New Legislation Aiming to Inject Competition Into Virginia’s Offshore Wind Market Could Spark a Reexamination of Dominion’s Monopoly Power

After a 2023 legislative session that saw Virginia lawmakers claw back oversight over Dominion Energy’s previously unchecked profits, Virginia’s monopoly utility is once again facing scrutiny over its balance sheet and commitment to clean energy. 

Sen. Creigh Deeds, a Democrat representing Charlottesville and an architect of last year’s successful push to restore regulatory oversight of Dominion, began this year’s session by introducing SB 578 to address the competition vacuum in Virginia’s offshore wind market.  It will order the Department of Energy to review and select offshore bids at a competitive rate.

In a statement, Deeds argued that Virginia was not generating enough renewable energy to meet its carbon reduction goals. He said Virginia needed to “grow [its] solar and wind-based energy,” before adding, “We have a lot of work to do.”

On Monday, the Committee on Commerce and Labor, which Deeds chairs, voted unanimously to revisit the bill during the 2025 legislative session.

The delay notwithstanding, SB 578 may have opened the door to a larger conversation about Dominion’s monopoly status in Virginia in light of the changing energy landscape in the U.S. 

“There’s an argument to be made that Dominion hasn’t really taken seriously the need for transitioning to renewables,” said Bill Shobe, a professor of public policy at the University of Virginia. “When you look at their latest integrated resource plan,” the company’s roadmap for future operations in Virginia, “it’s not a serious effort,” to transition to clean energy.

“That’s leading people to question whether we want to go with Dominion as our main electricity provider on this old monopoly contract model,” he said.

For some, a more crowded energy market is long overdue in Virginia. “It’s time that Dominion should have some competition,” said Nicole Martin, head of the Chesterfield County chapter of the NAACP. Martin, who has been fighting a new Dominion natural gas power plan in Chesterfield, added that competition for Dominion outside Virginia’s offshore wind market would benefit state ratepayers. “We should always have options,” she said. “Once we’re left with just one option, we’re forced to take whatever they give us.”

Aaron Ruby, a Dominion spokesperson, rejected the argument, saying Virginia’s current system of regulation is working to provide affordable, dependable electricity—and leading the nation, he added, in power from offshore wind. 

In 2020, Virginia passed the Virginia Clean Economy Act (VCEA), which required Dominion to “construct, acquire, or purchase” 5.2 gigawatts of offshore wind energy by 2034. Some of that energy will come from the company’s “Coastal Virginia Offshore Wind Project,” a farm of turbines off the coast of Virginia Beach the utility says is capable of delivering roughly 2.6 gigawatts of clean energy. Construction there can begin this year as Dominion received the last of its permits this month. 

Dominion estimates the project will be completed in 2026. It is unclear how the utility plans to supply the remaining gigawatts without another lease in the Atlantic. The utility’s best hope for building a new farm rests on a federal auction of offshore wind leases scheduled to be held this summer. 

As a monopoly regulated by the State Corporation Commission, Dominion can dictate the terms of its wind procurement process. The company enjoys a predetermined rate of return on its capital investments—which it realizes in the rates it charges customers. Dominion’s critics and supporters of Deeds’ offshore wind bill argue this structure creates higher costs for consumers, and disincentivizes Dominion from acquiring wind energy through so-called power purchasing agreements (PPAs) from other providers, potentially leaving good deals unconsidered.

“Dominion Energy does not support this legislation,” said Ruby, the Dominion spokesperson, in a statement to Inside Climate News. “Virginia’s regulated utility model is working, while the PPA model is failing,” he said, suggesting that the litany of offshore wind cancellations in other parts of the Atlantic was evidence that power purchasing agreements were driving up costs and delaying projects. 

Developers backing out of those projects have cited inflation and supply chain constraints as their primary concerns.

“We have a good model in Virginia, and it’s why we’re leading the nation in offshore wind,” Ruby said. “Let’s not break it.” Ruby did not say how Dominion plans to source the remaining gigawatts of offshore wind required by the VCEA. 

