Author Archives: Ivy Main

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Your 2015 Virginia legislative session cheat sheet, part 2: Fossil Fuels

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Photo credit: Corrina Beall

Photo credit: Corrina Beall

My last post covered clean energy bills introduced into the 2015 legislative session, which began last week and ends at the end of February. Time to hustle on to the oil, gas, and coal bills.

Coal subsidies

Coal companies claim to be victims of a “war on coal,” but for nearly two decades they’ve been conducting a war on Virginia taxpayers. Virginia’s tax code offers so many preferences that a 2012 study concluded the coal industry costs Virginia more than it gives back. Among other preferences, two different subsidies in the Code have allowed coal companies to siphon off tens of millions of dollars annually from the General Fund since 1996.

The subsidies come with nominal sunset dates, currently January 1, 2017. Over nearly twenty years, no matter how fat or lean the state’s financial condition, the legislature has repeatedly passed extensions, and they are being asked to do so again this year. HB 1879 (Kilgore) and SB 741 (Carrico) would extend the giveaway out to 2022.

(According to VPAP.org, Delegate Kilgore, chairman of the Commerce and Labor Committee, gets a check for $10,000 every year from coal giant Alpha Natural Resources. Alpha also gives ten grand a year to Senator Carrico, who just happens to sit on Senate Finance, which will hear the bill. I mention these facts only in passing. It would be cynical to suggest a connection.)

Supporters of the subsidies seem to believe coal companies need the inducement to blow up our mountains and dump waste into stream valleys. And they maintain this is a good thing for the people of Southwest Virginia, who can enjoy gainful employment by participating in the destruction of their communities.

The coal companies certainly do benefit from this arrangement, but coal jobs have declined to less than 5,000 total in Virginia today, and it’s clear to everyone that Southwest Virginia needs to diversify its economy or face a future of poverty and high unemployment. The coal subsidies suck up money that could be spent on new jobs and a better-educated workforce.

The McAuliffe administration, facing a budget shortfall, has suggested cutting the subsidies way back, and has no plans to extend them. HB 2181 (Toscano) reduces the amount of the subsidies for 2015 and 2016 but does not eliminate them. It also limits the amount that can be claimed on any one tax return to $500,000 under each Code provision.

HB 1877 (Krupicka) would end the subsidies altogether a year early. His bill goes further: it would redirect the savings into a fund to provide grants to students enrolled in Virginia public colleges and universities. Half the money would be required to go to students from the Coalfields region.

Natural gas

SB 1338 (Hanger) repeals a provision of the Code known as the Wagner Act (after Senator Frank Wagner, who introduced the legislation ten years ago). That provision allows interstate natural gas companies to enter private property without the consent of the owner in order to make “examinations, tests, hand auger borings, appraisals, and surveys.”

The Wagner Act gained notoriety last year when Dominion Power sued landowners who resisted efforts to survey their land. We think of Dominion as an electric utility, but Dominion Resources also owns a gas transmission company, and it plans to build a huge new pipeline to bring fracked gas from Ohio and West Virginia and deliver it to industrial customers and export facilities on the coast. Turns out, a lot of people don’t like strangers coming on their land without permission, especially when the point is to let the strangers decide whether they might want to seize the land for a pipeline. Well, who could have expected that?

But in case the GA doesn’t have an appetite for repealing the Wagner Act, how about making it harder to use? SB 1169 (Hanger again) amends it to add a pre-condition. Before any natural gas company can enter someone’s property without permission, the governing board of the locality must have adopted a resolution in support of the pipeline or gas works. Moreover, the resolution “shall not be adopted unless the governing body has found that locating the line or works within the city or county is consistent with its comprehensive plan, master plan, or any general development plan and that there exists a demonstrated public need for the line or works.”

HB 1475 (Ware) and SB 1163 (Saslaw) allow natural gas utilities to expand their systems to reach more retail customers. This legislation is not related to the interstate gas pipelines sought by Dominion and others. It deals with pipelines within the state that would connect customers who currently don’t have access to natural gas for heating and cooking (a more efficient use of energy than burning gas for electricity to perform the same functions).

But the gas utilities have taken a page from the Dominion playbook and overreached with their legislative language, including by declaring its plans and business goals to be “in the public interest” (the magic words that limit SCC review). We hear the bill is likely to be amended to take out the offending language.

Really a bill about energy efficiency, SB 1331 (Petersen) changes how the SCC evaluates natural gas conservation programs proposed by utilities. It instructs the SCC to determine the cost-effectiveness of a program by looking at the utility’s whole portfolio of conservation programs and not each judged separately. This should make it easier to get conservation programs approved, and it’s to the credit of the retail gas companies that they want it passed. Senator Petersen’s office informed me the bill originated with the governor’s office, which supports it.

Offshore oil drilling

Virginia doesn’t control the deep waters off our coast where oil may be lurking, and drilling is still years away, if it happens at all. But that has never stopped state lawmakers from making plans to spend the money we might earn from oil drilling, if Congress were to share some of the revenue with us. Most of us will recognize this game as, “Imagine if you won the lottery.”

Back in 2010, Governor McDonnell pushed through a bill to fund transportation projects with the imaginary money. In 2014, the law was amended to put $50 million into an emergency response fund to combat what would have to be a pretty small imaginary oil spill, with all the extra imaginary money going to the General Fund.

HB 1702 (Davis) proposes to amend the law again to take half of the imaginary General Fund money and put it into public schools. Well, who could object to that? Except for the imaginary part, of course.

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Your 2015 Virginia legislative session cheat sheet, part one: Clean energy bills

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photo credit: Amadeus

photo credit: Amadeus

I’m starting my review of 2015 energy legislation with a look at bills dealing with renewable energy and energy efficiency. Most of these bills will be heard in the committees on Commerce and Labor, though bills that cost money (tax credits and grants) usually go to Finance.

Bills referred to Senate Commerce and Labor are heard by the full committee, which meets on Monday afternoons. It consists of 14 members: 11 Republicans and 3 Democrats. They form a tough lineup; none of these senators received better than a “C” on the Sierra Club’s Climate and Energy Scorecard.

The House bills are typically assigned to the 13-member Special Subcommittee on Energy (10 Republicans and 3 Democrats, no fixed schedule). Bills that do not meet the approval of Dominion Power can expect a quick death here on an unrecorded voice vote, never to be heard from again. But on the plus side, the meetings are often quite lively, like old-fashioned hangings.

Net metering bills

Net metering is the policy that allows owners of solar (or other renewable) energy systems to be credited for the excess power they feed back into the grid when the systems produce a surplus; the owners use the credits when their systems aren’t supplying power and they need to draw electricity from the grid. Virginia law restricts who can use net metering, and how much. Expanding net metering is a major goal of renewable energy advocates, who argue it offers a free market approach to growth—give customers the freedom to build solar projects, get the utility out of the way, and solar will thrive.

