Piedmont Environmental v. Virginia Elec.

• Decision Date: 05 November 2009
• Docket Number: Record No. 090278.,Record No. 090249.,Record No. 090284.,Record No. 090253.,Record No. 090258.
• Citation: 278 Ga. 553,684 S.E.2d 805
• Court: Virginia Supreme Court
• Parties: The PIEDMONT ENVIRONMENTAL COUNCIL, et al. v. VIRGINIA ELECTRIC AND POWER COMPANY, d/b/a Dominion Virginia Power, et al.

684 S.E.2d 805

278 Ga. 553

The PIEDMONT ENVIRONMENTAL COUNCIL, et al. v. VIRGINIA ELECTRIC AND POWER COMPANY, d/b/a Dominion Virginia Power, et al.

Record No. 090249.

Record No. 090253.

Record No. 090258.

Record No. 090278.

Record No. 090284.

Supreme Court of Virginia.

November 5, 2009.

Patrick M. McSweeney (Wesley G. Russell, Jr., Richmond; Kevin J. Burke, County Attorney; Tracy A. Gallehr, Deputy County Attorney; Ross G. Horton, County Attorney; Kevin P. Black, Assistant County Attorney; Roy B. Thorpe, County Attorney; Charles W. Hundley, Richmond; James W. Moorman; McSweeney, Crump, Childress & Temple, Richmond; Cherry, Seymour, Hundley & Baronian, on briefs), for appellants.

Stephen H. Watts II, Richmond; John F. Dudley, Counsel to the Commission (E. Duncan Getchell, Jr., Richmond; Vishwa B. Link, Richmond; Kristian M. Dahl, Richmond; Erin M. Sine, Richmond; Karen L. Bell, Richmond; Lisa S. Booth; Randall B. Palmer; Jeffrey P. Trout; Richard D. Gary, Richmond; Robert M. Rolfe, Richmond; Charlotte P. McAfee, Richmond; William H. Chambliss, General Counsel; Wayne N. Smith, Senior Counsel; McGuire Woods; Hunton & Williams, on briefs), for appellees.

Present: KEENAN, KOONTZ, KINSER, LEMONS, and MILLETTE, JJ., and CARRICO and LACY, S.JJ.

OPINION BY Justice LAWRENCE L. KOONTZ, JR.

These five consolidated appeals of right arise from an order of the State Corporation Commission dated October 7, 2008 granting certificates of public convenience and necessity to two electric utilities, Virginia Electric and Power Company ("VEPCO") and Trans-Allegheny Interstate Line Company ("TrAILCo"), for the construction and operation of two Virginia segments of a proposed 500 kilovolt (500kv) interstate electric transmission line.¹ The interstate transmission line is to be operated by a regional transmission entity which is subject to federal regulation. VEPCO and TrAILCo are members of that regional transmission entity. As will be addressed subsequently in some detail in this opinion, the focus of the issues raised by the appellants in their challenge to the decision of the Commission involves the interplay of the requirements placed on the Commission by Code §§ 56-46.1 and 56-265.2 and certain federal regulations pertaining to the reliability of a regional electric transmission grid such as the one involved in the present case.

BACKGROUND

On April 19, 2007, VEPCO and TrAILCo, pursuant to the requirement of Code § 56-265.2, filed applications with the Commission for approval of two Virginia segments of a 500kv interstate electric transmission line project.² The project was intended to address an anticipated need for increased reliability in the transmission of electricity for distribution to the Virginia suburban communities of the Washington, D.C. metropolitan area along a transmission line originating at generation sources in central Pennsylvania and extending through West Virginia and the Shenandoah Valley to northern Virginia.³ VEPCO's application, filed jointly with TrAILCo which would hold a 50% stake in ownership of VEPCO's segment of the line, sought authority to build a transmission line from a point in Warren County on the west side of the Appalachian Trail near the boundary of Warren and Fauquier Counties to VEPCO's existing Loudoun Substation in Loudoun County. TrAILCo's separate application was for its wholly-owned segment of the transmission line that would enter the Commonwealth at the Virginia/West Virginia state line, run through the existing Meadow Brook Substation in Warren County, and continue from there a short distance to connect with VEPCO's line. Each application proposed preferred and alternate routes for each line.

