Virginia’s SCC staff goes rogue, attacks EPA over the Clean Power Plan

Virginians rally in front of U.S. EPA Headquarters in Washington, DC in support of the Clean Power Plan

Virginians rally in front of U.S. EPA Headquarters in Washington, DC in support of the Clean Power Plan

In recent years paleontologists have come to believe that the dinosaurs did not go extinct; they evolved into today’s chickens and other birds. It turns out, however, that some of them did not evolve. Instead, they took jobs at Virginia’s State Corporation Commission.

Now they’ve put their DNA on full display with comments they filed on the EPA’s Clean Power Plan. The proposed EPA rules, under section 111(d) of the Clean Air Act, would require states to reduce the power plant CO2 emissions driving climate change. The staffers assert primly that they “take no position on the broad policy issues,” but that they feel “compelled” to point out all the ways the plan is “arbitrary, capricious, unsupported, and unlawful.” These mostly boil down to their claims that the plan will force coal plant closures, raise rates significantly and threaten service reliability—claims experts say are badly off-base.

Note that the commissioners themselves didn’t sign onto these comments. They come from the career staff at the Energy Regulatory Division, led by Bill Stevens, the Director, and Bill Chambliss, the General Counsel. This is pretty peculiar. I can’t think of a single other agency of government where the staff would file comments on a federal rulemaking without the oversight of their bosses.

Bill and Bill acknowledge in a footnote that the staff comments represent only their own views and not those of the commissioners. But that distinction has already been lost on at least one lawmaker. Today Speaker of the House William J. Howell released a statement declaring, “The independent, nonpartisan analysis of the State Corporation Commission confirms that President Obama’s environmental policies could devastate Virginia’s economy.”

And really, “devastate”? But that’s the kind of hysteria you hear from opponents of the Clean Power Plan. While the rest of us see healthier air, huge opportunities for job growth in the clean energy sector, and the chance to avoid the worst effects of climate disruption, the Friends of Coal see only devastation. And no wonder: Howell accepted $14,000 from the coal industry just this year alone.

But back to what the Bills over at the SCC think about the Clean Power Plan. How did they arrive at their conclusion that it would raise rates? According to Cale Jaffe, a lawyer with the Southern Environmental Law Center who practices extensively before the SCC, “Staff never did an analysis of an actual plan to comply with the Clean Power Plan, which has a lot of flexibility built into it. Instead, the Staff simply took Dominion Virginia Power’s last Integrated Resource Plan from 2013 and used it as a proxy for a compliance plan. That’s a significant flaw that skews the Staff’s analysis.  The Dominion plan, after all, was released nearly a year before the EPA even announced its rule.”

Compounding the error, says Jaffe, the staff “artificially inflated the cost by assuming that the only compliance strategy would be for Dominion to build a new nuclear reactor: the most expensive resource, which is not a required compliance option.”

We can all agree with the staff that nuclear plants are appallingly expensive. That may be why the EPA doesn’t assume most states will build them as part of their compliance strategy. To the contrary, the expectation is that states will respond with energy efficiency, wind and solar—all resources that are plentiful in Virginia but largely untapped so far.

As Jaffe notes, “an independent analysis of the actual Clean Power Plan itself shows that Virginia can achieve its goals at a fraction of the cost while lowering Virginians’ bills by 8%.”

We have seen time and again that the SCC staff has never been friendly to either renewable energy or energy efficiency, so it’s no surprise that their comments dismiss them as unworkable. Indeed, it is clear from the comments they filed that their real interest is promoting an anti-EPA, pro-coal agenda. Otherwise it would be hard to understand why they would stray so far from their own area of practice to attack the very legality of the Clean Power Plan.

Jaffe lists a number of other ways the SCC staff screwed up, but you get the picture: careful, reasoned analysis wasn’t the point. Still, you’d think that if agency staffers decide to go rogue like this, they would be careful to get the facts right.

 

McAuliffe’s Energy Plan has a little something for (almost) everyone

On October 1, the Virginia Department of Mines, Minerals and Energy released the McAuliffe administration’s rewrite of the Virginia Energy Plan. Tomorrow, on October 14, Governor McAuliffe is scheduled to speak about the plan at an “executive briefing” to be held at the Science Museum of Virginia in Richmond. Will he talk most about fossil fuels, or clean energy? Chances are, we’ll hear a lot about both.

Like the versions written by previous governors, McAuliffe’s plan boasts of an “all of the above” approach. But don’t let that put you off. In spite of major lapses of the drill-baby-drill variety, this plan has more about solar energy, offshore wind, and energy efficiency, and less about coal, than we are used to seeing from a Virginia governor.

Keep in mind that although the Virginia Code requires an energy plan rewrite every four years, the plan does not have the force of law. It is intended to lay out principles, to be the governor’s platform and a basis for action, not the action itself. This is why they tend to look like such a hodge-podge: it’s just so easy to promise every constituency what it wants. The fights come in the General Assembly, when the various interests look for follow-through.

