Moving to block competition, Dominion files its own sort-of-green energy tariff

Just a couple of the great things that count as “renewable energy” in the Virginia Code.

Dominion Virginia Power has filed for permission from the State Corporation Commission (SCC) to offer a 100% renewable energy tariff to commercial and industrial customers with peak loads of over 1,000 kilowatts. In a footnote, Dominion states that it intends to propose a similar tariff for residential customers in the future. The case is PUR-2017-0060.

Customers who want only carbon-free energy like wind and solar will likely be disappointed. Dominion intends to use a “portfolio of resources” that will include “dispatchable resources”—i.e., hydropower and stuff that can be burned. Dominion promises the sources it uses will meet Virginia’s definition of renewable. That’s not reassuring. Under Virginia law, renewable energy can include sources like landfill gas and municipal solid waste, as well as “biomass, sustainable or otherwise (the definitions of which shall be liberally construed).”

Dominion’s filing comes scarcely one month after an SCC decision confirmed the right of independent renewable energy provider Direct Energy to offer its products to Dominion customers, but only so long as Dominion lacks its own green tariff for those customers. The SCC order (explained here) made clear that under Virginia law, a competitor like Direct Energy would be blocked from taking on new customers once Dominion has an approved tariff.

Dominion’s filing looks suspiciously like an effort to cut Direct Energy off at the knees. If the upstart competitor follows through with its plans to offer Virginia residents a renewable energy option, Dominion will surely propose a residential renewable energy tariff. SCC approval of Dominion’s tariff would shut out Direct Energy, which is targeting only residential consumers for its product. Under the language of the Code, it does not appear to matter whether a competitor can offer a better product, or a better price.

For the moment, Direct Energy is not backing down. The company has set up a web page to gauge the interest of residential consumers while it deliberates its next move. Ron Cerniglia, Director of Corporate and Regulatory Affairs for the Mid-Atlantic Region, told me he thinks the timing of Dominion’s filing is “curious,” given that “Dominion has had ten years to file a renewable energy tariff and hasn’t. We’re concerned about the implications of limiting choice for consumers. We don’t know if the move will actually offer a choice consumers want, or if it is just closing doors on others.”

Indeed, ten years have passed since Virginia enacted its current utility law, which includes the right of a customer to “purchase electric energy provided 100 percent from renewable energy” from another supplier if its own utility isn’t offering it. During most of that time, Dominion has sold Renewable Energy Certificates to customers under its “Green Power Program,” but it has never offered residential customers an opportunity to buy actual renewable energy. (See “Is a Green Power program worth your money?”)

This is slated to change as the utility works with the solar industry on implementing a new solar option under legislation passed this year. However, the new law specifies that the solar option will not count as a tariff for “electric energy provided 100 percent from renewable energy,” so it does not block competitive offerings like Direct Energy’s.

Dominion was agreeable to excluding the solar program because it interprets the Code’s reference to “electric energy provided 100% from renewable electricity” to mean the electricity must come from renewables 100% of the time, an interpretation almost no one else shares.

This seems to be the reason Dominion intends to include carbon-emitting sources into its renewable energy offering, even though it’s safe to say there are no customers clamoring to get their electricity from garbage or the clear-cutting of forests. It also means the new tariff will likely be priced higher than one that included only solar, because electricity from biomass is more expensive today than harvesting the sun. (No word from Dominion on why it doesn’t just assign a portion of its pumped storage capacity to serve an all-wind-and-solar product.)

But if customers want only wind and solar, they are also likely to be disappointed in Direct Energy’s product. Cerniglia says his company includes baseload sources like “cleaner biomass” in its renewable energy product to provide 24/7 power. He estimated that the initial mixture would consist of “50% to 60% municipal waste biomass (Pennsylvania and Virginia sourced) and 40% to 50% wind (Pennsylvania sourced) . . . We are also committing to not utilize virgin wood / clear cut wood biomass in our product mix at any time.”

Direct Energy also has not determined the pricing of its product yet, but Cerniglia said it would be “equal to or lower than what Dominion Virginia Power residential customers pay for ‘brown’ power.”

Perhaps most importantly, he noted, “The benefit of a competitive market is that customers can leave us at any time. They’re not captive.”

Shareholder vote shows growing unease over Dominion’s role in climate change

Dominion 2017 Ped Bridge

Black curtains are visible inside the pedestrian bridge over Marshall Street leading to the Richmond Convention Center (background on the left). They were installed to block shareholders’ view of protesters lining the sidewalk outside Dominion Resources’ 2017 shareholder meeting last week. Photo credit: Chesapeake Climate Action Network.

A stunning development occurred during Dominion Resources’ annual shareholder meeting in Richmond last Wednesday. But as shareholders, board members, and company officials left the meeting, no one yet knew about it. What’s more, the Richmond Times-Dispatch’s coverage also missed it, focusing instead on the company’s name change to Dominion Energy. (To its credit, the Norfolk Virginian-Pilot did break the story two days later.) Dominion’s hometown newspaper didn’t just bury the lede; it overlooked it altogether. And therein lies an interesting tale.

What was so stunning? Simply this—some 48 percent of Dominion shares that were voted supported the resolution of a major shareholder, the New York State Common Retirement fund, calling on the company’s board of directors to report on how the company will deal in coming years with the fact that the world needs to reduce greenhouse-gas emissions to an extent consistent with limiting global warming to 2 degrees Celsius. The resolution’s full text is available on p. 60 of Dominion’s 2017 proxy statement.

Understanding why the vote on this resolution is stunning requires some context.

