Monthly Archives: January 2016

Virginia legislators look to tax breaks and barrier-busting to boost renewable energy

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Let's get these projects moo-ving. Photo credit NREL

Let’s get these projects moo-ving. Photo credit NREL

The orchestrated mayhem of the Virginia General Assembly session is well underway. Thirteen days are gone and only twenty-one days remain until what’s known as “Crossover,” after which any bill that hasn’t passed its own chamber is effectively dead. This year Crossover falls on February 16. After that, each chamber considers only bills already passed by the other.

By that measure, yours truly is one lazy blogger, because I’m only just getting to the renewable energy bills. On the other hand, bills were still being filed until Friday, and some bills are undergoing revisions before they are heard in committee. These are moving targets; advocates beware.

Removing barriers to investment 

Readers of this blog know that Virginia law is riddled with barriers that restrain the market for wind and solar in Virginia. This year several bills take aim at the policies holding us back.

HB 1286 (Randy Minchew, R-Leesburg, in Commerce and Labor) is barrier-busting legislation developed by the solar industry in consultation with the wind industry and solar advocates. It clarifies that renewable energy companies that sell to retail customers under power purchase agreements (PPAs) are not public utilities and don’t have to meet the statutory requirements for public utilities and suppliers. Customers can use third-party PPAs to purchase renewable energy electricity generated by facilities located on the customer’s property, everywhere in the state. The bill also lifts the one percent cap on net metering programs relative to total utility sales, and authorizes community net metering programs. It also expands the concept of “agricultural net metering” to cover other customers who want to attribute electricity from one facility to multiple meters on the customer’s property.

In addition, the bill amends the Commonwealth’s energy policy by adding the goals of encouraging private sector distributed renewable energy, increasing security of the electricity grid by supporting distributed renewable energy projects, and augmenting the exercise of private property rights by landowners desiring to generate their own energy from renewable energy sources on their lands. None of this language by itself forces action, but the State Corporation Commission takes note of energy policy in its decision-making.

SB 140 (John Edwards, D-Roanoke, in Commerce and Labor) attacks the standby charges that have been so controversial. It increases the size of electrical generating facilities operated by residential or agricultural net energy metering customers that are subject to a monthly standby charge from those with a capacity of 10 kilowatts to those with a capacity of 20 kilowatts. Since residential solar facilities that are net-metered are already limited to 20 kW, this would effectively repeal standby charges for residential net metering.

SB 139 (John Edwards, D-Roanoke, in Commerce and Labor) makes a small change to the existing agricultural net metering option.

SB 148 (John Edwards, D-Roanoke, in Commerce and Labor) replaces the pilot program enacted in 2013 that authorized a limited pilot program for third-party PPAs. generation facilities. The bill requires the State Corporation Commission to establish third-party power purchase agreement programs for each electric utility. The existing pilot program applies only to Dominion Virginia Power and sets the maximum size of a renewable generation facility at one megawatt; the programs authorized by SB 148 apply to all electric utilities and do not set limits on the size of facilities.

Although SB 148 is similar to HB 1286 in attempting to ensure the legality of third-party PPAs, solar advocates prefer HB 1286. Giving the State Corporation Commission authority here should not be necessary and might lead to higher costs and more regulations.

Community energy/solar gardens

It’s darned hard to buy renewable energy in Virginia if you are among the approximately 75% of residents who can’t put solar panels on your own roof or build a wind turbine out on the back forty. That’s an enormous untapped market.

SB 1286, above, contains a provision authorizing community energy programs In addition, HB 1285 (Randy Minchew, R-Leesburg, in Commerce and Labor) is a stand-alone bill that authorizes (but does not require) investor-owned utilities and coops to establish community energy programs.

HB 618 (Paul Krizek, D-Alexandria, referred to Commerce and Labor) would require the State Corporation Commission to adopt rules for “community solar gardens” that would let customers subscribe to a portion of the output of a solar facility located elsewhere in their area. The solar electricity and the renewable energy credits (RECs) would be sold to the local utility, which would then credit the subscribers on their utility bills.

But whereas customers who have solar panels one their own roof get credited at full retail value and own the associated renewable energy credits, HB 618 allows the SCC to devise rules that could result in a much worse deal for solar garden subscribers, including allowing the utility to impose a “reasonable charge” to cover ill-defined costs.

