Appalachian Voices v. State Corporation Commission

Summary

The Supreme Court of Virginia affirmed the State Corporation Commission’s approval of Virginia Electric and Power Company’s rate-adjustment clause for projected costs of purchasing Regional Greenhouse Gas Initiative carbon allowances. The court held that the costs were necessary to comply with applicable environmental laws and regulations under Code § 56-585.1(A)(5)(e), and rejected Appalachian Voices’ argument that the Commission was required to determine whether lower costs could be achieved by reducing emissions.

Holdings

1. Under Code § 56-585.1(A)(5)(e), the relevant necessity is the necessity of the utility's costs to comply with applicable environmental laws or regulations. The statute does not require the Commission to determine that the utility selected the lowest possible allowance costs by first reducing emissions from existing power plants.
2. The State Corporation Commission did not misunderstand or fail to apply the legal standard governing RGGI rate-adjustment petitions and properly approved VEPCO's projected allowance costs.

Questions Presented

1. Whether Code § 56-585.1(A)(5)(e) requires the State Corporation Commission to determine that projected allowance costs are necessary to comply with Virginia's RGGI regulations, or instead requires the Commission to require the utility to pursue the lowest possible costs by reducing emissions before recovering allowance costs from ratepayers.
2. Whether the State Corporation Commission applied the correct statutory necessity standard when it approved VEPCO's RGGI rate-adjustment clause.

Disposition

affirmed