Virginia regulators reject Dominion renewable energy tariff

Virginia’s State Corporation Commission (SCC) has rejected Dominion Energy Virginia’s application for approval of a new rate schedule “CRG” under which it would offer renewable energy to large users of energy.

The SCC concluded Dominion had failed to show the tariff would result in “just and reasonable rates.” The Commission focused especially on two issues. First, the tariff relied on a formula made up of a long list of unknown variables including half a dozen different cost and price forecasts, producing “simply too much uncertainty and subjectivity.”

Second, Dominion proposed to collect a profit on the renewable energy it purchased for customers, equivalent to the return on equity it is allowed to charge on projects it builds. This would be unusual (typically the costs of purchased power are simply passed through to customers), and the Commission wasn’t having it.

This puts Dominion back at square one in developing a renewable energy tariff it can offer to large customers other than the Amazons and Facebooks of the world, who negotiate their own terms.

On the one hand, that’s good for customer choice and free market competition; as long as the utility does not have an approved tariff for 100% renewable energy, customers are allowed to buy renewable energy from other providers.

On the other hand, the SCC opinion also seems to suggest that when Dominion comes back with a new proposal, it might have to be one that, while cheaper, could be even less appealing to customers than the already-questionable CRG tariff. Pointing to the very broad definition of renewable energy in § 56-576 of the Code, the SCC makes the peculiar assertion that “The Commission must find that the energy provided by the proposed tariffs meets the General Assembly’s definition of renewable energy, not an individual customer’s preferred definition of such.”

This language concerns Cale Jaffe, Assistant Professor of Law at the University of Virginia and the Director of the Environmental and Regulatory Law Clinic. He says:

I take that as a not-so-thinly veiled criticism of Tier 1 renewables like wind and solar by the Commissioners.  I.e., Va. Code 56-576 defines “renewable energy” to include, “biomass, sustainable or otherwise, (the definitions of which shall be liberally construed), energy from waste, landfill gas, municipal solid waste….” I read the Commission as advising Dominion that if it comes back with another 100% Renewable Energy tariff, it needs to include “cheaper” options (if externalities are excluded), which the Commission would define to include unsustainable biomass along with other Tier 3 resources (e.g., waste to energy).

For customers, the result could be the worst of both worlds if a tariff with a mix of cheap, crummy stuff won SCC approval. It would close off the market to competition, yet probably not attract many takers.

Taking the optimistic view, though, there’s little out there in the renewable energy world that can compete with today’s wind and solar prices, with the exception of hydropower in places that have a lot of it. If Dominion’s prices are high, that’s because it insists on mixing in high-cost biomass to satisfy its own insistence that a renewable energy tariff consist of renewable energy 100% of the time.

The SCC’s focus on cost to customers has implications for Dominion’s proposed Schedule CRG-S, which would offer residential and smaller non-residential customers a mix of renewable sources at a fixed price that would increase the bills of participating residential customers by nearly 18%, or more than $20 per month for someone using 1,000 kWh. (Again, it’s that insistence on “100% of the time” that appears to be driving up the price.) This is a greater increase than the similar tariff Appalachian Power proposed, and the SCC rejected as too high, just a year ago.

How Virginia localities will get to 100% renewable

Supporters of clean energy gathered in Richmond on April 25 to launch the 100% Virginia Campaign. Photo courtesy of the Sierra Club.

Last week a coalition led by the Sierra Club launched a “100% Virginia” campaign designed in part to encourage more localities to follow the lead of Blacksburg and Floyd in committing to a 100% renewable energy future. For many people this energy transition now feels inevitable, at least in the long run. In the short run, though, it still feels very difficult.

Consider the obstacles we face in Virginia. Most localities have to deal with Dominion Energy Virginia (Dominion) or Appalachian Power (APCo), which have monopolies in their service territories. With few exceptions, customers can’t just sign up with another supplier who will offer a cleaner energy mix. And most local governments themselves buy electricity collectively from Dominion under a contract that gives them an attractive price but constrains their ability to generate power for themselves.

Our utilities themselves show no interest in abandoning fossil fuels. Dominion Energy Virginia’s parent company, Dominion Energy, is heavily invested in natural gas transmission, storage and export. The parent company needs the electric utility it owns to keep burning fracked gas for electricity so it can fill pipelines like its $6 billion Atlantic Coast Pipeline. Dominion has sunk billions of dollars of its customers’ money into new gas generating plants, which it won’t want to close early. And Dominion’s 2017 Integrated Resource Plan (IRP) showed the company expected to see its CO2 emissions actually increase over the next 25 years.

For its part, APCo is a subsidiary of Ohio-based American Electric Power (AEP). AEP has reduced its use of coal in recent years and plans major investments in renewable energy, but it won’t reach its planned 80% reduction in CO2 emissions until 2050. Meanwhile it is increasing its use of fracked gas.