That’s an unfortunate invitation to the utilities to pile on fees. Unless the utilities involved really want to make the program work for their customers, it’s hard to imagine this turning out well. We would not expect to see viable programs in Dominion or APCo territory if this passes. On the other hand, some municipal utilities have been more responsive to the interests of their customers, so it could work for them.

Tax credits and exemptions

An important tax bill to watch this year is HB 1305 (Jackson Miller, R-Manassas, referred to Finance), which changes the state and local tax treatment of solar and wind energy facilities. It exempts utility solar and wind from taxation, but lowers from 20 MW to 1 MW the size of other solar projects that are exempt from local machinery and tools tax (a kind of personal property tax; securing that exemption was a major win for the solar industry in 2014). The bill replaces the hard-won 100% exemption with an 80% exemption. The change is very nice for utilities (Virginia is always very nice to utilities), but it makes the economics worse for third-party owned facilities in the 1 MW to 20 MW range—exactly the ones the state should be trying to attract.

SB 743 (Frank Wagner, R-Virginia Beach, referred to Agriculture, Conservation and Natural Resources) helps solar projects below 5 MW qualify for the above-mentioned tax exemption passed in 2014. The bill makes the Department of Mines, Minerals and Energy the agency that certifies solar projects as “pollution control equipment and facilities,” eligible for exemption from state and local taxation. This exemption from state sales tax and local machinery and tools taxes is one of the few perks Virginia can offer commercial-scale solar developers here, where margins on projects are very thin compared with projects in North Carolina or Maryland with stronger incentives.

Tax credits are also on the agenda this year. Tax credits fell into disfavor in Virginia following an audit that revealed that many tax credits aren’t achieving their objectives (see: tax subsidies for coal mining). Senate Finance Committee members resolved to end them just about the same time the solar industry came asking for one themselves two years ago, with unhappy results for solar. But tax credits are legislative candy, and there’s no telling how long the diet will last. Hopeful persons may as well put out their own plate of chocolates. If the diet is off, then the main problem with this year’s bills, from the point of view of the Republicans who make up the majority of our legislature, is simply that they come from Democrats.

HB 480 (Rip Sullivan, D-Arlington, referred to Finance) establishes a 35% tax credit for renewable energy property, to be claimed over 5 years, with a $5 million program cap. The credit would apply not just to wind and solar but also some biomass, combined heat and power, geothermal and hydro systems.

SB 142 (John Edwards, D-Roanoke, referred to Finance) and HB 1050 (Sam Rasoul, D-Roanoke, referred to Finance) establish a tax credit of up to 30% for solar thermal systems used for water heating or space heating and cooling. Solar PV systems are not included in the bill.

State funding through carbon cap and trade

SB 571 (Donald McEachin, D-Richmond, referred to Agriculture, Conservation and Natuaral Resources) and HB 351 (Villanueva, R-Virginia Beach, referred to Commerce and Labor) would require the Governor to join the Regional Greenhouse Gas Initiative (RGGI), the cap-and-trade program that has successfully ratcheted down carbon emissions in the northeastern states. Funds generated by auction allowances would fund sea level rise adaptation in coastal areas, economic transition efforts for southwest Virginia, energy efficiency for low-income families, and distributed renewable energy programs.

Financing

HB 941 (David Toscano, D-Charlottesville, referred to Counties, Cities and Towns) expands the authorization for Property Assessed Clean Energy (PACE) programs to include residential and condominium projects. This would allow localities to offer low-interest financing to homeowners for both energy efficiency and renewable energy investments.

Utility cost recovery

HB 1220 (David Yancey, R-Newport News, referred to Commerce and Labor) is billed as a technical fix for language added to the Code last year that encourages utilities to invest in solar. The bill clarifies that a utility that purchases a solar facility is allowed cost recovery on the same favorable terms it would get by building the facility itself.

Energy storage

Energy storage is emerging as the hot new energy technology area, about where solar was five years ago. Interest in it has been driven by recent price declines as well as the success of wind and solar and the growing awareness that these carbon-free sources are likely to make up a significant portion of our electricity supply in coming years. So while the use of storage is by no means limited to renewable energy applications, I include it here because it will interest those who follow wind and solar policy.