Here’s my take on some of the major recommendations: IMG_3954

Renewable energy. Advocates and energy libertarians will like the barrier-busting approach called for in the Energy Plan, including raising the cap on customer-owned solar and other renewables from the current 1% of a utility’s peak load to 3%; allowing neighborhoods and office parks to develop and share renewable energy projects; allowing third-party power purchase agreements (PPAs) statewide and doubling both the size of projects allowed and the overall program limit; and increasing the size limits on both residential (to 40 kW) and commercial (to 1 MW) net metered projects, with standby charges allowed only for projects over 20 kW (up from the current 10 kW for residential, but seemingly now to be applied to all systems).

It also proposes a program that would allow utilities to build off-site solar facilities on behalf of subscribers and provide on-bill financing to pay for it. This sounds rather like a true green power program, but here the customers would pay to build and own the project instead of simply buying electricity from renewable energy projects.

Elsewhere in the recommendations, the plan calls for “flexible financing mechanisms” that would support both energy projects and energy efficiency.

In case unleashing the power of customers doesn’t do enough for solar, the plan also calls for the establishment of a Virginia Solar Energy Development Authority tasked with the development of 15 megawatts (MW) of solar energy at state and local government facilities by June 30, 2017, and another 15 MW of private sector solar by the same date. Though extremely modest by the standards of Maryland and North Carolina, these goals, if met, would about triple Virginia’s current total. I do like the fact that these are near-term goals designed to boost the industry quickly. But let’s face it: these drops don’t even wet the bucket. We need gigawatts of solar over the next few decades, so let’s set some serious long-term goals for this Authority, and give it the tools to achieve them.

Finally, the plan reiterates the governor’s enthusiasm for building offshore wind, using lots of exciting words (“full,” “swift,” “with vigor”), but neglecting how to make it happen. Offshore wind is this governor’s Big Idea. I’d have expected more of a plan.

And while we’re in “I’d have expected more” territory, you have to wonder whatever happened to the mandatory Renewable Portfolio Standard that McAuliffe championed when running for office. Maybe our RPS is too hopeless even for a hopeless optimist.

Energy Efficiency. Reducing energy consumption and saving money for consumers and government are no-brainer concepts that have led to ratepayers in many other states paying lower electricity bills than we do, even in the face of higher rates. Everyone can get behind energy efficiency, with the exception of utilities that make money selling more electricity. (Oh, wait—those would be our utilities.) The Energy Plan calls for establishing a Virginia Board on Energy Efficiency, tasked with getting us to the state’s goal of 10% savings two years ahead of schedule. But glaringly absent is any mention of the role of building codes. Recall that Governor McDonnell bowed to the home builders and allowed a weakened version of the residential building code to take effect. So far Governor McAuliffe hasn’t reversed that decision. If he is serious about energy efficiency, this is an obvious, easy step. Where is it?

Fracking_Site_in_Warren_Center,_PA_04

Natural Gas. Did I say offshore wind was the governor’s Big Idea? Well, now he’s got a bigger one: that 500-mile long natural gas pipeline Dominion wants to build from West Virginia through the middle of Virginia and down to North Carolina. Governor McAuliffe gets starry-eyed talking about fracked gas powering a new industrial age in Virginia. So it’s not surprising that the Energy Plan includes support for gas pipelines among other infrastructure projects. As for fracking itself, though, the recommendations have nothing to say. A curious omission, surely? And while we are on the subject of natural gas, this plan is a real testament to the lobbying prowess of the folks pushing for natural gas vehicles. Given how little appetite the public has shown for this niche market, it’s remarkable to see more than a page of recommendations for subsidies and mandates. Some of these would apply to electric vehicles as well. But if we really want to reduce energy use in transportation, shouldn’t we give people more alternatives to vehicles? It’s too bad sidewalks, bicycles and mass transit (however fueled) get no mention in the plan.

Photo credit Ed Brown, Wikimedia Commons.

Coal. Coal has fallen on hard times, indeed, when even Virginia’s energy plan makes no recommendations involving it. Oh, there’s a whole section about creating export markets for coal technology, as in, helping people who currently sell equipment to American coal companies find a living in other ways. These might be Chinese coal mining companies; but then again, they might be companies that mine metals in Eastern Europe, or build tunnels, or do something totally different. The Energy Plan seems to be saying that coal may be on its way out, but there’s no reason it should drag the whole supply chain down with it. Good thinking.

Nuclear. If you think the coal industry has taken a beating these past few years, consider nuclear. Nationwide, the few new projects that haven’t been canceled are behind schedule and over budget, going forward at all only thanks to the liberality of Uncle Sam and the gullibility of state lawmakers. But there it is in the Energy Plan: we’re going to be “a national and global leader in nuclear energy.” Watch your wallets, people. Dominion already raided them for $300 million worth of development costs for a third plant at North Anna. That was just a down payment.

Photo: U.S. Coast Guard

Photo: U.S. Coast Guard

Offshore drilling. As with nuclear, favoring offshore oil drilling seems to be some kind of perverse obsession for many Virginia politicians. Sure enough, the energy plan says we should “fully support” it. As for the downside potential for a massive spill of crude oil fouling beaches, ruining fishing grounds, destroying the coastal tourism economy, and killing vast numbers of marine animals, the plan says we must be prepared “to provide a timely and comprehensive response.” I bet Louisiana was at least equally prepared.