Both Dominion Energy Virginia and APCo make money by building new infrastructure, so they need customers to use more energy, not less. They oppose mandatory efficiency savings as well as customer-owned and third-party owned solar, both of which would reduce their own sales. One result is Virginia’s abysmal showing on energy efficiency rankings.

Virginia lacks a mandatory renewable portfolio standard (RPS), relying on a weak and voluntary standard. As a result, Dominion Energy Virginia’s energy mix is currently less than 4% renewable energy, none of it from wind or solar. (Dominion does generate a tiny amount of solar energy but sells the renewable energy certificates, so legally it no longer qualifies as energy from solar. This will be an ongoing problem as Dominion builds more solar.) APCo has more wind in its energy mix than Dominion does, but also more coal.

Customers who want to generate their own renewable energy face a long list of policy barriers, and Virginia lacks incentives like tax credits, rebates, or a REC market that would spur private investment. Under pressure from Dominion, APCo and the rural electric cooperatives, the General Assembly routinely defeats proposals that would boost investment in rooftop solar. A recent report gave Virginia an F on solar policy, ranking us among the “10 States Blocking Distributed Solar.”

If the General Assembly is unhelpful, Virginia’s State Corporation Commission (SCC) is actively hostile to renewable energy and energy efficiency. The SCC cares about low rates and not much else.

It’s also hard for local governments to fill the policy gap. Virginia is a Dillon Rule state, meaning local governments have only the power granted to them by state government. A city or county can’t adopt a building code requiring homes to be more energy efficient than called for in the statewide code, or require new buildings to have solar panels or green roofs.

With all these obstacles, the prospects for meaningful change once looked grim. But two trends have converged to change the outlook. First, the economics of electric generation have now shifted decisively in favor of renewable energy and away from fossil fuels (though a lot of people don’t know it yet). And second, customer demand for renewable energy has surged across the political spectrum, with major corporations driving much of the action.

As a result, even in Virginia a number of trends favor renewable energy:

Dominion’s 2017 IRP dropped plans for new baseload gas plants before at least 2025, a sharp change from 2016. That IRP for the first time identified solar as the least cost resource in Virginia, though it proposed a build-out of only 240 MW per year. Dominion’s 2018 IRP, due out May 1, will almost surely call for more than that, in keeping with 2018 legislation, SB 966, putting more than 5,000 MW of wind and solar by 2028 in the public interest.

SB 966 also called for a billion dollars in new spending on energy efficiency programs, and limited the SCC’s ability to reject proposed efficiency programs. Meanwhile, localities are putting in place Commercial Property Assessed Clean Energy (C-PACE) lending programs that will allow businesses and non-profits to access low-cost financing for both energy efficiency and renewable energy.

Corporate demand has created new solar options, including some from Dominion but also some that don’t involve our utilities. For example, the 500 MW solar farm that will serve Microsoft and others appears to be structured to bypass Dominion entirely. The deal uses what is known as a wholesale power purchase agreement, an option increasingly popular with corporations, institutions, local governments, and other large purchasers of energy. The Northern Virginia Regional Commission is currently working with local governments in its area to do something similar.

Legislation passed in 2017 is also finally producing a solar option for Dominion customers that will likely be available by the end of this year. As proposed, it will offer electricity generated from solar facilities in Virginia at a cost comparable to that of Dominion’s wretched Green Power Program.

Offshore wind has not gotten much attention in Virginia recently, but Dominion’s partnership with the Danish company Orsted, the world’s leading offshore wind developer, puts Virginia’s 12-MW pilot project on track for completion in 2020, with the commercial lease area likely to see the full build-out of 2,000 MW occur during the 2020s.

Finally, the Northam Administration is finalizing new regulations designed to reduce greenhouse gas emissions from power plants by having Virginia utilities trade carbon allowances with those in states that are members of the Regional Greenhouse Gas Initiative (RGGI). It’s not clear yet how much this will incentivize utilities to build wind and solar.

Localities considering a commitment to 100% renewable energy should feel optimistic about these developments. As renewable energy costs continue to tumble, charting a path to 100% also means saving money for taxpayers.

The exact path to 100% may not be clear, but it will likely involve a combination of some or all these options:

  • Prioritizing energy efficiency in both public and private buildings;
  • Investing in large offsite solar (and wind) facilities, and encouraging corporate and institutional customers to participate in similar investments;
  • Putting solar on rooftops and parking lots of municipal buildings and schools, using third-party PPA financing to avoid upfront capital costs;
  • Offering C-PACE financing to businesses for energy efficiency and solar;
  • Sponsoring and promoting “solarize” bulk purchasing programs that make it easier and cheaper for residential and commercial customers to install solar;
  • Promoting utility-sponsored renewable energy purchase options for residents and businesses as they become available; and
  • If adequate utility options don’t emerge, using municipal aggregation to purchase renewable electricity from another supplier.