This year’s initiatives include:

  • SB 833 and SB 764 (Edwards—apparently identical bills), HB 1950 (McClellan), and HB 1912 (Lopez) raise the maximum size of a commercial project eligible for net metering, from 500 kilowatts (kW) currently to 2 megawatts (MW). This is a much-needed expansion of the net metering program if Virginia is going to make real headway with solar. We are told Edwards plans to conform his legislation to HB 1622, below.
  • HB 1622 (Sullivan) raises the maximum size of a commercial project to 1 MW, and the maximum size of a residential system from the current 20 kW to a whopping 40 kW. But note that it does nothing to limit the standby charges utilities can charge for residential projects over 10 kW. Given that these charges are so punitive as to kill the projects, raising the cap wouldn’t create new market opportunities unless it is accompanied by a limit on the amount of standby charges that utilities can tack on.
  • HB 1911 (Lopez) amends the language allowing utilities to impose standby charges on residential and agricultural customers with systems over 10 kW to add the requirement that the State Corporation Commission conduct a “value of solar” analysis prior to approving the charges. Most solar advocates would rather see the legislature repeal the standby charge provision altogether, given how the utilities have abused it. Barring that, legislators should set a dollar limit of no more than five or ten bucks a month. But in the absence of any such reforms, it does make sense to at least require the SCC to do this more substantive analysis, ideally building on the framework developed over the summer by the Solar Stakeholder Group.
  • HB 1636 (Minchew) establishes “community net metering” as well as increasing the commercial project cap to 2 MW. This bill is a high priority for the solar industry and the environmental community. It provides the solution for owners with shaded roofs, renters and others who can’t install solar themselves by letting them subscribe to a community generation facility in their own or a neighboring county. Other forms of renewable energy are also allowed, so residents in windy areas could go in on a small wind turbine that wouldn’t make sense for a single household.
  • HB 1729 (Sullivan) creates “solar gardens” consisting of community organizations with 10 or more subscribers. The generation facility can be as large as 2 MW. The bill seems intended to accomplish much the same purpose as Minchew’s bill, although it is limited to solar. However, it allows the utility to impose “a reasonable charge as determined by the [State Corporation Commission] to cover the utility’s costs of delivering to the subscriber’s premises the electricity generated by the community solar garden, integrating the solar generation with the utility’s system, and administering the community solar garden’s contracts and net metering credits.” Boy, we’ve seen that movie before. Given what we’ve seen the SCC do with standby charges, the bill should be amended to put a cap on the amount of that “reasonable charge” so legislators know they aren’t writing a blank check.
  • SB 350 (Edwards) authorizes programs for local governments to use net metering for municipal buildings, using renewable energy projects up to 5 MW. It also allows a form of community net metering targeted to condominiums, apartment buildings, homeowner associations, etc., with a renewable energy facility located on land owned by the association. These customers would be exempt from standby charges.

Third-party power purchase agreements (PPAs)

HB 1925 (Lopez) and SB 1160 (Edwards) replace the current PPA program in Dominion territory with one that applies to both Dominion and APCo territories. It increases the project cap from the current 500 kW to 1 MW, and raises the overall program size to 100 MW from (50 MW). As with the current program, projects under 50 kW aren’t eligible unless the customer is a tax-exempt organization.

Utility-scale solar

HB 2219 (Yost) declares it to be in the public interest for Dominion Virginia Power or Appalachian Power to build up to 500 MW of solar power—a truly welcome objective—and authorizes the utilities to apply to the SCC for a certificate of public convenience and necessity for individual facilities of at least 20 MW in size, regardless of whether the facility is located in the utility’s own service territory.

“In the public interest” are the magic words that push the SCC to approve something it might not otherwise. Both utility giants have shown an interest in building and owning utility-scale solar, even as they have taught the SCC to believe that solar owned by anyone else burdens the grid. The magic words let them escape the corner they backed themselves into. That would be necessary here, given that our SCC wrongly believes the public interest requires the lowest cost energy regardless of the consequences to public health, the environment, national security, and the economy.

The solar industry has two concerns about HB 2219: the effect on ratepayers, since Dominion’s previous solar efforts have cost well above market rates; and the effect on the Virginia solar industry—or rather, the lack of an effect, since Dominion has hired only out-of-state companies. Virginia ratepayers could save money and the state could build more solar if legislation simply required the utilities to buy 500 MW of solar, and let the market decide who builds it. But of course, that’s now how things work in Virginia.

I also think it is unfortunate that the bill allows utilities to build solar plants that are not in the utilities’ own service territories, and that it does not require them to use Virginia contractors. Surely there would be more support for a bill promising projects that support local economies with jobs and tax revenues, and that requires the hiring of local installers. These seem like small enough things to ask.

HB 2237 (Yancey) allows Dominion or APCo to recover the costs of building or buying a solar facility in the state of Virginia of at least 5 MW, plus an enhanced rate of return on equity, through a rate adjustment clause. It also states that construction or purchase of such a facility, and the planning and development activities for solar energy facilities, are in the public interest. (The magic words again.)

This bill doesn’t require anything or make huge changes. It simply treats solar the way the Code currently treats other forms of generation, with the exception that the “in the public interest” language was previously used only to endorse a coal plant (what became the Virginia City Hybrid Energy Plant in Wise County). And note that this bill requires that the facility be in Virginia, and opens up the possibility of our utilities buying the facility rather than constructing it themselves, which could open the door to competition. This seems like a good way to proceed.

Grants and tax credits

HB 1728 (Sullivan) establishes a tax credit for renewable energy. Great idea, but last year the Senate Finance Committee made it clear they would not pass a new tax credit, so I assume this is a non-starter.

Last year’s renewable energy tax credit bill was amended to create a grant program instead. It passed both houses, but without funding and with the requirement that it be passed again this year. It is back this year as HB 1650 (Villanueva). (It has been assigned to House Committee on Agriculture, Chesapeake and Natural Resources and is on the docket for 8:30 a.m. Wednesday, January 21. Odd: it ought to be in Finance.) The grant would equal 35% of the costs of a renewable energy facility, including not just wind and solar, but also things like biomass, waste, landfill gas, and municipal waste incinerators. Facilities paid for by utility ratepayers are not eligible, and the grant total is capped at $10 million per year. Prospects for the program aren’t great given the state’s tight budget situation, but the bill is a high priority for the solar industry.

Another tax-related bill is HB 1297 (Rasoul), which authorizes localities to charge a lower tax on renewable projects than on other kinds of “machinery and tools.” Last year, you may recall, the solar industry was successful in getting passage of a bill that exempted solar equipment entirely from local machinery and tools taxes. Proponents are trying to ensure that Delegate Rasoul’s well-intentioned bill doesn’t reverse last year’s victory on solar.

Bills specific to energy efficiency

HB 1730 (Sullivan) establishes energy efficiency goals for electric and natural gas utilities. The good news: the goals are mandatory. The bad news: the goals are modest to a fault: a total of 2% energy savings by 2030 for electricity and 1% for natural gas.

HB 1345 (Carr) extends the sales tax holiday for Energy Star and WaterSense products to include all Energy Star light bulbs; currently only compact fluorescent light bulbs are eligible.

PACE bills

PACE (Property Assessed Clean Energy) is a way to finance energy efficiency, renewable energy and water conservation upgrades to commercial and non-profit-owned buildings. Local governments sponsor the financing for improvements and collect payments via property tax bills. Since the energy savings more than pay for the increased assessments, PACE programs have been hugely successful in other states.

Last year a bill that would have let localities extend “service districts” to cover clean energy (PACE by another name) failed in the face of opposition from the banking industry. This year’s bills are also not labeled PACE bills, but they achieve the same end. Apparently the parties have worked out the problems, a hopeful sign that a multi-year effort will finally meet with success.

SB 801 (Watkins) and HB 1446 (Danny Marshall) are companion bills that would authorize local governments to work with third parties to offer loans for clean energy and water efficiency improvements, creating “voluntary special assessment liens” against the property getting the improvements. The Department of Mines, Minerals and Energy would develop underwriting guidelines for local loans to finance the work. HB 1665 (Minchew) is similar, and we are told it will be conformed to HB 1446.