Utilities’ pullout won’t affect “value of solar” study

When Virginia’s utilities made a surprise announcement on September 5th that they would no longer participate in the state’s Solar Stakeholder Group (SSG), they may have hoped that doing so would stop the group’s Value of Solar study in its tracks. Not so: on Friday, at its first meeting since the utilities withdrew, the group agreed it would issue the report on schedule, although with no further input from members—thus guaranteeing that the report reflects only input submitted while the utilities participated.

This decision was essentially a moot point, because the group had actually wrapped up its work by that September 5th date in order to give the study authors time to incorporate comments, including those from the utilities. The resulting third draft of the report was provided to the remaining group members on September 29. It reflects the work of the full 49-member committee up to September 4.

Lead authors Damian Pitt and Gilbert Michaud of Virginia Commonwealth University will do some clean-up editing and draft a cover letter. Then, in accordance with the work plan established last summer, it will be submitted to the National Renewable Energy Laboratory (NREL) for review. The study is due in to the Senate Rules Committee by November 1. But as noted previously by Jim Pierobon, it’s not clear how much weight the study will have in the General Assembly now that the utilities have disavowed it.

The utilities have not said why they decided to withdraw from participation. They wrote no memos, offered no analysis, and sent no polite email to other members expressing regret or anything else.

The SSG grew out of an informal “Small Solar Working Group” that formed in 2013 as a way to bring together those with an interest in non-utility-scale solar.* Like the SSG, the Working Group included representatives from the solar industry, environmental groups, local government, academia, trade associations and the electric utilities. But while the Working Group set its own broad agenda, the SSG was formed in response to a specific letter request from the Clerk of the Virginia Senate to DEQ and DMME. The letter asked for a study of “the costs and benefits of distributed solar generation and net metering.”

From that description, and knowing that the utilities hastily decamped, you might think that the SSG actually calculated costs and benefits and came up with a value of solar, and that the result was good for solar advocates but bad for utilities. But in fact, the study reaches no conclusions at all. It could more accurately be described as a study about how you would conduct a study, were you so inclined. Which no one was, because then the utilities might have left. As they did, but only after ensuring the study incorporates their views.

Thus the study wraps up with statements like, “The SSG recognizes that the short- and long-term value of solar will be dependent on a wide range of conditions and perspectives.” And this: “With greater time, resource, and data access, future studies could produce actual values for the net VOS under each methodology.”

There is nothing wrong with such a limited approach, so far as it goes. Professors Pitt and Michaud did an excellent and comprehensive job in surveying the literature, comparing previous studies, and discussing the factors relevant to the issue of solar’s value to the grid, utilities, customers, and society at large. But given that this Value of Solar study came nowhere near assigning a value of solar, it’s hard to understand what the utilities might have objected to.

Nor had there been any hints the utilities were unhappy with the process or with the first two drafts of the report. At Friday’s SSG meeting, many of the other members expressed their surprise and frustration with the utilities’ pull-out. They noted that the utilities participated fully every step of the way and provided copious comments, which were reflected in the drafts. Indeed, three utility representatives served on the twelve-member steering committee that created the work plan and oversaw the study, making it as much their work as anyone else’s. (The other steering committee members were Professor Pitt, three representatives of local government, two conservation group reps., two solar industry members, and one citizen representative.)

So why did the utilities pull out? In retrospect, it may have been their plan all along. By pulling out, they could signal to their allies their disapproval of the study and try to prevent a follow-on study that would actually calculate a value for solar. And by waiting until the last moment to pull out, they maximized their influence over the study’s content, lest it have credence outside their sphere of influence.

But what the utilities lost by this clever maneuver is the trust of the rest of the group. The SSG, like the Small Solar Working Group before it, provided a forum for discussion among the many different parties with an interest in distributed solar. It is incredibly important in a forum like the SSG that people trust each other to act in good faith. Otherwise, 49 people are wasting their time.

The utilities’ decision to sacrifice this trust strikes me as both stupid and unnecessary. Many of us expected that the utilities’ lobbyists would quietly tell their friends in the legislature to ignore the Value of Solar study, that they participated just to be nice guys. Openly thumbing their noses at the study did nothing except prove they aren’t nice guys and cannot be trusted.

The rural electric cooperatives will have to answer to their members, who admittedly don’t seem to pay much attention. But Dominion Virginia Power and Appalachian Power are public utilities. They hold their monopolies by the grace of the people of Virginia, and are expected to act in the interest of the people they serve. In this case, they have manifestly failed to do so.

——————

* I was one of the founding members of the Small Solar Working Group and was responsible for asking the Department of Environmental Quality’s Carol Wampler to facilitate the meetings. Ms. Wampler had led other successful stakeholder groups and had a gift for guiding people with disparate interests towards consensus. (Unfortunately for the people of Virginia, she retired from DEQ this summer.) She brought in the equally-dedicated Ken Jurman from the Department of Mines, Minerals and Energy as a co-facilitator. The divide between the utility monopolies and everyone else proved too great to produce any consensus bills that could spur the flourishing of solar in Virginia, but it did develop a level of trust, unfortunately now compromised.

