Dominion Resources, Inc. Offshore Wind Cost Report 2014
|Company||Dominion Resources, Inc.|
|Subject(s)||Climate Change; Renewables|
|Resolved Clause Summary||Offshore Wind Cost Report|
Dominion supports increasing the use of wind and other renewable technologies to diversify its power supply system and ensure reasonable and stable rates for its consumers.
To date, Dominion has made significant investment into developing offshore wind. It commissioned two transmission studies in 2010 and 2012. In 2013, Dominion bid $1.6 million for the commercial lease rights to develop 112,800 acres of federal land off Virginia’s coast. Dominion is immediately required to pay $338,397 in rent each year on the lease area.
To date, the Federal government has made significant grant awards to Dominion. In 2011, the Department of Energy (DOE) awarded Dominion a $500,000 grant to study ways to achieve a 25% reduction in the cost of wind energy by integrating innovations in turbine foundation, installation and electrical infrastructure into the most optimal combination. In 2012, DOE awarded Dominion $4 million to design, develop, and demonstrate a grid-connected, 12-megawatt offshore wind facility of two test turbines mounted on innovative foundations, with again the primary goal being to cost reductions. Dominion is one of seven DOE awardees eligible for three second round DOE grants for up to $47 million each. The award announcement is expected in May 2014; Dominion anticipates being selected.
Given Dominion’s significant financial investment into developing Virginia offshore wind, approval of cost recovery from the State Corporation Commission (SCC) is critical to avoiding loss of the millions of dollars the company is investing in offshore wind. The SCC must determine the costs for electric generation to be reasonable and prudent in order to approve Dominion’s applications for cost recovery on both the two test turbines (anticipated by mid-2016) and the larger wind facility in the commercial lease area (anticipated prior to construction start in 2020.) Given the significant investment of federal grant money aimed at reducing the cost of offshore wind development, approval of cost recovery from the SCC is achievable.
To help ensure SCC approval of cost recovery for both projects, Dominion must embark on a public relations campaign to educate the public and elicit their advocacy to prompt the SCC to timely approve Dominion’s cost recovery requests. To do this, the public must be made aware of the costs for electricity born of both wind projects, and their tolerance to various price levels polled. Several Atlantic coast states pursuing offshore wind projects have had polls including neighboring states, Maryland and North Carolina. In every instance, the polls have revealed majority support for price increases given interest in clean energy and job opportunities associated with wind energy development. A realistic poll cannot be crafted until a cost analysis is done to determine the anticipated price for wind energy as it will appear on Dominion’s applications to the SCC for cost recovery.
RESOLVED: The shareholders request Dominion to analyze and make projections on the costs to ratepayers as those costs would appear on cost recovery applications to the SCC for both wind projects, and to share this report with the public by December 31, 2014.