Virginia Solar Energy Development Authority

HB 1725 (Bulova) and SB 1099 (Stuart) establish the Virginia Solar Energy Development Authority to “facilitate, coordinate, and support the development of the solar energy industry and solar-powered electric energy facilities in the Commonwealth.” This implements a proposal in the 2014 Virginia Energy Plan and is not expected to be controversial.

Virginia SREC registry

HB 2075 (Toscano) requires the SCC to establish a registry for solar renewable energy certificates (SRECs). It would not suddenly make Virginia SRECs valuable, but it would put the administrative framework in place to support a voluntary SREC market, or even a real one if Virginia were to adopt legislation requiring utilities to buy solar power.

Cross-cutting approaches to clean energy

A few bills would have a more sweeping effect on energy efficiency and renewable energy. HB 2155 (Sickles) is billed as an “Energy Diversity Plan.” It was supposed to be a “grand bargain” between utilities and the clean energy industries, with the McAuliffe administration participating as well, but we understand there are outstanding issues that make the bill’s future uncertain.

The big idea is to put all non-emitting energy sources into one category: primarily wind, solar, hydro and nuclear, but also adding in combined heat and power, demand response and energy efficiency. The bill creates a timeline that requires utilities to ramp up use of new, non-emitting sources gradually, beginning with 0.25% of retail sales in 2016 and ramping up to 35% in 2030.

The bill has the support of clean energy industries, but the idea of treating nuclear as a benign source of power on an even footing with efficiency and renewables concerns the environmental community.

I’ll write more about this bill if it looks like it has legs.

HB 1913 (Lopez) is the only bill of the bunch that directly targets Virginia’s Renewable Portfolio Standard (RPS). Maybe that shouldn’t be a surprise. Our RPS is a poor, sickly thing that most people have left for dead. To his credit, Lopez keeps trying. His bill keeps the RPS voluntary but beefs up the provisions to make the program meaningful, if a utility chooses to participate. Instead of mostly buying renewable energy certificates from things like old, out of state hydro dams, the bill would ensure that actual, real-world renewable projects get built. You know, what an RPS is supposed to do.

In addition, the bill folds into the RPS the state’s existing goal of 10% energy efficiency gains by 2022. Utilities have done very little toward meeting this goal. Putting it into the voluntary RPS might be the prod needed to get more efficiency programs underway.

Or it might cause a utility to drop out. Either way, the result would be better than what we have now, where Virginia pretends to have an RPS, and utilities pretend to care.

Update: Another net metering bill has been filed. SB 1395 (Dance) raises the commercial net metering cap from 500 kW to 2 MW.

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Pass the Coastal Protection Act to cut carbon, raise millions

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With today’s start of the Virginia legislative session, a lot of energy and climate bills are pouring in–some good, some not so good, some downright terrible. I’ll have an overview of them coming soon, but meanwhile guest blogger Dawone Robinson gives us a look at one of the best of the bills, the Coastal Protection Act, HB 2205 (Villanueva). A shorter version of his post appeared as an oped in the January 12 edition of the Richmond Times-Dispatch. Many thanks to Dawone for letting me run this. 

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A house in the process of being elevated, a very expensive solution to the problem of recurrent flooding due to sea level rise in Virginia. Photo credit: CCAN

A house in the process of being elevated, a very expensive solution to the problem of recurrent flooding due to sea level rise in Virginia. Photo credit: CCAN

Have you ever put together a list of items you would purchase if you won the lottery—before you remembered that you haven’t even purchased a ticket? Upon reflection, how premature was that list you so perfectly pieced together?

In Virginia, we face a similar dilemma when it comes to addressing the mounting crisis of flooding along our coast.

We’ve got plenty of laudable lists in the works. Last year, Virginia lawmakers unanimously passed a resolution establishing a joint subcommittee to study recurrent flooding issues and adopt recommendations. Legislators from both parties sent a unified message: flooding is a problem in Hampton Roads and we need to do something about it.

In 2008, former Governor Tim Kaine’s Climate Change Commission laid out more than 100 recommendations to mitigate and adapt to climate change and sea level rise. So far the state has failed to adopt a plan to execute them. To his credit, Governor Terry McAuliffe recently launched a similar commission. This panel, the state’s Secure Commonwealth Panel, and the General Assembly’s aforementioned recurrent flooding subcommittee all have the same mandate: convene, discuss, deliberate, and draft a set of recommendations.

So what’s the catch? While what needs to be done is relatively easy to identify, the cost is significant—if not staggering. Virginia needs to win the equivalent of a multi-hundred-million-dollar lottery every year to fund the adaptation measures required to protect coastal residents and infrastructure.

Hampton Roads is home to the world’s largest naval base, more than $80 billion in economic activity, and 1.7 million residents who routinely feel the effects of sea level rise. Streets need to be raised, levees need to be built, and homes and businesses need to be protected. The U.S. branch of the Dutch engineering firm Fugro estimated that it would cost the city of Norfolk at least $1 billion to fully adapt to rising seas and frequent flooding—which equals Norfolk’s entire annual government operating budget.

The non-profit group Wetlands Watch reports that the cost to either elevate or purchase the homes of residents in just five Hampton Roads localities that have sustained multiple flood losses of $1,000 or more in the last ten years would exceed $430 million. Relying on federal assistance alone, it could take up to 244 years to assist all homeowners seeking help in these five localities.

Meanwhile, the Virginia Institute of Marine Science warns that sea levels could rise by as much as seven feet along Virginia’s coast within this century. We can’t afford to keep creating unfunded wish lists, and we can’t wish the problems away.

Virginia needs a dedicated stream of state funding to help coastal families and localities fight climate change. Obviously, there’s no lottery for this. But thankfully there is a common-sense legislative approach being introduced in the Virginia General Assembly by Republican Virginia Beach Delegate Ron Villanueva. His bill, called the Virginia Coastal Protection Act, would help solve our massive coastal flooding problem with a first-ever state funding mechanism that is good for the economy and good for our communities.

By joining the state into the highly successful and fully established Regional Greenhouse Gas Initiative, or RGGI, the bill would generate more than $200 million per year in new state funds to invest in coastal adaptation and other climate change solutions. This relief could come when localities in Hampton Roads need it most. It would come without adding any new demands to the state’s tight budget. It would also come through a system proven to rein in energy costs while reducing emissions and raising revenue.

RGGI is a cooperative effort of nine East Coast states that caps and reduces greenhouse gas pollution. Since the program’s inception in 2008, RGGI states have reduced their carbon footprint 2.7 times faster than non-RGGI states. In the same time period, electricity prices have dropped by 8 percent in participating states, compared to a 6 percent rise throughout the rest of the nation.

Under RGGI, power plants purchase allowances for every ton of carbon they emit. The sale of carbon allowances gets reinvested back to the states. Under Del. Villanueva’s bill, half of Virginia’s projected $200 million in annual auction revenues would fund coastal adaptation efforts, 35 percent would fund energy efficiency and renewable energy projects, and 10 percent would fund workforce development, education, and economic assistance in Southwest Virginia.

The Virginia Coastal Protection Act is a win-win-win solution. We can establish a consistent and significant source of revenue to tackle flooding in Hampton Roads and generate funds to invest in other statewide priorities, while putting policies in place to help Virginia meet carbon reduction goals in an efficient and practical manner.

