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Virginia utility regulators Thursday rejected most of Dominion Energy’s $6 billion proposal to modernize its electrical grid, stating that the cost to customers was too high.

In its ruling, the State Corporation Commission laid out five pointers the state’s largest utility should follow if and when it resubmits its legislatively mandated plan to incorporate smart meters and other technologies into a digital, two-way grid.

Ed Baine, Dominion’s senior vice-president, electric distribution, said the utility will be using the commission’s guidance as a framework to refile because “we remain committed to building a smarter, stronger, and greener grid for our customers.”

Virginia’s sweeping Grid Transformation and Security Act, which went into effect last July, requires utilities to submit 10-year modernization plans to the commission. In this proceeding, Dominion was seeking approval for its first three-year phase of the plan.

Commissioners did approve as “reasonable and prudent” a $154.5 segment of Dominion’s plan that covers cybersecurity and physical security during the first phase. That total cost over a decade would reach $910.3 million.

The stumbling block for the commissioners was the total $5.07 billion cost for installing smart meters, adding other “intelligent” technology, and replacing and rebuilding parts of the grid to decrease outage duration and reduce restoration time. Costs for the first phase would be $1.34 billion.

“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 commissioners wrote in their 16-page decision.

“While we find the plan elements related to cyber and physical security are well-conceived, well-supported and cost-effective, we find that the remaining plan elements, which will cost customers hundreds of millions of dollars, are not,” they wrote.

Baine said Dominion was disappointed that commissioners “denied significant, foundational elements of our plans.”

Commissioners also said they agreed with the Consumer Counsel of the Office of Attorney General that “the plan … is significantly lacking in detail” and with an environmental advocate who testified that “as a complete package, the … plan is not cost-effective and will result in an economic loss for all customers.”

The Southern Environmental Law Center, the Sierra Club and other advocacy organizations support the idea of smart meters and related technologies. However, they say such advances can only help customers save money and energy if they optimize programs tied to energy efficiency, demand-response and distributed energy resources.

“Spending money first and hoping it works out is not prudent planning,” said Nate Benforado, an attorney with the Southern Environmental Law Center.

Commissioners echoed those comments by stating that if Dominion resubmits its proposal for transformation to a smart grid, the utility needs to include specifics such as detailed cost estimates, an education plan for customers and an analysis of how the plan promotes energy conservation, energy efficiency and demand-response.

Marjorie Leach-Parker, chair of the Sierra Club’s Virginia chapter, said her organization was prepared to back a Dominion plan that increased the penetration of renewable energy, reduced energy waste and eased electric vehicle integration.

“Instead, Dominion’s proposal was met with a firestorm of opposition and the (commission) rightly rejected it,” Leach-Parker said.

Elizabeth is a longtime energy and environment reporter who has worked for InsideClimate News, Energy Intelligence and Crain Communications. Her groundbreaking dispatches for InsideClimate News from Kalamazoo, Michigan, “The Dilbit Disaster: Inside the Biggest Oil Spill You Never Heard Of” won a Pulitzer Prize for National Reporting in 2013. Her book, "Outpedaling 'The Big C': My Healing Cycle Across America" is available from Bancroft Press. Based in Washington, D.C., Elizabeth covers the state of Virginia.