I have the same problem - i tried 3 microsoft original power supplies (including the dock). and even a 3rd party USB-C power supply.
same problem. what mitigates the problem is touching the BACK of the Surface Pro 7 screen while this happens and it will return to normal operation for a few minutes and then show up again.
I got my SF 7 as a bundle on black friday sale. it came bundled with that type cover.
If i could return it - i would - useless piece of hardware which i cannot use. This is 100% design flaw in the EMF sheilding of the SF 7 and i read online on other forums that this issue was present in SF 6 as well. I did all the nonsense microsoft asked me to do as mentioned above. nothing helped.
i even reached to MS support on twitter - they said they had "no such incidents that they are aware of" and waived me off.
Lousy hardware and lousy support. Microsoft should acknowledge this flaw and take back the device and refund us.