Virginia’s lawmakers are on the record in their overwhelming bipartisan support for finding solutions to the state’s growing flooding woes. Delegate Villanueva has put forward the best plan to take us beyond wish lists, and to start funding urgently needed solutions.

Dawone Robinson is Virginia Policy Director with the Chesapeake Climate Action Network, a regional climate-change policy and advocacy organization with more than 30,000 supporters in Virginia. You can reach him at dawone@chesapeakeclimate.org

UPDATE: State Senator Don McEachin (D-Richmond) has agreed to introduce the Coastal Protection Act into the Senate as a companion bill to Delegate Villanueva’s (SB 1428), making this now a bipartisan effort.

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Solar industry group tells Virginia HOAs to let the sunshine in

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Solar panels on the sunny front roof of a house should be cheered, not banned. Photo credit: NREL

Solar panels on the sunny front roof of a house should be cheered, not banned. Photo credit: NREL

Solarize Blacksburg had barely gotten underway last spring when the first complaints came in: homeowners who wanted to participate in the community bulk purchase of solar panels reported resistance from homeowner associations (HOAs) worried about aesthetics. Some HOAs were willing to work with residents, but others were not. Some HOAs refused to allow solar installations at all, even though most blanket prohibitions now violate state law.

The problem repeated itself around the state as more solarize programs took off. Many HOAs hadn’t heard about the new law, passed during the 2014 session, that nullifies HOA rules banning solar panels, including bans that have been in place for decades. Under the law, the only prohibition still legal would be one written into the HOA’s “recorded declaration”—something pretty much unheard of in Virginia, according to Senator (and lawyer) Chap Petersen, who wrote the bill.

But the law still allows “reasonable restrictions” on the “size, place and manner of placement” of solar panels, and what that means is open to interpretation. The Blacksburg organizers consulted lawyers and industry members to come up with a set of guidelines they hoped their local HOAs would use. But meanwhile, the same problem kept popping up across the state.

Now the Maryland, DC and Virginia Solar Energy Industries Association—or MDV-SEIA, as the trade association is known—has weighed in with its own guide. Not surprisingly, it recommends that HOAs be as accommodating as possible to residents who want to install solar panels. It is, nonetheless, a good starting point for HOA officers coming to the question for the first time. In the absence of any other guidance, it also puts HOAs on notice that restrictions going beyond MDV-SEIA’s recommendations may be challenged.

The industry guide contains a list of restrictions it considers reasonable, and those it does not. In general, restrictions that make a solar energy system either more expensive, or less effective, won’t pass muster. The classic example here is a requirement that solar panels not be visible from the street. If the street side of the house happens to be the only sunny side, then restricting solar panels to the rear is per se unreasonable.

Restrictions the industry group thinks are reasonable include requiring homeowners to get approval from the HOA before installing the system, placing the panels more or less flat on the roof, and concealing the wiring and components as much as possible.

Virginians dealing with this issue will take cold comfort in knowing that the fight over solar panels is playing out among HOAs and homeowners nationwide. Start typing “can HOAs” into Google, and the first phrase that pops up is “ban solar panels.” Moreover, while many states now prohibit solar bans, allowing “reasonable restrictions” is also common, and there is no consensus on what that means.

The nonprofit Solar Foundation, working with the Department of Energy’s Sunshot Solar Outreach Partnership, prepared a guide for community associations that contains a comprehensive discussion of this issue. “A Beautiful Day in the Neighborhood” was published before Virginia’s law was revised last year, but it remains an excellent resource for homeowners who want to educate their neighbors about the value of solar—and with any luck, head off disputes about what kind of restrictions the law allows.

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Virginia’s amazing year in energy: gas rises, coal falls, and solar shines (but it’s still not okay to say “climate change”)

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

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

Nobody laughed a few years ago when former governor Bob McDonnell dubbed Virginia the “Energy Capital of the East Coast”; we were all too astounded by the hyperbole. And today, even “Energy Suburb” still seems like a stretch. Yet, if you measure achievement by the sheer level of activity, Virginia is making a play for importance. The year’s top energy stories show us fully engaged in the worldwide battle between fossil fuels and renewable energy. Of course, while the smart money says renewables will dominate by mid-century, Virginia seems determined to drown rather than give up its fossil fuel addiction.

Coal falls hard; observers disagree on whether it bounces or goes splat. Nationwide, 2014 was a bad year for the coal industry. Coal stocks fell precipitously; mining jobs continued to decline; and the one thing electric utilities and the public found to agree on is that no one likes coal. Even in Virginia, with its long history of mining, coal had to play defense for what may have been the first time ever. So when Governor McAuliffe released the state’s latest energy plan in October, what was otherwise a paean to “All of the Above” omitted the stanza on coal. And this month, the governor proposed a rollback of the subsidies coal companies pocket by mining Virginia coal.

Of course, coal is not going quietly; Senator Charles Carrico (himself heavily subsidized by Alpha Natural Resources) has already responded with a bill to extend the subsidies to 2022.

EPA opens a door to a cleaner future, and Republicans try to brick it up. Speaking of hard times for coal, in June the EPA unveiled its proposal to lower carbon emissions from existing power plants 30% nationwide by 2030. Instead of targeting plants one-by-one, EPA proposed a systemic approach, offering a suite of options for states to reach their individualized targets.

The proposal drew widespread support from the public, but Virginia’s 38% reduction target set off howls of protest from defenders of the status quo. The staff of the State Corporation Commission claimed the rule was illegal and would cost ratepayers $6 billion. Republicans convened a special meeting of the House and Senate Energy and Commerce Committees, where they tried out a number of arguments, not all of which proved ready for prime time. The rule, they said, threatens Virginia with a loss of business to more favored states like—and I am not making this up—West Virginia. Also, Virginia should have received more credit for lowering its carbon emissions by building nuclear plants back in the 1970s when no one was thinking about carbon emissions.

Meanwhile, the Southern Environmental Law Center analyzed the rule and concluded that actually, compliance will not be hard. Virginia is already 80% of the way there, and achieving the rest will produce a burst of clean-energy jobs coupled with savings for consumers through energy efficiency.

Undaunted, Republicans have already introduced a thumb-your-nose-at-EPA bill developed by the fossil fuel champions at the American Legislative Exchange Council.

The “solarize” movement takes Virginia by storm. For the last few years, solar energy has been exploding in popularity across the U.S., but Virginia always seemed to be missing the party. So it surprised even advocates this year when pent-up consumer demand manifested itself in the blossoming of local solar buying cooperatives and other bulk-purchase arrangements. “Solarize Blacksburg” made its debut in March, going on to sign up hundreds of homeowners for solar installations. It was followed in quick succession by the launch of similar programs in Richmond, Charlottesville, Harrisonburg, Northern Virginia, Halifax, Floyd, and Hampton Roads.

The main reason for the solarize programs’ success was the steep decline in the cost of solar energy. 2014 saw the cost of residential installations in Virginia fall to record low prices, making the investment worthwhile to a broad swath of homeowners for the first time.

Utilities say maybe to solar, but only for themselves. Virginia still boasts no utility-scale solar, but utilities elsewhere signed long-term power purchase contracts for solar energy at prices that were sometimes below that of natural gas: under 6.5 cents/kilowatt-hour in Georgia, and under 5 cents in Texas. Compare that to the estimated 9.3 cents/kWh cost of power from Dominion Virginia Power’s newest and most up-to-date coal plant, the Virginia City Hybrid Energy Plant, and you’ll understand why Dominion has suddenly taken an interest in solar projects. Sadly, it’s own foray into rooftop solar so far stands as an example of what not to do, and a testament to why the private market should be allowed to compete.