HB 452 (Patrick Hope, D-Arlington, in Commerce and Labor) and SB 403 (Ebbin, D-Alexandria, in Commerce and Labor) create the Virginia Energy Storage Consortium to promote research, development, commercialization, manufacturing and deployment of energy storage. It’s a great idea.

HB 1137 (David Toscano, D-Charlottesville, in Commerce and Labor) directs the State Corporation Commission to develop a program to enable commercial and industrial customers to sell battery storage services to the grid. If you’ve heard of the concept known as “vehicle-to-grid” (using electric cars to put power back on the grid as well as drawing from it), you’ll understand what this is about. It would allow these and other “energy balancing devices” to provide value to the grid in the form of spinning reserves, frequency regulation, distribution system support, reactive power, demand response, or other electric grid services. It’s an idea whose time has come.

Biomass

Wind and solar have several less popular relatives with more tenuous claims on the renewable energy family name. Virginia’s definition of “renewable” embraces them all, regardless of merit. It treats biomass to a special place of honor, including even the burning of trees that haven’t been harvested sustainably, and regardless of how much pollution gets spewed into the atmosphere.

SB 647 (Barbara Favola, D-Arlington, in Commerce and Labor) and HB 973 (Alfonso Lopez, D-Arlington, in Commerce and Labor) would change that to require that electricity from new biomass plants, to qualify as renewable energy, would have to meet a minimum efficiency level. Burning wood from trees would generally meet that standard only when it produces both electricity and heat (or, through the magic of science, cooling).

Consumer choice

HB 444 (Manoli Loupassi, R-Richmond, in Commerce and Labor) and SB 745 (Frank Wagner, R-Virginia Beach, in Commerce and Labor) would expand the current requirement that utilities inform ratepayers about their options for purchasing renewable energy.

Which might lead you to ask, “what options?” since for most of us here in Virginia they are sadly lacking. But maybe this year’s session will start to change that.

A note about House Commerce and Labor: Bills noted above that have been assigned to the House Committee on Commerce and Labor have all been assigned to its Subcommittee on Energy. This powerful subcommittee typically meets only once or twice before Crossover. I’m told it will meet on the afternoon of Tuesday, February 9, likely continuing well into the evening due to the number of bills assigned.

February 9 is also Clean Energy Lobby Day, when members of the renewable energy and energy efficiency industries descend on Richmond to educate legislators about the need for sound reforms. This year the solar industry trade association MDV-SEIA is organizing the lobby day, which is free to participants. The organization has also created a petition to support third-party financing of solar in Virginia.

UPDATE:

Senator McEachin files bill for mandatory RPS. SB 761 Donald McEachin (D-Richmond) would make Virginia’s pathetic, voluntary RPS into a mandatory RPS that would rank as one of the best in the country. It would require utilities to meet an increasing percentage of electricity sales from solar, onshore wind, offshore wind, and energy efficiency, reaching 25% of base year sales by 2025 (and deleting the current, obnoxious slight-of-hand that leaves nuclear out of the equation, but keeping a base year of 2007). By 2017, half of it would have to come from sources located within Virginia.

2016 bills show Virginia might finally get serious (sort of) about energy efficiency

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Clive Upton/Wikimedia Commons

Clive Upton/Wikimedia Commons

Energy efficiency: it’s the resource that everyone praises and few pursue. If Dominion Virginia Power approached efficiency programs with the enthusiasm it devotes to building natural gas plants, then—well, it wouldn’t need the new gas plants.

And that’s the crux of the problem. Virginia’s utilities earn more money by building stuff than by not building it, and the excuse to build new stuff comes when demand for electricity increases. If people use less electricity—say, by buying more efficient lighting and appliances—that’s good for consumers, but bad for utility profits.

The Virginia State Corporation Commission hasn’t helped matters; it takes a skeptical view of utility-sponsored energy efficiency programs, rarely approving the kind of programs that would be needed for Virginia to make progress towards its modest goal of lowering electricity use 10% by 2022. Changing the SCC’s attitude through legislation is hard; doing so without the support of the utilities is impossible.