 

Why can’t I buy solar?

photoEvery year, on the first weekend in October, homeowners and businesses across the U.S. open their doors to a special kind of tourist: the solar wannabe. The American Solar Energy Society’s annual Solar Tour features homes with solar PV and hot water, along with an assortment of “green living” features that inspire envy and emulation.

Envy especially, I’m here to tell you. My home in the Northern Virginia suburbs is surrounded by beautiful mature trees that provide shade for my house, cooling for the neighborhood, carbon sequestration for the planet, and food for an abundance of insects, birds and other wildlife. What it doesn’t provide is a sunny place on the roof for solar panels. So when I go to houses on the DC Metro area tour, it’s a teeth-gritting experience.

I’m hardly alone. Less than a quarter of residents can install solar panels at their homes. The rest either have shade or other siting issues, or they are renters, or they live in condominiums where they don’t control the roof and common areas. That leaves the vast majority of us solar wannabes with nowhere to turn.

Some states let customers choose their electricity suppliers, which means they can select one that will supply them with renewable energy. But Virginia upholds the rights of monopolists to control our electricity supply. And my local monopolist, Dominion Virginia Power, sells only one electricity product: a mix of coal, nuclear, and natural gas, with barely a smidgen of stuff the legislature considers renewable (mainly wood trucked in from forests and burned).

I could subscribe to Dominion’s Green Power Program, but I’d still get the exact same dirty power. I’d just be paying extra for renewable energy certificates (RECs), mostly from wind farms in other states.

RECs don’t do it for me. Adding money to my utility bill for RECs is about as satisfying as buying a gallon of ordinary milk and adding a dollar extra to know that a buyer in Indiana paid for ordinary milk but got organic. Maybe both milks taste the same, but that’s not the point.

No, if I’m buying RECs, I want them to come attached to actual, Virginia-made wind or solar power. I know I’m not alone; the 20,000 people who have signed up for the Green Power Program, plus those who buy from other REC sellers like Pear and Arcadia, are proof that if Dominion cared to build wind or solar, it would find a ready market.

But it hasn’t. And Dominion also refuses to let the private market do the job. I’ve been approached by would-be solar developers who ask why they can’t put a solar array on unproductive farmland and sell the power to people like me. When that happens I swoon with delight for a moment, then glumly point them to the experience of Washington and Lee University three years ago. The university wanted to buy solar from a project on its campus but owned by a developer. Dominion came down on them like a ton of bricks, claiming a violation of its monopoly.

Dominion also opposes allowing customers to pool their money for a shared solar project, like an array on one house that could provide electricity for two or more. Sometimes called community net metering or solar gardens, and a growing trend in other states, shared solar unleashes the power of private investment by freeing up customers to build and own solar together and get credit on their utility bills for their percentage of the electricity the project puts on the grid. Imagine how much new economic activity we could create this way, and how much clean generation we could build, without state government mandates or subsidies.

There are thousands of Virginians like me who want renewable energy and are willing to pay for it. If our utilities don’t want to build it, they should step aside and let customers do it.

Why we can’t just shut up and eat our cookies (or embrace natural gas)

Fracking site, Marcellus Shale. Photo courtesy of U.S. Geologic Survey.

Fracking site, Marcellus Shale. Photo courtesy of U.S. Geologic Survey.

I grew up with brothers, so I knew from an early age that the easiest way to make friends with guys was to feed them chocolate chip cookies. I took this strategy with me to college, commandeering the tiny kitchen in our coed dorm. The aroma wafting down the hallways reliably drew a crowd.

One fan was so enthusiastic that he wanted to learn to make cookies himself. So the next time, he showed up at the start of the process. He watched me combine sugar and butter, eggs and white flour.

Instead of being enthusiastic, he was appalled. It had never occurred to him that anything as terrific as a cookie could be made of stuff so unhealthy. It’s not that he thought they were created from sunshine and elf magic; he just hadn’t thought about it at all. He left before the cookies even came out of the oven.

I felt so bad about it, I ate the whole batch.

But I can empathize with that guy when I’m told that as an environmentalist, I should love natural gas. Natural gas is the chocolate chip cookie of fossil fuels. At the point of consumption, everybody loves it. It’s cheap, there’s gobs of it, and it burns cleaner than coal, with only half the carbon dioxide emissions. Disillusionment sets in only when you look at the recipe. (“First, frack one well. . .”)

I realize we have only ourselves to blame. For years, environmentalists talked about gas as a “bridge fuel” that could carry us from a fossil fuel past to a future powered by renewable energy. No one would tarry on that bridge, we figured, because gas was expensive. We’d hurry along to the promised land of wind and solar.

But that was before hydrofracking and horizontal drilling hit the scene. Fracking opened up vast swaths of once-quiet forest and farmland to the constant grinding of truck traffic heading to drilling rigs that operate all day and night, poisoning the air with diesel fumes and sometimes spilling toxic drilling fluids onto fields and into streams. It was before studies documented well failures that let toxic chemicals and methane seep back up along the well borings and into aquifers, contaminating drinking water.

And it was before scientists sounded the alarm on “fugitive” methane emissions from wellheads: gas that escapes into the air unintentionally, sometimes at levels so high as to cancel out the climate advantage of burning natural gas instead of coal.

