Dive Brief:

Virginia regulators on Thursday rejected large portions of Dominion Energy's grid transformation proposal, including smart meter deployment and other modernization efforts.

The 10-year proposal would have cost approximately $6 billion, with the first three-year phase pegged at $1.5 billion. Regulators said Dominion's plan had not been shown to be cost effective, cutting $1.34 billion from the first phase and leaving just $154.5 million for security-related measures.

While the State Corporation Commission (SCC) did approve Dominion's physical and cyber security plans, the denials sent the utility back to the drawing board in terms of developing a smarter and more efficient grid. The utility said it will take the commission's comments into account when it files its next proposal in a statement sent to Utility Dive.

Dive Insight:

The denial follows a trend of states balking at the cost of smart meters and a slowdown in the deployment of advanced metering infrastructure (AMI), which is often considered fundamental to the next generation electric grid.

Virginia regulators joined their counterparts in Kentucky and Massachusetts in denying smart meter proposals, part of a trend that has seen AMI deployment flatline at roughly 50% of electric customers. The meters, capable of sharing granular information between consumer devices and the electric utility, can be used to provide demand response signals, integrate more renewable energy and develop time-of-use pricing.

"Dominion's proposed plan is expensive, so it is important that Dominion's customers receive adequate benefit for the costs they will bear in their monthly bills," the commission wrote in its order.

Regulators said they agreed with the Consumer Counsel of the Office of Attorney General, which had argued Dominion's plan was "significantly lacking in detail." They also sided with environmental groups who testified the plan was not cost-effective and would wind up creating a loss for all customers.

The Southern Environmental Law Center issued a statement supporting the commission's decision, though acknowledging the possible benefits of new grid technologies.

"The Commission recognized that Dominion was essentially asking to spend hundreds of millions of customer dollars on various projects, without a clear plan to ensure customers would actually realize any benefits. Spending money first and hoping it works out is not prudent planning," SELC attorney Nate Benforado said in a statement.

The SCC also denied grid hardening provisions, including replacing and rebuilding certain primary electricity line segments, after concluding they would not provide sufficient benefit relative to their cost. The denial is "without prejudice," however, allowing Dominion to refile a revised proposal in the future.