Prior to the filing of the applications for approval of the proposed segments of the transmission line by the Commission, the determination of the need for the construction of the entire 500kv interstate electric transmission line was subject to a federal regulatory process. That process involved the interaction of three administrative entities: the Federal Energy Regulatory Commission ("FERC"), a federal agency whose jurisdiction includes regulation of interstate electricity sales and wholesale electric rates as well as the authority to impose mandatory reliability standards on bulk electric transmission systems, commonly referred to as "grids;" the North American Electric Reliability Corporation ("NERC"), a non-profit corporation overseen by FERC and its Canadian regulatory counterpart that is responsible for developing standards for transmission grid operation, monitoring and enforcing compliance with those standards, and assessing the reliability of interconnected regional grids; and PJM Interconnection, LLC ("PJM"), a regional transmission entity⁴ ("RTE") regulated by FERC and monitored by NERC that coordinates wholesale electricity transmission in 13 states and the District of Columbia, including most of Virginia.

The federal determination of need for the new interstate transmission line was the result of a mandatory regional transmission expansion planning ("RTEP") process in which PJM attempts to identify future transmission system additions and improvements needed within PJM's operating area necessary to maintain transmission reliability standards established by NERC. During its 2006 RTEP process, PJM determined that additional transmission capacity would be needed to supply electricity to northern Virginia based on data that showed that an existing transmission line, the "Mt. Storm — Doubs line," was expected to begin experiencing intermittent overloads in 2011 with increasing severity thereafter, resulting in violations of NERC reliability standards on that line and elsewhere within PJM's operational area. VEPCO and TrAILCo used PJM's data showing the projected NERC violations, which supported the federal regulatory finding of need for the interstate transmission line, in their applications to the Commission to support the assertion that the Virginia segments of the line were a necessary improvement as required by Code §§ 56-265.2 and 56-46.1(B).

On June 1, 2007, the Commission issued an order directing publication of public notice of VEPCO's and TrAILCo's applications. The order also established a schedule for reviewing the applications and set hearing dates to receive public comment and evidence. The Commission appointed Alexander F. Skirpan, Jr., as a Hearing Examiner, to conduct further proceedings on the applications for approval of the segments of the transmission line. On July 28, 2008, Skirpan entered a 223-page report that detailed the extensive proceedings which he conducted, summarized the voluminous record, analyzed the evidence and issues, and made certain findings and recommendations to the Commission for favorable resolution of the applications.

As reflected in his report to the Commission, between July 2007 and July 2008, Skirpan conducted 23 days of public hearings in Richmond, as well as in Bristow, Front Royal, Warrenton, and Winchester, communities located on or near the proposed routes of the transmission lines. Skirpan identified over 30 government entities, public interest organizations and individuals, including the five appellants, who had directly participated in these proceedings. In addition, the Commission received over 1,300 written and electronic communications during the course of the proceedings.

Among the evidence and supporting documents received by Skirpan was the post-hearing memorandum of the Commission staff discussing the issues that the Commission would be required to address and giving recommendations as to their resolution. As relevant to the issues raised in these appeals, the staff's analysis of the utilities' assertion of need for the lines was based principally upon a report made by Bates White, LLC ("Bates White"), a consulting firm retained by the Commission "to conduct a review and independent verification of the Applicants' load flow modeling, contingency analyses and reliability needs assessment as introduced in the applications to justify the proposed transmission line." Bates White reviewed the reliability data originally used by PJM in the federal regulatory process that established the need for the new line in order to satisfy NERC standards, as well as updates to that data provided by the utilities at the request of the Commission. Bates White also reviewed evidence from the record to determine whether there were alternative methods to meet the anticipated future transmission reliability requirements including increasing the transmission infrastructure in other ways, introducing new sources of power generation on the existing transmission infrastructure, and through demand side management strategies for increased conservation to reduce the need for increased transmission and/or generation infrastructure.

On October 7, 2008, the Commission issued a final order approving both applications. As relevant to the issues raised in these appeals, the Commission found that the evidence established that the transmission line was needed to ensure future NERC reliability requirements within PJM's region of operation and specifically with respect to VEPCO's distribution of electricity to consumers in northern Virginia in 2011. The Commission further found that reasonably reliable estimates of new generation capacity within VEPCO's service area alone would not be sufficient to meet the future needs of the northern Virginia area, and that conservation through demand side management, alone or in combination with other transmission upgrades and/or additional generation capacity, would not be sufficient to avoid violations of NERC reliability requirements.

The Commission addressed the environmental impact of the proposed routes for the line segments and the review process conducted under the auspices of the Department of Environmental Quality in that regard. In giving final approval to the applications, the Commission...