This is where the Governor finds his opportunity for modest progress. Terry McAuliffe has been very, very good to Dominion. He’s supported its fracked-gas pipeline, its budget-busting nuclear ambitions, its new gas plants, and even the rate boondoggle it secured last year that allows it to pick the pockets of Virginia ratepayers to the tune of a billion dollars.

So the least Dominion can do is to support the Governor’s efforts to improve Virginia’s dismal record on energy efficiency, reflected in HB 1053 (referred to House Commerce and Labor) and SB 395 (Senate Commerce and Labor). In a sign the utility may have acquiesced, the bills patrons are Delegate Terry Kilgore, the powerful chairman of the House Commerce and Labor Committee, and Senator Kenny Alexander, a Democrat on Senate Commerce and Labor who has shown no previous interest in reforming energy policy—but who, like Kilgore, ranks utilities among his top donors.

The legislation replaces an ineffective lost-revenue provision in the Code with an incentive-based approach intended to reward investor-owned utilities for success. According to a fact sheet the Administration is sharing with legislators, the utilities will reap bonuses in proportion to the amount of energy saved through implementing cost-effective programs:

  • An additional 1% of the actual costs of the program, if the utility achieves a levelized cost of saved energy (LCSE) for the program at or below six cents per kilowatt-hour;
  • An additional 2% of the actual costs of the program, if the utility achieves a LCSE for the program at or below five cents per kilowatt-hour;
  • An additional 3% of the actual costs of the program, if the utility achieves a LCSE for the program at or below four cents per kilowatt-hour;
  • An additional 4% of the actual costs of the program, if the utility achieves a LCSE for the program at or below three cents per kilowatt-hour.

These two Administration bills have the most momentum behind them, but they are not the only legislation out there looking for ways to make serious energy efficiency gains. The best of the bills is HB 576 (Rip Sullivan, D-Arlington, in Commerce and Labor). It requires the SCC to approve cost-effective efficiency programs and, more significantly, establishes robust new energy efficiency goals that utilities would be required to meet.

Sullivan has clearly spent a lot of time this year thinking about the policy barriers to energy efficiency. He correctly pegs SCC procedure as one of the problems.

HB 575 (in Commerce and Labor) as well as HB 352 (Lee Ware, R-Powhatan, also in Commerce and Labor) take aim at the way the SCC evaluates energy efficiency programs. Sullivan’s bill would make it easier for a program to meet the SCC’s standards. As currently written, Ware’s would actually make it harder; however, we hear this may be a drafting error, so we will be watching for amendments that would make this a bill to support.

Two more good bills from Sullivan also deserve mention. HB 1174 (in Commerce and Labor) requires the SCC to report on Virginia’s progress towards our 10% energy reduction goal. HB 493 (referred to Appropriations) creates an Energy Efficiency Revolving Fund to provide no-interest loans to localities, school divisions, and public institutions of higher education.

Freshman Delegate John Bell (D-Chantilly) has introduced a modest bill of such remarkable common sense that it shouldn’t be needed (but is). HB 808 requires government agencies to use LED light bulbs instead of incandescent bulbs when installing, maintaining or replacing outdoor light fixtures. The bill has been referred to the Committee on General Laws.

It’s also worth noting that two bills I previously included in the roundup of climate-related legislation would also have a significant impact on energy efficiency investments. HB 351 (Ron Villanueva, R-Virginia Beach, referred to Commerce and Labor) and SB 571 (Donald McEachin, D-Richmond, referred to Agriculture) would direct the Governor to join the Regional Greenhouse Gas Initiative (RGGI), the cap-and-trade plan that the northeastern states have used successfully to reduce carbon emissions and raise funds to further the RGGI goals. In Virginia, these funds would include millions of dollars for energy efficiency.

Finally, there’s a bill expanding Virginia’s authorization for Property Assessed Clean Energy (PACE) programs, which allow localities to loan money to property owners for energy efficiency and renewable energy. HB 941 (David Toscano, D-Charlottesville) expands the authorization for PACE programs to include residential and condominium projects.

 

2016 Virginia bills show King Coal still calling the shots

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Virginia rorschach test: some see a destroyed landscape, others see campaign contributions.

Virginia rorschach test: some see a destroyed landscape, others see campaign contributions.

