Dominion's "Grid Mod" Travails Shows VA Needs Larger Reforms

Dominion’s addiction to spending their captive customer dollars on large, capital intensive projects with dubious value for those same customers hit a snag last week. The Va. State Corporation Commission (SCC) denied—for the most part, correctly—most of Dominion’s second request for approval of its multi-billion dollar “grid transformation” endeavor.

We support well-designed grid transformation projects. If thoughtfully designed and implemented, they deliver substantial consumer and environmental benefits. In particular, smart meters can arm customers with more information to use less energy to reduce bills and upstream pollution, and increase adoption of rooftop solar, electric vehicles, and behind-the-meter battery storage.

But Dominion’s second round attempt suffered from the same haphazard, everything-but-the-kitchen-sink planning as their first ill-fated round. Instead of a “measure twice, cut once” proposal, this was a “cut now, and maybe buy a tape measure in 2025” proposal to spend money and maximize shareholder earnings, rather than make targeted investment to deliver customer value.

The SCC's denial of any investment in smart meters, in particular, focused on the lack of a concerted plan to actually utilize them for customer benefit. While some modest deployment of additional smart meters may have been in order, the Commission was correct that Virginians deserve more value for such a large proposed investment.

The main teaching moment from Dominion’s ill-fated grid transformation travails points yet again to our dire need for Virginia to transform not the grid but Dominion’s entire utility business model. The monopoly utility's addiction to large, multi-billion capital projects, be it grid transformation, the Atlantic Coast Pipeline, or pumped storage projects no one needs, could be broken with simple reforms that result in both lower customer bills and pollution, not to mention a perfectly healthy utility balance sheet: decoupling, performance-based ratemaking rather than single-issue riders (RACs), and concerted investment in energy efficiency.

With those reforms, the third grid transformation round just might offer true value to customers and therefore pass muster with the SCC, with a utility no longer addicted to shoveling money out the door, and no longer afraid to deliver the goods that lower—rather than inflate—customer bills.

Here’s hoping the third time’s the charm.