HEC among utilities accusing Dominion Energy of improper accounting, overbilling

The Harrisonburg Electric Commission’s building on the corner of Liberty and Bruce streets. (File photo)

By Eric Gorton, senior contributor

The Harrisonburg Electric Commission is among a group of municipal power utilities that is asking federal regulators to review Dominion Energy’s accounting procedures before Dominion passes on millions of dollars of extra costs to the utilities and their customers.

The Virginia Municipal Electric Association filed a 19-page complaint with the Federal Energy Regulatory Commission on Oct. 29. The group is arguing that Dominion Virginia Energy plans to overbill the VMEA’s member utilities a total of $12.8 million as a result of the faulty accounting that is related to the early shutdown of fossil-fuel burning power plants across Dominion’s system.

Dominion has until Friday to respond to the complaint. VMEA members in addition to Harrisonburg are Elkton, Manassas, Blackstone, Culpeper, Franklin and Wakefield.

HEC’s portion of the $12.8 million would be $6 million because HEC accounted for approximately 47% of the VMEA load in 2020, the year Dominion used for writing off the early shutdowns, said Brian O’Dell, general manager of HEC. Dominion hasn’t billed the utilities for those milliions of dollars yet. 

“In using a depreciation account for the plant write-offs, VMEA, thus HEC, will incur costs associated with them that they may not have incurred otherwise. FERC has specific accounting guidelines for impairments that we feel should have been followed,” O’Dell said.

Dominion hasn’t yet filed its official response to the FERC, which was initially due by Nov. 17 but was pushed back to Friday at Dominion’s request. 

But Dominion Energy spokesman Rayhan Daudani replied to The Citizen’s request for comment with an email.

“Dominion Energy is committed to providing safe, reliable and affordable energy to all our customers as we transition to cleaner energy sources and retire older fossil fuel power stations in line with the requirements of the Virginia Clean Economy Act,” Daudani said. “We will continue to seek an equitable and appropriate resolution to the issues VMEA raised in the complaint.”

Passed in March 2020, The Virginia Clean Economy Act  requires Dominion to get all its electricity from renewable sources by 2045.

The complaint, which is available on the FERC website (docket number EL22-7-000), states that Dominion violated FERC rules in connection with its accounting for the financial consequences of retiring certain generating stations before the end of their useful life and that it “intends to collect those improperly recorded charges from VMEA.”

The organization estimates the faulty accounting would result in a 19.1% increase in VMEA’s total wholesale power costs for 2020.

“Under the present economic circumstances and in the middle of a pandemic, the rate impacts to VMEA members and the ultimate retail consumers could result in the loss of service to consumers, a consequence that interest on refunded amounts cannot remedy,” the complaint states. “Therefore, VMEA requests that the Commission rule on this matter as quickly as possible.”

The complaint also states that Dominion didn’t seek the Federal Energy Regulatory Commission’s approval for what it calls the “accounting scheme.”  

The VMEA’s complaint also contains supporting testimony from Steven Hunt, a certified public accountant. In a transcript of his testimony, Hunt said a utility must receive FERC’s approval to record an asset write-off in the way that Dominion has chosen to do it. And Hunt said he wasn’t aware of any exceptions to that. 

Essentially, Dominion “has invented its own solution,” the complaint says. 

The complaint requests that the FERC order Dominion to conform to the proper accounting and file the proper paperwork.

Dominion and VMEA have engaged in informal discussions about the dispute for more than six months, but those discussions reached an impasse, the complaint states, and “further discussion would not be useful in the absence of a Commission evaluation and ruling…”

O’Dell said it is important to get FERC’s opinion on the appropriate accounting treatment of the write-offs now because, as Dominion shuts down more coal and natural gas-fired power plants, he expects more of these costly write-offs that could pass additional charges on to the municipal utilities and, thus, local customers.

VMEA has asked FERC to address the dispute using its “fast track procedures.”

page on the FERC website states that in cases approved for fast tracking can receive a decision in fewer than 60 days. 

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