The estimated cost to Dominion Energy customers of a giant offshore wind farm has jumped from about $8 billion to about $10 billion, utility CEO Bob Blue said in an earnings call for investors on Friday.
Dominion Energy is operating a test project of two wind turbines off the coast of Virginia Beach, but wants to build a large wind farm of about 180 turbines that would be completed in 2026.
The Richmond-based company said it would file an application for the wind project on Friday at the Virginia State Corporation Commission, which regulates electric utilities in the state.
The Virginia General Assembly in 2020 passed a law called the Virginia Clean Economy Act that strips regulators of some of the traditional decision-making power over utility projects, however, and directs the SCC to approve up to $9.8 billion in customer cost recovery for the wind farm.
A news release from Dominion Energy on Friday estimated the project cost at that same amount — $9.8 billion.
The Richmond Times-Dispatch and ProPublica last year reported on how a late change to the legislation significantly increased the acceptable dollar amount.
“When we announced the project in September of 2019, the original pre-engineering and pre-RFP estimated cost was approximately $8 billion,” Blue said on the investors call. “Since that time, through the process of detailed engineering and most importantly through competitive solicitations of all components and services, we’ve now developed a detailed budget of approximately $10 billion.”
The reason for the increased cost, Blue said, included commodity pressures across various industries and completing a conceptual design and stakeholder engagement for the onshore transmission route that will bring electricity created by the turbines to power up to 660,000 homes.
Dominion uses natural gas, coal, oil, nuclear and other methods to create electricity. The company’s nuclear power plants generate about a third of its customers’ electricity needs.
The 2020 law mandates major construction of wind and solar plants as Virginia transitions to clean energy to reduce pollution.
The wind project would decrease Virginia’s reliance on fossil fuels for electricity production. Dominion estimates the average residential customer would pay a net average of $4 per month more for the wind farm.
Blue said Dominion also expects that savings from future tax-credit legislation would reduce customer costs.
Dominion’s wind farm would be the largest in the country and is on track for completion of construction in 2026, Blue said.
Tuesday’s political shift in Virginia gives Republicans control of the governor’s mansion and House of Delegates next year. Republicans say they plan to revisit the Clean Economy Act, and Gov.-elect Glenn Youngkin also has been critical of the law.
Dominion Energy, one of the largest sources of campaign money for the Virginia politicians who write laws governing the utility, funded a secretive political action committee during the election that attacked Youngkin. Blue later said the company should have better vetted the PAC before funding it.
Asked on the investor call about the changing dynamic, Blue said political power sometimes changes in Virginia but Dominion consistently “has maintained constructive relationships with members of both parties and we don’t see any reason that that would change.”
Blue said Dominion will do everything it can to help Youngkin achieve his objectives of growing Virginia’s economy, continuing a bipartisan commitment in the state to jobs and economic development.