In a last-ditch effort to stop climate regulations, Virginia Republicans try legislating by budget amendment

Dominion Energy Virginia's Chesterfield Coal Plant

Dominion’s coal-burning power plant in Chesterfield County.

The Northam administration is finalizing regulations to reduce the carbon pollution from Virginia power plants by 30 percent between 2020 and 2030. The Department of Environmental Quality (DEQ) estimates the move will cost consumers only about a dollar per month while accelerating the transition to clean energy.

Instead of celebrating this modest progress on climate action, Virginia Republicans have been fighting it every step of the way. Their latest effort takes the form of two amendments to the state budget that would effectively prevent Virginia from joining the Regional Greenhouse Gas Initiative (RGGI), a nine-state platform for trading carbon emission allowances. It would also stop the Commonwealth from participating in a new compact focused on reducing carbon emissions in transportation.

Virginia law gives the governor a line-item veto in the budget, which requires a two-thirds majority in the legislature to override. But for reasons known only to himself, Governor Northam has instead chosen to remove the amendments by offering his own amendments, which the General Assembly can reject by a simple majority vote.

This cues up the issue for a battle on the House floor on Wednesday, when the legislature returns for the “veto session.” The governor needs the votes of all the Democrats and at least two Republicans to prevail in the House, and those of at least one Republican and the Lieutenant Governor to prevail in the Senate.

Earlier this year, Republicans voted almost unanimously for legislation that, like the budget amendment, would have stopped Virginia from participating in RGGI. Northam vetoed that bill, saying it was bad policy and violated the state constitution. His action probably didn’t persuade any Republicans that he was right and they were wrong.

Still, there are reasons why a Republican who voted for the anti-RGGI bill might support the governor in the budget vote.

One is that using the budget to achieve a policy outcome you couldn’t reach through the legislative process makes a lot of legislators uneasy; it feels like bad governance.

Another is that the anti-RGGI bill was for show; everyone knew the governor would veto it. Moderate Republicans who privately acknowledge the urgency of the climate crisis were able to use their vote to demonstrate party loyalty without actually interfering with the DEQ program.

They bill vote also followed surprise testimony from State Corporation Commission staff members who claimed that trading with RGGI would cost Virginia households much more than DEQ modeling showed. The staff members provided no evidence, but hard-line Republicans saw the threat of rate increases as a gift horse they weren’t going to look in the mouth.

DEQ staff did look it in the mouth, however, and found a number of bad teeth.  DEQ Chief Deputy Chris Bast lambasted the SCC staff for coming into the discussion late, using incorrect assumptions, and failing to show their work.

The SCC staff members followed up after the end of the session with a letter stating their reasoning, though still without showing their math. The late release of the letter prompted Delegate David Toscano to write an editorial in the Washington Post decrying the staff members’ overtly political tactics as well as criticizing their analysis.

In its response to comments on the proposed carbon regulations, DEQ lists several flaws in the SCC staff’s analysis, ranging from significantly overestimating program costs to assuming that Virginia coal plants are immune to the economic stressors affecting coal plants across the U.S.

With time to reflect, many legislators will conclude the evidence supports DEQ. But more to the point, some Republicans may realize that holding Virginia back is bad economics and bad policy.

An analysisreleased this month shows wind and solar could replace 74 percent of coal plants nationwide at an immediate savings to customers; by 2025, that number will be 86 percent. Major utilities like Xcel and MidAmerican have targeted 100% renewable energy, saving money for customers in the process.

Meanwhile, voters across the country—and in Virginia—support renewable energy over fossil fuels by wide margins. Even polling by conservative groups shows strong support for clean energy.

It simply makes no sense for Virginia to opt out of the clean energy future. No doubt a lot of Republicans will vote to do it anyway in hopes of denying a win to a Democratic governor. But if they do, they run the risk of their constituents holding them accountable come November.

This article originally appeared in the Virginia Mercury on April 2. It has been updated to include DEQ’s response to the SCC staff’s letter.

Update April 4: Disappointingly but not surprisingly, the Governor’s amendments were defeated along party lines yesterday. If he wants to keep the carbon regulations moving towards implementation, he will have to exercise his veto authority. There have been questions raised about his authority to do that, so stay tuned. 

A revised generation plan leaves Dominion’s case for its pipeline in shambles

In December of last year, regulators at the State Corporation Commission (SCC) took the unprecedented step of rejecting Dominion Energy Virginia’s Integrated Resource Plan (IRP). Among other reasons, the SCC said the utility had over-inflated projections of how much electricity its customers would use in the future.

On March 8, Dominion came back with a revised plan. And sure enough, when it plugged in the more realistic demand projections used by independent grid operator PJM, and accounted for some energy efficiency savings, the number of new gas plants it planned for dropped in half. Instead of 8-13 new gas combustion turbines, the revised plan listed only 4-7 of these small “peaker” units.

Yet there is a good chance Dominion is still overinflating its demand numbers.  Although the re-filed IRP is short and vague, it appears Dominion isn’t figuring in the full amount of the energy efficiency programs it must develop under legislation passed last year.

SB 966 required Dominion to propose $870 million in energy efficiency and demand-response programs designed to reduce energy use and the need for new generation. But Dominion has proposed just $118 million in its separate demand-side management filing (case PUR-2018-00168).

Moreover, the company has concocted a theory whereby it can satisfy that $870 million requirement by spending just 40 or 50 percent of it and pocketing the rest. In its DSM case Dominion argues that since the Virginia Code allows a utility to recover lost revenue resulting from energy efficiency savings, it can simply reduce the required spending by the amount of lost revenue it anticipates.

It’s a great theory, and suffers only from being wrong. (Oh, and also from infuriating legislators, energy efficiency advocates, and pretty much everyone else who was involved in crafting SB 966.)

It also indicates that Dominion’s demand figures in the IRP are based on plans to spend just a fraction of the $870 million in energy efficiency, achieving much less demand reduction than backers of the law envisioned.

If the SCC decides Dominion can’t withhold hundreds of millions of dollars in efficiency spending, that additional spending will have to be factored into demand projections. Thus the IRP’s demand projection can only go down—and with it, the number of gas plants that might be “needed.”

And yet even the resulting number is likely too high. Several of Dominion’s large corporate customers have been trying to leave its fond embrace to seek better renewable energy offerings elsewhere. (The SCC recently rejected Walmart’s effort to defect.) If they were allowed to leave, how much would that further reduce the need for new generation?

For that matter, those customers and many others, including many of the tech companies responsible for what demand growth there is, say they want renewable energy, not fossil fuels. Dominion claims the renewable generation will have to be backed by gas peaker plants, but energy storage would serve the same purpose and further reduce the need for gas. The SCC will rule on that question when—and if—Dominion ever requests permission to build one of those peakers. It is possible the utility will never build another gas plant.

That’s bad news for Dominion Energy’s other line of business, gas transmission and storage. With demand for new gas generation falling off a cliff, Dominion’s ability to rely on its customer base as an anchor client for the Atlantic Coast Pipeline becomes increasingly doubtful.

Dominion may actually have conceded as much in its re-filed IRP. In response to the SCC’s order that Dominion include pipeline costs in its modeling of the costs of gas generation, Dominion merely stated, without discussion, that it is using the tariff of the pipeline owned by the ACP’s competitor Transco, which supplies gas to Dominion’s existing plants.

This statement continues a pattern of Dominion avoiding any mention of the ACP in SCC proceedings, lest it invite hard questions. But Dominion can’t have it both ways. If it will use Transco, it doesn’t need the ACP. If it plans to use the much more expensive ACP and just isn’t saying so, it has lowballed the cost of gas generation and is misleading the SCC.

This is unfair to customers, and it may backfire on Dominion. The ACP received its federal permit on the strength of contracts with affiliate utilities, but Dominion hasn’t yet asked the SCC to approve the deal. Leaving the ACP out of the discussion in the IRP year after year makes it harder to win approval. When and if the company finally asks the SCC for permission to (over)charge ratepayers for its contract with the ACP, it will not have built any kind of a case for a public need or benefit.

This is not just a risk that Dominion Energy chose to take, it is a risk of the company’s own creation. It defied the Sierra Club’s efforts to have the SCC review the ACP contract early on, knowing it would face vigorous opposition from critics. But since then, its chances for approval have only gotten worse. Back then, the pipeline cost estimate came in at $3 billion less than it is today, Dominion Virginia Power was halfway through a massive buildout of combined-cycle gas plants, and the IRP included several more big, new, gas-hungry combined-cycle plants.

Now the ACP’s cost has climbed above $7 billion and may go as high as $7.75 billion, excluding financing costs, CEO Tom Farrell told investors last month in an earnings call. Meanwhile, the IRP includes an ever-shrinking number of gas plants, to be served by a different pipeline.

One investment management company told clients in January the spiraling price tag may make the ACP uncompetitive with existing pipelines. And Farrell faced a host of cost-related questions in his call with investors.

But Farrell downplayed the risk when it came to a question from Deutsche Bank about the need for SCC approval. Managing Director Jonathan Arnold asked, “On ACP, when you guys are talking about customers, does that include the anchor utility customers, your affiliate customers? Does whatever you’re going to negotiate with them need to be approved by the state regulatory bodies?”