Legislation introduced in the General Assembly would keep Virginia’s gravy train rolling for coal companies. SB 44 (Charles Carrico, R-Alpha Natural Resources) and HB 298 (Terry Kilgore, R-Alpha Natural Resources) are framed as “limits” because the taxpayer-financed subsidies for coal mining would top out at $7.5 million per year. But watch your wallets: the primary objective of the legislation is to extend the coal subsidies an extra three and a half years, through 2019. So these bills should more accurately be seen as $25 million giveaways. The bills have been referred to the committees on Finance.

It appears the coal companies need the money to pay bonuses to their executives. Alpha Natural Resources, which filed for bankruptcy in August to avoid paying creditors, plans to pay its top executives bonuses worth up to $11.9 million. Meanwhile, Alpha laid off more than 160 coal miners a week before Christmas.

According to the Virginia Public Access Project, Alpha Natural Resources gave almost $500,000 in campaign contributions to Virginia legislators during the 2014-2015 election cycle. Carrico was the top recipient, raking in $24,267 from Alpha; Kilgore snagged fifth place with $20,000.

Consol Energy gave over $236,000 to legislators over the same time period. Kilgore was their top recipient, at $12,500, while Carrico received $10,000. Note that both Carrico and Kilgore ran unopposed.

In a separate attempt to give back to the coal industry, Ben Chafin has introduced SB 365 (referred to Transportation), a bill that would remove the Coalfields Expressway from the transportation prioritization process. If it were to pass, this strip mine disguised as a highway wouldn’t have to meet the normal standards required of real roads to be eligible for state funding. The disastrous Route 460 would also be excused, in case any future administration is dumb enough to revive it. Chafin is another Coalfields Republican who ran unopposed while hauling in more than $100,000 from donors in the energy and mining industries, including $15,000 from Alpha Natural Resources and $9,500 from Consol.

The bankruptcy of Alpha, like that of dozens of other coal companies in recent years, threatens more than the campaign coffers of Virginia legislators. Coal mining has declined steadily in Virginia, leaving displaced workers who could make much better use that $7.5 million annually if it were redirected for job retraining and education. Right now, in contrast to the Republican rhetoric, only the Obama Administration seems to care about out-of-work coal miners.

While ignoring workers, legislators are at least waking up to the threat posed to taxpayers when bankrupt coal companies walk away from their obligations to clean up and reclaim the land they’ve mined. HB 1169 (Todd Pillon, R-Abingdon, referred to Agriculture) would increase the amount of the reclamation bonds that mine operators must post, and give the Commonwealth a lien against the land.

Coal ash pollution prompts legislation on proper closure of storage ponds

Meanwhile, Virginia’s coal legacy continues to have repercussions for communities across the state, wherever waste from burning coal has piled up in toxic ponds next to rivers and streams. For years utilities have taken an out-of-sight, out-of-mind approach to coal ash, quietly ignoring the potential for devastating spills like the one that contaminated the Dan River.

In Prince William County, Dominion Virginia Power proposes to close one of these leaky coal ash ponds by draining the water out of it and slapping on a cover. A compliant Department of Environmental Quality just issued Dominion a permit to discharge the partially-treated wastewater into Quantico Creek, which flows directly into the Potomac River.

In response, Democratic Senator Scott Surovell, whose district includes this section of Prince William County, has filed SB 537 (referred to Agriculture, Conservation and Natural Resources) to require the removal of all waste from closed coal ash ponds for proper disposal in permitted landfills that meet federal standards.

UPDATE: A January 21 news report informs us that Alpha Natural Resources owes Wise County, Virginia, nearly $1.46 million in unpaid taxes for 2015, with another $1 million owed to Dickenson County. Please feel free to make the appropriate snarky comments; I’m still stuck in a “you gotta be kidding” loop.

UPDATE 2: Not content to let Senator Carrico get all the glory giving away Virginia taxpayer money to pay multi-million dollar bonuses to tax-evading coal bosses, Ben Chafin has filed his own bill to do the same thing.  SB 718 appears to be the same as SB 44 and has also been referred to Finance.

 

2016 Virginia legislative session opens with stark choices for dealing with climate change

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Setting an example for Virginia leaders. But will they follow? Photo courtesy of Glen Besa.

Setting an example for Virginia leaders. But will they follow? Photo courtesy of Glen Besa.