Shareholders have been submitting resolutions for at least eight years urging Dominion’s board to face up to global warming and the company’s role as a major carbon polluter contributing to that warming. In the past, some resolutions have gotten favorable votes as high as 24 percent, while others have been in single digits. Many large investors routinely follow the company board’s advice, and Dominion’s board always recommends a “no” vote on any environment- or climate-related resolution. Getting favorable votes is an uphill battle when a company’s powerful board is working against you.

That’s why the 48 percent vote for the retirement fund’s resolution this year is so huge. The total value of the nearly 198 million shares voting for the resolution was $15.5 billion, based on Dominion’s May 9 closing stock price.

“The vote by Dominion’s shareholders speaks volumes,” said New York State comptroller Thomas P. DiNapoli, trustee of the state’s retirement fund. “This is a wake-up call for the company to be responsive and explain how the Paris Agreement’s worldwide effort to rein in global warming will impact its business. Shareholders need to know what steps Dominion is prepared to take to address climate risk.”

But there’s still more to the tale. The stunning vote spike didn’t become known until hours after the meeting, and even then only to those who knew where to find the results and had a calculator handy to compute the vote percentages. That delay was no accident, but the result of Dominion’s efforts to keep the news from coming out during the meeting.

Until a few years ago, Dominion announced vote totals on shareholder resolutions during each meeting. That’s easy enough to do, since virtually all votes are cast in advance, and literally just a handful are cast on paper ballots collected during the meeting. But as favorable vote percentages on shareholder resolutions crept upwards over the years, Dominion discontinued the practice of announcing vote counts during the meeting. Instead it now reports only whether the resolutions got more than 50 percent of the vote. So this year it was simply announced during the meeting that the four shareholder resolutions on the ballot failed to get a majority of votes. End of story; nothing more to see here, folks.

By law, however, Dominion must report the actual shareholder vote totals to the Securities and Exchange Commission for public disclosure. It did so in the afternoon following the meeting, and put its SEC filing on the company’s website. Those who thought to look for them and knew where to look could find the vote results. Then, with a calculator or spreadsheet they could compute the vote percentages.

Dominion’s quiet move to prevent shareholders (and reporters) attending the meeting from learning the vote totals until later in the day is part of a pattern of subtle and not-so-subtle company efforts to tightly control messaging at its shareholder meetings. The control efforts have evolved each year as more shareholders have questioned the company’s environmental and climate record during meetings, and as demonstrators have begun to appear regularly outside to protest.

The company’s control effort reached somewhat absurd levels this year, as shareholders had to show their drivers’ licenses and admission tickets at four separate checkpoints before gaining entry to the meeting. As shareholders crossed an elevated pedestrian bridge across Marshall Street from the parking garage to the Richmond Convention Center, they found black curtains temporarily set up on floor stands to line the glass walls of the bridge, serving no purpose but to block any views of demonstrators on the street below. Then, when shareholders descended an escalator to the hallway outside the first-floor meeting room, they also found a long line of temporary stands of more black curtains. They were about eight feet high—just enough to block views through the wall of windows facing Marshall Street, where protesters had gathered on the sidewalk. This served to cast a bit of a funereal pall over the hallway, as shareholders drank coffee and ate Virginia ham biscuits before the meeting.

But enough about the voting process and window curtains. Understanding the true significance of the big vote spike for the retirement fund’s climate resolution requires a brief look at how Dominion addresses, and fails to address, the climate crisis. Dominion occasionally talks up its reductions in carbon intensity in electricity generation over the years. That’s the amount of carbon dioxide emitted per unit of electricity. And the company touts new solar projects, which are growing, but not nearly fast enough to catch up with Virginia’s neighboring states or to reduce carbon emissions on the needed timetable.

But Dominion has plans to increase its total carbon-dioxide emissions over the next fifteen years. And what the company never, ever does, is link its plans and its planned future greenhouse-gas emissions to what climate science tells us is needed to keep global warming to no more than 2 degrees Celsius. Indeed, as I wrote last year, Dominion executives studiously avoid even mentioning climate change in public, even when the topic is right in front of them, begging for attention. George Mason University climate-communication expert Edward Maibach and coauthors reported last year that silence on climate change can lead to more silence, in what they call a “climate spiral of silence.”

Meanwhile, while publicly silent about climate, Dominion still belongs to and supports the American Legislative Exchange Council (ALEC), which has a long track record of misinforming state legislators about climate science and working to block meaningful action to reduce greenhouse-gas emissions.

That’s why the 48 percent vote for the retirement fund’s resolution is so huge. Shareholders owning nearly half of the Dominion shares that were voted last week told the company’s board of directors and management that they need to start publicly talking and seriously thinking about climate change, and to explain how they will operate a business that is consistent with the need to keep global warming under 2 degrees.

Perhaps Dominion’s board believes, as at least one Dominion executive does, that climate change is an overblown issue that is pushed by “warmists,” that there’s been no global warming for fifteen years, and that global warming (which by the way isn’t happening) may not be human-caused. Such a belief would allow the board to ignore this shareholder vote, and assume that in future years the resolution will never get a majority vote because climate change concerns will go away as more people see climate change as a hoax. But maybe Dominion’s board, or at least a majority of its members, know better and will listen to the wake-up call delivered to them last week.

As I left the meeting I passed again by the black curtains in the convention hall windows and on the pedestrian bridge over Marshall Street. Just as Dominion used curtains to block views of protesters, its executives seemingly wear blinders to avoid looking at (and talking about) climate change. It’s past time for the blinders to come off and for Dominion’s management and board to look around at the wider world out there.

