A settlement has been reached on protections tied to an offshore wind project in Virginia, stakeholders wrote in a filing to state regulators.

Dominion Energy Virginia, the utility developing the 2.6 GW Coastal Virginia Offshore Wind project, said the settlement would protect ratepayers from unforeseen increases in construction costs above the project's budget by instituting a cost-sharing policy.

The tentative agreement spells out a cost-share arrangement if the project exceeds its estimated $9.8 billion budget.

Customers would be on the hook for 100% of the first $500 million in cost overruns. Dominion would then split on a 50-50 basis the next $1 billion in overruns to $11.3 billion. For project costs that top $11.3 billion, Dominion would be responsible for 100% of the total, up to $13.7 billion. Beyond that amount, Virginia state utility regulators would be asked to weigh in on the project's continued viability.

The agreement also calls for the cost-share bands to decline in step with any project cost reductions that result from benefits of the federal Inflation Reduction Act, which was signed into law earlier this year.

Dominion also agreed to provide a detailed explanation of any factors that cause the project's net capacity factor to fall below 42% on a three-year rolling average basis. Regulators would review the explanation and decide what remedial actions, if any, are required.

The settlement gives the State Corporation Commission of Virginia (SCC) an enhanced review of performance instead of implementing a performance guarantee, Dominion said. The investor-owned utility previously said that a performance guarantee threatened the project's viability.

Dominion filed the settlement with the Office of the Attorney General, Walmart, Sierra Club, and Appalachian Voices on Oct. 28. The SCC must now review the settlement.

"I appreciate the thoughtful effort of all parties in reaching a constructive agreement to allow the project to continue moving forward," said Bob Blue, Dominion Energy chair, president & and chief executive officer.

The 176-turbine Coastal Virginia Offshore Wind project is expected to be completed in late 2026.

On Aug. 5, the SCC issued an order granting reconsideration of the project and temporarily suspending the agency's approval of the project. The order contained a performance guarantee provision, aimed at ensuring Dominion’s customers don’t have to pay for replacement energy if the project doesn’t generate electricity at the expected level.

Dominion petitioned the commission to reconsider the performance guarantee, calling it “untenable” and warning that as initially outlined, it would force the company to “terminate all development and construction activities.”

Despite the hang-up with the SCC, Dominion said the project has proceeded on schedule.

This article includes reporting from the Associated Press