One of the first bills filed in Virginia’s 2016 legislative session—and already passed through committee—would require the McAuliffe Administration to write a report about how awful the EPA’s Clean Power Plan is for Virginia, and then to develop a state implementation plan that won’t comply.

That’s not exactly how HB 2 (Israel O’Quinn, R-Bristol) puts it, but it’s hard to read the language any other way. The bill instructs the Department of Environmental Quality to write a report critiquing the Clean Power Plan’s terrible effects (stranded costs! price increases! coal plant retirements! shoeless children!). It neglects any mention of the Plan’s benefits—like less pollution, better public health, and bill savings from energy efficiency. DEQ is then directed to write a plan that details all the bad stuff (but not the good stuff) and submit that to the General Assembly for approval before it can go to EPA. Does anyone think the General Assembly will approve a plan that makes compliance sound as awful as Republicans want DEQ to describe it?

The irony here is that the bill assumes the Clean Power Plan is the huge game-changer for Virginia that environmentalists had hoped it would be. Sadly, the Clean Power Plan doesn’t demand much of Virginia; if we simply meet new electricity demand with energy efficiency and renewable energy, we would be at or near to full compliance.

But recognizing that Virginia got a pass would be inconvenient for the bill’s drafters over at the American Legislative Exchange Council (ALEC). ALEC has an agenda to promote, and the agenda demands that Republicans be outraged, regardless of the reality on the ground.

We hear outrage was in full display Tuesday as Republicans pushed the bill through Commerce and Labor on a party-line vote. Democrats patiently explained that if Virginia doesn’t submit a plan that complies with the Clean Power Plan, EPA will write one for us. Republicans responded with shoeless children.

SB 482 (Mark Obenshain, R-Harrisonburg, referred to Agriculture, Conservation and Natural Resources) and SB 21 (Ben Chafin, R-Lebanon, also in Agriculture) are Senate companion bills.

The flip side

If the Clean Power Plan doesn’t actually demand much of Virginia, nothing prevents the state from using the federal requirements to its own advantage. HB 351 (Ron Villanueva, R-Virginia Beach, referred to Commerce and Labor) and SB 571 (Donald McEachin, D-Richmond, referred to Agriculture) take this lemon-to-lemonade approach with the Virginia Alternative Energy and Coastal Protection Act. The bill would direct the Governor to join the Regional Greenhouse Gas Initiative (RGGI), the cap-and-trade plan that the northeastern states have used successfully to reduce carbon emissions and raise funds to further the RGGI goals.

The legislation is similar to last year’s Virginia Coastal Protection Act, which was unable to get out of committee due to Republican opposition. But as warming ocean water expands and lifts sea levels along our coast, even Republicans must wonder how they are going to deal with the costs. Right now, the only answer out there belongs to Villanueva and McEachin.

Other legislators, meanwhile, offer small steps in the right direction. HB 739 (Christopher Stolle, R-Virginia Beach, referred to General Laws) would establish the Virginia Flooding Adaptation Office. A Chief Resiliency Officer would oversee its operations, pursue funding opportunities, and recommend initiatives to help with adaptation efforts. (Maybe she will recommend joining RGGI!)

A similar but more limited bill, HB 1048 (Keith Hodges, R-Urbana, also referred to Agriculture) would create a position of Chief Resiliency Officer to coordinate “issues related to resilience and recurrent flooding,” recommend actions to increase resilience, and pursue funding.

HB 903 (also Stolle, referred to Agriculture, Chesapeake and Natural Resources) resolves to designate a Commonwealth Center for Recurrent Flooding Resiliency to study “recurrent flooding and resilience.” HJ 84 (Stolle again, referred to Rules) and SJ 58 (Mamie Locke, D-Hampton, referred to Rules) would continue the ongoing study of “recurrent flooding” and rename it as “coastal flooding.” (Yes, legislators are moving towards calling it “sea level rise” at about the same rate the sea is rising.)

SB 282 (Lynwood Lewis, D-Accomack, referred to Agriculture) would establish the Virginia Shoreline Resiliency Fund as a low-interest loan program to help residents and businesses that are subject to “recurrent flooding.” Funding, for the most part, would require appropriations from the General Assembly.