Farrell’s answer sounds nonchalant. “In Virginia, it’s like any other part of our fuel clause. It will be part of the fuel clause case in 2021 or 2022 along with all the other ins and outs of our fuel clause.”

Oh, Mr. Farrell, it is not going to be that easy.

An earlier version of this article first appeared in the Virginia Mercury on March 20, 2019.

How the General Assembly failed Virginia again on clean energy

Child on father's shoulders with sign reading "We need a healthy planet"

Photo credit Sierra Club.

When the General Assembly session opened January 9, legislators were presented with dozens of bills designed to save money for consumers, lower energy consumption, provide more solar options, and set us on a pathway to an all-renewables future. Almost none of these measures passed, while bills that benefited utilities kept up their track record of success.

Before I review the individual bills, it’s worth considering for a moment how very different Virginia’s energy future would look if the best of 2019’s bills had passed. In that alternate universe, Virginians could have looked forward to:

  • A freer and more open market for renewable energy at all levels, including unrestricted use of third-party financing for renewable energy, an end to punitive standby charges and arbitrary limits on customer solar, and new opportunities for local governments to install solar cost-effectively.
  • A mandate for utilities to achieve real energy efficiency results, not just to throw their customers’ money at programs.
  • An energy efficiency revolving fund to offer no-interest loans to local governments, public schools and public institutions of higher learning.
  • The right to choose an electricity supplier for renewable energy, instead of being restricted to more expensive and less desirable utility offerings (if available at all).
  • Tax credits for solar on landfills, brownfields and economic opportunity zones.
  • Rebates for low and moderate-income Virginians who install solar.
  • A new revenue source for spending on climate adaptation efforts, energy efficiency programs, and coalfields transition, made possible bythe auctioning of carbon allowances to power plants as part of joining the Regional Greenhouse Gas Initiative; half the lowered carbon emissions would have been achieved through installing wind and solar.
  • Movement towards an eventual phase-out of fossil fuels.
  • Stronger assurance that customers won’t be overcharged for the use of the Atlantic Coast Pipeline or other fracked-gas pipelines owned by utility affiliates.

But in a legislature still ruled by Dominion Energy and Republicans (in that order), what we mostly got instead were bills letting utilities charge their electricity customers for speculative development projects (HB 1840, HB 2738 and SB 1695) and rural broadband infrastructure (HB 2691), and another that would actually prevent the state from pursuing carbon reduction regulations (HB 2611).

A year ago legislators agreed that Dominion and Appalachian Power should propose hundreds of millions of dollars in energy efficiency programs, as a way to sop up some of those companies’ excess earnings instead of the unthinkable alternative of taking the money away from them. This year subcommittees killed bills (HB 2294, HB 1809) that would have insisted those programs be effective. (HB 2294 would have also made last year’s renewable energy goals mandatory.)

The energy efficiency bills that did pass were far more modest: making it harder for the SCC to reject utility-proposed programs (HB 2292 and SB 1662) and establishing a stakeholder group to provide input on programs (HB 2293).

“Energy Freedom,” and other similar legislation aimed at opening up the rooftop solar market, died on party-line votes in committee.

In fact, the party-line vote became a theme whenever bills came up that Dominion opposed. Anyone sitting through the House Commerce and Labor subcommittee hearing, watching one customer solar bill after another be unceremoniously killed, might have wondered if the vote buttons had gotten stuck.

The only significant renewable energy legislation to make it through the committee gauntlet was a long-negotiated Rubin Group bill that gives customers of Virginia’s rural electric cooperatives more opportunities to install solar, at the cost of accepting future new demand charges (HB 2547 and SB 1769). Whether it works in favor of all coop solar customers or not remains an open question. The coops would not provide advocates with any cost modeling and referred us to the solar industry trade association MDV-SEIA, which told us they couldn’t provide it either because of a confidentiality agreement within the Rubin Group.

But the bill does raise the limit on the amount of customer solar that can be built in those parts of the state served by rural electric coops. Customers of Dominion and APCo didn’t get even that much, though one bill—from a Republican—calls for those utilities to provide a total of $50 million in assistance to low-income, elderly and disabled customers for solar and energy efficiency. HB 2789 marks one of the rare bright spots of the 2019 session.

Two other minor renewable energy bills could make incremental progress for a handful of municipalities (HB 2792 and SB 1779) and school systems (HB 2192 and SB 1331).

And that, I’m sorry to say, is pretty much it for energy legislation this year.

Below is a final rundown of the bills that passed, followed by the ones that didn’t. Links in the bill numbers will take you to their summary pages in the Legislative Information Service. The summaries there should not be relied on, because amendments may make a bill quite different by the time it gets passed (or dies). Follow the links on a page to read the legislation or see vote results. Many of the committee hearings were recorded on video.

Bills that passed: renewable energy

HB 2192 (Rush) and SB 1331 (Stanley) is a school modernization initiative that includes language encouraging energy efficient building standards and net zero design. It also encourages schools to consider lease agreements with private developers (apparently there is one particular North Carolina firm that wants this). It does not provide for the more common use of third-party power purchase agreements. It has nice (but not mandatory) language on net zero schools. It allows leases with private developers who will construct and operate buildings and facilities. It permits public schools to contract with utilities for solar energy as part of the school modernization project. An amendment added language requiring that renewable energy facilities must be on school property and cannot be used to serve any other property. PPAs are not mentioned. Ambiguous language in these provisions may cause problems for schools. Both bills passed the House and Senate almost unanimously with Senator Black the only naysayer.

HB 2547 (Hugo) and SB 1769 (Sturtevant) make changes to the net metering program for customers of electric cooperatives. The overall net metering cap is raised from the current 1 percent to a total of 5%, divided into separate buckets by customer type and with an option for coops to choose to go up to 7%. Customers will be permitted to install enough renewable energy to meet up to 125% of previous year’s demand, up from 100% today. Third-party PPAs are generally legal for tax-exempt entities, with a self-certification requirement. However, the coops will begin imposing demand charges on customers with solar, to be phased in over several years, replacing any standby charges. This bill was negotiated between the coops and the solar industry via the “Rubin Group.” An amendment to the bill establishes a stakeholder group for further discussions with Dominion and APCo on net metering, a prospect that will appeal only to eternal optimists and amnesiacs who don’t remember the past five years of time-wasting, fruitless negotiations. SB 1769 passed both the Senate and House unanimously. HB 2547 passed the House unanimously and the Senate 36-4, with Black, Chase, Stuart and Suetterlein voting no this time, with no discernible reason for the change.

HB 2621 (Ingram) and SB 1398 (Stanley) authorize a locality to require the owner or developer of a solar farm, as part of the approval process, to agree to a decommissioning plan. This was a negotiated Rubin Group bill. SB 1398 was incorporated into SB 1091 (Reeves), which was amended to conform to the compromise language of HB 2621.

HB 2741 (Aird) establishes a rebate program for low and moderate-income households that install solar. Amended so it retains the structure of the program but removes funding. As amended it passed both House and Senate.

HB 2792 (Tran) and SB 1779 (Ebbin) establish a 6-year pilot program for municipal net metering for localities that are retail customers of investor-owned utilities. The initial bill negotiated with the utilities was much more limited than most localities wanted; further amendments whittled it down to a point where it won’t help localities with significant projects like landfill solar. However, we are told it will be useful for a few small on-site projects that don’t need PPAs. Even with the utilities on board, 21 House Republicans and one senator (Sutterlein) voted against the House bill, though only 12 House Republicans were hardcore enough to vote against the identical Senate bill when it crossed over. 

HB 2789 (O’Quinn) requires Dominion and APCo to develop pilot programs to offer solar and energy efficiency incentives to low-income, elderly and disabled customers. The energy efficiency money, totaling $25 million, is to come out of the amount the utilities are required to propose in efficiency spending under last year’s SB 966. The renewable energy incentives, also $25 million, cannot come out of that spending; the legislation is silent on how it will be paid for. Passed the House 90-9, with only Republicans as holdouts. Passed the Senate 37-3, with only Black, Stuart and Suetterlein in opposition.

Bills that passed: energy efficiency

HB 2292 (Sullivan) and SB 1662 (Wagner), dubbed the “show your work bill,” requires the SCC to provide justification if it rejects a utility energy efficiency program. As amended, the bills passed almost unanimously.

HB 2293 (Sullivan) establishes a stakeholder process to provide input on the development of utility energy efficiency programs. Passed both houses unanimously.

HB 2332 (Keam) protects customer data collected by utilities while allowing the use of aggregated anonymous data for energy efficiency and demand-side management efforts. A substitute changed the bill to one requiring the SCC to convene a Data Access Stakeholder Group to review customer privacy and data access issues. As amended, the bill passed both Houses unanimously. 

SB 1400 (Petersen) would have removed the exclusion of residential buildings from the Property Assessed Clean Energy (PACE) program, which allows localities to provide low-interest loans for energy efficiency and renewable energy improvements on buildings. After passing the Senate unanimously, the bill was amended in the House to remove the residential PACE authorization (it does expand PACE to include stormwater improvements). As amended, it passed both houses unanimously. It’s probably cheating putting this one in the“passed” category, but I needed the win. 