But just as environmentalists were thinking, “Whoa, natural gas turns out to be a bridge to nowhere,” electric utilities were embracing fracked gas in a big way. Fracking has made gas so cheap that giving up coal is no sacrifice. It’s so cheap they see no reason to get off the bridge and embrace renewable energy. At one conference I attended, a gas company executive gushed, “Natural gas is no longer a bridge fuel. It’s a destination fuel!”

All I could think was, “In that case, the destination must be Cleveland.” Which was surely unfair to Cleveland.

Just to be clear: environmentalists are not opposed to gas because we are spoil-sports, or purists, or hold stock in solar companies. The problem with natural gas is that it isn’t made by Keebler elves, but extracted through a nasty process that is harming the planet in ways both local and global.

If the best anyone can say about natural gas is that it’s not as bad as coal, then lingering on the bridge makes no sense. And anything we do that keeps us here—opening up Virginia to fracking, or building a huge new pipeline to bring fracked gas from other states—is both foolish and dangerous. Foolish, because embracing cheap gas distracts us from the serious business of building wind and solar and using energy more efficiently; and dangerous, because the planet will not stop warming while we play shell games with carbon.

 

 

 

Dominion’s ties to ALEC, McDonnell’s conviction, all part of one corrupt package

Group Dominion quit ALEc image 2

Protesters gather outside the Crystal City headquarters of ALEC

A crowd of protesters gathered at the Arlington headquarters of the American Legislative Exchange Council (ALEC) on September 4 to demand that Dominion Resources, the parent of public utility monopoly Dominion Virginia Power, drop its membership in the right wing “bill mill.”

On the very same day, a jury convicted ex-Governor Bob McDonnell and his wife on federal corruption charges, setting off a new round of debate about Virginia’s lax ethics laws.

The two news items sound like different topics, but in fact they are both about the corruption undermining our democratic system. The McDonnell trial, with its focus on swank vacations, golf clubs, designer clothes and other neat stuff, actually missed the bigger breach of public trust that goes on every day. This takes the form of unlimited corporate campaign contributions and gifts to members of both parties, and the influence over legislation purchased by this largesse.

Dominion Power has spent decades and many millions of dollars building its influence in Richmond this way, to the point where most legislators don’t bother pursuing a bill if the utility signals its opposition. That’s why Virginia has not followed so many other states in requiring its utilities to invest in energy efficiency, wind and solar. Economic arguments, jobs, electricity rates—all these are talked about in committee, and all are irrelevant to the fate of a bill. The only relevant question for legislators is, “What does Dominion think?”

What Dominion thinks, though, is not about what’s good for its customers, but what’s good for its own bottom line. And this is where ALEC comes in. Dominion Virginia Power’s president, Bob Blue, sits on an ALEC committee with representatives from the climate-denial group Heartland Institute, the Koch-funded anti-environment group Americans for Prosperity, and that most oxymoronic of lobby shops, the American Coalition for Clean Coal Electricity. Their purpose is to craft model state bills that protect fossil fuel profits and attack all efforts to regulate carbon emissions.

Dominion provides a straight shot from ALEC’s back-room bill-brokering to Virginia’s statute books, trampling environmental protections along the way and giving the lie to Dominion’s façade of environmental responsibility. No wonder so many of last week’s protesters were Dominion customers who objected to the utility using the money it charges them for electricity to pay its ALEC dues.

We see the result every year in the General Assembly, as bills drafted by ALEC pop up all over the place without attribution. In addition to attacking clean energy, ALEC bills oppose worker protections and minimum wage initiatives, promote stand-your-ground bills like the one at issue in the Trayvon Martin case, and of course, undermine the kinds of clean-government efforts that would reduce the influence of corporations—like campaign finance reform.

And because the voters are the only people who could prove more powerful than corporations—and the only ones who might ultimately cut off the corporate cash flow—ALEC works to undermine voting rights as well.

In the wake of the McDonnells’ convictions, Virginia legislators are once again mumbling about tightening up the rules on gifts. The discussion is half-hearted; the pay for their work is paltry and the hours are long, so they aren’t anxious to give up the perks.

But it’s too late for half-measures. Elected officials are going to have to subject themselves to a ban on gifts, and the prohibition should extend to ballgame tickets, golf getaways and sit-down dinners. The loophole that currently allows campaign funds to be used for personal use must also be closed to avoid an end-run around the gift ban.

But until we turn off the corporate cash spigot, our democracy will still have special interests, not voters, calling too many shots.

Where are the Renewables? 2014 update on Virginia wind and solar policy

Virginia lags well behind neighboring states on renewable energy. We have no utility scale wind or solar projects and very little in the way of customer-owned and other distributed generation—no more than18 megawatts (MW) of distributed solar, at last estimate. This puts the Commonwealth dead last among neighboring states. The reason is not a lack of resources, but a lack of will to create strong policies to promote development of wind and solar.

wind and solar state comparisonsLast fall I posted a summary of Virginia’s policies that detailed both the gloomy picture and the reasons behind it. The policies haven’t changed much since then, but there are new grounds for hope. Governor McAuliffe is talking up renewables, Republicans see business opportunities in solar energy, and the newly-proposed EPA Clean Power Plan puts carbon pollution squarely at the center of the energy calculus.