Localities also have to do a better job advocating for clean energy at the General Assembly and with the Governor, where they are currently underrepresented in the energy debate. They need to become squeaky wheels about things like the barriers to customer-owned solar, the paucity of renewable energy options and our substandard residential building code.

But most of all, localities have to begin taking advantage of the efficiency and solar options that already exist. Too many boards of supervisors and city councils waste time dithering and second-guessing and deferring to unmotivated staff and wondering if, gee, maybe it would be better to wait for someone else to go first.

Getting to 100% may not be easy, but it’s impossible if you never start.

The race to 100% renewable is on in Virginia: Floyd and Blacksburg lead in committing to energy transition (sort of)

On October 24, 2017, deep in the heart of Virginia, the mostly Republican supervisors of Floyd County (population 15, 755) issued a resolution proclaiming the county’s commitment to reduce greenhouse gas emissions by “replacing fossil fuels with renewable energy along with conservation and energy efficiency,” and “support[ing] the achievement of near zero greenhouse gas emissions through policies that shift the energy supply strategy of our County from fossil fuels to 100% clean renewable energy.” The vote in support was unanimous.

The vote made Floyd the first Virginia locality to join more than 70 cities, towns and counties across the U.S. that have committed to achieving 100% renewable electricity. At least five cities are already powered by renewable energy today, according to the Sierra Club. (And surprise! None of the five are in California.)

Floyd’s resolution does not set a date for accomplishing its goal, so some might call it more aspirational than committed. And even the residents of Floyd subsequently showed themselves more than a little conflicted. (I’ll get to that in a moment.)

But within three months, the Town of Blacksburg followed suit with its own resolution in favor of 100% renewable energy, and it upped the ante by setting a target date of 2050. The Blacksburg commitment is bolstered by the town’s previous work on a climate action plan and its own claim to fame as the location of Virginia’s first Solarize campaign.

As best I can tell, Floyd and Blacksburg are the only Virginia localities to take the pledge so far, but the idea is under consideration across the state. The Sierra Club launched its “Ready for 100” campaign in Virginia almost two years ago in an effort to persuade Arlington and Alexandria to set a target date of 2035 for both government and residents to be powered by 100% renewable electricity. Fairfax City and Charlottesville have also begun the conversation.

The 2035 target proposed for Arlington and Alexandria is both more and less ambitious than Blacksburg’s goal, since it covers only the electric sector. Moving to 100% renewable energy, as Blacksburg aims to do, also requires things like eliminating petroleum use in transportation and an end to heating by natural gas and fuel oil. These are harder in the near term but generally considered achievable by 2050, given the projections for electric vehicles, cost declines that make electricity from wind and solar competitive with fossil fuels, and a growing belief that combating climate change will soon push us towards a policy to “electrify everything.”

Not everyone agrees that abandoning fossil fuels is the right goal, including some of the same people who said it was. Immediately after passing the 100% resolution, supervisors in Floyd County contracted a case of buyers’ remorse when the local Tea Party found out and raised a ruckus. (The local newspaper had been covering the topic for months, but evidently it didn’t make Fox News.)

Barely six weeks later, on December 12, the board issued a hastily-prepared second resolution. It began by repeating several findings of the first resolution, including recognizing the threat of climate change and the role of humans in causing it. So far, so good. Then it took a sharp detour to praise fossil fuels and to pledge to “protect the freedom and economic interests” of residents by working for “viable, cost-effective, clean and reliable energy resources of all available types,” which the drafters seemed to think included fossil fuels. Only one supervisor voted no. They did not, however, repeal the first resolution. That leaves Floyd with its first-in-the-commonwealth status on embracing 100% renewable energy, but sadly paralyzed on putting it into action.

It is worth reading this second Floyd resolution to understand the underlying concerns of the noisy minority who pushed it through. It reveals that a belief in coal as a cheap fuel remains common, though it has been years since coal lost its competitiveness. And the reference to fossil fuels as “clean” is surely an echo of the “clean coal” propaganda that never had any truth behind it, but seemed to offer a free lunch. The very silliness of the phrase works in its favor: since no one would make up something so absurd, people figure, it has to be true.

The second resolution also reflects a genuine concern about the potential of an over-active government to infringe on individual liberties. Billy Weitzenfeld, President of Sustain Floyd, told me some local people who were opposed to the pro-renewable energy resolution expressed a fear that it would lead to the government taking away peoples’ wood stoves and forcing everyone to put solar panels on their houses. Thus the freedom from utility control that rooftop solar offers to consumers was turned on its head and made to look like a threat to individual liberty.

Weitzenfeld feels the Tea Party concerns are misplaced, but he also thinks the conflict could have been avoided by better dialog in the process. It was unfortunate, he said, that fear took over, and—at least temporarily—brought a halt to what had been an exciting momentum on clean energy initiatives.

