Editorial: Back on track

Good news: It looks as though the giant wind farm project off the coast of Virginia Beach is back on track. Dominion Energy, the Office of the Attorney General, environmental groups and advocates for ratepayers have hammered out what looks like a creative, equitable agreement on how much Dominion can pass cost overruns on to consumers.

The new agreement must be approved by the State Corporation Commission in a hearing Nov. 21. The SCC gave the wind farm a green light in August but Dominion threatened to abandon the project because of one of its ratepayer protections. Saying that it was too broad, inflexible and “untenable,” Dominion objected to the proposed “involuntary” performance standard intended to protect Dominion’s customers from bearing too much of the project’s financial risks.

The new agreement is being praised all around. The chairman of Dominion Energy, Bob Blue, called it “a constructive agreement to allow the project to continue moving forward.” Virginia Attorney General Jason Miyares hailed it as a “landmark and commonsense framework” that allows for innovative green energy projects while protecting Dominion’s customers.

It’s noteworthy that Walmart, Virginia’s largest private employer, signed on to the new agreement. The Sierra Club, the Southern Environmental Law Center and Appalachian Voices, a regional environmental nonprofit, also support the new agreement.

Of course, no one had opposed the offshore wind project initially, before Dominion balked at the performance standard. It’s encouraging now that a compromise has been reached that’s acceptable to Dominion and to those looking out for ratepayers as well as champions of green, renewable energy.

The performance standard to which Dominion objected said that consumers should not have to pay for cost overruns if the wind project doesn’t perform at 42% of capacity or better in any three-year period.

The new proposal says that if the project costs more than the projected $9.8 billion, ratepayers would pay for additional costs up to $10.3 billion. Overruns between $10.3 billion and $11.3 billion would be split 50/50 between ratepayers and Dominion stockholders. Dominion would handle any overruns above $11.3 billon. If costs go above $13.7 billion, the SCC will take another look.

It’s more flexible than the original safeguard, which would have put the cost decision in the SCC’s hands if the wind farm didn’t reach that 42%-or-better threshold in a three-year period.

Dominion’s project will be a trailblazer in offshore wind energy. Its planned 176 wind turbines 27 miles off the shores of Virginia Beach would be the largest offshore wind project in the nation. With such an ambitious undertaking, there are considerable risks and many unknowns.

When the legislature passed the Virginia Clean Economy act in 2020, it rightly declared the wind farm in the public interest. It’s certainly in the best interests of Hampton Roads, where it should bring good jobs and boost the region’s reputation as a national leader in offshore wind energy. It’s also in the best interests of the country, helping to make us more energy independent while slowing global warming.

So it’s appropriate that ratepayers bear some cost burden. Dominion has said residential customers can expect an average monthly bill increase of $4.72, with a peak of $14.22 in 2027. Dominion also says that in the long run, the project should save customers money because offshore wind turbines have no fuel costs. That’s encouraging, especially after the SCC’s recent approval of monthly increases for Dominion customers because of rising fuel costs.

There’s general agreement that risks and costs should be shared between Dominion’s shareholders and customers who pay its rates. The trick is to find a balanced, fair way to pay for this forward-looking project without placing too great a burden on anyone.

Dominion, the attorney general’s office and environmental groups all are praising this latest plan as having that balance. Let’s hope the SCC agrees and the offshore wind project can become reality.