So you won’t find this year’s policy overview markedly different, but it’s interesting to consider how these developments might affect the 2015 legislative session, which legislators and lobbyists are already preparing for.

Renewable Portfolio Standard (RPS)

Virginia has only a voluntary RPS, which means utilities have the option of participating but don’t have to. If a utility opts to participate in Virginia’s RPS, any costs it incurs in meeting the goals can be charged to ratepayers.

Until last year, utilities could also qualify for a huge bonus for meeting the goals: more than $38 million annually in the case of Dominion Virginia Power. Widely regarded as a consumer rip-off and the subject of protests by environmentalists and a damning report from the Attorney General’s office, the bonuses were stripped out in 2013 as part of a larger package of changes. As a result, the only incentive utilities now have to participate in the RPS is their desire to look “green.”

Unchanged are the extremely weak provisions of the RPS. Although nominally promising 15% renewables by 2025, the statute sets a 2007 baseline and contains a sleight-of-hand in the definitions section by which the target is applied only to energy not produced by nuclear plants. The result is that our RPS goal is effectively well under 10%. Add to that a kitchen-sink approach to what counts as renewable energy, and it’s hard to view our RPS as anything but a hopeless mess.

And indeed, the RPS is as impotent in practice as it is in theory. In the case of Dominion Virginia Power, the RPS has so far been met largely with out-of-state renewable energy certificates (RECs) from old hydro projects built prior to World War II. The State Corporation Commission is as much to blame for this as Dominion; in its view, if near-worthless junk RECs will meet the statutory minimum, why pay more?

Yet it was utility opposition that derailed efforts to improve the goals in the 2014 legislative session. Multiple meetings and intense negotiations between utility lobbyists, advocates and legislators achieved only a five-year limit on utilities’ ability to “bank” RECs for use in later years. (Most states have shorter limits.)

Prior to taking office, Governor McAuliffe spoke in support of a mandatory RPS that would achieve real progress on wind and solar. A strong RPS remains high on the wish list of clean energy advocates, but no gambler would put money on ours.

Utility “green power” programs

Section 56-577(A)(6) of the Virginia code allows utilities to offer “green power” programs. Unlike the RPS, participation by consumers is truly voluntary. Participants sign up and agree to be billed extra on their power bills for the service.

Ideally, a utility would use the money to build or buy renewable energy for these customers; however, Virginia utilities have not done this except in very tiny amounts. Instead, utilities pay brokers to buy renewable energy certificates (RECs) on behalf of the participants. In Dominion’s case, these RECs meet a recognized national standard and are much superior to those bought for the RPS, but they primarily represent power produced and consumed out of state, and thus have no effect on the power mix in Virginia. For a fuller discussion of the Dominion Green Power Program, see my previous post, What’s wrong with Dominion’s Green Power Program

In the case of Appalachian Power, the RECs come from a conventional hydro facility in West Virginia that was built in 1960, so the RECs don’t even meet most environmental groups’ standard for renewable energy.

Customer-owned generation

Given the lack of wind or solar options from utilities, people who want renewable energy generally have to build it themselves. A federal 30% tax credit, available until the end of 2016, makes it increasingly affordable. The Virginia legislature passed a bill in 2014 that would offer an additional incentive through a grant program, but it did not receive funding.

Owners of wind and solar systems in RPS states can sell RECs to their utilities, helping to recoup installation costs and aiding in financing. The lack of a true RPS in Virginia means RECs generally cannot be sold to Virginia utilities. (As noted above, Virginia utilities do not need wind and solar to meet their RPS goals.) RECs generated here can sometimes be sold to utilities in other states (as of now only Pennsylvania) or to brokers who sell to voluntary purchasers. Currently the State Corporation Commission is reviewing the possibility of setting up a REC registry in Virginia that could serve the voluntary REC market.

Net metering

Section 56-594 of the Virginia code allows utility customers with wind and solar projects to net energy meter. System owners get credit from their utility for surplus electricity that’s fed into the grid at times of high output. That offsets the grid power they draw on when their systems are producing less than they need. Their monthly bills reflect only the net energy they draw from the grid.

If a system produces more than the customer uses in a month, the credits roll over to the next month. However, at the end of the year, the customer will be paid for any excess credits only by entering a power purchase agreement with the utility. This will likely be for a price that represents the utility’s “avoided cost” of about 4.5 cents, rather than the retail rate, which for homeowners is about 10.5 cents. Given the current cost of installing solar, this effectively stops people from installing larger systems than they can use themselves.

Virginia law also does not allow system owners to share the electricity with other consumers through community net metering or solar gardens. Several bills that would have permitted this were introduced in the 2014 session but defeated due to utility opposition. Community net metering remains one of the solar industry’s highest priorities.

Under a bill introduced by Delegate Randy Minchew (R-Leesburg) and passed in 2013, owners of Virginia farms with more than one electric meter are permitted to attribute the electricity produced by a system that serves one meter (say, on a barn) to other meters on the property (the farmhouse and other outbuildings). This is referred to as “agricultural net metering.” The law takes effect July 1, 2014 for investor-owned utilities (Dominion and Appalachian Power) and July 1, 2015 for the cooperatives.