Weitzenfeld has not thrown in the towel, though. He and other advocates in Floyd are getting back to doing “the proactive stuff that can really make a difference”: putting solar on rooftops through a second Solarize program, encouraging energy audits, engaging the public, and building what he calls “the constituency of practitioners,” people whose own experience with renewable energy will make them the ones to push back against fear and misinformation the next time around.

Looking on the bright side, even the rebelling Tea Partiers recognized the climate threat, which is also a theme common to the other Virginia resolutions. In other conservative states, more prosaic considerations have driven the decision. And by that, of course, I mean money. The Republican mayor of Georgetown, Texas, said economics pushed them to become one of the first cities in America to run entirely on wind and solar energy, when they found they could save money doing it. Bentonville, Texas, may become the second city in that state to achieve the 100% goal, on economic grounds as well as due to concerns over air quality associated with coal and gas burning.

In 2008, tiny Rock Port, Missouri, became the first locality in the U.S to be powered entirely by wind energy, taking advantage of a cheap and abundant resource in a windy farm community. Greensburg, Kansas, also went all-wind in 2013, and uses this and other green initiatives as a major branding tool.

All of these are small communities that control their own electricity supply, which gives them options most Virginia localities lack. Blacksburg residents get their electricity from Appalachian Power; most others have to deal with Dominion Energy Virginia or one of the rural electric cooperatives. So even if they achieve consensus within their communities on a goal of 100% renewables, meeting the goal will require navigating a range of barriers.

We are not alone there. A fair number of the cities on the Ready for 100 list are also located in the Southeast, and suffer from the same outdated monopoly utility structure that we do. Virginia localities can look for guidance to Atlanta, Georgia (100% renewable energy by 2035), and Columbia, South Carolina (100% renewable electricity by 2036).

Next week Sierra Club will launch its “100% Virginia Campaign” to encourage residents across the state to advocate for clean energy in their communities, with the hope that more localities will take up resolutions for 100% renewable electricity by 2035.

More generally, Sierra Club organizer Alice Redhead says the goal is to “build a movement for clean energy across the state and set the conditions for Virginia to transition to 100% renewable energy statewide by 2050. We are pushing for localities around Virginia to commit to 100% clean energy, but we are also making sure that the campaign is flexible rather than one size fits all and allows for locally-tailored initiatives that are strategic for the conditions in different areas of the state. Local campaign teams that are a part of the 100% Virginia network will develop unique plans to advocate for clean energy progress specific to their area.”

In an upcoming blogpost I’ll take a harder look at the obstacles facing Virginia localities, as well as the opportunities that make getting to 100 a viable option.

After losing a vote on the double dip, is Dominion losing Power?

An earthquake shook Richmond, Virginia on the afternoon of Monday, February 12, rocking the House of Delegates just as it was supposed to be passing HB 1558, Dominion Energy’s Ratepayer Rip-Off Act of 2018. The bill was intended to help the utility lock in stupendous unearned profits for its parent company, courtesy of the monopoly’s captive customers, under the guise of supporting clean energy and grid investments.

And the bill did pass the House, but only after delegates adopted an amendment offered by Minority Leader David Toscano stripping away a lucrative provision that Dominion both desperately wanted and swore didn’t exist: the infamous “double dip” that the SCC has said would allow Dominion to charge customers more than twice over for a large portfolio of infrastructure projects. With billions of dollars worth of projects on the drawing board, the double dip meant serious money.

Anyone who didn’t believe the double dip was real only needed to listen to Dominion lobbyist Jack Rust respond to repeated questions about it during a Senate Commerce and Labor Committee hearing two weeks earlier. It was a “yes or no” question that Rust wouldn’t answer with a yes or a no.

Obfuscation, however, was good enough for the Senate, which passed SB 966 last week by a bi-partisan vote of 26-13. It was good enough for Governor Northam, too, who had already pledged to sign the bill. A few environmental groups broke ranks to support the bill, too, cheering the provisions for energy efficiency and the promise of more renewables.

Admittedly, the Attorney General’s Office of Consumer Counsel remained opposed. So did other environmental and consumer groups, complaining not just about the double dip, but about ceding control over the future of Virginia’s electric grid to a profit-driven monopoly. But when has the General Assembly ever cared what environmental and consumer groups thought? So passing the bill through the House should have been easy.

And then Toscano called Dominion’s bluff. If the double dip is real, said Toscano, his amendment would fix it. If the bill doesn’t already allow for double-dipping, then making doubly sure of that does no harm.

The logic was unassailable, though bill patron and Friend of Dominion Terry Kilgore assailed it anyway. As the Associated Press reported, Kilgore tried to persuade legislators to reject Toscano’s amendment. Yet even some fellow Republicans deserted him on the vote, helping Democrats pass it 55-41. A quick-thinking Delegate Habeeb, apparently recognizing bad optics for the Republicans, called for a second vote, and this time the amendment passed 96-1, with even Kilgore supporting it.

