D. Scott Norwood testimony before VA SCC on offshore wind costs
Virginia State Corporation Commission efile|D. Scott Norwood|Mar 25, 2022
Energy expert, D. Scott Norwood, presented this testimony before the VA SCC addressing the high-cost of the Dominion proposal to construct an offshore wind energy facility in waters off the Virginia coasts. A summary of his testimony is provided below. The full testimony can be downloaded from the links on this page.
Energy expert, D. Scott Norwood, presented this testimony before the VA SCC addressing the high-cost of the Dominion proposal to construct an offshore wind energy facility in waters off the Virginia coasts. A summary of his testimony is provided below. The full testimony can be downloaded from the links on this page.
Mr. Scott Norwood presents testimony addressing his findings and recommendations regarding VEPCO’s application for approvals of the Company’s proposed Coastal Virginia Offshore Wind Commercial Project (“CVOW Project” or “Project”) and Rider Offshore Wind (“Rider OSW”).
Apart from the legislative policy preferences expressed in the 2020 Virginia Clean Economy Act for the CVOW Project, Mr. Norwood’s analysis finds that
(1) the $9.8 billion CVOW Project is not needed to serve the Company’s system capacity requirement through at least 2035;
(2) the capital costs are approximately 2 to 3 times the cost of solar resources; and
(3) VEPCO’s forecasted economic benefits of the Project are based on a cost/benefit analysis (“CBA”) that overstates the benefits, which remain within the margin of error for a 34-year forecast of utility system costs.
Notwithstanding Mr. Norwood’s reservations regarding the need for and high cost of the CVOW Project, he acknowledges that the Virginia General Assembly has declared that utility-owned offshore wind electric generation facilities are to be in the public interest, and that the law directs that the Commission to give due consideration to economic development and social cost of carbon benefits of the Project.
In consideration of the high fixed cost of the CVOW Project and the significant risks posed to customers, if approved, Mr. Norwood recommends that VEPCO be required to file periodic status reports, similar to the requirement for the Virginia City Hybrid Energy Center, that address the performance and cost of the Project through the construction period and for at least the first year of commercial operations.
He further recommends that the Commission cap the cost of the CVOW Commercial Project and related interconnection facilities at the Company’s $9.8 billion estimated cost level presented in this case (which already includes hedging and contingencies), and that the capital, O&M costs and operating performance of the CVOW facility be subject to minimum standards that reasonably reflect the assumed costs and performance level (42% capacity factor) reflected in the Company’s CBA for the Project, as measured on a rolling 3-year average basis.
Additionally, the Commission should have the Company publicly commit to in-service dates for the CVOW Project. In the event that the Company has reasonable belief that an in-service date is going to be delayed by more than 6 months or that the $9.8 billion estimated cost of the Project will be exceeded by 5% or more, the Commission should require that the Company make an immediate filing with the Commission that provides notice of the delay or cost increase, provides an explanation of the reasons for the delay or cost increase, and which reopens the question of prudence in light of the delay in scheduled in-service dates or Project cost overruns.