Standby charges and other limits

Dominion Power is at the forefront of a national pushback against policies like net metering that facilitate customer-owned generation.

When net metering was instituted in Virginia, residential systems were limited to 10 kilowatts (kW), and commercial systems to 500 kW. The solar industry succeeded in getting the residential limit raised to 20 kW in 2011, but the change came with a catch: the utility was allowed to apply to the State Corporation Commission to impose a “standby” charge on those customers.

Seizing the opportunity, Dominion won the right to impose a standby charge of up to about $60 per month on these larger systems, eviscerating the market for them just as electric cars were increasing interest in larger systems. (SCC case PUE- 2011-00088.) Legislative efforts to roll back the standby charges were unsuccessful.

In the spring of 2014 Appalachian Power filed for rate changes to include even more extreme standby charges for residential systems between 10 and 20 kW. Its rate case, PUE-2014-00026, will be heard by the SCC on September 16, 2014.

The standby charges supposedly represent the extra costs to the grid for transmission and distribution. In the summer of 2013, in a filing with the SCC (PUE-2012-00064, Virginia Electric and Power Company’s Net Metering Generation Impacts Report), Dominion claimed it could also justify standby charges for its generation costs, and indicated it expects to seek them after a year of operating its Solar Purchase Program (see discussion below).

Aside from residential systems between 10 and 20 kW and a provision attached to the Agricultural Net Metering bill, there is no express authority in the Virginia code for Dominion to seek new standby charges. This suggests we may see utility-sponsored legislation in the 2015 session if Dominion follows through.

Homeowner Association Bans

Homeowner association (HOA) bans and restrictions on solar systems have been a problem for residential solar. In the 2014 session, the legislature nullified bans as contrary to public policy. The law contains an exception for bans that are recorded in the land deeds, but this is said to be highly unusual; most bans are simply written into the HOA covenant.

Even where HOAs cannot ban solar installations, they can impose “reasonable restrictions concerning the size, place and manner of placement.” This language is undefined. It would seem that an HOA cannot use it to prohibit systems that are visible from the front of the home, if that is the only place that gets sun, but beyond that, residents may need to negotiate with their neighbors to achieve agreement. The Town of Blacksburg has been wrestling with this issue in the context of its Solarize program and is working with the Maryland-DC-Virginia Solar Energy Industries Association to develop guidelines that might be helpful to other communities. If litigation ensues, legislation may be needed to define “reasonable restrictions.”

Barriers to third-party ownership

One of the primary drivers of solar installations in other states has been third-party ownership of the systems, including third-party power purchase agreements (PPAs), under which the customer pays only for the power produced by the system. For customers that pay no taxes, including non-profit entities like churches and colleges, this is especially important because they can’t use the 30% federal tax credit to reduce the cost of the system if they purchase it directly. Under a PPA, the system owner can take the tax credit and pass along the savings in the form of a lower power price.

In 2011, when Washington & Lee University attempted to use a PPA to finance a solar array on its campus, Dominion Power issued cease and desist letters to the university and its Staunton-based solar provider, Secure Futures LLC. Dominion claimed the arrangement violated its monopoly on power sales within its territory, notwithstanding what appeared to be an exception in §56-577(A)(5)(a) of the Virginia code authorizing third party sales of renewable energy.

The threat of prolonged litigation scuttled the PPA contract, although the solar installation was able to proceed using a different financial arrangement.

After a long and very public fight in the legislature and the press, Dominion and the solar industry negotiated a compromise that specifically allows customers in Dominion territory to use third-party PPAs to install solar or wind projects over the next two years under a pilot program capped at 50 MW. Projects must have a minimum size of 50 kW, unless the customer is a tax-exempt entity, in which case there is no minimum. Net-metered projects are subject to the net metering limit of 500 kW. Projects that are not net metered can be as large as 1 MW.

Appalachian Power and the electric cooperatives declined to participate in the PPA deal-making, so the legal uncertainty about PPAs continues in their territories.

Meanwhile, however, Secure Futures has developed a third-party-ownership business model that it says works like a PPA for tax purposes but does not include the sale of electricity, and therefore should not trigger a challenge from Appalachian Power or other utilities. Currently Secure Futures is the only solar provider offering this option, which it calls Customer Self-Generation.

Dominion “Solar Partnership” Program

In 2011, the General Assembly passed a law allowing Dominion to build 30 MW of solar energy on leased property, such as roof space on a college or commercial establishment.

In theory, the point is to study the effect on the grid of integrating solar energy. This strikes many people as ludicrous, given that New Jersey now has over 1200 MW of solar and could probably tell us how it’s going. Still, it was 30 MW more than the utility had planned to build previously.

The SCC wasn’t as thrilled as solar advocates were, so one of the conditions of its approval was that the RECs that are generated must be sold to help reduce the cost. Thus the power will not be used to meet RPS goals.

As of August 2014, Dominion has completed only three projects, one on a university and the other two on commercial buildings, for a total of 1,432 kW. The company has hired only out-of-state installers, disappointing Virginia industry members who hoped it would lead to work for local companies.