Yet Virginia utilities continued their hostility to customer-owned solar. Dominion put the kibosh on a bill that would have expanded access to solar energy through community net-metering, while Appalachian Power matched Dominion’s earlier success in imposing punitive standby charges on owners of larger residential systems.

Fracking, pipelines, and gas plants, oh my! Renewable energy may be the future, but the present belongs to cheap natural gas. Yes, the fracking process is dirty, noisy and polluting, and yes, methane leakage around gas wells is exacerbating climate change. But did we mention gas is cheap?

2014 saw proposals to drill gas wells east of I-95, while the Virginia government began updating its regulations to govern fracking. Dominion Power started construction on a second new gas power plant, and talked up its plans for a third. The utility giant, a major player in the gas transmission business, also got approval to turn its liquefied natural gas import terminal in Cove Point, Maryland, into an export terminal. With visions of customers dancing in its head, it also announced plans for a major new pipeline to bring fracked gas from West Virginia through Virginia and into North Carolina—one of three proposed pipelines that would cut through the Virginia countryside and across natural treasures like the Appalachian Trail. The pipeline created an instant protest movement but gained the wholehearted approval of Governor McAuliffe.

Flooding in Hampton Roads becomes the new normal; it’s still not okay to ask what’s causing it. A cooler-than-normal year for the eastern United States gulled many landlubbers into believing that global warming was taking a breather, but meanwhile the ocean continued its inexorable rise along Virginia’s vulnerable coastline. It’s one thing to shrug off the occasional storm, said residents; it’s harder to ignore seawater that cuts off your parking lot at every high tide. 2014 will go down as the year everyone finally agreed we have a problem—even in the General Assembly, which passed legislation to develop a response to the “recurrent flooding.” But while the bill recognized that the problem will just get worse, it avoided noting why.

The public gets it, though. The Richmond Times-Dispatch reports that climate change was the number one topic of interest to writers of letters to the editor in 2014. And loud cheers greeted Governor McAuliffe’s announcement that he would reestablish the state’s commission on climate change, which Bob McDonnell had disbanded. As one environmental leader quipped, “People in Tidewater are tired of driving through tidal water.”

Public corruption: in Virginia, it’s not just for politicians. Everyone can agree that it was a really bad year for the Virginia Way, that gentlemanly notion that persons of good character don’t need no stinkin’ ethics laws. But we also saw plenty to prove the adage that the real scandal is what’s legal. As we learned, Virginia law allows unlimited corporate contributions to campaigns, and puts no limits on what campaigns can spend money on. So if some legislators act more like corporate employees than servants of the public, well, that’s how the system was set up to work.

But the system only works when corporations get their money’s worth from the politicians, and that quid pro quo usually comes at the public’s expense. For example, take Dominion Power’s North Anna 3 shenanigans (please). In an exceptionally bold exploitation of the Virginia Way, Dominion Power secured passage of legislation allowing it to bill customers for hundreds of millions of dollars it had spent towards a new nuclear plant that it is unlikely to build. (And the irony is that ratepayers will still be better off throwing the money down that rathole than they will be if Dominion does manage to build it.)

So as we look ahead to 2015’s energy battles, anyone wondering who the winners and losers will be needs only one piece of guidance: in Virginia, just follow the money.

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Fiscal and environmental sanity get a boost as McAuliffe proposes to roll back coal subsidies

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Your taxpayer dollars at work!

Your taxpayer dollars at work!

Thanks to the state’s budget deficit, Virginia may finally scale way back a notorious fossil fuel subsidy that currently transfers tens of millions of dollars annually from taxpayers to the pockets of corporations that mine Virginia coal. The Richmond Times Dispatch reports that if Governor McAuliffe has his way, the Virginia Coal Employment and Production Incentive Tax Credit and the Coalfield Employment Enhancement Tax Credit will be limited to $500,000 per year, saving the government $20 million per year.

The refundable tax credits were intended to make Virginia coal cheaper for utilities to buy, and thus more competitive with coal mined in other states. In theory, that was supposed to mean more coal mining jobs in southwest Virginia. In practice, the subsidies meant some coal companies paid no state taxes, and actually received significant cash handouts, even as coal jobs declined. And because the subsidies are based on tons of coal mined and not on the number of people employed, mining companies suffered no penalty from capital investments that maximized production while cutting jobs.

Critics of the subsidies thought they had won their point three years ago when the Joint Legislative Audit and Review Committee (JLARC) issued a critique of the various Virginia tax credits that was especially critical of the handouts to coal companies. As it describes beginning on page 67, the subsidies did not stop coal employment from falling 54% since 1990, or slow the steady decline in production:

“The precursor to one of the current coal credits was in place before the decline began, while the other was enacted shortly thereafter. It is important to note that with or without the credits, the decline in Virginia coal production was predicted by numerous analysts because over two-thirds of recoverable coal reserves in Virginia have already been mined.”

Indeed, the report continued, coal employment and production was actually worse with the credits in place:

“In the process of developing and refining the credit, analysts projected that coal employment and production would decline by 28 percent between 1996 and 2005 without the credit. However, actual mining employment was substantially lower than expected during this period, declining 36 percent.”

In spite of this damning analysis, in 2012 the General Assembly actually extended the expiration date of the coal subsidies until 2017. Insiders say Senate Democrats were persuaded to vote for the extension as a favor to coalfields senator Phil Puckett, who needed the backing of coal companies to hold his seat in 2013 and keep Democrats in control of the Senate. (Some might say he failed to return the favor.)

The coal subsidies have long infuriated environmentalists and community activists in the Coalfields region. In their view, Virginia taxpayers should not be forced to reward mining companies for blowing off the tops of our mountains, filling ancient stream valleys with rubble, poisoning wells and rivers, and destroying homes to get at the last, thin seams of Virginia coal.

So Coalfields activists welcomed the Governor’s proposal as a “good first step” in planning a future where coal is no longer the economic engine it once was. “We need to take our heads out of the sand and invest heavily in diversifying our economy in Southwest Virginia,” said Wise County resident Jane Branham, Vice President of Southern Appalachian Mountain Stewards. “Supporting outdoor recreation, tourism, sustainable agriculture, reforestation and a new generation of entrepreneurs is the path forward in the mountains, not subsidizing bad actor coal companies that continue to poison the natural resources our future depends on.”

Renewable energy advocates have also complained that by making coal cheaper, the subsidies make it harder for other forms of energy to compete. One would expect this argument to resonate with free market advocates, a category that supposedly includes all Virginia Republicans and a lot of the Democrats. Yet in spite of criticism from some Democrats, the subsidies have not faced serious opposition before now.

Acquiescence in such an expensive and counter-productive corporate welfare program mostly reflects the influence of the Virginia coal industry. (See last week’s post for a sampling of how coal companies work to buy votes with campaign cash.) But the drafters sweetened the deal with a provision that siphons off a portion of the excess cash to fund the Virginia Coalfield Economic Development Authority (VACEDA), which is supposed to help the region diversify beyond coal. (It might work better if coal executives didn’t sit on the board.)

Under McAuliffe’s proposal, VACEDA would get a direct appropriation of $1.2 million to replace the money it would lose by the scaling back of the tax credits. That should satisfy those legislators whose primary concern is helping residents of southwest Virginia.