By all accounts, the vote was unprecedented. Dominion does not lose floor votes. The vote rocked the House.

In hindsight, perhaps Dominion should have known a fault line had formed. Grassroots groups were agitating against the power of monopoly. A new group called Clean Virginia was agitating against the bill. Almost all the freshmen Democrats had pledged not to accept Dominion money—and there were a lot of them, thanks to last fall’s “blue wave” election. But the Republicans had already scuttled most of their bills; surely they had learned humility? They had not. They all supported Toscano’s amendment, and all but one followed him in opposing final passage of the bill, which passed 63-35.

The earthquake could be felt over at Dominion headquarters, where reporters could be seen inspecting the foundation for damage. CEO Tom Farrell called in his damage control specialists, heavy-hitting lobbyists Eva Teig Hardy and Bill Thomas, to persuade legislators to support the Senate version of the bill over the House version—or failing that, to lard it up with new favors to the utilities.

According to the AP, Kilgore continued to maintain after the vote that the double dip was “more perception than reality.” But he also said, “Toscano’s amendment takes ‘a lot of stuff out that needs to stay in’ the legislation. ‘I’m going to have to fix it.’”

One might think Dominion and its allies would be embarrassed to defend a provision they say doesn’t exist. Reportedly they have pivoted to a different argument, that the company would have no incentive to invest in renewable energy if it isn’t allowed to rip off ratepayers in the process. Accordingly, they are holding solar investments hostage, knowing how much Democrats want them.

Dominion’s new argument is simply posturing. Its 2017 Integrated Resource Plan declared solar to be the cheapest form of energy in Virginia, and it had signaled via the Rubin Group its plan to build at least 3,000 MW of solar in the coming years. Saying now that it might take its ball and go home is a sign its lobbyists are out of good arguments.

In the past, good arguments were not a requirement for Dominion to get what it wants; political power has always been enough. It will be interesting to see now whether Dominion emerges with some semblance of its omnipotence intact, or whether this earthquake presages new shocks that could crack the fortress.

 

When a billion dollars is not enough: Dominion tries a hostile takeover of the SCC

I’d call this a dog of a bill, but this is my dog, and she’s pretty darned cute.

For this bill, we really need a different animal altogether. Photo credit bmani/Creative Commons.

 

We have seen the future, and it looks suspiciously like the past.

I’m referring, of course, to the much-anticipated legislation Dominion Energy Virginia’s friends are peddling in the Virginia legislature to replace the infamous rate rip-off of 2015 with a brand new way for utilities to skip regulatory oversight and avoid giving refunds.

Personally, I have to hand it to Dominion on this one. Its lobbyists spent the fall trying to convince legislators not to reverse the brilliantly—though falsely—named “rate freeze.” Dominion hoped legislators would ignore estimates that the utility would keep northwards of a billion dollars in unearned profit from it, not to mention the barrage of newspaper articles connecting Dominion’s campaign contributions to the votes of legislators in support of the law. Apparently, a lot of legislators made it clear they were done being snookered, because by December, Dominion had publicly announced that it, too, believed it was time to change the law.

So Dominion had a PR disaster on its hands, and what did it do? Offer massive refunds and a return to regulatory oversight? Heck, no. The new bill allows Dominion to avoid regulatory oversight pretty much forever, while rebating just a fraction of the loot. Awesome head fake, guys!

Mind you, there are a lot of great buzzwords in the bill. If you didn’t know any better—if you happen to be one of this year’s snookerees, as the rank-and-file legislators are meant to be—you might think this bill is intended to transform the grid and add massive amounts of solar energy and energy efficiency. It could have been written to do that, but it wasn’t.

For a fuller explanation of this legislation and how it fits into the long pattern of Virginia legislators giving away the store to Dominion, see this terrific analysis from Dan Casey of the Roanoke Times. As he demonstrates, this is not legislation aimed at transforming the business of energy in Virginia. It’s aimed at ensuring Dominion gains unfettered control.

If legislative leaders are serious about transforming our energy economy, they could amend the bill now to give the State Corporation Commission back its role in protecting consumers from unwise spending and by ordering refunds and rate reductions when utilities collect more than permitted by law. The current draft of the bill throws a small fraction of past overearnings back to customers, ignores 2017 overearnings altogether, and allows utilities to game the system so rates can only go up hereafter.

Grid transformation is indeed important—so important that it shouldn’t be left to profit-seeking utilities to decide what grid investments are in the public interest. This issue needs an independent study with in-depth analysis and extensive public input– the sensible approach that has been taken by numerous states across the country. Letting Dominion decide what investments to make guarantees we’ll see only the ones that allow Dominion to tighten its control over Virginia’s power supply.