Dominion Solar Purchase Program

The same legislation that enabled the Community Solar initiative also allowed Dominion to establish “an alternative to net metering” as part of the demonstration program. As developed by the utility, the program turned out to be a buy-all, sell-all deal for up to 3 MW of customer-owned solar. Approved by the SCC this year, the program allows owners of small solar systems on homes and businesses to sell the power and the associated RECs to Dominion at 15 cents/kWh, while buying regular grid power at retail for their own use. Dominion then sells the power to the Green Power Program at an enormous markup, a blatant rip-off that, shockingly, received the SCC’s stamp of approval.

I’ve ripped this program so often and so thoroughly from the perspective of the Green Power Program that I won’t bother to repeat my criticisms here. From the point of view of potential sellers, however, the program isn’t so hot either. Some installers who have looked at it say it’s not worth the hassle given the costs involved and the likelihood that the payments represent taxable income to the homeowner. There is also a possibility that selling the electricity may make homeowners ineligible for the 30% federal tax credit on the purchase of their system. Sellers beware.

And then there’s the problem that selling the solar power means you aren’t powering your home or business with solar—which for most people is the whole point of installing it.

A Renewable Generation tariff for large users of energy

Currently renewable energy projects are subject to a size limit of 500 kW for net-metered projects, or 1 MW for PPA projects that are not net-metered. These limitations constrain universities, corporations, data centers, and other large users of energy that might want to run on wind or solar. And of course, the utilities’ interpretation of Virginia law would prohibit a developer from building a wind farm or a solar array and selling the power directly to users under a power purchase agreement.

In response, Dominion Power created a so-called Renewable Generation Tariff (PUE-2012-00142) to allow customers to buy larger amounts of renewable power from providers, with the utility acting as a go-between and collecting a monthly administrative fee.

Putting the utility in the middle of the sale seems cumbersome and bureaucratic, but in a regulated market is probably to be expected. If customers insist on actual power (bundled with RECs) and specify wind and/or solar, this may be useful to the Virginia market. We have not heard whether any customers have stepped forward to use the tariff. Wind developers tell us it is not an inducement for them to build in Virginia.

What happened to utility-scale wind and solar?

A few years ago, Dominion Power got a bill passed to support a 4 MW solar facility in Halifax. The project was dropped when problems plagued the battery storage system that was integral to the project.

Utility-scale wind almost had its moment, too. A few wind farm proposals made it to the permitting stage, including ones in Highland County and on Poor Mountain in Roanoke. For the past few years, Dominion Power’s website has listed 248 MW of land-based wind in Virginia as under development, without any noticeable progress. “Under development” turns out to mean “maybe someday.”

Plummeting prices for shale gas seem to have been the primary culprit for the demise of these proposals. Wind in the Midwest and Great Plains can outcompete any other fuel source, but it’s more expensive in the East. The SCC has also proved unfriendly to renewable energy, dismissing suggestions that it should take into account price stability, environmental benefits and other external costs when evaluating generating sources.

However, Dominion has now announced plans for 220 MW of utility-scale solar in Virginia, to be installed beginning in 2017. We shall see.

As for Virginia’s great offshore wind resource, the perception that offshore wind energy will be costly is also making that a hard sell. A year ago Dominion won the federal auction for the right to develop about 2000 MW of offshore wind power, and the lease terms call for the company to file construction plans within five years. The federal government’s timeline leads to wind turbines being built off Virginia Beach around 2020. As I’ve discussed elsewhere, Dominion is something less than committed to seeing the process through. This puts advocates in the legislature and the business and environmental communities in the odd position of being keener on a development than the developer is.

Meanwhile, however, Dominion is part of a Department of Energy-funded team proceeding with two 6-MW offshore wind test turbines scheduled to be installed in 2017.

What’s past is prologue

In past years several bills have sought to address the fundamental misalignment of Virginia’s energy priorities that supports fossil fuels over renewable energy and energy efficiency. Virginia taxpayers currently subsidize fossil fuel use, including through tens of millions of dollars annually in direct payments to coal mining companies, as well as indirectly, such as by imposing on the public the added costs of health care for treating asthma caused by air pollution.

Bills requiring the SCC and utilities to consider factors such as climate change and the environment (Delegate Kaye Kory, D-Falls Church), health care externalities (Senator Don McEachin, D-Richmond) and price stability (Delegate Alfonso Lopez, D-Arlington), unfortunately never made it out of committee

But all that was before EPA proposed a Clean Power Plan under Section 111(d) of the Clean Air Act on June 2, thrusting carbon into the center of energy policy decision-making. If the plan takes effect as proposed, Virginia will have to develop a state implementation plan (SIP) that reduces total carbon pollution from power plants. One way to do it will be to throttle back on the fossil fuels and bring on emissions-free wind and solar.

The SIP wouldn’t be due until at least 2016, and if some members of Congress (not to mention members of the Virginia legislature) have their way, the 111(d) rules will never take effect. But whatever happens, building wind and solar seems like one of those decisions no one is likely to regret. The more we have, the better prepared we will be—for 111(d) rules or a carbon tax, price spikes in natural gas, interruptions of fuel supplies, or a disaster that takes down the grid

The question remains whether enough of our elected leaders think this way to begin making changes before changes are forced upon us. We’ll all have to stay tuned to find out.