Those whose primary concern is helping coal companies, however, aren’t likely to be happy. Congressman Morgan Griffith has already been quoted as suggesting Governor McAuliffe’s proposal to scale back the coal subsidies amounts to a “war on coal.”

He expressed no concern about coal’s war on the people of southwest Virginia. For those who care about that, Governor McAuliffe’s move feels like a breath of clean air.

——————–

Addendum: Senator Bill Carrico (R-Alpha Natural Resources) has now filed a bill, S741, to extend the coal subsidies until 2022. 

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Tiny Virginia subcommittee tasked with deciding future of bills related to EPA’s Clean Power Plan; meeting set for December 17

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Photo credit: Sierra Club

Photo credit: Sierra Club

The EPA’s proposed Clean Power Plan could reshape Virginia’s energy future for the next fifteen years, and possibly permanently. If the state takes advantage of this opportunity, it will reduce carbon pollution, improve human health, save money for consumers, drive job creation in the fast-growing technology sector, and make our grid stronger and more secure.

If the state doesn’t act, EPA will design its own plan for Virginia, ensuring reduced carbon emissions but without the flexibility the state would have by doing it for itself.

This presents a conundrum for Virginia’s General Assembly, which is not known for embracing federal environmental regulations. The usual skepticism was on display on November 19, when the Senate and House Commerce and Labor Committees met in a joint session to take up the Clean Power Plan—or more precisely, to give utilities and the State Corporation Commission staff the chance to attack it.

At the conclusion of that meeting, the two Republican committee chairs, Senator John Watkins and Delegate Terry Kilgore, named three members of each committee—two Republicans and one Democrat from each chamber—to a special subcommittee tasked with deciding what kind of legislative action the General Assembly should take in response to the Clean Power Plan. Kilgore also put himself on the subcommittee, which will now take up any bills that Virginia legislators introduce related to the Plan.

This subcommittee has scheduled its first meeting for December 17 at 1:00 p.m. in Senate Room A of the General Assembly building in Richmond. By law, all committee meetings are open to the public.

According to General Assembly procedure, before anyone else in the entire legislature can consider a bill, it will have to pass muster with these seven men. So who are these hugely important people, and what is the likelihood that they will seize this historic opportunity to make Virginia a leader in clean energy?

The Senate members consist of Republicans Frank Wagner and Benton Chafin and Democrat Dick Saslaw. Wagner and Saslaw were obvious choices given their seniority on the committee and active role on energy issues. Chafin—well, we’ll get to him in a moment.

Frank Wagner is from Virginia Beach and is known for his interest in energy generally, and especially in promoting new projects. He sponsored the legislation that led to the Virginia Energy Plan in 2006 and has been an important supporter of offshore wind development, perhaps reflecting his undergraduate degree in Ocean Engineering and his Tidewater residence.

The General Assembly website says Wagner is the president of Davis Boatworks, a vessel repair facility whose principal customer is the Defense Department. Living in the Hampton Roads area, Wagner is aware of how real sea level rise is; presumably he understands the connection to climate change.

In spite of his interest in offshore wind, coal rules when it comes to funding Wagner’s political campaigns. The Virginia Public Access Project shows coal giant Alpha Natural Resources was Wagner’s second-best donor over the years, with a total of $43,643 in campaign money since 2003, ahead of Dominion Power’s $37,350. Energy and mining interests combined gave gifts totaling $188,152. Of this, $350 came from Highland New Wind Development LLC back in 2008 and $250 came from the offshore wind company Seawind in 2010.

Of course, who gives money to an elected official does not necessarily dictate how that official votes. But it probably should be mentioned that for the 2014 session, Wagner earned an F on the Sierra Club’s Climate and Energy Scorecard, disappointing clean energy advocates who have sometimes had reason to see him as an ally.

Also a low performer on the energy scorecard is Dick Saslaw, scraping by with a D. Saslaw is a career politician who was first elected to the GA in 1976, when he was 36. (He is now 74.) His biography lists his background as an owner and operator of gas stations.

Saslaw is the Senate Democratic Leader and used to be Chair of the Senate Commerce and Labor Committee, until his party lost the Senate. In theory, his leadership position in the Democratic Party should make him a defender of President Obama’s climate initiative. In practice, not so much.

Although he is a Fairfax County Democrat, Saslaw does not share his constituents’ enthusiasm for wind and solar, nor in general, their concern for the environment. Somebody once told him that renewable energy costs a lot; that’s been his story ever since, and he’s sticking with it, facts be damned.

Saslaw is proud of his close ties to Dominion Virginia Power, whose interests reliably predict his votes on any given bill. The Virginia Public Access Project reports that Dominion has given more money to Saslaw than to any other legislator. In 2014 alone, Dominion gave Saslaw $25,000. Over the years, Dominion’s contributions to Saslaw have totaled $240,508, making the utility Saslaw’s top donor.

Saslaw has also received more money from Appalachian Power than any other Democrat–$44,000–even though that utility does not provide service anywhere in his district. In addition, coal interests gave him $90,250, natural gas companies ponied up $50,250, and the nuclear industry chipped in $28,000.

A single contribution of $250 makes up the only entry under “alternative energy.”

This brings us to new Senator Ben Chafin, the Republican delegate from Southwest Virginia who replaced Democratic Senator Phil Puckett (he of the Tobacco Commission scandal). Chafin is a lawyer and farmer, and as his website informs us, “Ben Chafin has a proven record fighting for the coal industry. Ben sponsored successful legislation (House Bill 1261) to fight against Obama EPA’s effort to kill the industry through over-regulation. Ben will continue to work in Richmond to protect coal and grow other Southwest industries like natural gas.”

Not surprisingly, coal interests led all other industry donors to Chafin’s 2013 campaign for Delegate and his 2014 campaign for Senate ($59,000 altogether), though he did pretty well by natural gas, too ($14,150). As a delegate, Chafin earned a gentleman’s C on the Sierra Club scorecard, but it would probably be a mistake to pin our hopes on his becoming a clean energy champion. His role on the subcommittee is surely to give Coal a voice.

On the other hand, Chafin must recognize that the economics of fracked gas and ever-more competitive wind and solar means Virginia coal has no chance of ever regaining its former glory. Southwest Virginia now needs to craft a strategic retreat from mining and work on economic diversification. That’s not inconsistent with the Clean Power Plan.

On the House side—but here I have to digress for a moment to comment on the seemingly random composition of the House Commerce and Labor Committee. The Senate side is bad enough; any Democrat who has evinced environmental sympathies over the years has been dumped from the Senate Commerce and Labor, and when he was in power, Saslaw did a lot of the dumping.

But it’s worse over at the House. The leadership keeps reshuffling its energy committee, as if in a frantic effort to make sure nobody learns anything, while the delegates who actually came to the job with an interest and knowledge of energy never seem to get a turn. Energy law is a hard area to learn. It’s complicated, and if you don’t have time to master it, you are even more likely to accept guidance from either the party leader who tells you how he wants you to vote, or the glib industry lobbyists who assure you they have the public’s welfare at heart just as much as you do. (Plus they give you money!)

So Chairman Terry Kilgore had little enough to work with on his committee. The three delegates he named to this incredibly important subcommittee, though they are undoubtedly smart and hardworking people, bring no discernable expertise on either climate or energy to the General Assembly’s review of the Clean Power Plan.

Well, digression over.