The bill also tries to buy off environmentalists with a promise of up to 4,000 MW of solar by 2028, a figure that was already in play (and appears in other bills this year) as a result of negotiations between utilities and the solar industry. To put that in context, recall that The Solar Foundation analysis showed Virginia needs 15,000 MW of solar to equal just 10% of our electricity supply. Do the math: 4,000 MW is well under 5% under the best of circumstances. When a bunch of other states are getting 20% of their electricity from wind and solar resources today, the promise of less than 5% over ten years is not only grossly inadequate, it’s insulting. Perhaps we environmentalists can be bought, but not that cheaply.

But will legislators wise up in time? Senate Minority Leader Dick Saslaw’s version of the legislation (there are several), SB 967, runs for 22 pages of mind-numbing detail that can’t be fully understood by anyone but a lawyer specializing in electric utility regulation. I’m not one, and I’m grateful for the help of people who are. Saslaw’s bill was introduced Friday—the last possible day to file legislation—and did not appear online until Tuesday. The Senate legislation may come before the Commerce and Labor committee as soon as Monday, and House versions may be in subcommittee on Tuesday.

Not everyone is being snookered, to be sure. Senator Chap Petersen has renewed his earlier effort for a more straightforward repeal of the “rate freeze,” and a bipartisan group of 11 senators have fired off a letter to the SCC asking for a report on what effect the various bills will have “on refunds owed to rate payers for past payments” and “the effects on future rates.” Six House members have done the same.

Finally, this afternoon Governor Northam weighed in, saying he has “significant concerns about the bill that is on the table.” An email from the Governor’s office laid out goals that echo what critics have been saying. First, more money should be refunded to ratepayers. Grid modernization should be defined, the focus on clean energy increased, and the SCC should be involved to make sure Virginians “are getting the best bang for the buck.” And perhaps most critically, the legislation should “restore the SCC’s authority to ensure that Virginia families and businesses do not pay more for power than they should under state law.”

Perhaps having the Governor weigh in will put a stop to the plan to turn electric utility regulation over to the monopolies themselves. Associated Press reporter Alan Suderman quotes Dominion spokesman David Botkins as saying by way of response that the legislation is a “work in progress.”

But why is this up for negotiation? Legislators should insist on a return to regular order, put an independent agency in charge of grid transformation, and set mandatory targets for decarbonizing our electricity supply. It’s time for the snookering to stop.

Virginia legislators face a flood of new solar bills

Photo courtesy of Department of Energy, via Wikimedia Commons.

It’s true that Republicans remain in control of the General Assembly, and the way things run in Richmond, having only the narrowest of margins diminishes the majority’s power remarkably little. Yet the Blue Wave swept in a set of younger, more diverse, and more progressive delegates, many of whom are as interested in reforming energy policy as they are in social and economic issues.

As a result, I count more than 50 bills dealing with solar, energy efficiency, electric vehicles and battery storage; several more that affect clean energy by addressing carbon emissions; and still others that deal with utility regulation in ways that have implications for renewables and storage. And bills are still being filed.

In this post, I cover just the renewable energy bills of general interest filed to date, saving energy efficiency, storage, EVs and climate for later.

Most of these bills cover renewable energy generally. Bills submitted by the Rubin Group (the private negotiating group consisting mostly of utilities and solar industry members) are limited to solar.

One bill this year takes a new run at a mandatory renewable portfolio standard (RPS). This is Delegate Sullivan’s HB 436, which narrows the kind of resources eligible for the program (now mostly wind, solar and hydro) as well as making it mandatory. As currently drafted it is so ambitious that it would likely mean utilities would have to buy a lot of Renewable Energy Certificates from out of state to meet the early year targets, but changes to the bill may be in the works.

Delegate Sullivan has also proposed HB 54, which would provide a state tax credit of 35% of the cost of installing certain kinds of renewable energy property, up to a maximum credit of $15,000.

Several bills enable community solar programs, to provide options beyond the utility-controlled program passed last year that more closely resembles a green tariff. SB 313 (Edwards) SB 311 (Edwards) offer two different customer-controlled models. SB 586 (Gooditis) would authorize, but not require, utilities to set up utility-controlled programs; it differs from last year’s bill in that customers would have a direct connection with a specific renewable energy project. Since it would not be limited to solar, it could open a new option for community wind.

The Rubin Group drafted three pieces of legislation. The centerpiece bill, SB 284 (Saslaw) and HB 1215 (Hugo) raises from 500 megawatts (MW) to 4,000 MW (by 2024) the amount of large-scale solar utilities can build or buy that is deemed to be “in the public interest,” a designation that takes this determination away from the State Corporation Commission. The bill also makes it in the public interest for utilities to own or buy up to 500 MW of small-scale solar projects (under 1 MW each). These will be distributed projects, but utility-controlled, along the lines of Dominion’s not-very-successful Solar Partnership Program.

