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N.C. Utilities Commission Issues Order Involving Virginia Electric and Power Co.

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RALEIGH, North Carolina, Jan. 16 -- The North Carolina Utilities Commission issued the following order (Docket No. E-22): In the Matter of Application by Virginia Electric and Power Company d/b/a Dominion Energy North Carolina for Approval of Demand-Side Management and Energy Efficiency Cost Recovery Rider Pursuant to N.C. Gen. Stat.Sec.62-133.9 and Commission Rule R8-69

ORDER APPROVING DSM/EE RIDER AND REQUIRING FILING OF PROPOSED CUSTOMER NOTICE

HEARD: Tuesday, November 12, 2019, in Commission Hearing Room 2115, Dobbs Building, 430 North Salisbury Street, Raleigh, North Carolina

BEFORE: Commissioner ToNola D. Brown-Bland, Presiding; Chair Charlotte A. Mitchell, Commissioner Lyons Gray and Commissioner Daniel G. Clodfelter

APPEARANCES:

For Dominion Energy North Carolina:E. Brett Breitschwerdt, McGuireWoods, LLP, 434 Fayetteville Street, Suite 2600, Raleigh, North Carolina 27601

Carolina Industrial Group for Fair Utility Rates I (CIGFUR): Warren Hicks, Bailey & Dixon, LLP, Post Office Box 1351, Raleigh, North Carolina 27602

For the Public Staff: Heather D. Fennell, Staff Attorney, Public Staff - North Carolina Utilities Commission, 4326 Mail Service Center, Raleigh, North Carolina 27699-4300

BY THE COMMISSION: North Carolina General Statute Sec. 62-133.9(d) authorizes the North Carolina Utilities Commission (Commission) to approve an annual rider to the rates of electric utilities to recover all reasonable and prudent costs incurred for the adoption and implementation of new demand-side management and energy efficiency (DSM/EE) programs. In accordance with Commission Rule R8-69(b), such rider consists of the utility's reasonable and appropriate estimate of expenses expected to be incurred during the rate period and a DSM/EE experience modification factor (DSM/EE EMF) rider to collect or refund the difference between the utility's actual reasonable and prudent costs incurred during the test period and actual revenues realized during the test period under the DSM/EE rider then in effect. The Commission is also authorized to award incentives to electric utilities for adopting and implementing new DSM/EE programs, including appropriate rewards based on the sharing of savings achieved by the programs. These utility incentives are included in the utility's reasonable and appropriate estimate of expenses expected to be incurred during the rate period and DSM/EE EMF riders described above.

Further, Commission Rule R8-69(b) provides that the Commission will each year conduct a proceeding for each electric utility to establish an annual DSM/EE rider to recover DSM/EE related costs and utility incentives. Commission Rule R8-69(e) provides that the annual DSM/EE cost recovery rider hearing for each public utility will be scheduled as soon as practicable after the annual fuel and fuel-related charge adjustment proceeding held by the Commission for the electric public utility under Commission Rule R8-55.

On August 13, 2019, Virginia Electric and Power Company, d/b/a Dominion Energy North Carolina (DENC or the Company), filed in this docket its Application for Approval of Cost Recovery for Demand-Side Management and Energy Efficiency Measures (Application), seeking approval of new DSM/EE rider rates to recover the Company's reasonable and prudent DSM/EE costs, common costs, taxes, net lost revenues (NLR), and a DSM/EE Portfolio Performance Incentive (PPI).

Pertinent Proceedings in Prior Dockets

The Commission most recently approved DENC's recovery of its reasonable and prudent DSM/EE costs and utility incentives by Order issued on January 10, 2019, in Docket No. E-22, Sub 556(2019Order).

On October 14, 2011, in Docket No. E-22, Sub 464, the Commission issued its Order Approving Agreement and Stipulation of Settlement, Approving DSM/EE Rider, and Requiring Compliance Filing (2010 Cost Recovery Order). In the 2010 Cost Recovery Order, the Commission approved the Agreement and Stipulation of Settlement between the Public Staff and the Company (Stipulation), filed on March 2, 2011, as well as the Cost Recovery and Incentive Mechanism (Mechanism), attached as Stipulation Exhibit 1 to the Stipulation (collectively, Stipulation and Mechanism).

On December 13, 2011, in Docket No. E-22, Sub 473, the Commission issued its Order Approving DSM/EE Rider and Requiring Customer Notice in DENC's 2011 DSM/EE cost recovery proceeding (2011 Cost Recovery Order). The 2011 Cost Recovery Order also approved a first Addendum to the Stipulation and Mechanism (Addendum I) related to jurisdictional allocation of DSM/EE costs. Addendum I was then incorporated as part of the Stipulation and Mechanism.

On April 29, 2013, in Docket No. E-22, Sub 486, the Commission issued its Order Granting Conditional Approval of Cost Assignment Proposal that approved a cost assignment methodology for allocating 100% of the incremental costs of DENC's prospective North Carolina-only Commercial Lighting Program and HVAC Upgrade Program to the North Carolina retail jurisdiction. On December 18, 2013, in Docket No. E-22, Sub 494, the Commission approved this cost assignment methodology for programs offered only in North Carolina as the second Addendum to the Stipulation and Mechanism (Addendum II). Addendum II was then incorporated as part of the Stipulation and Mechanism.

On May 7, 2015, in Docket No. E-22, Sub 464, the Commission issued its Order Approving Revised Cost Recovery and Incentive Mechanism and Granting Waiver (Order on Revised Mechanism). The Order on Revised Mechanism approved an updated Cost Recovery and Incentive Mechanism for Demand Side Management and Energy Efficiency Programs (Revised Mechanism). The Revised Mechanism is effective for projected DSM/EE costs and utility incentives on and after January 1, 2016, and for true-up of DSM/EE costs and utility incentives for the period beginning July 1, 2014, through December 31, 2014, and on a lagging calendar year basis thereafter. The Revised Mechanism replaced the similar Mechanism that had been in effect since 2011. However, it also contained a provision stating that beginning with 2017, DENC would switch the calculation of the bonus utility incentive approved for inclusion in its DSM/EE and DSM/EE EMF riders from a Program Performance Incentive to a Portfolio Performance Incentive.

On May 22, 2017, in Docket No. E-22, Sub 464, the Commission issued its Order Approving Revised Cost Recovery and Incentive Mechanism (2017 Mechanism), which implemented the change to the Portfolio Performance Incentive (PPI)./1

The 2017 Mechanism became effective as of May 22, 2017, for projected costs and utility incentives beginning January 1, 2018, and for true-ups of costs and utility incentives beginning January 1, 2017, and is used in this proceeding to calculate the Rider C billing rates related to DSM and EE measures projected to be installed or implemented for Vintage Year 2019 as well as the EMF true-up for DSM and EE measures installed or implemented during Vintage Year 2017.

The complete text of the PDF is available at (https://starw1.ncuc.net/NCUC/ViewFile.aspx?Id=dafa22bd-ef44-4bc0-8858-91ec1f0b35d7)

* * *

1/ For the levelization run-out of the trued-up Program Performance Incentive for measures installed or implemented prior to 2017, the Company carried forward those incentives as calculated pursuant to the Mechanism and Revised Mechanism. The program cost, common costs, and net lost revenue utility incentive revenue requirements are also calculated in the same manner under the 2017 Mechanism as they were under the Mechanism and Revised Mechanism

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