Last December, Dominion filed an application with the State Corporation Commission (SCC) for its proposed Phase XI DSM programs. This filing included three new energy efficiency programs, four new EE program “bundles,” one demand response program, and one EV telematics pilot program. The company requested a $149M budget cap with a 15% variance. In addition to the new programs, Dominion asked to permanently close its appliance recycling program and expand its agricultural program to residential customers who run small, family farms. The Company requested to close an additional seven other programs whose measures were being rolled into the proposed program bundles. 

Our Executive Director, Chelsea Harnish, filed testimony on behalf of the Virginia Energy Efficiency Council (VAEEC) in support of the Phase XI programs with a few concerns and suggestions for improvement. 

Here is a summary of other highlights from our testimony:

1. Leveraging functionalities of AMI to enhance the effectiveness of DSM programs
2. Expanding program offerings to dual-fuel customers (those with gas heat and electric AC)
3. Quantifying whether funding from the Inflation Reduction Act could lower program costs
4. Including Non-Energy Benefits (e.g., Social Cost of Carbon) in cost/benefit test scores
5. Requiring BPI certification for the Residential Home Retrofit Program Bundle

On May 17, 2023, the case was heard before the Hearing Examiner assigned to oversee the case. The Examiner was very supportive of the stakeholder process and stated several times that parties were “on notice” to vet new program ideas and areas of concern through the stakeholder process. This is the first time that a Hearing Examiner has put such an emphasis on the value of the stakeholder process. We hope the Commission’s Final Order reflects this same sentiment.

Meeting the Goals of the Virginia Clean Economy Act

As part of the application, company witnesses shared the progress towards meeting the Energy Efficiency Resource Standard (EERS) goals of the Virginia Clean Economy Act (VCEA). According to Dominion, the Commission has not made it clear whether they should calculate Gross savings (all savings achieved in a given year) or Net savings (all savings achieved in a given year minus free riders), so they provided calculated savings for both. As seen in the table below, provided by company witness Nate Frost, the company has met the 2022 goal either way but is only able to achieve the 2023 goal with gross savings calculations. For the 2024 and 2025 goals, the company is projected to not meet either goal under either scenario.

In pre-filed testimony, SCC staff witness Andrew Boehnlein noted that Dominion will have a projected shortfall of 1180 GWh in meeting the 2025 energy-savings goal. Mr. Boehnlein also calculated that the proposed Phase XI programs would only cover 5% of the shortfall in 2024 and 7% in 2025. Given that there are no further opportunities for new programs in 2024, the company must prioritize implementing recommendations from its long-term plan filed as part of last year’s filing (Phase X) to bridge the gap in 2024.

Company witnesses identified several market barriers they believe are impeding the company’s success in meeting its goals. These challenges include declining potential and updated building codes. The VAEEC questioned the extent to which these were barriers during the proceeding. For instance, current building codes should only be used as the baseline for determining the savings potential for new construction programs since it is unlikely that homes constructed prior to the last 3-5 years would meet more stringent energy codes. In interrogatories, company witnesses confirmed they only use current building codes for new construction programs. Since the company only has one residential new construction program, current energy-efficient building codes are unlikely to severely affect the company’s ability to meet its EERS goals.

All utilities experience declining potential, the continual reduction of savings opportunities out in the market, especially for lighting products as federal regulations have required more efficient product manufacturing. However, declining potential is not the same for every utility. Utilities that have been implementing programs over several decades find that declining potential can severely affect new program opportunities. However, for Dominion, who only began offering energy efficiency programs in 2009, and has low participation numbers in most of their programs, there is still a lot of potential energy savings to be captured.

As mentioned, Dominion’s participation numbers are low. SCC staff witness Mr. Boehnlein summarized data from the Company’s 2022 EM&V report. In 2021, the average residential program achieved approximately 45% of expected participation and 57% of estimated energy savings. For the non-residential programs, the average was 43% of expected participation and 32% of estimated 2021 savings. Staff surmised that based on previous program performance, the Company’s projected participation rates for the proposed Phase XI programs are higher than any program that has been implemented to date. In other words, the proposed programs will cover less than 5% of the estimated shortfall in 2024 and 7% in 2025.

Mr. Boehnlein also noted that the 2022 EM&V report stated portfolio bill savings for customers were approximately $26.6M while program costs were more than double at about $59.8M with 43% of those costs being administrative in nature.

Hearing Examiner’s Report and Recommendations

On June 16, 2023, the Examiner issued his recommendations to the Commission, which included approval of all programs, with the $149M budget cap and 15% variance, with no program expiration date. While the budget variance request and not having a predetermined closure date are standard in other states, in Virginia, these requests were typically denied by the SCC up until last year. 