Terry Kilgore himself is a lawyer and a 20-year member of the House from the coalfields region of southwest Virginia. Dominion is his top individual donor, at $122,000, but coal interests together make up the single biggest category of givers to his campaigns, at $243,188, with electric utilities at $218,680, natural gas at $97,830, the oil industry at $16,400, and nuclear energy at $8,500. Just since 2013, he’s taken in over $136,000 from energy and mining interests.

That’s awfully good money for a safe seat, and his votes have reflected it. His energy votes earned him a D on the Sierra Club scorecard. It’s unlikely that he will abandon his coal friends, but like Senator Chafin, he will serve his constituents best if he works to attract new business to his struggling region. Home weatherization and energy efficiency programs would be popular there, and solar energy is one of the fastest-growing industries in America.

The other House subcommittee members Kilgore appointed are Republicans Jackson Miller and Ron Villanueva and Democrat Mathew James. Jackson Miller is a Manassas Realtor and former police officer who has been in the House since 2006. The bills he has introduced primarily reflect his interests in real estate and criminal law, although he also introduced legislation supporting uranium mining. He has received a total of $79,252 from energy and mining companies since 2010, primarily electric utilities, natural gas, coal, nuclear, and uranium. He earned a D on the Climate and Energy Scorecard. Why he is on this subcommittee is anyone’s guess, but certainly Northern Virginia stands to gain a lot of technology jobs if the state develops its clean energy industries as it should.

Virginia Beach Republican Ron Villanueva has not been as popular with the energy and mining companies, whose donations to his campaigns have totaled $20,550. Villanueva’s website says he was the first Filipino-American elected to state office in Virginia when he became a delegate in 2009. Villanueva has been friendly to the solar industry, and while he received a D on the scorecard, he also received an award from the Sierra Club for his work on a bill to provide a tax credit for renewable energy projects. (The bill was converted to a grant in the Senate but not funded.)

Like Delegate James and Senator Wagner, Villanueva lives in an area that is feeling the effects of climate change sooner than any other part of Virginia, so his constituents know how much the Clean Power Plan matters. For that matter, his day job as a partner with SEK Solutions, a military contractor, should mean he’s aware of the Pentagon’s focus on climate change as a national security issue, as well as a threat to its coastal assets.

Portsmouth Democrat Matthew James also hasn’t been especially popular in the energy industry. Since 2009, when he first ran for delegate, he has accepted a mere $5,000 from Dominion, $3,500 from coal interests, and $3,350 from the natural gas companies—token amounts by Virginia standards, but they may be due for a sudden increase.

James does not seem to have introduced any energy-related bills. However, his votes earned him an A on the Sierra Club scorecard. James is listed as the President and CEO of the Peninsula Council for Workforce Development. Maybe he will see an opportunity in the Clean Power Plan to develop jobs in the solar, wind, and energy efficiency industries, which have outperformed the economy generally.

So there you have the five Republicans and two Democrats who get first crack at any bill either facilitating Virginia’s compliance with the Clean Power Plan, or hostile to it. If they like a bill, it moves to the full Commerce and Labor committees. If they scuttle a bill, no one else in the entire legislature will get to vote on it.

That’s how it works, or doesn’t, in the Old Dominion.

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Virginia regulators approve Appalachian Power’s “solar tax”

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Virginia homeowners had better tell their solar installers to keep it under 10 kW. Photo credit Gray Watson

Virginia homeowners had better tell their solar installers to keep it under 10 kW. Photo credit Gray Watson

The State Corporation Commission has granted Appalachian Power Company’s request to be allowed to impose “standby” charges on residential customers with solar systems over 10 kilowatts. The charges can range up to more than $100 per month, regardless of how much electricity the homeowner actually draws from the grid.

In its Final Order in case number PUE-2014-00026, dated November 26, the SCC ruled that APCo’s standby charge complies with § 56-594 F of the Virginia Code, which provides for standby charges for net-metered residential systems between 10 and 20 kW. (The law does not allow for net metering of residential systems over 20 kW.)

Environmental groups intervened in the case and ran a grassroots campaign that generated over 1500 comments to the SCC, opposing what has been dubbed a “tax on the sun.” The result, however, was never in much doubt. The SCC has repeatedly demonstrated a willingness to accept without scrutiny utility assertions that solar customers impose costs on other customers.

Attorneys at the Southern Environmental Law Center, who argued against the standby charges on behalf of the Sierra Club and other groups, say the SCC’s reasoning is flawed. According to Cale Jaffe, Director of the SELC’s Virginia office, “Appalachian Power actually conceded during the hearing that it was ‘not in a position’ to determine whether solar customers had ‘a positive or negative impact to the distribution cost of service.’  In other words, Appalachian Power said that solar customers might be having a positive impact in helping to reduce APCo’s distribution costs, but that the power company didn’t have the data and didn’t know one way or the other.”

Jaffe added, “We saw that piece of evidence as a fatal concession, at least with respect to the distribution portion of the charge.” Yet a reading of the Final Order suggests the Commission never even considered the point.

The SCC allowed APCo, like Dominion before it, to consider only transmission and distribution costs, ignoring generation costs for now. Advocates urge that solar systems produce power at times of peak demand, reducing the need for utilities to buy expensive peak power, and therefore actually saving them money. The utilities dispute this, but it is worth noting that APCo’s most recent Integrated Resource Plan from March of this year projects that solar power will be cheaper than its avoided cost of energy by 2019. But of course, the point of standby charges isn’t about the cost of solar, but about preventing customers from generating their own power.

In spite of all the time and money APCo has spent to get approval for the standby charges, the utility has said that only five existing customers will be affected. The real impact will be to limit the number of homeowners who choose to install large solar systems going forward. The prospect of paying high standby fees will likely discourage APCo customers from buying systems over 10 kW, as has happened in Dominion’s territory after the SCC allowed Dominion Virginia Power to impose similar standby fees a year ago.

Although a 10 kW system is bigger than the average Virginia home needs by itself, people with electric cars can find their demand exceeds that limit. Moreover, Dominion Virginia Power has signaled that it would like to impose standby charges on all of its solar customers, regardless of system size.

The actions of Virginia utilities and the SCC put the commonwealth in the thick of a nationwide battle over customer-owned, “distributed” solar. While most studies analyzing the value of solar have concluded that distributed solar benefits the public and the grid, utilities fear it will eat into their profit margins. They see Virginia as a good place to establish a precedent friendly to the utility viewpoint, due to the commonwealth’s history of allowing its utilities to dictate energy policy. So far, this episode proves them right.

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Dominion ditches plans for onshore wind in Virginia, but grows bullish on solar

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Not for you, Virginia.

Not for you, Virginia.

Well, now it’s semi-official: in spite of what it has been telling customers for years, Dominion Power is not going to build onshore wind in Virginia. Speaking at an Edison Electric Institute conference in Dallas on November 13, Dominion Resources Executive Vice President and CFO Mark Gettrick spelled it out:

“When the wind business first got started, a decade, a decade and a half ago, we built two wind projects early on [Mt. Storm, in West Virginia, and Fowler Ridge, in Indiana], and we elected not to build any more. We steered away from wind. We do not think wind would ever be a good resource on land, in Virginia anyway, and so we elected not to pursue incremental wind projects.”

Someone should probably let the rest of the company in on the secret. Dominion’s website still insists the company has three Virginia onshore wind projects in development, and it included 247 megawatts’ worth in its latest Integrated Resource Plan (IRP). But the plan reflects the company’s cooling enthusiasm for wind energy, with the projects now slated for 2022-2024.

