Last December, Dominion Energy filed their latest DSM application (Phase XII) with the State Corporation Commission. The company is proposing four new programs and seeks to modify two current programs. The VAEEC is a respondent in the case, with our Executive Director, Chelsea Harnish, providing expert testimony..  

The four new programs are: Residential New Construction (EE), Residential Smart Thermostat Purchase (EE), Residential Smart Thermostat (DR), and Non-residential New Construction (EE). They also requested to update the eligibility criteria for the Phase VIII Small Business Improvement Enhanced Program to allow for businesses with more than five locations to participate, and to change the Phase VIII Non-residential Energy Efficiency Midstream Program to offer more up-to-date program measures, such as ice makers and dishwashers.  

We fully support Dominion’s application. However, we identified several areas for continued improvement

Support for the Phase XII Filing as Necessary but not Sufficient to Meet VCEA targets

The programs and alterations proposed are necessary steps for Dominion to achieve their energy efficiency goals. However, it is still very unlikely that they will go far enough to meet the VCEA EERS targets. Chelsea said in her testimony, “Since this filing is the last opportunity for the Company to propose new programs before the end of 2025, it will need to deploy other resources including: increasing participation rates, utilizing Commission approved, portfolio level marketing funds to increase consumer awareness, and do more to leverage the functionalities of Advanced Metering Infrastructure or AMI.” 

Dominion will also need to launch all of its previously approved programs to start accumulating the energy savings needed to meet the VCEA targets, as well as continuing to utilize the stakeholder group to build out implementation plans for the four key recommendations from the Hearing Examiner’s Report. As it currently stands, and depending on the metric used, Dominion will only achieve 3.2% savings in 2024 and 3.7% in 2025, which are significantly short of the mandated 3.75% and 5%, respectively. However, it is critical that the SCC does not address this shortfall by reducing the EE targets – meeting the targets that were adopted in the VCEA, and continuing to mandate stronger goals, are critical to promoting an energy-efficient economy, combating climate change, and providing a safe and healthy environment for all Virginians. 

In regards to the New Residential Home Construction Program, we raised concerns about the version being utilized in the program. The Dominion program only requires that new homes are built to Energy STAR 3.1 standards, however, the standard was recently updated to 3.2, which is required for home builders to receive the federal 45L tax credit. Since it has been confirmed by EPA that homes built to 3.2 do meet the standards in 3.1, we asked the Commission to ensure that Dominion allows homebuilders building to version 3.2 can also participate in their program. 

Analysis of the Long-Term Plan, Project Management Report

In late 2022. Dominion released a long-term plan (LTP) outlining how the company would meet the energy savings goals in the VCEA. In last year’s filing, the company did not provide specific metrics or quantifiable data on tracking this progress so the Commission recommended they include an LTP Progress Report with this year’s filing. Unfortunately, the report in the current filing continues to be vague while also reporting that the company is making “considerable progress” on the recommendations set forth in the LTP. We provided examples of metrics the company issued in interrogatories, as well as the EE stakeholder group, and asked the Commission to explicitly require quantifiable metrics in future filings so that stakeholders can better assess the true progress that is being made towards the VCEA goals. 

Review of Cost-Effectiveness Test Results

Virginia law requires proposed utility EE programs to pass three out of a possible four cost-effectiveness tests in order to be approved by the SCC. These four tests are:

• Participant Cost Test
• Utility Cost
• Total Resource Cost and
• Ratepayer Impact Measure (“RIM”) 

 These tests were designed in the 1980s and do not take into account any of the technologies or modernizations of the intervening decades. Moreover, the tests vary widely from state-to-state or even program-to-program, with the inputs heavily weighted towards the costs to the utility without considering many of the benefits. 

As our members are likely aware, the VAEEC formally supported the SAVE Act in the 2024 General Assembly Session, which requires the Commission to develop a single cost-benefit test following the guiding principles of the National Standard Practice Manual (NSPM). The Governor added an amendment, which will also require the utilities to perform the TRC test in addition to the new test. While this amendment is not perfect, there are opportunities to address the issues this could raise before the new test is implemented in 2029. On April 17th, the General Assembly reconvened for “veto session,” and formally accepted this amendment. 

Adopting a new cost-effectiveness test following the guiding principles of the NSPM would ensure that all investor-owned utilities in Virginia are using the same inputs in a transparent and balanced analysis that is forward-looking and aligns with the energy policy goals of the Commonwealth.

Discussion of Net/Gross Savings Metrics 

The VCEA codifies “total annual energy savings” as the method-of-choice for determining energy savings, which includes savings from both new measures installed in a given program year, as well as measures installed in previous years that are still actively providing energy savings. 

However, there has been an ongoing debate on whether the utilities can use net or gross savings to meet the VCEA targets. Dominion and SCC staff say the utilities should be able to use gross savings while environmental experts state that only net savings should be counted. While the VAEEC does not have a position on this issue, we felt compelled to weigh in this year when the company provided definitions for the two terms that do not align with industry standards. 

Gross savings are the difference in energy consumption based on the savings from a particular measure or project vs the baseline consumption without that measure in place – and net savings, is essentially gross savings minus “free riders,”- or customers who would have installed the measure without participation in a utility program, per the EPA Guidebook for Energy Efficiency Evaluation, Measurement, and Verification.  

In simpler terms, gross savings are calculated as the energy savings attributable to a particular measure—for instance, by comparing the energy usage of a high-efficiency dishwasher to the energy usage of the ordinary dishwasher it replaced. 

In Dominion’s Legal Memorandum on the matter, the company stated the difference was related to whether or not the savings were from a program or specific measure. 

“Simply stated, gross savings are the savings from the energy efficiency measure (e.g., savings from a high efficiency light bulb or air conditioner upgrade) while net savings are the savings from the energy efficiency program (e.g., the Residential Home Energy Assessment Program or Non-residential Heating and Cooling Efficiency Program).” Not only is this not an industry-recognized definition, but it is also contradictory to the technical reference materials used in Dominion’s own 2023 EM&V report. 

When considering whether to use gross or net savings to calculate progress towards the VCEA goals, the SCC will need to rely on correct definitions cited in industry standard manuals.