Bills that passed: energy transition and climate

HB 2611 (Poindexter) would prohibit Virginia from joining or participating in RGGI without support from two-thirds of the members of the House and Senate, making it sort of an anti-Virginia Coastal Protection Act. Passed the House on a 51-48 party-line vote. Passed the Senate on a 20-19 vote. Only one Republican, Jill Vogel, voted against it. The Governor is expected to veto it.

HB 2747 (Kilgore) and SB 1707 (Chafin) create a Southwest Virginia Energy Research and Development Authority “for the purposes of promoting opportunities for energy development in Southwest Virginia, to create jobs and economic activity in Southwest Virginia consistent with the Virginia Energy Plan prepared pursuant to Chapter 2 (§ 67-200 et seq.), and to position Southwest Virginia and the Commonwealth as a leader in energy workforce and energy technology research and development.” Among the powers listed are promotingrenewable energy on brownfield sites, including abandoned mine sites, and supporting energy storage, including pumped storage hydro. Fossil fuel projects are not listed, but are also not excluded. Both bills passed unanimously.

Bills that passed: other utility regulation

HB 1840 (Danny Marshall) allows utilities to develop transmission infrastructure at megasites in anticipation of development, charging today’s customers for the expense of attracting new customers. The legislation was amended to change the language to the nicer-sounding “business park,” but it continues to allow utilities to recover costs for constructing transmission lines and substations to serve these speculative projects. It passed unanimously in the Senate and 82-18 in the House, with mainly the newer Democrats voting no.

HB 2477 (Kilgore) originally would have eliminated one of the few areas of retail choice allowed in Virginia by preventing large customers from using competitive retail suppliers of electricity, including for the purpose of procuring renewable energy, in any utility territory with less than 2% annual load growth. A substitute bill removed most of the bad provisions and confined its operation to APCo, but also left it incomprehensible, so I can’t possibly tell you what it does. As far as I was able to determine, no customers opposed the final bill, which passed the House and Senate unanimously.

HB 2691 (O’Quinn) originally would have established a pilot program for electric utilities to provide broadband services in underserved areas, and raise rates for the rest of us to pay for it. The bill was amended so utilities can only provide the capacity on their lines to private broadband suppliers. The investment is eligible for recovery as an electric grid transformation project under last year’s SB 966, presumably so it is paid for out of utility overearnings instead of a new rate increase.The amended bill passed both houses almost unanimously.   

HB 2738 (Bagby) and SB 1695 (Wagner) authorizes utilities to acquire rights of way for sites that the Virginia Economic Development Partnership Authority decides could be developed to attract new customers, and allows utilities to recover costs from existing customers. A substitute tightened the requirements somewhat, but it remains another giveaway to utilities in the name of speculative development, at the expense of landowners and consumers.The House bill passed 85-13with mostly newer Democrats in opposition, then passed the Senate 37-3, with McPike, Spruill and Suetterlein voting no. The Senate bill passed 34-6; although the bills appear to have been identical, Chase, Newman and Peake also voted no. The House vote on SB 1695 was 84-13.

And now for the also-rans.

Bills that failed: renewable energy

HB 2329 (Keam) and SB 1456 (McClellan and Edwards) is the Solar Freedom bill that would have removed 8 barriers to renewable energy installations by utility customers, including lifting the 1% net metering cap, removing PPA caps, and allowing municipal net metering. HB 2329 was defeated inCommerce and Labor 8-7 on a party-line vote. The Senate companion was killed in Commerce and Labor on a 10-3 party-line vote.

HB 1683 (Ware) gives electric cooperatives greater autonomy, including authority to raise their total system caps for net metering up to 5% of peak load. Amended to remove the net metering language, then withdrawn by patron.

HB 1809 (Gooditis) follows up on last year’s HB 966 by making the renewable energy and energy efficiency provisions mandatory. If utilities don’t meet annual targets, they have to return their retained overearnings to customers. Defeated inCommerce and Labor subcommittee 3 on party-line vote, with only Democrats supporting.

HB 1869 (Hurst), SB 1483 (Deeds) and SB 1714 (Edwards) creates a pilot program allowing schools that generate a surplus of solar or wind energy to have the surplus credited to other schools in the same school district. HB 1869defeated in Commerce and Labor subcommittee 3 on party-line vote. In Senate Commerce and Labor, SB 1714 was incorporated into SB 1483, then defeated unanimously.

HB 1902 (Rasoul) would provide a billion dollars in grant funding for solar projects, paid for by utilities, who are required to contribute this amount of money through voluntary contributions (sic). Killed in Appropriations subcommittee on party-line vote.

HB 1928 (Bulova) and SB 1460 (McClellan) expands utility programs allowing third-party power purchase agreements (PPAs) for renewable energy while continuing to restrict the classes of customers who are allowed to have access to this important financing tool. In committee hearings, utility lobbyists claimed there was no need for the legislation because there is “plenty of room left” under the existing caps. Industry members testified that there is a lot more in the queue than is public, and caps will likely be reached this year. HB 1928 killed in Commerce and Labor subcommittee 3 by a 6-4 vote; Republican Tim Hugo voted with Democrats in support of the bill. SB 1460 killed in Senate Commerce and Labor 10-3, with only Democrats supporting.

HB 2117 (Mullin) and SB 1584 (Sutterlein) fixes the problem that competitive service providers can no longer offer renewable energy to a utility’s customers once the utility has an approved renewable energy tariff of its own. Now that the SCC has approved a renewable energy tariff for APCo, this is a live issue. HB 2117defeated inCommerce and Labor subcommittee 3 on party-line vote. Although the patron of SB 1584, David Sutterlein, is a Republican, his bill died in Senate Commerce and Labor 11-1, with only fellow Republican Ben Chafin voting for it, and Republican Stephen Newman abstaining.

HB 2165 (Davis and Hurst) and HB 2460 (Jones and Kory), and SB 1496 (Saslaw) provide an income tax credit for nonresidential solar energy equipment installed on landfills, brownfields, in economic opportunity zones, and in certain utility cooperatives. This is a Rubin Group bill. HB 2165 and HB 2460 were left in the Committee on General Laws (i.e, they died there). SB 1496 was amended in Finance to change it from a tax credit to a grant-funded program, but with no money. Then it passed the committee and the Senate unanimously.  However, it was then killed unanimously in a House subcommittee of Commerce, Agriculture, Natural Resources & Technology.

HB 2241 (Delaney) establishes a green jobs training tax credit. Failed in House Finance subcommittee on party-line vote.

HB 2500 (Sullivan) establishes a mandatory renewable portfolio standard (RPS) for Virginia, eliminates carbon-producing sources from the list of qualifying sources, kicks things off with an extraordinarily ambitious 20% by 2020 target, and ratchets up the targets to 80% by 2027. Failed inCommerce and Labor subcommittee 3 with only Democrat Mark Keam supporting it.

HB 2641 (Gooditis) makes third-party power purchase agreements for distributed renewable energy resources legal statewide. Killed in Commerce and Labor subcommittee 3 by a 6-3 vote. Delegate Hugo, who had voted for Bulova’s narrower PPA bill, joined the other Republicans in voting against this broader one.

HB 2692 (Sullivan) allows the owner of a multifamily residential building to install a renewable energy facility and sell the output to occupants or use for the building’s common areas. Stricken from docket.

HJ 656 (Delaney) would have the Virginia Resources Authority study the process of transitioning Virginia’s workforce from fossil-fuel jobs to green energy jobs. Failed to report from Rules subcommittee on party-line vote, all Republicans voting against it.

Bills that failed: energy efficiency (some of which had RE components)

HB 2243 (Sullivan) creates an energy efficiency revolving fund to offer no-interest loans to local government, public schools, and public institutions of higher learning. Killed in Appropriations subcommittee on party-line vote.

HB 2294 (Sullivan) establishes mandatory energy efficiency goals for electric and gas utilities. Killed in Commerce and Labor subcommittee 3 on party-line vote.

HB 2295 (Sullivan) creates an energy efficiency fund and board to administer it. Killed in an Appropriations subcommittee on a party-line vote.

SB 1111 (Marsden) requires utilities to provide rate abatements to certain customers who invest at least $10,000 in energy efficiency and, by virtue of their lower consumption, end up being pushed into a tier with higher rates. Stricken at the request of the patron.

HB 2070 (Bell, John) provides a tax deduction for energy saving products, including solar panels and Energy Star products, up to $10,000. Stricken from docket in Finance subcommittee.

Bills that failed: energy transition and climate

HB 1635 (Rasoul, with 9 co-patrons) imposes a moratorium on fossil fuel projects, including export facilities, gas pipelines and related infrastructure, refineries and fossil fuel exploration; requires utilities to use clean energy sources for 80% of electricity sales by 2028, and 100% by 2036; and requires the Department of Mines, Minerals and Energy to develop a (really) comprehensive climate action plan, which residents are given legal standing to enforce by suit. This is being referred to as by the Off Act. Defeated on the floor of the House 86-12.