This is disappointing news, but it certainly isn’t a surprise. Dominion proposed its Virginia wind farms back before fracking caused natural gas prices to nosedive, undercutting the economic case for wind. At that point, Virginia’s lack of a real RPS meant Dominion had no incentive to build higher-priced generation, and every reason to believe the State Corporation Commission would reject a wind project, as it did similar proposals from Appalachian Power.

But though it is abandoning wind, the company is enthusiastic about solar. Gettrick said Dominion sees “gas and solar” as the way to comply with the EPA’s Clean Power Plan, which will require states to lower their carbon emissions from electric generating plants. Gettrick said:

“We see a growing need in Virginia to install solar for native load compliance with carbon. So that’s what we’re doing . . . So watch where we go with solar. We like the technology, the cost continues to drop, and we see it as a cornerstone for future development in Virginia.”

Advocates may wonder, why solar and not wind? Wind would seem to be cheaper, after all, and a single utility-scale turbine provides more power than hundreds of home solar systems.

The IRP offers part of the answer. For a utility, not all power is equal. Dominion has plenty of power for times when demand is low; the challenge is filling in the peaks and valleys of demand above that minimum level. Dominion needs the most power on summer days when solar produces well but wind does not.

The other part of the answer is price. This will surprise people who have seen the rock-bottom prices of wind power in places like Iowa and Texas, where wind outcompetes even natural gas. But it’s cheap to build wind among cornfields or on open rangeland, where access is easy. It’s more expensive to do it in the eastern mountains, where narrow, winding roads pose logistical challenges. The result is that wind power in the Southeast will cost about double what it costs in the Plains, according to the most recent Lazard analysis.

By contrast, Lazard calculates that utility scale solar power costs only about 20% more in the Southeast than it does in the dry, sunny Southwest, where utility-scale solar has reached grid parity. So while the best wind prices are well below the best solar prices nationwide, solar may be cheaper than wind in Virginia.

Lazard’s analyses are based on actual projects, but it also makes some predictions about where prices are headed. It projects unsubsidized utility-scale solar prices of six cents per kilowatt-hour by 2017, confirming predictions of widespread grid parity made by other analysts like Citibank and Deutsche Bank.

If you’re concerned about meeting EPA carbon emissions rules, or just concerned about the environment, period–or you want a reliable and stable-priced resource to hedge gas–solar makes very good sense.

Given these price trends, Dominion’s enthusiasm is entirely understandable. But surely it has some explaining to do, after years of trashing solar to legislators and the SCC. It has gone so far as to slap standby charges on customers who generate their own solar power. And as we’ve seen, its own forays into rooftop solar can’t be counted a success.

But perhaps we could all let bygones be bygones. If Dominion would focus its efforts on utility-scale solar while allowing the removal of barriers constraining the private market for commercial and residential solar, all of us would be winners.

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Dominion Virginia Power says its 30 MW Solar Partnership Program likely to top out at “13 or 14” MW

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Photo credit Christoffer Reimer

Photo credit Christoffer Reimer

At a stakeholder meeting in Chesterfield, Virginia, on Monday, Dominion Virginia Power revealed that it expects to have installed a total of 6 megawatts (MW) of distributed solar generation by year’s end, out of the 30 MW approved by the General Assembly. But the program, which Dominion calls its Solar Partnership Program, may achieve only a total of “thirteen or fourteen megawatts” before it exhausts the $80 million that the State Corporation Commission authorized the company to spend on it.

Dominion had originally requested $110 million for the program, under which it develops large solar facilities on rooftops it leases from commercial, industrial or institutional customers in selected areas. But many solar industry members and advocates, including yours truly, argued that it should be possible to install 30 MW of solar for much less. It turns out that we were right that the private sector could do it for less, but wrong in thinking Dominion could.

The $80 million price tag works out to a cost of between $5.70 and $6.15 per watt, a number that is at least two and a half times what a commercial customer would expect to pay if it purchased a system directly. It’s vastly higher even than what residential customers are paying under the popular “solarize” programs that have sprung up around the state this year, which are producing contracts for home systems at $2.90-3.55 per watt.

Dominion analyst Nate Frost told me at the meeting that the SCC required the company to include all the related costs of the program, including financing and O&M as well as the cost of leasing rooftops from participants. But this still puts the price far above what similar projects would cost if built and owned by a private sector firm, according to an industry insider I consulted.

I followed up with Mr. Frost by email to ask for a cost breakdown, and to find out whether unique factors might have driven up the cost. Mr. Frost referred me to the company’s August 29 filing with the SCC (which, due to the SCC’s impossibly user-unfriendly website, I cannot link you to, although you can look it up yourself on the website by searching under case PUE-2011-0017).

That filing does not, unfortunately, answer any of the questions I put to Mr. Frost. But reading it does give a strong impression that the company had expected to be able to install the full 30 MW under the cost cap, and was as surprised and dismayed as the rest of us to find they were proceeding with projects way too slowly while blowing through their budget way too fast.

Of course, the point of the Solar Partnership Program is not to show whether Dominion is capable of competing with private companies, but to give the utility a chance to examine how solar integrates with the existing grid. This is important because solar is such a new and untried technology that the utility could not possibly know what might happen if it just scattered twenty or thirty megawatts’ worth of it into a system with tens of thousands of megawatts of fossil fuel generation. Sure, critics might suggest Dominion could get that information from New Jersey, which has over 1,300 MW of solar in a state half the size of Virginia. But what the critics fail to understand is that unlike Virginia, New Jersey actually encourages solar, making its electrons highly suspect. This is why we need our own study.

Monday’s stakeholder meeting revealed more bad news about Dominion’s progress on solar. Also behind schedule is the Solar Purchase Program, under which solar owners who would otherwise be eligible to net meter (using their solar power themselves) are offered 15 cents per kilowatt-hour to sell their green electricity to Dominion for resale to the Green Power Program, while purchasing “brown” power for their own use at the standard rate. Although the program has been open for more than a year and has a capacity of 3 MW, to date it has signed up only 703 kilowatts.

Solar industry members and analysts had criticized the design of the program from the outset. But again, the company’s SCC filing (included with the Solar Partnership Program filing) reveals Dominion’s surprise and chagrin that the great majority of customers who initially signed up for the program changed their minds.

Nor are customers jumping to take advantage of Dominion’s “Schedule RG,” which makes the utility a middleman for sales of renewable energy from producers to large customers, like the consumer-conscious corporations that have driven big solar installations in many other states. Thus far there have been no takers. That’s not a huge surprise to observers; Schedule RG was criticized at the time of its proposal for its cumbersome design. (Yes, we are seeing a pattern here.)

By contrast, reported Mr. Frost, the net metering option that allows customers to install solar on their own property and for their own use has attracted 1,080 customers, who have installed a total of 8 MW to date, with 86% of these customers residential.

These aren’t huge numbers either, but they probably don’t include more than a few of the home systems currently under development through the solarize programs, which will add significantly to our residential total this year. Two projects using third-party power purchase agreements (PPAs) will also add as much as a megawatt.

The lesson seems to be that customers are doing a better job installing solar than Dominion is. If Virginia is serious about increasing renewable energy in the state, it should free the private market to build distributed generation like rooftop solar: serving every kind of customer of every size, everywhere in the state. If the utilities want to compete on a level playing field, let them. Otherwise, they should be encouraged to focus on developing multi-megawatt, utility-scale projects for the grid. There is plenty of room for both, and we need it all.