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Dominion says new offshore wind deal won’t impact ratepayers


Dominion says new offshore wind deal won’t impact ratepayers

Feb 26, 2024 | 12:03 am ET
By Charlie Paullin
Dominion says new offshore wind deal won’t impact ratepayers
One of two wind turbines off the coast of Virginia Beach that comprise Dominion Energy's Coastal Virginia Offshore Wind pilot project. The Virginia Attorney General's Office is criticizing the massive cost estimates of a larger planned wind development in the same area. (Sarah Vogelsong/ Virginia Mercury)

Dominion Energy Virginia says the deal it announced Thursday to sell half of its interest in its Coastal Virginia Offshore Wind project to investment firm Stonepeak is not expected to have any impact on ratepayers.

Dominion spokesperson Aaron Ruby said the deal will have no “impacts to the cost, customer bill impact, construction or operation of CVOW and no change to the consumer protections approved by” Virginia’s State Corporation Commission, which regulates utilities in the commonwealth.

The deal must be approved by the SCC, which is expected to make a decision on it by the end of 2024.

Under the agreement, Dominion will retain control of the project, a 2.6 gigawatt wind farm off the coast of Virginia Beach that will cost an estimated $9.8 billion.

The deal follows the conclusion of a top-down business review Dominion began last year to improve its financial standing and is seen as a move to reduce the utility’s debt levels.

“If we have a healthy balance sheet, we’re going to provide the best customer experience. We’re going to be able to invest to meet the state’s goals,” said Dominion Chair, President and CEO Bob Blue. “That is a very compelling reason for regulators to approve this transaction, and I’m highly confident that they’ll see the benefits and approve it.”

If approved by regulators, Stonepeak, a firm with $61 billion in investments in infrastructure and real assets, will pay Dominion $3 billion, minus a $145 million payment from the utility. Dominion and Stonepeak will then split the capital costs needed to complete the project up to a $11.3 billion amount, excluding financing costs. Stonepeak will have the option to provide extra funding.

The two companies will split the profits of the project proportional to the amount of funding Dominion receives from Stonepeak.

Rob Kupchak, senior managing director at Stonepeak, said in a statement that the investment is “a fitting addition to our global renewables strategy.”

“Dominion Energy’s impressive track record building and operating large-scale infrastructure projects paired with Stonepeak’s experience successfully constructing offshore wind assets gives us confidence in CVOW’s path forward, and we are excited to partner with Dominion in delivering this critical renewable energy generation resource to its customers,” Kupchak said.

Legislation from former Sen. Lynwood Lewis, D-Accomack, in 2023 allowed Dominion to pursue a partner for the project.

“Any sale would have to be approved by the SCC,” Lewis told lawmakers in February 2023. “There is no thumb on the scale language in here, no in the public interest language either. The SCC can decide it’s a good deal or it’s a bad deal. And if there is any profit realized from the sale of this interest, that is to be returned to the consumers, the customers, the ratepayers.”

Katharine Bond, a lobbyist for Dominion, pitched the bill as a way “to lower costs of offshore wind.” And Lewis argued that bringing a noncontrolling partner into the project “would obviously dramatically reduce the borrowing they would have to do to complete the project.”

Dominion said during an investor call Thursday that CVOW remains “on time and on budget,” with a projected completion date at the end of 2026.

Jackson Morris of the Natural Resources Defense Council, an environmental nonprofit, said the deal didn’t raise any red flags for him because Dominion will retain control of the project, and the SCC will be required to approve the agreement.

“If the SCC does a good job on doing due diligence on the deal, it shouldn’t have any negative impact on timing or cost of the project,” Morris said.