SB 284 and HB 1215 don’t actually require the utilities to do anything, but the legislation is widely seen as signaling their intent to move forward with additional solar development. While a very welcome signal, legislators should keep in mind that a Solar Foundation analysis earlier this year noted it would take as much as 15,000 MW of solar to provide just 10% of Virginia’s electricity supply.

Recognizing this reality, Delegate Mark Keam has introduced HB 392, which declares it in the public interest for the Commonwealth to get 10% of its electricity from solar, and raises to 15,000 MW the amount of utility solar in the public interest.

The two other Rubin Group bills deal with land use, putting language into the code giving people the right to put up solar panels on their own property for their own use, except where local ordinances specifically prohibit it, and subject to setback requirements, historic districts, etc. The bills are SB 429 (Stanley), its companion bill HB 508 (Hodges), SB 179 (Stanley) and companion bill HB 509 (Hodges).

The Rubin Group tried and failed to negotiate changes to Virginia’s net metering program, which affects most customer-sited solar projects, including residential rooftop solar. This is hardly a surprise; a group that works on consensus gives every member veto power. With utilities hostile to any perceived incursion on their monopoly power, and solar advocates pledged to protect the rights of residents, there aren’t a whole lot of opportunities for consensus here.

With the Rubin Group out of the net metering space, legislative champions have stepped into the vacuum to propose a host of bills that would support customers who install solar for their own use:

  • HB 393 (Keam) removes the 1% cap on net metered projects, and provides that when net metered projects reach 1% of a utility’s electric load, the SCC will conduct a study of the impact of net metering and make recommendations to the General Assembly about the future of the program. HB 1060 (Tran) simply removes the cap.
  • SB 191 (Favola) provides that Virginia customers who wish to self-generate electricity with renewable energy using the net metering provisions of the Code may install up to 125% of their previous 12 months’ electric demand, or in the case of new construction, of the electric demand of similar buildings. A 2015 law currently limits customers to 100% of previous demand.
  • HB 421 (Sullivan) allows owners of multifamily residential buildings to install renewable energy facilities and sell the output to occupants. This bill does not provide for the electricity to be net metered.
  • HB 930 (Lopez) requires the SCC to establish a net metering program for multifamily customer-generators, such as condominiums, apartment buildings, and homeowner associations.
  • HB 978 (Guzman) requires utilities to justify standby charges with a value of solar study. As currently written, the bill does not appear to have retroactive effect, so it might not repeal the existing, much-hated standby charges already approved by the SCC.
  • SB 82 (Edwards) expands the agricultural net metering program, increasing the project size limit from 500 kW to 1 MW, providing that the electricity can be attributed to meters on multiple parcels of land, and repealing the 2017 law ending agricultural net metering in coop territory.

Finally, several bills once again tackle third-party power purchase agreements (PPAs), which the Virginia Code appears to make legal, but which utilities have consistently maintained are a violation of their monopoly on the sale of electricity. HB 1155 (Simon) reaffirms the legality of PPAs. SB 83 (Edwards) replaces the existing PPA pilot program that dates from 2013 and directs the SCC to establish a broader program.

HB 1252 (Kilgore) replaces the existing pilot, which has different rules for Dominion and APCo, with a new program renamed “net metering power purchase agreements” that would be consistent for both utilities. It would open up APCo territory more than at present, by allowing any tax-exempt entity to participate rather than just the private colleges and universities that won inclusion last year. However, as currently drafted, it would narrow the program as it exists in Dominion territory by eliminating the eligibility of for-profit customers. Although it is the least customer-friendly option among the PPA bills, Kilgore’s position as chairman of House Commerce and Labor, which will hear the bill, gives it the strongest chance of passage.

Note that most of the renewable energy bills (other than those dealing with tax credits and land use) will go to the Commerce and Labor committees. In the House, a subcommittee usually meets once to hear all the bills (and typically to kill all but the ones anointed by chairman Terry Kilgore). While the schedule is not set, in the past the subcommittee meeting has been held in early February.


Important dates:

First Day of Session: Wednesday, January 10

Bill filing Deadline: Friday, January 19

Crossover (last day on which bills passed in one chamber can go to be heard in the other): Wednesday, February 14

Sine Die (end of Session): Saturday, March 10 

How to research a bill:

I’ve hot-linked the bills discussed here, but you can also find them all online pretty easily. On the home page of the General Assembly website, you will see options at the lower right that direct you to the Legislative Information Service, or LIS. If you know the number of a bill, you can type it into the first box (omitting spaces), and click “GO.” This will take you to a page with information about the bill, including a summary of the bill, the bill’s sponsor (called a “patron” in Virginia), the committee it has been assigned to, and its current status. Follow links to learn more about the committee, such as who is on it and when it meets. You will also see a link to the full text of a bill as a PDF.