On May 22, Seth Heald will receive a master of science degree in energy policy and climate from Johns Hopkins University. His final paper in the program was about climate silence and moral disengagement. He is a Dominion Energy shareholder, and chair of the Sierra Club’s Virginia Chapter.

Sierra Club files petition with SCC seeking Affiliates Act review before Dominion commits to Atlantic Coast Pipeline deal

 

By Pax Ahimsa Gethen – Own work, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=55451003

Today the Sierra Club filed a petition with the Virginia State Corporation Commission seeking a Declaratory Judgment that Dominion Virginia Power’s arrangement to obtain gas capacity in the Atlantic Coast Pipeline is subject to Commission approval under the Virginia Affiliates Act. That law requires a public service corporation to get the approval of the Commission before it enters into a “contract or arrangement” with an affiliated company.

The Affiliates Act applies, according to the Sierra Club, because Dominion Virginia Power’s parent corporation, Dominion Resources, is a partner in the Atlantic Coast Pipeline joint venture, and Dominion Virginia Power’s (DVP) fuel procurement subsidiary, Virginia Power Services Energy Corporation (VPSE), contracted for capacity on the pipeline. Put more simply, a utility—Dominion Virginia Power– and two of its corporate affiliates have negotiated a business deal, and the Affiliates Act directs the Commission to carefully review that deal to ensure that consumers don’t get the short end of the stick.

If the Commission grants Sierra Club’s petition, DVP will have to submit its agreement with Atlantic Coast to the Commission for formal review and approval. Sierra Club and other interested parties will then have a chance to weigh in on whether the agreement will actually benefit consumers.

There is good reason to think it won’t benefit consumers. Bill Penniman, a retired energy attorney who serves as Conservation Co-Chair for the Virginia Chapter of the Sierra Club, has studied Atlantic Coast’s filings with the Federal Energy Regulatory Commission (FERC). He notes that as of now, the amount of money that DVP (via VPSE) will pay Atlantic Coast for pipeline capacity is secret. The public filings reveal, however, that the maximum amount Atlantic Coast can charge any customer is more than three times the amount that another company, Transcontinental, can charge for pipeline capacity that services the exact same power plants as Atlantic Coast. And as it happens, says Penniman, DVP already has twenty-year shipping agreements with Transcontinental. The fact that DVP is now trying to enter into a whole new contract to ship gas to the same power plants via a much costlier pipeline ought to raise a lot of eyebrows.

If this talk of parent companies and subsidiaries is confusing, it might help to picture Dominion Resources as a giant spider with DVP as one leg and other Dominion-owned companies as other legs. Some of those legs have hairs on them; they are subsidiaries of the subsidiaries, but still part of the spider. VPSE is a hair on the DVP leg; its job is to buy fuel and whatever else the utility needs to run its power plants and make electricity.

In this case, VPSE has contracted with Atlantic Coast to buy a big chunk of space on the pipeline. DVP will use this pipeline capacity to deliver the gas needed to fire its Greenville and Brunswick facilities. Yet another leg on the spider, Dominion Transmission, has been hired to build and operate both Atlantic Coast and a connecting line called the Supply Header (which ups the price of the whole system).

To top it all off, the spider itself, Dominion Resources, owns 48% of the Atlantic Coast venture, along with Duke Energy and Southern Company. You can picture the Dominion spider teaming up with its spider buddies on the project, but I don’t recommend that if you tend towards arachnophobia and are already not happy with this analogy.

Having VPSE contract for capacity on Atlantic Coast is absolutely critical to the success of the whole pipeline venture. Atlantic Coast can’t get permission from the Federal Energy Regulatory Commission (FERC) to build the pipeline unless it can show the pipeline is needed, and the only way to show need is by having customers lined up to buy the capacity. If VPSE didn’t sign that contract, Atlantic Coast couldn’t get built.

But here’s the thing: while FERC has final authority for approving or rejecting the pipeline itself, Virginia’s State Corporation Commission has authority to decide whether any agreements between regulated utilities and their corporate affiliates are in the public interest. In fact, the law says that the Commission must review and approve inter-affiliate agreements before they take effect.

However, even though DVP has directed VPSE to buy pipeline capacity on Atlantic Coast for DVP to use at its power plants, DVP has never submitted VPSE’s arrangement with Atlantic Coast for Commission review. Atlantic Coast has assured FERC it has enough customers to justify building the pipeline, but the fact of the matter is, one of its key customers—VPSE (and, by extension, DVP)—may not have had authority to enter into the deal in the first place.

This is what the Affiliates Act is supposed to prevent. Virginia Code section 56-77 says that any “contract or arrangement” between a public service company and an affiliated interest for goods, property, or services requires prior approval from the Commission. The fact that VPSE is acting as a contractual middle man between DVP and Atlantic Coast makes no difference: this is an arrangement between DVP, VPSE, and Atlantic Coast that is made specifically for the benefit of DVP. They’re all the legs (and leg-hairs) of the same spider, and they are likely to put the spider’s welfare above anyone else’s. And that’s exactly the reason the General Assembly passed the Affiliates Act.

The Atlantic Coast Pipeline is a big deal for Dominion Resources. The company is all-in on natural gas, and building this $5 billion pipeline is expected to generate a lot of profit for shareholders. What’s missing from this equation is the public interest, and there are good reasons for the Commission to be skeptical. How does it benefit Virginians to construct an extraordinarily expensive pipeline when much cheaper pipeline capacity already exists? That’s the question the Sierra Club will pose to the Commission if grants the petition and requires DVP to submit its Atlantic Coast agreement for review.

