Dominion’s Rush to Spend Leaves Grid Modernization Behind

Dominion’s three-billion dollar Grid Transformation proposal, submitted yesterday to the SCC for its approval, reads like a utility spending plan that further increases bills, rather than a customer service plan to lower them.

The grid transformation component of this year’s Grid Transformation and Security Act, like the renewables and energy efficiency commitments in that law, had been promising (and can still be). We had hoped Dominion would target grid transformation investment on programs that lower rising and artificially-inflated customer bills, by shifting Dominion’s business model to incorporate more rooftop solar, better customer service, and more demand response and electric vehicles, all with the added benefit of reduced emissions.

Dominion's proposal instead seeks to shovel customer dollars out the door as quickly as possible, mostly for an expensive grab bag of routine maintenance and assorted doodads. That kitchen sink approach is disappointing, given that the central premise of Dominion’s grid transformation package, as codified in Virginia’s Grid Transformation law, is to “accommodate or facilitate the integration” of renewable energy. That central foundation is missing from the package as proposed.

In addition to the primacy of integrating clean energy, there is indeed a related need to catch the Commonwealth’s entire electric grid up with the 21st century.  That means a more flexible, adaptive grid that readily accommodates not just rooftop solar, but also demand response programs, time of use rates, and battery storage, to reduce pollution, customer costs, and the need for new gas plants and expensive O&M upgrades.

But in its hurry to spend, Dominion’s proposal entirely overlooks those fundamental benefits and raises the risk that they won’t be delivered, leaving Virginians holding an expensive bag.

Until Dominion more clearly targets an outcome of clean energy and lower bills, including by making a good faith effort to get out of the way of more distributed solar uptake, they have not earned the right to spend so much customer money in the way they proposed yesterday.

Let’s look at some specifics of the proposal, to see where Dominion falls short, and how the proposal must be improved before the SCC.

“Grid Hardening”: An Unrelated Solution in Search of a Problem

The biggest ticket item in Dominion’s proposed grab-bag, grid hardening, should never be the dominant component of any true “grid transformation” package, for the express reason that it doesn’t transform anything. 

Yet despite the Grid Transformation and Security law’s fundamental premise of delivering more clean energy through grid modernization, the bulk of Dominion’s proposal is in “grid hardening.”  That means performing routine, commonsense rebuilding, replacing, and shoring up of the physical components of the grid.  Think new poles, trimmed trees, better dug holes, and swapped-out parts, routine measures you would hope any responsible regulated monopoly would undertake.

However, plopping most of their investment in this category is misplaced, as it confuses this largely routine O&M spending (tree trimming and pole replacement) with truly transformational elements, like increased rooftop solar panels, two-way power flows, shifting electric use to off-peak hours, and electric vehicle charging. The bulk of the almost $2 billion Dominion proposes to spend on physical upgrades, therefore, simply does not belong in a grid modernization proposal.

First, a significant portion of that nearly $2 billion investment to shore up the grid is not needed, if Dominion were more proactive in reducing the strain on the grid via true grid transformation: demand response, rooftop solar, energy efficiency, and other peak shaving and shifting opportunities. While there are glimmers of those opportunities elsewhere in the proposal, placing most of their bet on “hardening” gets it exactly backwards.

While we are all inconvenienced by storm outages and therefore expect our utility to make prudent investments in replacing old equipment and trimming trees, spending $2 billion in the name of grid transformation mistakes the utility’s business-as-usual responsibility to keep its older 20th century house in order, with a shift to a truly modern, clean, and adaptive 21st century grid. 

In other words, Dominion has not earned the right to spend this sum, absent more fundamental investments that make overreliance on poles and wires obsolete.

To correct this flaw, Dominion should instead propose only those specific physical upgrades that are narrowly-focused on enabling two-way power flow and increased solar uptake, and leave routine O&M to a separate, non-grid transformation proceeding.

Smart Meters: Overlooking the Opportunity Right under Our Noses

In proposing to spend nearly half a billion dollars on installing smart meters, rather than proving the value of the ones already deployed, Dominion puts an expensive new cart before a horse we’ve already paid for.