HB 1686 (Reid, with 14 co-patrons) and SB 1648 (Boysko) bans new or expanded fossil fuel generating plants until Virginia has those 5,500 MW of renewable energy we were promised. This is referred to as the Renewables First Act. HB 1686:Defeated inCommerce and Labor Subcommittee 3. 2 Democrats voted for it, 6 Republicans and 1 Democrat against. SB 1648 PBI’d 12-0 in Commerce and Labor.

HB 2501(Rasoul) directs the Division of Energy at DMME to include a greenhouse gas emissions inventory in the Virginia Energy Plan. Killed in Commerce and Labor subcommittee 3 on party-line vote.

HB 2645 (Rasoul, with 13 co-patrons), nicknamed the REFUND Act, prohibits electric utilities from making nonessential expenditures and requires refunds if the SCC finds they have. It also bars fuel cost recovery for more pipeline capacity than appropriate to ensure a reliable supply of gas. Other reforms in the bill would undo some of the provisions of last year’s SB 966, lower the percentage of excess earnings utilities can retain, and require the SCC to determine rates of return based on cost of service rather than peer group analysis. Democrat Steve Heretick voted with Republicans to kill the bill in Commerce and Labor subcommittee 3.

HB 2735 (Toscano) and SB 1666 (Lewis and Spruill) is this year’s version of the Virginia Coastal Protection Act, which would have Virginia formally join the Regional Greenhouse Gas Initiative (RGGI). It dedicates money raised by auctioning carbon allowances to climate adaptation efforts, energy efficiency programs, and coalfields transition. HB 2735 died in Commerce and Labor subcommittee 3 on party-line vote. SB 1666 met the same fate in Agriculture, Conservation and Natural Resources, with Democrat Rosalyn Dance abstaining.

HJ 724 (Rasoul) is a resolution “Recognizing the need for a Green New Deal in Virginia which promotes a Just Transition to a clean energy economy through lifting working families.” This was referred to Commerce and Labor subcommittee 3, where it was left without a hearing.

Bills that failed: other utility regulation

HB 1718 (Ware) requires an electric utility to demonstrate that any pipeline capacity contracts it enters are the lowest-cost option available, before being given approval to charge customers in a fuel factor case. Delegate Ware testified in committee that the bill was not intended to stop the Atlantic Coast Pipeline, but would simply guide the SCC’s review of a rate request after the pipeline is operational. Dominion’s lobbyist argued the legislation was unnecessary because the SCC already has all the authority it needs, and it shouldn’t be allowed to look back to second-guess the contents of the ACP contract. The bill passed the House 57-40. Do look at the votes; this is the most interesting energy vote of the year, as it neatly separates the Dominion faction from the pro-consumer faction. Unfortunately, the bill was then killed in Senate Commerce & Labor, where the Dominion faction runs the show, so most senators didn’t have the opportunity to demonstrate whose side they’re on.

HB 2503 (Rasoul) requires the State Corporation Commission to conduct a formal hearing before approving any changes to fuel procurement arrangements between affiliates of an electric utility or its parent company that will impact rate payers. This addresses the conflict of interest issue in Dominion Energy’s arrangement to commit its utility subsidiary to purchase capacity in the Atlantic Coast Pipeline.  Stricken from docket.   

HB 2697 (Toscano) and SB 1583 (Sutterlein) supports competition by shortening the time period that a utility’s customer that switches to a competing supplier is barred from returning as a customer of its utility from 5 years to 90 days. HB 2697 died in House Commerce and Labor subcommittee 3 on a party-line vote, with all the Republicans voting against it. SB 1583 died in Senate Commerce and Labor 11-2, with only Republicans Newman and Chafin voting for it. Democrats Saslaw, Dance and Lucas joined the rest of the Republicans in demonstrating their Dominion-friendly bonafides.

SB 1780 (Petersen) requires, among other things, that utilities must refund to customers the costs of anything the SCC deems is a nonessential expenditure, including spending on lobbying, political contributions, and compensation for employees in excess of $5 million. It directs the SCC to disallow recovery of fuel costs if a company pays more for pipeline capacity from an affiliated company than needed to ensure a reliable supply of natural gas. It requires rate reviews of Dominion and APCo in 2019 and makes those biennial instead of triennial, and provides for the SCC to conduct an audit going back to 2015. It tightens provisions governing utilities’ keeping of overearnings and provides for the allowed rate of return to be based on the cost of providing service instead of letting our utilities make what all the other monopolists make (“peer group analysis”).  Killed in Commerce and Labor 12-1, with only Republican Richard Stuart supporting the bill.

Growth in data centers overpowers Virginia’s renewable energy gains

 

Greenpeace rebranded National Landing, the future home to Amazon’s HQ2, with a human-sized Alexa, lamppost signs and street posters highlighting the company’s stalled progress towards its commitment to power its cloud with 100% renewable energy. Photo credit Greenpeace.

 

More than 100 massive data centers, over 10 million square feet of building space, dot the Northern Virginia landscape around Dulles Airport in what is known as “Data Center Alley.”

And the industry is growing fast.

Local governments welcome the contribution to their tax revenue, but these data centers come with a dark downside: they are energy hogs, and the fossil fuel energy they consume is driving climate change.

A new report from Greenpeace called Clicking Clean Virginia: The Dirty Energy Powering Data Center Alley describes the magnitude of the problem:

“Not including government data centers, we estimate the potential electricity demand of both existing data centers and those under development in Virginia to be approaching 4.5 gigawatts, or roughly the same power output as nine large (500-megawatt) coal power plants.”

As these data center operations continue to grow, they are providing the excuse for utilities, primarily Dominion Energy Virginia, to build new fracked-gas infrastructure, including gas generating plants and the Atlantic Coast Pipeline.

Many of these same tech companies have publicly committed to using renewable energy, and in some cases they have invested heavily in solar and wind power in other states. With the exception of Apple, however, all these data center operators are falling far short in meeting their Virginia energy demand with renewables. Intentionally or not, that makes them complicit in Dominion’s fossil-fuel expansion.

One tech company in particular stands out in the report, due to the sheer size of its operations. Greenpeace calculates that Amazon Web Services, the largest provider of cloud hosting services in the world, has a larger energy load than the next four largest companies combined.

For a while, it looked like AWS would provide leadership commensurate with its size. In 2015, AWS helped break open the solar market in Virginia with an 80-megawatt solar farm. A year later it added another 180 megawatts of solar here, as well as a wind farm in North Carolina in Dominion territory.

Then the investments stopped, while the data center growth continued.

Today, Greenpeace estimates that AWS uses close to 1,700 megawatts for its Virginia data centers. Adjusted for their capacity factors, the renewable energy projects total just 132 megawatts, or less a tenth of the energy the data centers use.

The capacity factor of an energy facility reflects how much energy it actually produces, as opposed to its “nameplate” capacity. A solar facility produces only in daylight, but a data center consumes energy 24/7. To match all of its energy demand with solar energy, AWS would need more than 7,000 megawatts of solar—at least 15 times the amount in all of Virginia today.

For a company whose website promises a commitment to 100 percent renewable energy, that’s a major fail.

The Greenpeace report shows Amazon is not alone in data center operators that are dragging their feet on clean energy. It is simply, by far, the largest. The next three biggest data center operators—Cloud HQ, Digital Reality, and QTS—have no renewable energy at all in Virginia.

Better-known names like Microsoft and Facebook also operate Virginia data centers. Although both have invested in Virginia solar farms, they also fall well short of meeting their energy needs with renewables.

The tech giants are not entirely to blame in all this. As the Greenpeace report details, many of them have asked the General Assembly and the State Corporation Commission for more and better options for purchasing renewable energy. Their requests have largely been ignored.

Virginia’s monopoly system makes it hard for the companies to buy clean electricity from other providers. Our number one monopoly, Dominion Energy, claims to be working hard to meet the large customers’ demand for renewable energy, but its extensive investments in gas infrastructure pose a clear conflict of interest.

Surely, though, if anyone can stand up to Dominion on its home turf, it should be Amazon — which, of course, plans to make Virginia its home turf as well.

And AWS does have options, including more solar as well as land-based wind from the Rocky Forge wind farm and offshore wind from Virginia or North Carolina.

The fact that Amazon doesn’t even seem to be trying should be of great concern to Virginians. As Greenpeace puts it, “AWS’ decision to continue its rapid expansion in Virginia without any additional supply of renewable energy is a powerful endorsement of the energy pathway Dominion has chosen, including the building of the ACP, and a clear signal that its commitment to 100 percent renewable energy will not serve as a meaningful basis for deciding how its data center are powered.”

Amazon has already fired back at the Greenpeace report. In a statement, it asserts that “Greenpeace’s estimates overstate both AWS’ current and projected energy usage.”

However, the statement did not offer a different estimate. It also points to its investments in Virginia renewable energy (the same ones described in the report) and concludes, “AWS remains firmly committed to achieving 100 percent renewable energy across our global network, achieving 50 percent renewable energy in 2018. We have a lot of exciting initiatives planned for 2019 as we work towards our goal and are nowhere near done.”

Well, that’s nice.

But meanwhile, those data centers are using electricity generated from burning fossil fuels, driving climate change, and providing an excuse for new fracked gas infrastructure. Given the rapid pace of data center construction in Virginia, it’s going to take a lot of exciting initiatives from AWS — and all the other data center operators — to make any kind of meaningful impact.