Furthermore, why should DVP commit itself (and its customers) to a huge amount of natural gas capacity over twenty-year period when there are better, cleaner options available? While Dominion and all its spider legs may think that burning more gas is a great idea, the reality is, natural gas increasingly looks less like a long-term energy solution and more like a trap for companies that made the wrong bet. At the same time, renewable energy and efficiency resources are growing ever cheaper. The Commission might well question Dominion’s plan to lock its customers into a bad investment in fossil fuels over the next twenty years at the expense of smarter renewable alternatives.

There’s a reason the Affiliates Act exists, and this is it. Here’s hoping the Commission grants Sierra Club’s petition and gives the Dominion spider a good, hard look under the microscope.

 

Dominion Power promises huge solar investments and a lower carbon footprint—or does it?

Dominion Virginia Power says energy from solar farms is now a low-cost option. Photo credit Kanadaurlauber.

Dominion Virginia Power released its updated Integrated Resource Plan (IRP) this week with a press release that promised thousands of megawatts (MW) of new solar power and a dramatically lower carbon footprint. In a remarkable turnabout, the Executive Summary declares, “The Company must now prepare for a future in which solar PV generation can become a major contributor to the Company’s overall energy mix.”

Alas, a closer look reveals Dominion will actually increase its carbon emissions over the period studied. Meanwhile, the solar would be built at a rate of only 240 MW per year over the 15-year period covered by the IRP, about the same amount being installed in Virginia this year. (Over 25 years, Dominion says its solar could reach 5,200 MW, which means the pace of installation would actually drop in the out years.) That should elicit yawns, not excitement.

The solar numbers pale in comparison to the more than 4,600 MW of new natural gas combined-cycle plants Dominion has been building just in this decade. (Remember that solar farms generate electricity at about 20-25% of “nameplate” capacity on average, while combined-cycle gas plants nationally average 50-60%, and can achieve 70% or higher.*) And even come 2032, the new solar will make up only a tiny fraction of a generation portfolio that consists almost entirely of coal, gas and nuclear.

I’ll be interested to see the numbers analyzed, but my guess is that all the renewable energy Dominion proposes to build over the next 15 years represents no more than 5-10% of its total electric generation. That’s too little, too late, in a state that can do so much better.

So the more things change, the more Dominion stays the same. Behind the hype being offered to the press stands a utility that is still committed to fossil fuels and nuclear power.

Virginia utilities file IRPs with the State Corporation Commission (SCC) every year. The plans are supposed to reflect the utilities’ best sense of how they will meet consumers’ needs for electricity while complying with state and federal laws and policies. This involves some guesswork about the direction of future regulations, including regulations of CO2 emissions.

In spite of President Trump’s determination to roll back climate protections while he is in office, Dominion’s IRP assumes an eventual price on carbon. Most utilities nationwide are doing the same thing. But given the uncertainties, Dominion has chosen (as it did last year) to model different scenarios instead of committing to a single plan.

Even the low-cost plan that wouldn’t comply with the EPA Clean Power Plan contains just as much solar as the other plans, reflecting the company’s assessment (on page 3) that solar is now “cost-competitive with other more traditional forms of generation, such as combined-cycle natural gas.”

Yet the carbon reductions Dominion promises in its press release appear to be something of a sleight-of-hand. For one thing, Dominion has chosen to compare its CO2 output in 2032 to its output in 2007, not 2017. CO2 emissions were markedly higher in 2007 than now, with the shale gas boom and the rise of renewables leading to massive coal retirements in the interim.

Moreover, a careful reading of the press release reveals the reductions Dominion promises are per-capita, not overall. A chart on page 115 of Dominion’s IRP shows every one of the scenarios Dominion studied will actually increase the company’s total CO2 emissions between now and 2042.

That reality exasperates climate activists. Glen Besa, former Director of the Virginia Chapter of the Sierra Club, comments, “The only impression you could have reading Dominion’s release was that it was making dramatic reductions in carbon pollution, which obviously is not the case.”

CO2 emissions would not increase if Dominion were simply shutting down coal and building more solar. But all of the alternative scenarios Dominion models for its IRP contain more gas plants: at least another 1,374 MW of gas combustion turbines in all plans, and 1,591 MW of combined cycle gas in some scenarios. Combustion turbines are more flexible than combined-cycle plants and so are better for meeting spikes in demand and integrating renewable energy like solar, but while they run less often, they are typically higher-polluting. Many utilities are using demand response or installing battery storage instead; Dominion appears to prefer gas.

All this gas means higher CO2 output. Not incidentally, burning more gas also means more business for Dominion’s parent corporation, Dominion Resources (soon to be known as Dominion Energy), which is heavily invested in gas transmission. And crucially, Dominion Energy needs more gas power plants to justify building the Atlantic Coast Pipeline. So building more gas plants serves the interests of Dominion’s affiliates, not its customers.

The problem with building new gas plants is that it lowers carbon only so far compared to coal, and then you’re stuck at that level for the life of the gas plants, unless you’re willing to abandon them early. That’s why any utility that’s serious about protecting ratepayers from stranded costs has to invest in wind, solar, energy efficiency and storage, not natural gas.

Speaking of wind, the IRP includes the 12 MW pilot project known as VOWTAP in all of the plans, even though Dominion lost millions of dollars in federal funding when it would not commit to building the two test turbines by 2020, three years past the original deadline. But none of the scenarios studied include any land-based wind, and none include a build-out of the federal offshore wind energy area Dominion bought the rights to, which could support at least 2,000 MW of offshore wind power. This is a strange omission given that Dominion continues to include a scenario in which it would build the world’s most expensive nuclear reactor, known as North Anna 3.