To be sure, smart meters are the bedrock of true grid transformation, because they enable and optimize: (1). customer owned and large-scale solar and wind, (2). commonsense time-of-use rates that shift load to non-peak hours, (3). demand response programs such as timed appliances, and (4). battery storage and EV adoption.

All of these not only lower total customer costs, but pollution as well, by delivering more clean energy and avoiding the need for the dirtiest generation, including the next round of new gas plants Dominion proposes to build.

However, in its rush to spend customer dollars first and optimize later, Dominion’s proposal does not include any of these optimal uses in the hundreds of thousands of smart meters it already has.  Instead of utilizing that existing and paid for infrastructure, Dominion proposes to dash forward to physical installation of smart meters everywhere, for everyone, and as quickly as possible.

With smart meters already deployed in significant numbers, Dominion’s shoot first, ask questions later approach is expensive and backwards. Dominion must earn the right to 100% deployment by first showing it can use the ones it already has in order to transform the grid, by using the meters to increase rooftop solar, shift demand, enable battery storage, lower customer bills, and reduce the cost of the scores of gas plants it wants to build.

None of these components are currently proposed, and that’s just wrong. Until they are, Dominion is like a new farmer who owns one acre, but wants to buy 100 acres before he’s shown he can successfully harvest from the one acre he already has.

Instead, Dominion must first propose and focus on the wide variety of ways it can utilize the smart meters it already has, concurrent with a much more modest physical deployment, so that it can prove its ability to actually shift peaks, increase DER and EV deployment, and reduce customer bills.

“Customer Information Platform”: Laudable Goal, Wrong Proceeding

Dominion’s grid transformation proposal also confuses Virginia’s desire for cleaner energy and lower bills with Dominion’s already-existing obligation to provide basic customer service that meets modern expectations. Specifically, the grid transformation proposal proposes to spend $185 million in customer dollars to “deliver comprehensive customer information and streamlined transactions, as well as multi-channeled engagement between Dominion and its customers.”

Huh?

Dominion should be providing that kind of modern and adequate customer service like this anyways. Like their proposal to spend $2 billion on mostly routine maintenance and upgrades like new poles and yardtree trimming, we don’t need the Grid Transformation and Security Act for them to do so.

So while Dominion is certainly entitled to seek cost recovery for service upgrades, they should not conflate customer service 101 with true “grid transformation.”

Instead, Dominion’s proposal should more narrowly focus customer-facing investment on those components of customer service that enable true transformation. In today’s world, that simply means a narrowly-tailored app so each customer can assess her energy usage, monitor rooftop solar value, and deploy demand response programs throughout the home. Such engagement will allow Dominion’s customers to make their energy choices on their smart phones in the same way they already do with nearly every other aspect of modern life. What is Dominion waiting for?

So rather than throwing the kitchen sink of customer service under the banner of “grid transformation,” Dominion should only propose those narrow customer tools that enable true grid transformation. In doing so, Dominion could be proud of delivering an app their customers love.

Next Steps: Dominion’s Proposal Must Be Significantly Sharpened and Focused

As with any significant investment, especially when Virginians’ own dollars are at stake, Dominion’s proposed pricetag can only be justified if it delivers direct customer benefit through a transformed grid that delivers cleaner energy, cheaper. Dominion isn’t there yet, and much flab needs to be cut.

Here’s how:

First, Dominion should go back to the statutory grid transformation definition and its narrow foundational goal to deploy more renewable energy, and concurrently make a good faith effort not to stand in the way of wider adoption of rooftop solar that grid modernization is intended to enable.

Second, don’t prioritize grid maintenance and physical upgrades like tree trimming, investments that should be made anyways, over true grid transformation, and focus instead on the grid upgrades that directly enable true grid transformation and its two-way power flows.

Third, show that you and your customers can utilize the smart meters we already have to reduce customer cost, shift and shave peaks, and integrate more rooftop solar, before asking to install them everywhere.

Lastly, there’s an app for all of this, so make it.

If Dominion can make those improvements, as it goes before the SCC for approval to spend its customer dollars, then we truly can look forward to a transformed grid and the benefits of lower bills and cleaner air that Dominion can deliver.

About the Authors

Walton Shepherd

Virginia Policy Director, Climate & Clean Energy Program

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