The Hearing Examiner was thorough in his review of the case and analyzed all of the remaining issues one by one. In most instances, the Examiner validated suggestions and concerns brought up by the VAEEC and recommended the SCC direct the company to address each one via the stakeholder group and require the company to report on these issues in their next DSM filing. These issues include:

• Cost-effectiveness testing: VAEEC recommended analyzing non-energy benefits, such as the societal cost of carbon and health benefits
• Allowing dual-fuel customers to participate in most programs: VAEEC recommended allowing customers who use gas furnaces to heat their homes and electric AC to keep their homes cool should be allowed to participate in most, if not all, programs. The Examiner not only recommended this become a stakeholder discussion but also noted that if the company is projected to miss their 2024 and 2025 VCEA goals, then expanding customer eligibility could have an “immediate and measurable impact on achieving those savings targets….”
• Accelerating program consolidation: In last year’s filing, VAEEC expressed concern with the Company’s plan to not begin bundling programs until existing contracts with implementation vendors end (i.e. 2025 at the earliest). The company took this feedback and offered four new bundled programs in this year’s filing. Other respondents expressed the need to continue bundling programs into the seven overarching programs laid out in the long-term plan, which the company agreed to discuss where practical. The Hearing Examiner agreed that acceleration was critical in order to pursue, “immediate and measurable impact on achieving those savings targets….” in 2024 and 2025.
• Exploring and incorporating full AMI functionality into DSM programs: VAEEC recommended the company leverage AMI functionality in DSM programs. The company is committed to exploring these functionalities via its grid modernization applications. The Examiner noted what little time is left to increase participation levels and savings in the company’s DSM programs to achieve their 2024 and 2025 goals, stating, “I believe the Company does not have the time to sit back and address the issue as part of its grid transformation program, and for that reason, I am recommending that the issue be referred to the Stakeholder Group for consideration and analysis over the upcoming year.” The Examiner also went on to recommend a pilot program to deploy in areas with high concentrations of AMI deployment.

Additionally, the Hearing Examiner made recommendations on the following key issues as well:

• BPI certification- The Hearing Examiner provided an alternative recommendation to what the VAEEC, the environmental respondents, and public witnesses recommended. He recommends that BPI certification should not be required for HVAC measures, but appears to require this certification for contractors performing ductwork in addition to continuing to require BPI certification for thermal envelope measures. In terms of the VA Residential Energy Building Analyst License, the examiner stated that the statute is clear that this license is required for any type of residential energy assessment and suggested the company consult with the VA Department of Professional and Occupational Regulation in regards to whether such license would be required for contractors performing assessments as part of the Residential Home Retrofit Bundle. 
• Implementation plan- the environmental respondent witness, Jim Grevatt, recommended the Commission require Dominion to demonstrate how it could meet its EERS goals by filing an implementation plan within 90 days of the release of the Commission’s Final Order. The Hearing Examiner largely agreed with Mr. Grevatt but provided an alternative recommendation suggesting the Commission require Dominion to prepare a Project Management Plan and Risk Management Strategy consistent with the Commission’s Final Order in the 2020 DSM Case detailing completed tasks, tasks to be completed within the next twelve months, and tasks that remain to be completed in order to fully implement the LTP.
• Net vs. Gross calculated savings- Environmental Respondents and Dominion argued over how the EERS goals in the VCEA should be calculated- as either “gross” or “net” savings. In Mr. Grevatt’s testimony, on behalf of the environmental respondents, he argued that the Commission provided direction on this in the Final Order last year stating that, “specific savings that can be reasonably identified, and that were not achieved as a result of Dominion’s programs and measures,” should not be counted towards the EERS goals (i.e. the savings should be calculated as “net”). Dominion disagreed, arguing that the ruling was not clear and that the analysis of “gross” and “net” savings is complex and should be deferred until the first EERS compliance case next year. While the Hearing Examiner agreed with environmental respondents that the Commission explicitly state that the EERS savings should be calculated as “net” savings, he also agreed with the Company that in light of the complexity of the issue, the decision should be deferred until next year, “in a case where the issues are fully developed in an evidentiary record.”  

In summary, the Hearing Examiner’s report details a lot of issues and opportunities for Dominion to meet its EERS goals in 2024 and 2025. The VAEEC and our members have worked diligently to provide feedback and support through the stakeholder process and the DSM proceeding and applaud the Examiner for recognizing the importance of stakeholder engagement.

We anticipate the Commission’s Final Order sometime in August. We hope to see most of these recommendations included and we will be ready to get to work.