Polls consistently show overwhelming public support for renewable energy. Yet right now, ordinary Virginia ratepayers have no access to renewable energy unless they put solar on their own rooftop. Corporations like Amazon Web Services and Microsoft account for the bulk of the solar energy being installed in Virginia, with most of the remaining going to the military, state government, universities, and schools.

So 3,200 MW over 15 years won’t even begin to satisfy consumer demand. North Carolina installed almost 1,000 MW last year; I’d like to see Dominion set that as an annual target, bringing it up to the 15,000 MW over 15 years it modeled for last year’s IRP (before hiding the encouraging results from pubic view). Round out the solar with other cost-effective clean energy options, and we will see the kind of carbon reductions that don’t have to be fudged in a press release.


*On page 88 of the IRP, Dominion provides it own capacity factor forecasts: solar 25%, combined cycle gas 70%, gas combustion turbines 10%, nuclear 96%, onshore wind 42%, offshore wind 42%. The chart does not include a number for coal.

Arlington Creates Legal Authority for Solar-on-Schools Power Purchase Agreements; Plans October RFP

By Will Driscoll

Clearing a legal hurdle that may affect other Virginia school systems, Arlington Public Schools has created a new type of purchasing authority so it may enter into power purchase agreements (PPAs) for solar power.

Arlington’s School Board created that authority by amending its purchasing resolution at its April 20, 2017 meeting, by unanimous vote.  The school system staff plans to issue a request for proposals (RFP) for solar power in October, and complete its first PPA project by September 2018, according to a draft timetable.

 
The Arlington School Board voted unanimously to create the authority to enter into solar power purchasing agreements, on April 20, 2017.  From left: Tannia Talento, Barbara Kanninen, Nancy Van Doren, James Lander, and Reid Goldstein.  (Photo credit: author)

Arlington officials concluded that the previous version of its purchasing resolution, which satisfied the requirements of the Virginia Public Procurement Act, did not permit procuring construction or capital projects through “alternate methods” such as power purchase agreements (PPAs).

Arlington Public Schools (APS) officials determined that such alternate methods of procurement must meet the requirements of Virginia’s Public-Private Educational Facilities and Infrastructure Act of 2002 (PPEA).

Specifically, according to the approved amendment, “Section 56-575.16 of the PPEA requires that APS may not consider any Unsolicited PPEA Proposal nor solicit PPEA Bids or Proposals for a Qualifying Project until APS has adopted and made publicly available guidelines that are sufficient to enable APS to comply with the PPEA.  These Guidelines are adopted by the [School] Board for the purpose of satisfying that requirement.”

APS purchasing office staff and legal counsel prepared the proposed amendment, modeling it on procedures outlined in the PPEA.  The new provisions, now incorporated in the APS Purchasing Resolution, call for competitive bidding on any PPA project, and require School Board approval before any PPA agreement is signed.

“This is a really big deal for us,” said school board member Barbara Kanninen.  “We are opening up the opportunity to have solar power for Arlington Public Schools.  That’s really forward thinking, it’s smart energy use and I’m fully supportive of this.”

School board member James Lander noted the opportunity “to walk the walk that we talk when we talk about being a progressive environment, a forward-thinking community.” He added that solar on schools “will allow instructional opportunities for our students.”

In public comments prior to the vote, Tim Whitehouse, executive director of Chesapeake Physicians for Social Responsibility, said that the group’s 150 members in Arlington “strongly support the effort of the Arlington School Board to enter into power purchase agreements for solar.”  He added, “We’ve seen in schools where this happens, children get interested in renewable energy and the school systems develop programs that help educate the kids.”  Will Driscoll (author of this article) of Arlington 350 noted that prices for installed commercial solar declined 20 percent in 2016, creating an opportunity for the school district to save money with solar.  Noting that the school board must approve any PPA agreement before it may be signed, and could reject any agreement they find unsatisfactory, he said “we have nothing to lose, and much to gain.”

The new provisions provide an opportunity for solar contractors to submit an unsolicited proposal to APS, along with a proposal review fee of $2,500.  Any such proposal may prompt the school district to undertake a solar project, in which case the school district would solicit competing bids, in accordance with PPEA guidelines.

The provisions call for APS to hire “qualified professionals” from outside the APS staff to review all solicited proposals.  These professionals may include an architect, professional engineer, or certified public accountant.  APS will also hold a public hearing prior to entering into any PPA agreement.

To date, Arlington has installed a 497 kilowatt solar system on Discovery Elementary School and a 90 kilowatt system on Wakefield High School, both through outright purchase during the construction phase for each school.

Direct Energy wins right to sell renewable energy in Virginia, but there’s a catch

Direct Energy may have just won a Pyrrhic victory in its bid to sell renewable energy to Virginia residents. The State Corporation Commission ruled last week that the company can market 100% renewable electricity to Virginia customers of Dominion Virginia Power and Appalachian Power, but only as long as the utilities aren’t offering it themselves. Once they do, Direct Energy can continue to serve existing customers but won’t be able to sign up new ones.

The ruling makes it harder for Direct Energy to enter the residential market in Virginia. On the other hand, Direct Energy appears to have won a round on a second issue involving sales to large (over 5 megawatts in demand) commercial and industrial customers. The SCC ruled that these customers don’t have to give five years’ notice before they can switch back to their utility from a renewable energy provider like Direct Energy, as they would have to do if they were not buying renewable energy.