Virginia’s solar job numbers rose 9% in 2018

Workers install solar panels at the University of Richmond.

The Solar Foundation has released its National Solar Jobs Census for 2018, showing solar jobs in Virginia increased from 3,565 in 2017 to 3,890 in 2017, an increase of 9%.

That puts Virginia 20thin the nation for solar jobs, though only 34thif measured on a per capita basis.

Nationwide, solar job numbers fell 3.2% to 242,000 jobs as the Trump administration’s tariffs on solar panels took a toll, yet 29 states saw increases. The Solar Foundation projects a 7% increase in 2019.

The Virginia job numbers sound good until you compare us to the competition. To the south of us, North Carolina continues to eat our lunch, with 6,719 solar jobs, while Maryland to the north has 4,515. Both these states lost jobs compared to 2017, but remain way ahead of Virginia both in absolute terms and jobs per capita. (Not surprisingly, they also have a lot more solar installed.)

In fact, measured in solar jobs per capita, Virginia remains an East Coast laggard. Every state on the Atlantic except Georgia and Pennsylvania has more solar workers per capita than Virginia has—and those two states are not far behind us.

This is especially unsettling because while North Carolina and states to the north of us have renewable portfolio standards (RPS) that require their utilities to buy renewable energy, most southeastern states do not. The fact that they are beating Virginia on solar jobs suggests we have a lot of room left for improvement.

In spite of shrinking employment and the impact of tariffs, solar installations nationally rose 8% in 2018, according to Bloomberg New Energy Finance (BNEF) in its Sustainable Energy in America Factbook. (BNEF also shows higher job numbers for solar than the Solar Foundation recorded, possibly due to different methodologies.)

More installed capacity by fewer workers may reflect higher productivity on the part of the industry, as installers learn to work better and faster, and as communities support them with streamlined permitting and public education.

The growth in utility-scale solar is surely a factor also. Rooftop residential and commercial solar is labor-intensive, while large, ground-mounted arrays allow significant economies of scale. Statistics from the Solar Energy Industries Association (SEIA) show utility-scale solar has been driving much of the increase in solar installations over the past several years.

Although solar remains a very small part of the nation’s overall energy mix, the BNEF report shows it makes up a significant share of new energy being built, even beating out natural gas in 2016 and 2017. BNEF also shows solar jobs run only barely behind jobs in gas. Considering only electric generation, solar jobs are way ahead of all other sources, including gas. (Coal lost the jobs race several years ago, even in Virginia, and in spite of the subsidies we throw at coal mining.)

For Virginia policy makers who are focused on job creation, solar is a clear winner. As the Solar Foundation notes, “In the five-year period between 2013 and 2018, solar employment increased 70% overall, adding 100,000 jobs. By comparison, overall U.S. employment grew only 9.13% during that same period.”

This article originally appeared in the Virginia Mercury on February 14, 2019. 

As Virginia prepares to join carbon-trading states, arguments erupt over the price of admission

photo courtesy of the Sierra Club

Virginia won’t enter the nine-state carbon emissions trading program known as the Regional Greenhouse Gas Initiative until 2020 under regulations being finalized by the state, but debate about how much it might cost utility ratepayers is already heating up.

Estimates range from little or no cost — or even a cost savings — to as high as $12 per month for the average household, depending on who is doing the calculations and the assumptions they make.

An Associated Press article reports that State Corporation Commission staff testified before a legislative committee that joining RGGI via the Virginia Coastal Protection Act, SB 1666 and HB 2735, would cost Virginia households an added $7-12 per month. The Northam administration disputed the SCC figure, saying the true cost would be about a dollar per month.

Republicans killed the bill in both the Senate and House committees that day.

A few days later, the anti-RGGI bill, HB 2611 (Poindexter), sailed through the House on a party-line vote. It would prevent Virginia from participating in RGGI or any other carbon-reduction regimen. If it also passes the Senate in coming weeks, it faces certain veto by the governor.

So is joining RGGI an inexpensive way to incentivize utilities to save energy and lower carbon emissions, or will it pile costs onto customers?

RGGI, for those of you who need a quick brush-up on your carbon policies, is a cooperative, market-based effort that has been running in New England and the Mid-Atlantic states as far south as Maryland for the past decade.

It works by auctioning carbon pollution allowances to major emitters, gradually ratcheting down the number of allowances made available each year to incentivize conservation and the use of lower-carbon fuels. States use the money they raise to fund energy efficiency, community solar, weatherization and other programs, often focusing especially on low-income residents.

First things first: RGGI works.

According to a 2018 report by Analysis Group, the RGGI region has met its targets, and benefited economically as well:

“Over three years (2015-2017), the RGGI program led to $1.4 billion (net present value) of net positive economic activity in the nine-state region,” the report says. “Each RGGI state’s electricity consumers and local economy also experienced net benefits from the RGGI program. When spread across the region’s population, these economic impacts amount to nearly $34 in net positive value added per capita.”

Virginia’s carbon reduction plan, now in the final stages of drafting at DEQ, will have Virginia participate in the RGGI auctions but not raise money from auctioning allowances.

Beginning in 2020, RGGI will add Virginia carbon emissions (28 million tons, the baseline DEQ has chosen) to the total for the existing members (56 million tons), and our utilities will bid for and trade allowances with the utilities in the other nine states.

But unlike the existing RGGI states, under DEQ’s plan Virginia will distribute its share of carbon allowances to our utilities at no cost, based on their previous year’s electricity sales. Utilities will sell the allowances into the RGGI auction bucket and buy back as many as they need. Initially, at least, the effect on ratepayers should be pretty much a wash.

Chris Bast, chief deputy at the Virginia Department of Environmental Quality said DEQ’s modeling program estimated rates would increase about 1 percent as a result of the new regulations. That’s a much lower figure than the $7 per month the SCC estimated the program would cost even with free allowances.

State Corporation Commission spokesman Ken Schrad said the DEQ “has understated the price of carbon emissions and understated Dominion’s cost of money for future capital investments (borrowed from lenders or invested by shareholders).”

“DEQ modeled Dominion as if it was a deregulated utility in a competitive market,” Schrad said. “Dominion’s fossil fuel generating units must be paid for in rates regardless of whether they are generating electricity under its vertically integrated structure.”

Bast takes issue with this. “I don’t know where the SCC got its numbers,” Bast told me. “Many folks, including the DEQ, have done extensive modeling to determine the environmental and economic impacts of the rule. That modeling is part of the public record and is part of the extensive public process that has gone into crafting this regulation. The SCC’s analysis is an outlier by several orders of magnitude – nearly 600%. The SCC has not provided any comment about ratepayer impact during any of our regulatory proceedings.

“We’re simply asking the SCC to show their work. But, to date, they have refused to provide us with the analysis that supports their conclusions.”

Bast says DEQ has not modeled what the program would cost if utilities had to pay for allowances, as contemplated under the Coastal Protection Act. Paying for allowances, according to the SCC, could drive costs up by an additional $5 per month.

This is a moot point, for now, since the Coastal Protection Act did not pass. But advocates believe that auctioning allowances offers an opportunity to raise funds to invest in energy efficiency and climate programs, so the idea remains on everyone’s radar for next year.

How RGGI works:

Under the Coastal Protection Act, auction proceeds would go into the state’s coffers to fund energy efficiency and resiliency programs that benefit the public. Utilities would be able to recover the costs of buying allowances from their customers, so there would be more impact on rates than there would be if allowances are free.

The Coastal Protection Act takes an extra step and actually requires investor-owned utilities to build wind and solar to achieve at least 50 percent of the required emissions reduction. If that amount were to exceed what they planned to build anyway, it would mean more costs paid for by customers—though maybe not a lot, if it speeds up the retirement of old fossil fuel plants that ought to close anyway.

RGGI reduces carbon emissions over time by gradually decreasing the number of auction allowances available in the region year after year. As the carbon cap tightens, either allowances become more expensive, or utilities reduce emissions, or both.

So far the RGGI states have succeeded in reducing emissions without higher allowance prices. They have done this in large part by closing coal plants and investing in energy efficiency and renewable energy, including programs paid for by auctioning the carbon emissions allowances.

Most RGGI states also have mandates for efficiency and renewable energy, which Virginia lacks. (In spite of the hoopla around it, last year’s “grid mod” bill did not require utilities to achieve any specific efficiency or renewable energy outcomes.) The combined effect of all these actions is that the prices paid for auction allowances in RGGI have stayed low.

According to the Analysis Group, consumers in RGGI states have benefited:

“On the one hand, the inclusion of the cost of CO2 allowances in wholesale prices tends to increase wholesale electricity prices in the RGGI region at the beginning of the 2015-2017 period,” the report says.

“But these near-term impacts are more than offset during these years and beyond, because the states invest a substantial amount of the RGGI auction proceeds on energy efficiency programs that reduce overall electricity consumption and on renewable energy projects that reduce the use of higher-priced power plants. Consumers gain because their overall electricity bills go down.

