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Office of the Attorney General v. State Corporation Commission

Supreme Court of Virginia

September 12, 2014

OFFICE OF THE ATTORNEY GENERAL, DIVISION OF CONSUMER COUNSEL
v.
STATE CORPORATION COMMISSION, ET AL

Page 775

William T. Reisinger, Assistant Attorney General (Mark R. Herring, Attorney General; Cynthia E. Hudson, Chief Deputy Attorney General; Rhodes B. Ritenour, Deputy Attorney General; C. Meade Browder, Jr., Senior Assistant Attorney General, on briefs), for appellant.

John F. Dudley (K. Beth Clowers; Alisson P. Klaiber, on brief), for appellee State Corporation Commission.

Joseph K. Reid, III (Elaine S. Ryan; Lisa S. Booth; Charlotte P. McAfee; McGuireWoods, on brief), for appellee Virginia Electric and Power Company.

PRESENT: Kinser, C.J., Lemons, Millette, Mims and McClanahan, JJ., and Lacy and Koontz, S.JJ. OPINION BY JUSTICE ELIZABETH A. McCLANAHAN. JUSTICE MIMS, dissenting.

OPINION

ELIZABETH A. McCLANAHAN, JUSTICE

Page 776

FROM THE STATE CORPORATION COMMISSION

In these consolidated appeals, we consider whether the State Corporation Commission (" the Commission" ) properly interpreted Code § 56-585.1(A)(6) (" Subsection (A)(6)" ) to allow Virginia Electric and Power Company, d/b/a Dominion Virginia Power (" Dominion" ), to recover an enhanced rate of return on common equity for transmission infrastructure associated with the Brunswick County Power Station and included in the Subsection (A)(6) rate adjustment clause for that facility.

I. Facts and Proceedings

In 2012, Dominion filed an application with the Commission for certificates of public convenience and necessity approving construction of (1) the Brunswick County Power Station, an approximately 1,358 megawatt natural gas-fired combined cycle electric generating facility to be located in Brunswick County, and (2) transmission interconnection facilities associated with the Brunswick generation plant, including new transmission lines, two new switching stations, and facilities necessary to " tap" existing transmission lines in Brunswick and Greensville Counties. The estimated costs of the Brunswick project total $1.27 billion, including approximately $89.1 million in associated transmission infrastructure costs.

Pursuant to Code § 56-585.1(A)(6), Dominion's application also sought approval of a rate adjustment clause (" RAC" ), designated as Rider BW, to recover the costs of the Brunswick project and infrastructure associated therewith, " including the transmission facilities necessary to interconnect the facility with [Dominion's] transmission system." [1] At the time of its application, Dominion's general rate of return on common equity (" ROE" ) authorized by the Commission during Dominion's 2011 biennial rate review was 10.4%. As part of Rider BW, Dominion sought a 100 basis point (1%) enhancement on its general ROE for the projected construction work in progress period, the associated allowance for funds used during the construction period, and the first fifteen (15) years of the service life of the Brunswick

Page 777

facility.[2] Dominion proposed applying the resulting 11.4% enhanced ROE to the costs of the generation facility as well as the costs of associated transmission and non-transmission infrastructure.

After receiving Dominion's application, the Commission's staff filed a motion for ruling asking the Commission to rule that the enhanced ROE authorized by Subsection (A)(6) " applies only to the 'facility,' i.e., the generating plant, and not to 'infrastructure associated therewith[.]'" The Office of the Attorney General's Division of Consumer Counsel (" Consumer Counsel" ) and the Virginia Committee for Fair Utility Rates each filed responses supporting the Staff's interpretation of Subsection (A)(6).

Dominion filed a response opposing the Staff's motion, arguing that the Staff's position is inconsistent with the plain language of Subsection (A)(6), which establishes that costs of associated infrastructure are " costs of the facility." Moreover, Dominion argued that the Staff's interpretation of Subsection (A)(6) is inconsistent with the General Assembly's stated goal of providing " an incentive to undertake such ...


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