This is a significant win for Direct Energy’s ability to offer renewable energy to large customers, since Dominion’s position on the five-year notice requirement could scare off customers worried about being left without a supplier if Direct Energy were to leave the market. However, that part of the SCC’s order is under review in response to a motion for reconsideration filed by Dominion on Tuesday, so I won’t address that further here.

Direct Energy is a Delaware-based company currently licensed to sell natural gas in Virginia as a competitive service provider. Last August the company filed a petition for declaratory judgment (PUE-2016-00094) asking the SCC to clarify its rights under Virginia law to sell renewable energy to customers of Dominion Virginia Power. The SCC brought in Dominion and Appalachian Power, and Southern Environmental Law Center (SELC) intervened on behalf of environmental groups Appalachian Voices and Chesapeake Climate Action Network.

Section 56-577 (A)(5) of the Virginia Code explicitly allows sellers of 100% renewable energy into the territories of the state’s monopoly utilities if those utilities themselves aren’t offering renewable energy to their customers. Currently, neither Dominion nor Appalachian Power offer a tariff for renewable energy. That means the door is wide open for anyone else to do so.

But that open door is merely a tease, as the Commission’s order just confirmed. All Dominion or APCo has to do is jump in with its own product, and the door shuts in the face of the interloper. Once the SCC approves a utility’s program, Direct Energy can continue selling to any customers it has already signed up, but it won’t be able to sign up any new customers.

It can take months or years of marketing for a third-party supplier to build up enough of a customer base to make the whole effort worthwhile, so the SCC’s ruling makes the Virginia residential market much less attractive.

Direct Energy and the environmental groups had argued that once a competitive service provider got approval to sell 100% renewable electricity in Virginia, it ought to be able to continue signing up new customers, even once the SCC had approved a competing product from the incumbent utility. As the company explained in its Petition:

It would be illogical for the Virginia General Assembly to prohibit Direct Energy or any competitive service provider from continuing to market and serve additional customers once Dominion Virginia Power begins to offer a 100% renewable energy tariff. No retail business can survive if it cannot do business with new customers. This is certainly true in the retail energy market, in which customers move on and off a system with regularity, reacting to price signals and relocating in and out of utility service territories. Consequently, it is most reasonable to interpret Virginia Code § 56-577 (A) (5) (b) to allow Direct Energy to continue to serve additional customers to the class of customers to which it is marketing at the time that the Commission approves a Dominion Virginia Power 100% renewable energy tariff.

Unfortunately for Direct Energy, the Code was written to protect Virginia utilities from competition to the greatest extent possible consistent with also making them look good. What is logical and reasonable to anyone running a business doesn’t enter into it; nor, for that matter, does the best interest of the buying public.

The SCC’s order is a win for Dominion and APCo, but a loss for customers who have waited ten years for their utilities to offer them renewable energy. Both Dominion and APCo offer what they call “green power” but are simply sales of renewable energy certificates as an add-on to regular “brown” power.* Even if the utilities now gin up a their own renewable energy product, consumers would be better off having choices.

After all, the Virginia Code doesn’t say a utility program has to be better or cheaper than the one offered by a competitive service provider like Direct Energy. Indeed, some consumers have already expressed concern Dominion might close the door on Direct Energy with a product that meets the Virginia Code’s broad definition of renewable energy but is distinctly inferior.

“My worry is that Dominion will offer a “100% renewable” program that is biomass, hydro and other things that aren’t really zero carbon, but still slide by,” says Ruth Amundsen, a solar advocate in Norfolk. “And then Direct Energy would be out.”


*Legislation passed this year will allow customers to buy electricity generated from solar facilities from their utilities. The program is styled “community solar,” but it looks like it would satisfy the statutory definition of a sale of electricity generated from 100% renewable energy. However, a provision of the bill, added at the behest of SELC, states that it will not be considered such a product.

Why, you might ask, would Dominion agree to a provision that says their solar option isn’t a tariff for 100% renewable energy, especially with the Direct Energy petition outstanding? I have an answer, but first a word of caution: you are now getting deep in the weeds. Carry tick repellant.

Recall that the fight over third party power-purchase agreements (PPAs) involves two provisions of the Virginia code, including § 56-577 (A) (5)—the one we’re talking about here. Companies that want to help customers install on-site solar facilities by using PPAs have argued that this section clearly permits customers to buy solar electricity from third party suppliers when their utility doesn’t offer a renewable energy tariff. No green tariff, no bar to a PPA.

But the utilities argue that this kind of electricity sale doesn’t meet the statutory requirement, because although a solar facility is 100% renewable, it does not serve 100% of the customer’s load. A strange reading, yes; and wrong, too, according to an SCC hearing examiner who looked at the question back when APCo put together its own renewable energy product. APCo decided to withdraw its product rather than risk the SCC confirming the hearing examiner’s reading. That action meant the utilities could keep their reading of the statute as a live threat against any company that wants to offer a PPA under terms that don’t meet the terms of the pilot program Dominion negotiated a few years ago.

Apparently, preserving that argument mattered more to Dominion than chasing off would-be competitors like Direct Energy. The gamble will have paid off if Direct Energy drops its Virginia effort in light of the SCC’s ruling last week.