“Since RGGI’s commencement in 2009, energy and dollar savings resulting from all states’ investments in energy efficiency and renewable energy has more than offset the wholesale market price increases associated with inclusion of allowance costs in market bids.”

Virginia is as well-positioned as any of the RGGI states to meet the carbon-reduction goals.

Utilities can reduce energy demand through energy efficiency, resulting in less need for carbon-emitting fuel to be burned. They can also replace coal-fired generation with power from gas (with about half the CO2 of coal) or renewables (zero C02 for wind, water and solar; biomass has CO2 emissions as high as coal, but decision-makers pretend it’s carbon neutral).

Our nuclear plants, which provide a big chunk of Virginia’s electricity, are already operating at full capacity, and that’s not expected to change.

Intuitively, the solutions wouldn’t be expected to cost very much. Some of Virginia’s coal plants aren’t running very much these days anyway, putting them precariously close to the point where it is cheaper to close them than keep paying to have them available. As for alternatives, Dominion says solar is the cheapest form of new energy.

And energy efficiency is, famously, the lowest-cost energy resource, and vastly underutilized in Virginia.

In fact, projections have Dominion coming in under the RGGI cap for at least several years, putting our utilities in the happy (for them) position of possibly making money in the auctions.

But that doesn’t quite settle the matter.

There is one other consideration that could affect rates: Virginia utilities participate in the regional transmission organization known as PJM, which runs the wholesale power market. Anything that makes Virginia power more expensive makes it less attractive to the market.

That is surely part of the SCC staff’s concern.

To understand this dynamic, I consulted economist Bill Shobe, a professor at the Center for Economic and Policy Studies at the Weldon Cooper Center for Public Service at the University of Virginia, who studies carbon markets.

Shobe said that if Virginia utilities get CO2 allowances for free based on their previous year’s electricity generation, as the DEQ plan calls for, there should be no impact on their power plants’ competitiveness in PJM. The cost to customers would be little or nothing.

But if a coal or gas plant has to add the cost of CO2 allowances to its price of power, as happens in other RGGI states, power plants from non-RGGI states that don’t have to charge for CO2 will have a price advantage.

Shobe said if a Virginia utility adds the cost of CO2 allowances to the price of power from its own fossil fuel plants, those plants won’t run as much. Even the utility itself might buy cheaper wholesale power rather than run its own plants. Worse, the imported power could be higher in CO2 than the Virginia power it displaces, a problem known as “leakage.”

Dominion Energy Virginia’s 2018 Integrated Resource Plan, a document that forecasts how the utility will meet electric demand, predicted that if Virginia joined RGGI, its four big gas plants would run only an average of 64 percent of the time in 2025, compared to 79 percent in a scenario with no carbon constraints.

Dominion also claimed the cheaper imported power would come with such a higher carbon footprint than the power it was replacing that the whole deal would be counterproductive as a CO2 reduction strategy.

Skeptics should note that Dominion didn’t report the assumptions behind the modeling. Even its consultant, ICF, included a disclaimer that it was using the information Dominion gave it but “makes no assurances as to the accuracy of any such information or any conclusions based thereon.”

It’s also not clear that Dominion recognized any difference between getting free allowances and having to pay for them.

Shobe explained that Dominion’s modeling program didn’t account for DEQ’s use of “output-based allocation”— that is, distributing carbon allowances for free based on a utility’s generation in the previous year. This approach, said Shobe, incentivizes the utility to keep generating as much zero- or low-carbon electricity as it can so it will get as many allowances the next year as possible, and it will use its allowances to keep its own power competitive with imports.

The modeling that ICF did for Dominion, say Shobe, “treats all allowances as if they are sold at auction. Period. They don’t even attempt to model free allowances much less output-based allocation.”

With free allowances, customer costs should be minimal.

What if we auction the allowances?

Shobe said auctioning allowances instead of distributing them for free would make the power from Virginia’s fossil fuel plants less competitive in the PJM market. Yet customers will still have to pay for the capital cost of these huge gas plants that the SCC itself foolishly allowed Dominion to build, even if the power they generate is less competitive in PJM.

(“Foolishly” is obviously my term for it. The SCC not only doesn’t admit it did anything wrong, it rejected Dominion’s IRP in part because the company didn’t propose building yet another giant gas plant.)

The SCC’s high-end estimate seems to be based on this concern, but its numbers are much higher than even Dominion’s.

Dominion’s IRP estimated that joining RGGI would “cost Virginia customers about $530 million over the period 2020 to 2030,” or $53 million per year. The IRP says the impact would be about $3.50-$5 per month for residential customers, depending on the approach taken.

Even that estimate has to be taken with a bucket of salt. As the SCC staff noted at the time, Dominion overestimated the costs of joining RGGI by using overly high demand projections and failing to assume any decrease in demand from the hundreds of millions of dollars in efficiency programs the utility is required to design.

Obviously, those programs will also lower carbon emissions, helping Virginia meet the RGGI targets—as will building the solar energy envisioned by the grid mod bill.

So how the SCC staff has now come up with cost estimates even higher than Dominion’s is a head-scratcher. Nothing in the Coastal Protection Act appears to add costs beyond what Dominion knew about for its IRP.

This debate is surely not over.

We hope DEQ and the SCC will come together on a shared set of facts and assumptions, but meanwhile it is worth noting two points.

One is that even Dominion agrees some sort of carbon regulation at the federal level is likely eventually, even if it doesn’t happen under President Donald Trump’s administration.

Starting to shrink our carbon footprint now instead of later is going to save us money, even apart from its climate and health benefits.

The other is that the RGGI approach brings proven economic benefits to customers. As the Analysis Group report showed, customers in RGGI states actually saw lower bills in spite of higher rates because of the investments in energy efficiency.

If that happens in Virginia, joining RGGI will actually put more money in the pockets of customers.

 

A version of this article first appeared in the Virginia Mercury on February 6, 2019. 

So many bills filed, so few remain: almost-halftime status report on climate and energy legislation

Virginia statehouse, where the General Assembly meetsTuesday, January 5 marks “crossover” at the Virginia General Assembly, the date when House bills go over to the Senate, and Senate bills to the House. Any legislation that hasn’t made it through the gantlet to a successful vote in its starting chamber evaporates in a puff of smoke, if it has not already died due to causes natural or unnatural.

I’ve hot-linked the bill numbers to their pages in the Legislative Information Service; follow the links on the page to read the legislation or see vote results. The information below is based on what was available as of yesterday, February 3.

Many of the committee hearings were recorded on video.

Renewable energy bills

Solar Freedom, the bill to remove barriers to customer-owned solar statewide, met implacable resistance from Republicans in control of the Commerce and Labor committees, as did narrower bills focused just on power purchase agreements (PPAs). That meant the only significant renewable energy legislation moving forward is a bill negotiated between the rural electric cooperatives and solar advocates that will ease restrictions on customer solar in coop territory. See HB 2547 (Hugo) and SB 1769 (Sturtevant), below.

Two bills that would have provided financial support for solar have passed their committees, but only after the money part got taken out.

A watered-down municipal renewable energy bill survives, but in a disappointingly limited form. An interesting solar-on-schools bill now looks less interesting.

Legislation enabling localities to impose new decommissioning requirements on large solar farms will likely move forward.

Here is the status of the renewable energy bills I’ve been tracking, with a little color commentary sprinkled in:

 HB 2329 (Keam) and SB 1456 (McClellan and Edwards) is the Solar Freedom bill that would have removed 8 barriers to renewable energy installations by utility customers, including lifting the 1% net metering cap, removing PPA caps, and allowing municipal net metering.  Advocates gave this everything they had, with hundreds of citizens lobbying for the bill and showing up at the subcommittee hearings.But Republicans held firm for their utility friends. HB 2329 was defeated in Commerce and Labor 8-7 on a party-line vote with two Democrats absent and one (Lindsay) present but strangely not voting. The Senate companion was killed in Commerce and Labor on a 10-3 party-line vote. Some of the reforms in Solar Freedom also appear in weakened form in one bill (HB 2547 and SB 1769) that moves forward—but only for the electric cooperatives.   

HB 1683 (Ware) gives electric cooperatives greater autonomy, including authority to raise their total system caps for net metering up to 5% of peak load. Amended to remove the net metering language, then withdrawn by patron.

HB 1809 (Gooditis) follows up on last year’s HB 966 by making the renewable energy and energy efficiency provisions mandatory. If utilities don’t meet annual targets, they have to return their retained overearnings to customers. Defeated in Commerce and Labor subcommittee 3 on party-line vote, with only Democrats supporting.

HB 1869 (Hurst), SB 1483 (Deeds) and SB 1714 (Edwards) creates a pilot program allowing schools that generate a surplus of solar or wind energy to have the surplus credited to other schools in the same school district. HB 1869 defeated in Commerce and Labor subcommittee 3 on party-line vote. In Senate Commerce and Labor, SB 1714 was incorporated into SB 1483, then defeated unanimously.

HB 1902(Rasoul) would provide a billion dollars in grant funding for solar projects, paid for by utilities, who are required to contribute this amount of money through voluntary contributions (sic). Killed in Appropriations subcommittee on party-line vote.