Always read the full text of a bill rather than simply relying on the summary. Summaries sometimes contain errors or omit critical details, and bills can get amended in ways that make them very different from what the summary says. For the same reason, make sure you click on the latest version of the bill’s text.

If you don’t know a bill number, the General Assembly home page also lets you search “2018 Regular Session Tracking.” When you hit “GO,” this button brings you to a page with options for finding a bill, including by the name of the legislator (“member”), the committee hearing it, or the subject.

When you click on the name of a committee, you will see the list of bills referred to that committee, with short descriptions. It also tells you who is on the committee, when the committee meets and where. You can click on “Agendas” to see which bills are scheduled to be heard at the next committee meeting. Unfortunately the agendas are not set until a day or two before the meeting.

 

Northern Virginia governments look at major renewable energy energy purchase

If the Northern Virginia Regional Commission has its way, local jurisdictions will buy power from a solar or wind farm in the near future. Photo credit Christoffer Reimer.

The Northern Virginia Regional Commission has selected a consultant to assist area localities in a joint procurement of renewable energy. Participating cities and counties will be able to aggregate their demand to get the kind of economies of scale that have allowed corporations like Amazon and Facebook to lower their energy cost by investing in large solar and wind farms.

On November 17, NVRC announced that Customer First Renewables, a national expert in matching large energy users with renewable energy projects, will serve as its technical advisor. Customer First Renewables and NVRC plan to issue a Request for Proposals (RFP) to identify one or more “shovel-ready,” large scale projects to present to NVRC’s thirteen member governments. Those local governments will individually decide whether to participate in the group purchase.

According to a Request for Qualifications that NVRC issued in its search for a consultant, the project(s) to be selected must be greater than 10 megawatts in size and result in new renewable energy capacity added to the grid. Preference will go to projects located in Virginia or in the regional grid that serves Virginia, known as PJM.

NVRC will act as a central contact and facilitator, but it will be up to the participating localities to negotiate a contract. NVRC Director Robert Lazaro said discussions with representatives of area localities indicate the interest is there for a major renewable energy buy like this. Arlington, Alexandria, Manassas Park, and Falls Church are among the jurisdictions most interested, with others possibly joining as they learn more.

“We see this as a way to green the grid, save money, and assist the solar industry in Virginia,” said Lazaro.

Niels Crone, Senior Vice President for Business Development at Customer First Renewables, said his company was excited to be involved in the procurement effort. “We are delighted to work with NVRC to help Northern Virginia jurisdictions get affordable, large-scale renewable energy,” he said.

NVRC is following an ambitious timeline. A project workshop for local government staff is scheduled for December 11, and a Request for Proposals (RFP) is due January 2, 2018.

How does a group purchase work?

Amazon and other large corporations have become major drivers of new wind and solar projects in PJM, including several large solar farms in Virginia. The steadily-tumbling costs of wind and solar make it possible for the companies to green their energy supply while lowering their overall energy costs using innovative financing approaches. Not all of these would work in Virginia, but one that does is the wholesale, or “virtual” power purchase agreement.

A virtual PPA allows a customer to buy and sell energy in the wholesale market, avoiding potential obstacles such as a utility’s monopoly on the retail sale of electricity.

Local governments in Virginia buy electricity from Dominion Energy Virginia at retail under a contract negotiated by the Virginia Energy Purchasing Governmental Association (VEPGA). That contract makes Dominion their only electricity supplier, and Dominion currently does not offer wind or solar as an option. A virtual PPA would not change this relationship; Dominion will continue to supply localities with electricity from its (decidedly un-green) power plants.

A virtual PPA would, however, let participating localities contract for the output of a renewable energy project, with the electricity sold into the wholesale market rather than delivered to the localities. Given the right project, the price for the electricity in the wholesale market could exceed the price paid to the project owner under the PPA, allowing the localities to pocket the difference—indirectly lowering their energy costs. The localities would also receive an additional benefit in the form of renewable energy certificates generated by the projects, demonstrating they have legally “greened” their energy supply.

There is some financial risk involved, since the PPA price is fixed, while wholesale prices fluctuate. Part of Customer First Renewables’ job will be to find the best project economics with the least risk. Corporate buyers, universities and large institutions around the country have used this approach successfully to lower their energy costs and meet their sustainability goals.

As members of the Metropolitan Washington Council of Governments (MWCOG), Northern Virginia localities are committed to reducing greenhouse gas emissions to 80 percent below 2005 levels by 2050, with an interim goal of 20 percent by 2020. MWCOG’s 2017-2020 Regional Climate and Energy Action Plan (available here) also sets a target of meeting 20 percent of the region’s electric consumption from renewable sources by 2020.

As the report notes, however, “There needs to be an immense undertaking to meet the 2020 and 2050 goals.” Here’s hoping Northern Virginia is ready to do its share.