 

Update, April 7. Ron Cerniglia, Director of Corporate & Regulatory Affairs for Direct Energy, provided the company’s view of the SCC’s ruling for us. His note reads:

In its ruling on Direct Energy’s Petition for Declaratory Judgment, the State Corporation Commission (SCC) agreed with Direct Energy on two of the three major points on which Direct Energy sought clarification.  The SCC did not agree that a retailer could continue to provide 100% renewable service to residential and small (<5 MW) individual customers, including new customers, after the utility (e.g., APCo or Virginia Electric and Power Company) receives approval of their own 100% renewable tariff.  However, residential customers and individualized non-residential customers who sign-up with a retailer do not immediately return to utility service when and if a utility receives approval of their 100% renewable tariff.  Instead, the customer remains with the retailer for the term of the customer agreement.  
The SCC agreed with Direct Energy that a retailer may continue to offer 100% renewable service to large customers (>5 MW) or to customers aggregating to >5 MW even if such sales are no longer permitted because the utility  is offering its own 100% renewable tariff.  The SCC also agreed with Direct Energy that if a retailer is providing 100% renewable service to a large customer that several  conditions and limitation  do not apply.  That includes the requirement of  that 5 year advance notice must be given before a retailer’s customer can return to the utility for service.  It is on this last point that Dominion has filed a Petition for Reconsideration.  This week, the SCC granted Dominion’s petition without ruling up or down on its substance. 
We do not believe that Dominion has raised any issue that the SCC has not already considered. We are very appreciative of the SSC’s actions to date and are hopeful that it will make short work of the petition, and quickly enter another Order denying Dominion the relief it is requesting.  Direct Energy is excited to open up the Virginia market to competition with a 100% renewable product. Once the uncertainty has been addressed, we believe that Virginians will have the choice to choose a renewable power supply solution.
Update May 12. On April 26, the SCC issued an Order on Reconsideration confirming its earlier ruling that the five year advance notice requirement did not apply to large customers (over 5 MW) who return to the utility following cancellation of a renewable energy supply contract with a competitive service provider.
On May 9, 2017 Dominion filed with the SCC its own plan for a renewable energy tariff for large users.  (PUR-2017-00060.) The filing notes that Dominion intends to follow this with a residential green tariff.

Memo to legislators: Virginia is not a low-cost energy state

Sure, there is something to be said for using a lot of energy–if you’re a Jack Russel Terrier. For the rest of us, not so much.
Photo credit Steve-65 – Own work, CC BY-SA 3.0, https-::commons.wikimedia.org:w:index.php?curid=17865919

Anyone who has attended the annual meeting of the House Energy Subcommittee has watched the Republican majority vote down all manner of legislation designed to improve Virginia’s poor ranking on energy efficiency. Since energy bills have to survive this subcommittee before the rest of the General Assembly gets to hear them, this little band of naysayers effectively holds back progress on initiatives that would save money and reduce energy use.

Why would they do that? As discussed in my last post, these delegates almost invariably vote the way Dominion Virginia Power wants them to. And Dominion doesn’t like these bills. The utility is in the business of selling electricity, and energy efficiency is bad for business.

Of course the utilities don’t put it that way. At this year’s subcommittee meeting, Dominion Virginia Power lobbyist Bill Murray explained his company’s opposition to one of Delegate Rip Sullivan’s energy efficiency bills by saying that real efficiency gains depend on the actions of individuals, and Virginians aren’t incentivized to take these actions because Dominion keeps our rates so admirably low.

This might put you in mind of former Vice President Dick Cheney’s dismissal of conservation as a sign of personal virtue but not a sound basis for energy policy. Let’s set that aside. Murray’s comments might also be thought unfair to his own client, which has tried and failed to get approval from the State Corporation Commission for various programs that would help consumers practice personal virtue. (If you wonder why, in that case, he was standing there opposing legislation designed to produce a better result, you are missing the point of the Subcommittee Hearing. It’s Kabuki theatre, people, and you really shouldn’t miss it.)

For now, however, let’s simply ask whether Mr. Murray’s claim is correct. Are we really paying less for energy than residents of other states?

We should first clarify whether we are talking about rates, or bills. Dominion prefers to focus on rates, but what people pay are bills. Few people can tell you what their electricity rate is, but most have a sense of the bottom line on their monthly bill.

According to the U.S. Energy Information Agency, Virginia’s 2016 residential rates stand at an average of 10.72 cents per kilowatt-hour, which is indeed about 12% below the national average of 12.21.* The average for our peer group, the South Atlantic region, is 11.11 cents per kWh, with Maryland at the high end (14.01 cents), and Georgia at the low end (9.92 cents).

When it comes to monthly bills, however, Virginia residential customers ($130.58) pay almost exactly the South Atlantic average ($131.20), but we are way above the national average ($114.03). (Note the bills are based on 2015 data; the EIA has not updated this chart for 2016.) If having to pay more for electricity is the primary motivation to adopt energy efficiency measures, Virginians are more motivated than most Americans.

Several factors can make a state have lower bills despite higher rates. Among these is energy efficiency. Energy efficiency is why a state like California, with high incomes and notoriously high residential electricity rates (16.99 cents/kWh), still has average monthly bills ($94.59) that are 30% below Virginia’s. California has succeeded in keeping per capita energy use flat for decades while the U.S. average climbed steadily, only flattening out in the past ten years. California is currently ranked 49th in the nation for per capita energy consumption, and 49th in total energy costs. “California” is a bad word among Virginia Republicans, who assume anything that state does must be bad, but California’s experience has to be considered by anyone who cares about energy costs.

Back at the Energy Subcommittee meeting, Bill Murray did not mention California, but he did offer his opinion on the cause of Virginia’s higher-than-average bills. He noted that many Virginians use electric heat pumps to heat their homes, which drives up winter electricity use, resulting in higher bills on average. (An EIA analysis using 2009 data showed that 55% of Virginia households heat with electricity, higher than the U.S. average but less than the South Atlantic average.)