For some, Deeds’ bill is a continuation of a decades-long fight to bring competition to Virginia’s energy markets. “I fought Dominion for a decade saying they had too much power and too much monopoly,” said Chap Petersen, a former state senator. “I believe very strongly in disaggregating in the way we deliver electricity.”

A dearth of competition and a guaranteed rate of return on capital investment from ratepayers under current Virginia law creates an “incentive to emphasize capital investment over other possible approaches,” said Shobe. “If someone else does the capital investment and Dominion buys the electricity, they don’t get a rate of return on that.”

Shobe said SB 578 may indicate that some lawmakers in Virginia feel it’s time to “step outside a regular monopoly provider contract and say to Dominion, ‘No, in some of this new expensive generation, we’re going to go with a new plan.’”

Cracks in Dominion’s seemingly impenetrable political armor—the utility has spent upwards of $1 million in political donations during previous political cycles—began forming last February when Deeds and a bipartisan coalition passed legislation that diminished Dominion’s ability to set its own rates, to the surprise of political observers across the country.

Deeds’ new legislation focused on offshore wind would mean increased competition for Dominion in a bullish market, said Evan Vaughn, executive director of the Mid-Atlantic Renewable Energy Coalition, a group of utility-scale renewable and energy storage developers that helped craft some of the language in Deeds’ bill. “Overall energy demands are huge,” Vaughn said. Several of Virginia’s neighboring states have recently passed legislation with more ambitious gigawatt totals than the 5.2 gigawatts required under the VCEA, he added.

“Competition is a good thing. It leads to better price formation, that is, finding the optimal price that the market can deliver for a project. It increases transparency from the standpoint of a Virginia ratepayer or consumer so that they know they’re getting the best value out of that project,” he said.

Just a handful of nautical miles south of Dominion’s Virginia Beach wind farm, off the shores of Kitty Hawk Beach in North Carolina, sits another future wind farm, potentially capable of delivering enough energy to fulfill the VCEA’s offshore wind requirements. Avangrid, an energy company which owns the lease in that area, said it has tried to reach an agreement with Dominion to sell the utility power from its site once it’s completed.

Those conversations “haven’t gone very far,” said Ken Kimmel, chief development officer for offshore at Avangrid, which had a hand in creating Deeds’ bill.

The Kitty Hawk wind farm—which the company said could be capable of delivering about 3.5 gigawatts of energy—is still awaiting federal permits. “If we were able to get a power purchase agreement, we could have the project built and operating in time to meet that 2034 deadline,” Kimmel said.

But Dominion may still be able to build another wind farm of its own in the Atlantic. This summer, the Bureau of Ocean Energy Management (BOEM) will auction a combined 277,948 offshore acres covering two chunks of ocean water for development in the central Atlantic region, one near Virginia. 

As several East Coast states continue to demand offshore wind energy to meet their legally binding mandates, Vaughn expects competition for those leases to be fierce. “Either somebody else wins it, not Dominion. Then that area will likely supply Maryland, because Maryland has over 6.5 gigawatts of unfulfilled demand,” Vaughn said. “Or, Dominion wins, and they could use it to supply Virginia.” 

The former outcome may leave Dominion with no clear path to fulfilling its VCEA requirements, Vaughn said, given that the options for future federal leasing in the Atlantic are unclear. 

Vaugh added Dominion could still win areas up for federal auction in 2024 and this bill would still help drive down prices for Virginia ratepayers. If Virginia’s Department of Energy could decide to look elsewhere for offshore wind, Dominion would “have to compete on a level playing field with other developers,” Vaughn said. “At the end of the day—even if Dominion ends up winning—the state’s consumers can know that they got the best deal.”

Deeds’ proposed bill would not alter Dominion’s monopoly position; rather, it would make sure that the state can consider a broad range of bids to fulfill its offshore wind needs.

The bill “isn’t opening the rest of their load to competition,” said Kim Harriman, Avangrid’s senior vice president of public and regulatory affairs. Dominion would still “preserve the majority of its monopoly status,” she said.

In the coming year, the bill’s proponents hope that Virginia’s Commission of Electric Utility Regulation will study the proposed legislation to determine, among other effects, its implications for Dominion’s rate of return and ratepayers’ fees.