HB 1928 (Bulova) and SB 1460 (McClellan) expands utility programs allowing third-party power purchase agreements (PPAs) for renewable energy while continuing to restrict the classes of customers who are allowed to have access to this important financing tool. In committee hearings, utility lobbyists claimed there was no need for the legislation because there is “plenty of room left” under the existing caps. Industry members testified that there is a lot more in the queue than is public, and caps will likely be reached this year. HB 1928 killed in Commerce and Labor subcommittee 3 by a 6-4 vote; Republican Tim Hugo voted with Democrats in support of the bill. SB 1460 killed in Senate Commerce and Labor 10-3, with only Democrats supporting.

HB 2117 (Mullin) and SB 1584 (Sutterlein) fixes the problem that competitive service providers can no longer offer renewable energy to a utility’s customers once the utility has an approved renewable energy tariff of its own. Now that the SCC has approved a renewable energy tariff for APCo, this is a live issue. HB 2117 defeated in Commerce and Labor subcommittee 3 on party-line vote. Although the patron of SB 1584, David Sutterlein, is a Republican, his bill died in Senate Commerce and Labor 11-1, with only fellow Republican Ben Chafin voting for it, and Republican Stephen Newman abstaining.

STILL ALIVE: HB 2165 (Davis and Hurst) and HB 2460 (Jones and Kory), and SB 1496 (Saslaw) provide an income tax credit for nonresidential solar energy equipment installed on landfills, brownfields, in economic opportunity zones, and in certain utility cooperatives. This is a Rubin Group bill. HB 2165 and HB 2460 remain stuck in the Committee on General Laws (not a good sign). SB 1496 was amended in Finance to change it from a tax credit to a grant-funded program, but with no money. Then it passed the committee unanimously. 

STILL ALIVE:  HB 2192 (Rush) and SB 1331 (Stanley) is a school modernization initiative that includes language encouraging energy efficient building standards and net zero design. It also encourages schools to consider lease agreements with private developers (apparently there is one particular North Carolina firm that wants this). It does not contemplate the more common use of third-party power purchase agreements. HB 2192 was amended in General Laws, where it passed unanimously. It still has nice (but not mandatory) language on net zero schools. It allows leases with private developers who will construct and operate buildings and facilities. It permits public schools to contract with utilities for solar energy as part of the school modernization project. New language requires that renewable energy facilities must be on school property and cannot be used to serve any other property. PPAs are still not mentioned. Ambiguous language in these provisions may cause problems for schools. SB 1331 was amended with what appears to be the same language as its House counterpart. It reported unanimously from Finance.

HB 2241 (Delaney) establishes a green jobs training tax credit. Failed in House Finance subcommittee on party-line vote.

HB 2500 (Sullivan) establishes a mandatory renewable portfolio standard (RPS) for Virginia, eliminates carbon-producing sources from the list of qualifying sources, kicks things off with an extraordinarily ambitious 20% by 2020 target, and ratchets up the targets to 80% by 2027. Failed in Commerce and Labor subcommittee 3 with only Democrat Mark Keam supporting it.

STILL ALIVE:  HB 2547 (Hugo) and SB 1769 (Sturtevant) makes changes to the net metering program for customers of electric cooperatives. The overall net metering cap is raised from the current 1 percent to a total of 5%, divided into separate buckets by customer type and with an option for coops to choose to go up to 7%. Customers will be permitted to install enough renewable energy to meet up to 125% of previous year’s demand, up from 100% today. Third-party PPAs are generally legal, with a self-certification requirement. However, the coops will begin imposing demand charges on customers with solar, to be phased in over several years, replacing any standby charges. This bill was negotiated between the coops and the solar industry via the “Rubin Group.” You have to hand it to the coops, this is huge movement on their part, if not perfect, and it is too bad that Dominion and APCo held fast to their obstructionist position rather than allow their customers more freedom to install solar. An amendment to the bill establishes a stakeholder group for further discussions with Dominion and APCo on net metering, a prospect that will appeal only to eternal optimists and amnesiacs who don’t remember the past five years of time-wasting, fruitless negotiations. Delegate Hugo told me he tried to get Dominion and APCo to sign on to the coop deal but couldn’t persuade them—and I understand from others that he did make a real effort. But he scoffed at my suggestion that maybe Dominion shouldn’t have the final say. HB 2547 reported unanimously from Commerce and Labor. SB 1769 was amended to include the same stakeholder language requiring the mice to continue negotiations with the cat. It has now passed the Senate unanimously.

STILL ALIVE: HB 2621 (Ingram) and SB 1398 (Stanley) authorize a locality to require the owner or developer of a solar farm, as part of the approval process, to agree to a decommissioning plan. This is a Rubin Group bill. An amended version of HB 2621 reported from Counties, Cities and Towns unanimously. SB 1398 was incorporated into SB 1091.

HB 2641 (Gooditis) makes third-party power purchase agreements for distributed renewable energy resources legal statewide. Killed in Commerce and Labor subcommittee 3 by a 6-3 vote. Delegate Hugo, who had voted for Bulova’s narrower PPA bill, joined the other Republicans in voting against this broader one.

HB 2692 (Sullivan) allows the owner of a multifamily residential building to install a renewable energy facility and sell the output to occupants or use for the building’s common areas. Stricken from docket.

STILL ALIVE: HB 2741 (Aird) establishes a rebate program for low and moderate-income households that install solar. Amended so it retains the structure of the program but removes funding; otherwise it was going to be sent to Appropriations to die. As amended it was reported Commerce and Labor unanimously.

STILL ALIVE: HB 2789 (O’Quinn) requires Dominion and APCo to apply for approval of three-year programs to incentivize low-income energy efficiency and solar totaling $25 million each. The efficiency spending comes out of the money utilities are required to spend under last year’s grid mod legislation. The solar spending is new money. Somehow I missed this bill in my earlier round-up. It passed the House 88-11. The nay votes are  all Republicans: Adams, L.R., Byron, Cole, Fariss, Freitas, Gilbert, Landes, Poindexter, Wright, Brewer and LaRock.

STILL ALIVE: HB 2792 (Tran) and SB 1779 (Ebbin) establishes a 6-year pilot program for municipal net metering for localities that are retail customers of investor-owned utilities. The initial bill negotiated with the utilities was predictably much more limited than most localities wanted; further amendments have left it useful for only a few small on-site projects that don’t need PPAs. Fairfax County supervisor Jeff McKay testified in committee it would do nothing to help the county’s projects.Tran presented the amended bill in committee just a day or two after coming under fire from conservative Republicans for a bill that would ease one restriction on late-term abortions. In an obviously orchestrated attempt to demonstrate that conservative middle-aged white men still wield the power in Richmond, Delegate Hugo said he needed time to read the amendment. Committee chairman Terry Kilgore obliged, saying they would come back to it. Kilgore then kept Tran waiting through several hours of other bills, many of which also had new amendments, before letting her bill come back up. (Proving once again that middle school has nothing on the General Assembly.) As amended, HB 2792 reported from Commerce and Labor 19-2, with only Republicans Hugo and Head voting no.

HJ 656 (Delaney) would have the Virginia Resources Authority study the process of transitioning Virginia’s workforce from fossil-fuel jobs to green energy jobs. Failed to report from Rules subcommittee on party-line vote, all Republicans voting against it.

STILL ALIVE: SB 1091 (Reeves) imposes expensive bonding requirements on utility-scale solar farms, taking a more drastic approach than HB 2621 (Ingram) and SB 1398 (Stanley) to resolving the concerns of localities about what happens to solar farms at the end of their useful life. SB 1091 was amended to conform to the compromise language of HB 2621 and has passed the Senate unanimously.

Energy Efficiency (some of which have RE components)

We’re seeing modest progress in efficiency bills this year, mostly of the greasing-the-wheels variety. One of particular interest is Chap Petersen’s bill enabling Property Assessed Clean Energy (PACE) financing programs for residential buildings.

HB 2243 (Sullivan) creates an energy efficiency revolving fund to offer no-interest loans to local government, public schools, and public institutions of higher learning. Killed in Appropriations subcommittee on party-line vote.

STILL ALIVE: HB 2292 (Sullivan) and SB 1662 (Wagner), dubbed the “show your work bill,” requires the SCC to provide justification if it rejects a utility energy efficiency program. HB 2292 reported from Commerce and Labor with a substitute. SB 1662 passed the Senate with only 6 Republicans in opposition.

STILL ALIVE: HB 2293 (Sullivan) establishes a stakeholder process to provide input on the development of utility energy efficiency programs. Reported unanimously from Commerce and Labor with a substitute.

HB 2294 (Sullivan) establishes mandatory energy efficiency goals for electric and gas utilities. Killed in Commerce and Labor subcommittee 3 on party-line vote.

HB 2295 (Sullivan) creates an energy efficiency fund and board to administer it. Killed in an Appropriations subcommittee on a party-line vote.

STILL ALIVE: HB 2332 (Keam) protects customer data collected by utilities while allowing the use of aggregated anonymous data for energy efficiency and demand-side management efforts. Reported unanimously from Commerce and Labor with a substitute.

SB 1111 (Marsden) requires utilities to provide rate abatements to certain customers who invest at least $10,000 in energy efficiency and, by virtue of their lower consumption, end up being pushed into a tier with higher rates. Stricken at the request of the patron.

