it
a hub for offshore wind.
In addition to the Office of the Attorney General, the agreement
is joined by Dominion Energy Virginia, Walmart, Sierra Club and
Appalachian Voices. Key components of the settlement, which
requires approval from the SCC, would provide for pragmatic cost
sharing in the event of unforeseen cost increases prior to
completion and other significant customer benefits, including the
following:
- In the context of the project's current capital investment of
$9.8 billion, the company voluntarily
agreed that shareholders will share 50% of any costs in the range
of $10.3 billion to $11.3 billion, if any.
- The company has further voluntarily agreed that shareholders
will be responsible for 100% of any prudently incurred costs in the
range of $11.3 billion to
$13.7 billion, if any.
- There is no voluntary cost-sharing agreement for any costs that
exceed $13.7 billion.
- The company will not be required to guarantee future energy
production levels or factors beyond its control as was outlined in
the August Order. Instead, the company will provide a detailed
explanation of the factors contributing to any shortfall in energy
output from projected amounts in a future SCC proceeding.
The company will also ensure that customers receive the benefits
of the Inflation Reduction Act, which could provide potential
additional customer savings.
"Given the now-significantly de-risked status of the project's
development and given its continued 'on-budget' status, we feel
that this settlement reflects a balanced sharing of financial
impacts in what we currently see as unlikely scenarios of material
delays or cost overruns," added Blue.
In addition to solar, energy storage, and nuclear, offshore wind
is a key component to Dominion Energy's diverse energy generation
strategy to meet the Commonwealth's clean energy goals and the
company's own Net Zero target. Offshore wind complements the
company's growing solar portfolio in Virginia, since offshore wind and solar
generate peak energy at different times throughout the day and
year.
View the proposed settlement filing on the Dominion Energy
website.
About Dominion Energy
About 7 million customers in 15 states energize their homes
and businesses with electricity or natural gas from Dominion Energy
(NYSE: D), headquartered in Richmond,
Va. The company is committed to safely providing reliable,
affordable and sustainable energy and to achieving Net Zero
emissions by 2050. Please visit DominionEnergy.com to
learn more.
This news release includes certain "forward-looking
information." Examples include information as to expectations,
beliefs, plans, goals, objectives and future financial or other
performance or assumptions concerning matters discussed in this
release. Our business is influenced by many factors that are
difficult to predict, involve uncertainties that may materially
affect actual results and are often beyond our ability to control
or estimate precisely. We have identified and will in the
future identify in our SEC Reports on Forms 10-K and 10-Q a number
of factors that could cause actual results to differ from those in
the forward-looking statements. We refer you to those discussions
for further information. Any forward-looking statement speaks only
as of the date on which it is made, and we undertake no obligation
to update any forward-looking statement to reflect events or
circumstances after the date on which it is made.
For further information:
Media: Jeremy Slayton, 804-297-5247 or
Jeremy.L.Slayton@dominionenergy.com
Investor Relations: David
McFarland, 804-819-2438 or
David.M.McFarland@dominionenergy.com
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SOURCE Dominion Energy