Dominion Energy Virginia, Office of Attorney General, Walmart, Sierra Club and Appalachian Voices File Settlement Agreement for Coastal Virginia Offshore Wind
- The proposed agreement balances stakeholder interests; adheres to project schedule and budget
- If approved, significant client benefits include protection against unforeseen increases in construction costs beyond the project budget and enhanced performance review by CSC in lieu of a performance guarantee
- Customer-focused regulated utility framework enables Dominion Energy to prioritize reliability and affordability for customers while investing in clean, fuel-free energy projects
RICHMOND, Va., October 28, 2022 /PRNewswire/ — Dominion Energy Virginia, the Attorney General’s Office, Walmart, Sierra Club and Appalachian Voices today filed a settlement agreement regarding the company’s pending motion with 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 CSC, the agreement will resolve the current complaint and provide significant benefits to clients.
The settlement agreement provides a balanced and reasonable approach that supports continued investment in CVOW to meet Commonwealth public policy and economic development priorities and the needs of Dominion Energy Virginia’s 2.7 million customers representing more than 5 millions of people and businesses.
CVOW’s schedule calls for construction to be completed by the end of 2026, when it can generate enough clean energy to power up to 660,000 homes. The August 5, 2022 Order of the SCC affirmed that CVOW responds to all Virginia legal requirements for user cost recovery and issuance of a certificate of public convenience and necessity for terrestrial infrastructure. The settlement agreement replaces the performance guarantee previously ordered with a cost-sharing approach for unforeseen costs that exceed the project budget, as well as an enhanced review of operational performance by the Commission.
The settlement agreement aligns with the state-regulated, customer-focused utility framework in Virginia. This framework has resulted in nation-leading decarbonization targets, customer rates below relevant national and regional averages, and high levels of customer reliability, enabled by a state regulatory model that encompasses planning at term, a diversity of production sources and guarantees of resilience.
“I appreciate the thoughtful efforts of all parties to reach a constructive agreement that allows the project to continue moving forward,” said Blue Bucket HatChairman, President and CEO of Dominion Energy.
“Since the August order, we have further mitigated some of the project development risks which builds our confidence in being on time and on budget. We have:
- Continued to work closely with the Bureau of Ocean Energy Management and other stakeholders to support the project schedule;
- Advanced engineering and design in preparation for immediate release of major equipment for manufacturing;
- Advanced procurement and other pre-construction activities for the onshore scope of work; and
- Independent project review and construction readiness assessment, as well as a full schedule and cost assessment.
“Project development has continued uninterrupted to maintain the project schedule. We expect over 90% of project costs, excluding contingencies, to be fixed by the end of the first quarter of 2023, compared to approximately 75% risking the project and its budget today.
“We have a lot of work ahead of us as we continue to build on our long history of delivering projects on time and on budget while safely delivering affordable, reliable and clean energy to our customers. “offshore wind is expected to ease pressure on customers fuel prices for 30 years once the project is in service. Our customers expect reliable and affordable energy – and offshore wind is essential to accomplishing this mission.”
The company previously announced that its third quarter 2022 earnings call will take place at 10 a.m. ET Friday November 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 from Virginia economy, especially in Hamptons Roads.
As a renewable energy resource, offshore wind turbines have zero fuel costs, which is especially beneficial given the recent increase in fuel costs across the country. The project is expected to save Virginia customers more than $3 billion during its first 10 years of operation. However, if current trends in commodity market pressure continue, these savings could total up to nearly $6 billion – almost double the savings.
The economic development and job creation of offshore wind power are transformative for Hamptons Roads and the Commonwealth, including in its various communities. CVOW could create more than 2,000 direct and indirect jobs during construction and operation, while encouraging companies to invest in Virginia making it a hub for offshore wind power.
In addition to the Attorney General’s office, the deal is joined by Dominion Energy Virginia, Walmart, Sierra Club and Appalachian Voices. Key elements of the settlement, which require SCC approval, would provide for pragmatic cost sharing in the event of unforeseen cost increases prior to completion and other significant customer benefits, including:
- In the context of the current capital investment of the project of $9.8 billionthe company has voluntarily agreed that shareholders share 50% of all costs in the order of $10.3 billion at $11.3 billionif only.
- The company has further voluntarily agreed that shareholders are responsible for 100% of all costs prudently incurred within the range of $11.3 billion at $13.7 billionif only.
- There is no voluntary cost-sharing agreement for costs that exceed $13.7 billion.
- The company will not be required to guarantee future energy production levels or factors beyond its control, as set out in the August order. Instead, the company will provide a detailed explanation of the factors contributing to any shortfall in energy production from projected quantities in a future CCS proceeding.
The company will also ensure that customers receive the benefits of the Cut Inflation Act, which could provide them with potential additional savings.
“Given the now significantly reduced risk status of the project’s development and given its ongoing ‘budget’ status, we believe this settlement reflects a balanced sharing of financial impacts in what we currently view as unlikely scenarios of delays or significant cost overruns,” added Blue.
Along with solar, energy storage and nuclear, offshore wind is a key part of Dominion Energy’s diversified power generation strategy to meet the Commonwealth’s clean energy targets and the Net Zero target of the company. Offshore wind complements the company’s growing solar portfolio by Virginiasince offshore wind and solar generate peak energy at different times of the day and year.
See proposed Dominion Energy settlement filing 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), whose head office is at Richmond, Virginia. The company is committed to safely provide reliable, affordable and sustainable energy and to the realization Net zero emissions by 2050. Please visit DominionEnergy.com to learn more.
This press release contains certain “forward-looking information”. Examples include information about expectations, beliefs, plans, goals, objectives and future financial or other performance or assumptions regarding matters discussed in this release. Our business is influenced by many factors that are difficult to predict, involve uncertainties that could materially affect actual results, and which we often cannot control or estimate with precision. We have identified and will identify in our future 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 these discussions for more information. Any forward-looking statement speaks only as of the date it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date it is made.
For more information:
Media: Jeremy Slayton, 804-297-5247 or [email protected]
Investor Relations: David McFarland804-819-2438 or [email protected]
SOURCE Dominion Energy