STILL ALIVE: SB 1400 (Petersen) removes the exclusion of residential buildings from the Property Assessed Clean Energy (PACE) program, which allows localities to provide low-interest loans for energy efficiency and renewable energy improvements on buildings. Passed the Senate unanimously.

HB 2070 (Bell, John) provides a tax deduction for energy saving products, including solar panels and Energy Star products, up to $10,000. Stricken from docket in Finance subcommittee.

Energy transition and climate

Bills designed to push Virginia towards a clean energy future died in the face of unanimous Republican opposition. House Republicans also united to pass a bill prohibiting Virginia from implementing its carbon reduction plan. But in a faint nod to reality, most Republicans and Democrats support legislation to help southwest Virginia develop renewable energy and energy storage (as long as it doesn’t cost anything).

HB 1635 (Rasoul, with 9 co-patrons) imposes a moratorium on fossil fuel projects, including export facilities, gas pipelines and related infrastructure, refineries and fossil fuel exploration; requires utilities to use clean energy sources for 80% of electricity sales by 2028, and 100% by 2036; and requires the Department of Mines, Minerals and Energy to develop a (really) comprehensive climate action plan, which residents are given legal standing to enforce by suit. This is being referred to as the “Off Act.” Defeated on the floor of the House 86-12.

HB 1686 (Reid, with 14 co-patrons) and SB 1648 (Boysko) bans new or expanded fossil fuel generating plants until Virginia has those 5,500 MW of renewable energy we were promised. This is referred to as the “Renewables First Act.” HB 1686: Defeated in Commerce and Labor Subcommittee 3. 2 Democrats voted for it, 6 Republicans and 1 Democrat against. SB 1648 PBI’d 12-0 in Commerce and Labor.

STILL ALIVE: HB 2611 (Poindexter) would prohibit Virginia from joining or participating in RGGI without support from two-thirds of the members of the House and Senate, making it sort of an anti-Virginia Coastal Protection Act. Passed the House on party-line vote.

HB 2501 (Rasoul) directs the Division of Energy at DMME to include a greenhouse gas emissions inventory in the Virginia Energy Plan. Killed in Commerce and Labor subcommittee 3 on party-line vote.

HB 2645 (Rasoul, with 13 co-patrons), nicknamed the REFUND Act, prohibits electric utilities from making nonessential expenditures and requires refunds if the SCC finds they have. It also bars fuel cost recovery for more pipeline capacity than appropriate to ensure a reliable supply of gas. Other reforms in the bill would undo some of the provisions of last year’s SB 966, lower the percentage of excess earnings utilities can retain, and require the SCC to determine rates of return based on cost of service rather than peer group analysis. Democrat Steve Heretick voted with Republicans to kill the bill in Commerce and Labor subcommittee 3.

HB 2735 (Toscano) and SB 1666 (Lewis and Spruill) is this year’s version of the Virginia Coastal Protection Act, which would have Virginia formally join the Regional Greenhouse Gas Initiative (RGGI). It dedicates money raised by auctioning carbon allowances to climate adaptation efforts, energy efficiency programs, and coalfields transition. HB 2735 died in Commerce and Labor subcommittee 3 on party-line vote. SB 1666 met the same fate in Agriculture, Conservation and Natural Resources, with Democrat Rosalyn Dance abstaining.

STILL ALIVE: HB 2747 (Kilgore) and SB 1707 (Chafin) create a Southwest Virginia Energy Research and Development Authority which will, among other things, promote renewable energy on brownfield sites, including abandoned mine sites, and support energy storage, including pumped storage hydro. HB 2747 reported unanimously from Commerce and Labor and was referred to Appropriations, where it passed with a substitute (presumably removing its fiscal impact, though I haven’t looked closely enough to confirm that). SB 1707 reported from Local Government and then from Finance, also with a substitute, presumably the same one.

HJ 724 (Rasoul) is a resolution “Recognizing the need for a Green New Deal in Virginia which promotes a Just Transition to a clean energy economy through lifting working families.” This was referred to Commerce and Labor subcommittee 3, but there is no further information about it in the LIS.

Other utility regulation

 Bills that preserve, protect, and extend the monopoly power of our utilities are doing well. On the other hand, Dominion has so far failed to kill a bill strengthening the standards of review the SCC will use in considering whether to allow rate recovery for pipeline capacity. 

STILL ALIVE: HB 1718 (Ware) requires an electric utility to demonstrate that any pipeline capacity contracts it enters are the lowest-cost option available, before being given approval to charge customers in a fuel factor case. The discussion in the committee was lively. Delegate Ware assured the committee the bill was not intended to stop the Atlantic Coast Pipeline, but would simply guide the SCC’s review of a rate request after the pipeline is operational. Dominion’s lobbyist argued the legislation was unnecessary because the SCC already has all the authority it needs, and it shouldn’t be allowed to look back to second-guess the contents of the ACP contract. The bill passed the committee 11-8, with Democrats Keam, Kory, Bagby, Toscano, Heretick, Mullin and Bourne joining Republicans Ware, Byron, Webert and Wilt in support.  Republicans voting against were Kilgore, Hugo, Marshall, Robert Bell, O’Quinn, Yancey, Ransone, and Head. Democrat Eileen Filler-Corn abstained. [UPDATE 2/5/19: HB 1718 passed the House on a bipartisan vote of 57-40, with Filler-Corn abstaining again. Here is the tally of who voted on which side.]

STILL ALIVE: HB 1840 (Danny Marshall) allows utilities to develop transmission infrastructure at megasites in anticipation of development, charging today’s customers for the expense of attracting new customers. Reported from Commerce and Labor with a substitute. Democrats Bagby, Heretick, Mullin and Bourne joined the Republicans in support.

STILL ALIVE: HB 2477 (Kilgore) would eliminate one of the few areas of retail choice allowed in Virginia by preventing large customers from using competitive retail suppliers of electricity, including for the purpose of procuring renewable energy, in any utility territory with less than 2% annual load growth. A substitute bill in Commerce and Labor removes this language but replaces it with other requirements designed to make it difficult for large customers to leave the embrace of their incumbent monopoly. The substitute passed 15-2, with only Delegates Filler-Corn and Keam opposed.

HB 2503 (Rasoul) requires the State Corporation Commission to conduct a formal hearing before approving any changes to fuel procurement arrangements between affiliates of an electric utility or its parent company that will impact rate payers. This addresses the conflict of interest issue in Dominion Energy’s arrangement to commit its utility subsidiary to purchase capacity in the Atlantic Coast Pipeline.  Stricken from docket.

STILL ALIVE: HB 2691 (O’Quinn) establishes a pilot program for electric utilities to provide broadband services in underserved areas, and raise rates for the rest of us to pay for it, proclaiming this to be in the public interest. A substitute bill has utilities only providing the capacity on their lines to private broadband suppliers, and makes the investment eligible for recovery as an electric grid transformation project (seriously!), but prevents utilities from going into broadband services themselves. The amended bill passed Commerce and Labor unanimously.

HB 2697 (Toscano) and SB 1583 (Sutterlein) supports competition by shortening the time period that a utility’s customer that switches to a competing supplier is barred from returning as a customer of its utility from 5 years to 90 days. HB 2697 died in House Commerce and Labor subcommittee 3 on a party-line vote, with all the Republicans voting against it. SB 1583 died in Senate Commerce and Labor 11-2, with only Republicans Newman and Chafin voting for it. Democrats Saslaw, Dance and Lucas joined the rest of the Republicans in demonstrating their Dominion-friendly bonafides.

STILL ALIVE: HB 2738 (Bagby) and SB 1695 (Wagner) authorizes utilities to acquire rights of way on land that the Virginia Economic Development Partnership Authority decides could attract new customers to the site, and allows utilities to recover costs from existing customers. Because, you know, having utilities seize Virginians’ land for speculative development is already going so well for folks in the path of the pipelines. Who could complain about paying higher rates to help it happen more places?  A substitute tightens the requirements somewhat without changing the basics. HB 2738 reported from Commerce and Labor 19-1 (Kory opposing, Keam abstaining). SB 1695 now has a similar amendment; it passed the Senate 34-6 and has been referred to House Commerce and Labor. The dissenting senators are an interesting mix of Rs and Ds: Chase, McPike, Newman, Peake, Spruill, and Suetterlein.

SB 1780 (Petersen) requires, among other things, that utilities must refund to customers the costs of anything the SCC deems is a nonessential expenditure, including spending on lobbying, political contributions, and compensation for employees in excess of $5 million. It directs the SCC to disallow recovery of fuel costs if a company pays more for pipeline capacity from an affiliated company than needed to ensure a reliable supply of natural gas. It requires rate reviews of Dominion and APCo in 2019 and makes those biennial instead of triennial, and provides for the SCC to conduct an audit going back to 2015. It tightens provisions governing utilities’ keeping of overearnings and provides for the allowed rate of return to be based on the cost of providing service instead of letting our utilities make what all the other monopolists make (“peer group analysis”).  Killed in Commerce and Labor 12-1, with only Republican Richard Stuart supporting the bill.