To get a look at the whole energy picture across states, I created the table below that compares residents’ costs of electricity, natural gas and fuel oil across the U.S. Virginia ranked 18th out of 51. Because it isn’t weather-adjusted, it can’t tell the full story. However you slice it, though, Virginia is not a low-cost energy state.

It may still be true that middle-class homeowners don’t feel the bite of energy bills enough to go to the trouble of figuring out what they should do to save energy. If it’s hard, people don’t do it—which is one reason energy efficiency programs are designed to make it easier. But middle-class homeowners also aren’t the only ones who would benefit. Across Virginia, people with incomes below 50% of the poverty level spend at least 40%, and often more than half their income, on energy bills.

So if cost equals motivation, Virginians are motivated. What’s lacking are the energy efficiency programs to help people save energy, and the laws to enable those programs.

 

Overall Rank State Total Energy Cost Monthly Electricity Cost (Rank) Monthly Natural-Gas Cost (Rank) Monthly Home Heating-Oil Cost (Rank)
1 Connecticut $304 $155

(7)

$44

(20)

$104

(1)

2 Rhode Island $259 $107

(39)

$61

(5)

$91

(4)

3 Massachusetts $253 $115

(34)

$60

(6)

$78

(6)

4 Alaska $241 $129

(20)

$53

(13)

$59

(7)

5 New Hampshire $234 $127

(25)

$20

(44)

$87

(5)

6 Vermont $231 $120

(30)

$18

(48)

$93

(3)

7 New York $220 $115

(32)

$66

(3)

$39

(9)

8 Maine $217 $107

(40)

$6

(49)

$104

(2)

9 Pennsylvania $211 $121

(28)

$50

(15)

$40

(8)

10 Maryland $209 $145

(13)

$43

(22)

$21

(11)

11 Delaware $208 $152

(9)

$37

(26)

$19

(12)

12 Georgia $203 $157

(6)

$46

(19)

$0

(42)

13 New Jersey $200 $115

(33)

$63

(4)

$22

(10)

14 Alabama $197 $171

(3)

$26

(40)

$0

(39)

15 South Carolina $196 $177

(1)

$19

(47)

$0

(32)

16 Mississippi $184 $163

(4)

$21

(43)

$0

(49)

17 Ohio $183 $120

(29)

$59

(7)

$4

(19)

18 Virginia $182 $141

(14)

$31

(32)

$10

(13)

18 Hawaii $182 $177

(2)

$5

(50)

$0

(51)

20 Kansas $181 $125

(27)

$56

(11)

$0

(47)

21 Michigan $180 $106

(43)

$72

(2)

$2

(25)

22 North Dakota $179 $140

(15)

$32

(31)

$7

(15)

22 Texas $179 $155

(8)

$24

(41)

$0

(50)

24 Missouri $178 $134

(18)

$44

(21)

$0

(36)

25 Indiana $177 $129

(21)

$47

(17)

$1

(29)

26 Illinois $176 $96

(47)

$80

(1)

$0

(35)

27 Oklahoma $175 $135

(17)

$40

(24)

$0

(43)

28 Tennessee $174 $147

(10)

$27

(37)

$0

(37)

29 Wisconsin $171 $109

(37)

$57

(9)

$5

(17)

30 Minnesota $170 $108

(38)

$57

(10)

$5

(16)

31 Louisiana $169 $146

(11)

$23

(42)

$0

(46)

32 North Carolina $168 $145

(12)

$20

(45)

$3

(22)

33 Kentucky $167 $136

(16)

$30

(34)

$1

(30)

33 South Dakota $167 $129

(23)

$34

(28)

$4

(20)

35 Florida $164 $160

(5)

$4

(51)

$0

(44)

36 West Virginia $162 $126

(26)

$32

(30)

$4

(18)

36 Iowa $162 $109

(36)

$52

(14)

$1

(27)

38 Nevada $161 $128

(24)

$33

(29)

$0

(31)

38 Nebraska $161 $119

(31)

$42

(23)

$0

(33)

40 Arkansas $158 $129

(22)

$29

(36)

$0

(41)

41 Wyoming $154 $107

(41)

$46

(18)

$1

(28)

42 Arizona $153 $134

(19)

$19

(46)

$0

(48)

43 District of Columbia $148 $82

(51)

$58

(8)

$8

(14)

44 Idaho $146 $113

(35)

$30

(35)

$3

(23)

45 Montana $145 $103

(44)

$40

(25)

$2

(26)

46 Utah $144 $89

(49)

$55

(12)

$0

(34)

47 Colorado $141 $92

(48)

$49

(16)

$0

(38)

48 Oregon $135 $107

(42)

$26

(38)

$2

(24)

49 California $126 $96

(45)

$30

(33)

$0

(40)

50 Washington $125 $96

(46)

$26

(39)

$3

(21)

51 New Mexico $124 $88

(50)

$36

(27)

$0

(45)

 

Data derived from WalletHub, “2016’s Most & Least Energy-Expensive States,’ July 13, 2016, https://wallethub.com/edu/energy-costs-by-state/4833/#methodology. I was only interested in energy consumption in buildings, so I backed out the numbers for motor fuel cost.

______________________________

*The EIA data reflect statewide averages. Dominion’s own residential rates tend to be lower than Virginia’s statewide average. It costs more to bring electricity to rural areas, so APCo and the coops would be expected to have higher rates. And urban dwellers use less electricity on average than rural residents, which keeps bills lower for city folks in Dominion territory. But since most states have a mix of urban and rural residents, it seems correct to compare statewide averages.

Note, too, that the discussion here—and at the Energy Subcommittee meeting—concerned residential rates. Virginia’s commercial rates are significantly better than the U.S. average.