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SCV: Ratepayers had no right to weigh in on fuel agreements

While fuel-company affiliates entering procurement agreements had to obtain approval from the State Corporation Commission, the Commission sufficiently reviewed the agreements. Such review and approval does not require a formal hearing where the public can raise objections.


Appellant Sierra Club petitioned the State Corporation Commission for declaratory judgment against Virginia Electric & Power Co., Virginia Power Services Corp., and Atlantic Coast Pipeline. Sierra Club argued that Virginia’s Affiliates Act required Virginia Electric to file a fuel procurement agreement between affiliates Virginia Power Services and Atlantic Coast for approval by the Commission.

Sierra Club claims that, because the Commission did not approve the Fuel Agreement before it was made, Sierra Club and its members (Virginia Electric ratepayers) have been deprived of an opportunity to participate in a review process to make their concerns known to the Commission, as required by Code § 56-84. The utilities moved to dismiss on the ground that no actual controversy existed between the parties.

The Commission granted the motions to dismiss, explaining that, in approving the Fuel Agreement, it had concluded that no additional approval was necessary for affiliate contracts because the Commission retained continuing supervisory control over the Fuel Agreement’s terms and conditions. The Commission further held that its consideration of the Pipeline Agreement was separate from Virginia Electric’s recovery of costs paid to Virginia Power Services under the Fuel Agreement and would be relevant for purposes of a proceeding under Code § 56-249.6. Thus, Sierra Club’s claim of harm caused by the Pipeline Agreement’s potential impact on retail rates was not ripe for adjudication.

Sierra Club has appealed.

Affiliates Act review satisfied

In its 2014 Order, the Commission approved the Fuel Agreement subject to the Commission staff’s review of agreements between Virginia Electric’s affiliates. The stated reason for such review was that the affiliate agreements might be relevant to whether continuing approval of the Fuel Agreement remained in the public interest pursuant to the Commission’s continuing supervisory control over the terms and conditions of the Fuel Agreement in order to protect and promote the public interest. As a result, the Commission concluded it had already taken into consideration the type of contract that Virginia Power Services has entered into with Atlantic Coast.

Further, Virginia Electric was to identify any other arrangements and agreements among its affiliates and file the same with the Commission. The Commission also reserved the right to examine the books, records, and other related documents of any affiliate in connection with the approval granted in the Order.

Therefore, to the extent that Code
§ 56-84 provides for Commission review of the Pipeline Agreement, that review has been accomplished by the Commission’s procedure in reviewing the Fuel Agreement.

No formal hearing required

In this context, the Commission is not required to hold a formal hearing at which interested parties such as Sierra Club are entitled to participate. Indeed, the plain language of § 56-84 allows the Commission to hold a hearing, “either formal or informal as may be determined by the Commission.” Because the legislature has empowered the Commission to hold an informal hearing to approve the structure of a utility’s fuel arrangements, Sierra Club was not denied any right to appear. Therefore, it has suffered no procedural harm.


Sierra Club v. State Corp. Comm’n, Record No. 171550, Aug. 9, 2018. SCV (per curiam), from SCC. VLW No. 018-6-060, 11 pp.

VLW 018-6-060