Category Archives: Utilities

Law? What law? Pandering to the governor, Dominion’s new plan ignores Virginia’s climate law

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Dominion Energy headquarters, Richmond, VA

Last December, Dominion Energy produced a remarkable document: a climate report predicting that by 2040 its electricity supply will be dominated by renewable energy. Coal will be gone by 2030, and methane gas will hang around in ever-smaller amounts, just to fill in the energy gaps. Small modular nuclear reactors (SMRs) probably won’t play a role for at least 15 years, during which time solar will become the mainstay of the electricity supply. According to the report, this strategy will allow Dominion to meet its goal of becoming carbon-neutral by 2050.  

Fast forward a few months, and the same company, using the same information, projects a future full of new methane-burning plants and SMRs. Dominion Energy Virginia’s 2023 Integrated Resource Plan (IRP), released May 1, now insists that the phenomenal growth of the data center industry and, to a lesser degree, the adoption of electric vehicles require so much energy that it can’t possibly meet legally-mandated climate goals. Accordingly, the plan doesn’t even try.

Instead of decarbonizing in accordance with Virginia’s role in the Regional Greenhouse Gas Initiative (RGGI) and the requirements of the Virginia Clean Economy Act (VCEA), Dominion now says it must build new methane-burning plants and keep old, expensive coal plants running “beyond statutory retirement deadlines established in the VCEA.”  All the alternatives examined in the IRP “assume that Virginia exits the Regional Greenhouse Gas Initiative (‘RGGI’) before January 1, 2024,” in violation of Virginia law. Most of the alternatives include the same SMRs its Climate Report recognized as unready. Compared to Dominion’s 2022 IRP update (filed just last September!), now costs have ballooned and CO2 emissions will skyrocket. 

What could possibly have happened in the course of a few months to produce this about-face? The astounding growth projections for the data center industry may be news to many Virginians, but not to the utility that provides their power. Vehicle electrification is hardly a surprise either. SMRs did not achieve any breakthroughs in technology or economics this winter, nor did anyone suddenly discover a way for new gas plants to make sense for the climate or ratepayers. Dominion makes a big deal out of the Christmas cold snap, but you have to try pretty hard to believe that requires upending all previous planning.

What did happen was the 2023 General Assembly session, in which Gov. Glenn Youngkin played a decisive role in handing Dominion a major – and unaccustomed – defeat. With Dominion Energy holding its shareholder meeting today, the company badly needs to show it is back in the governor’s good graces. And the governor, as we know, is not a fan of the energy transition. 

In other words, the IRP is a political document, not a serious approach to meeting Virginia’s electricity needs, at a time when climate change is accelerating and fossil fuels are giving way to superior renewable energy technologies.  

Market watchers will recall that Dominion’s stock price tanked in the fall of 2022, losing more than 30% of its value from August to November. So the company came up with a bill that would have increased the profit margin for its Virginia utility from 9.35% to 10.77%. This number was calculated to improve Dominion’s standing on Wall Street but would cost consumers an extra $4 billion, according to the State Corporation Commission’s estimate. The company also expected to be able to defeat pro-consumer legislation that would return more authority over rates to the SCC.

Dominion’s bill was widely panned, but that hardly made it a non-starter. In past years, the company has gotten what it wanted more often than not, thanks to powerful friends like Senate Majority Leader Dick Saslaw, D-Fairfax, and House Majority Leader Terry Kilgore, R-Scott. This is the beauty of doing business in a state that allows corporations, even public utilities, to supply unlimited campaign donations to elected officials. Over the years, Dominion’s contributions to Republican Kilgore nearly match its contributions to Democrat Saslaw. Most other General Assembly members get contributions from Dominion, too, helping to cement bipartisan support for the company’s priorities.

As the patrons of this year’s money bill, Saslaw and Kilgore should have been able to deliver enough votes from members of both parties to ensure a profitable outcome for their biggest campaign donor. They were not counting on the governor poking holes in the plan. 

Dominion’s beating this year grew from seeds it sowed in 2021. That year, Dominion made a bad bet on Democrat Terry MacAuliffe to win the governorship, secretly funding a dark money group to run ads attacking Youngkin. 

This year, Youngkin took his revenge. As a Wall Street guy himself, he knows how to hit a corporation where it hurts. 

Youngkin forced Dominion to accept changes to the bill that increase the company’s return on equity modestly (and only temporarily), but take away other avenues of profit. Adding insult to injury, the General Assembly also adopted the pro-consumer legislation that allows the SCC to set “fair and reasonable” rates in the future. 

Dominion declared itself satisfied with the result, but Wall Street judged otherwise. The company’s stock, which had started to rally in January, reached a ten-year low this spring. 

Aside from punishing Dominion, the governor achieved none of his energy goals in the legislative session. Rolling back the VCEA, exiting RGGI through legislation, reversing the Clean Car Standard — none of that happened. And as long as the Democrats keep control of at least one chamber in the General Assembly in this fall’s election, none of that is likely to happen. 

So Dominion’s IRP violates Virginia’s laws and the public’s trust (such as it is), makes a mockery of its own climate plan and proposes “solutions” that will drive up both costs and carbon emissions. As a plan, it can’t be taken seriously.  

All that, however, is beside the point. It makes the governor happy. And what makes the governor happy, Dominion hopes, will make its shareholders happy. 

That assumes the shareholders don’t care about climate change, or that they hold values that are as malleable as those of Dominion CEO Bob Blue and the rest of the company’s leadership. 

Climate change? What climate change?

An earlier version of this article was published in the Virginia Mercury on May 10, 2023.

Is your electricity bill keeping you in the dark?

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A seemingly simple question came across my desk a few weeks ago: What does Dominion Energy Virginia charge residents per kilowatt-hour (kWh)? Given how frequently I write about Dominion, I was embarrassed not to have a quick answer. In my own defense, though, Dominion makes it hard to find out. And when you do find out, the answer is, it depends. 

Examine a recent bill, and you will see the number of kilowatt-hours you used in the preceding month, a confusing list of charges and the dollar amount that you owe. You can do the math to figure out what you paid this month per kilowatt-hour, but that’s more of a snapshot than the whole picture.

 A Fairfax resident’s Mar. 6, 2023 Dominion Energy electricity bill. (Ivy Main/The Virginia Mercury)

I asked colleagues to send me their utility bills to see what people were actually paying, and I got out my calculator. Everyone’s rate was different, and the more electricity they used, the less they paid per kWh. Even after I removed state and local taxes from the equation, rates ranged from a low of 12.2 cents per kWh for a home that used 2930 kWh in February, to a high of 17.3 cents for a home that, thanks to solar panels, drew just 179 kWh from the grid in the same time period. 

As that solar home shows, the flat rate of the basic customer charge skews the average price higher. That basic charge is currently $6.58 per month, according to Dominion’s residential rate schedule, but you won’t see it on your bill. 

The rate schedule reveals other information your bill doesn’t tell you, and that’s where the real impact lies: you pay less per kWh, in both generation and distribution charges, for the electricity you use in excess of 800 kilowatts per month from October through May. From June to September, you pay less in distribution charges for every kilowatt over 800, but more in generation charges.

You’re also charged a single rate year-round for transmission, which is different from distribution. Plus, every kilowatt-hour is subject to a list of riders – “charges applied to certain rate schedules to recover various costs associated with Dominion Energy’s electric operations and electricity production,” according to Dominion – and non-bypassable charges. The rate schedule doesn’t identify these charges, but the bill does, albeit with no explanation for how the amounts are determined. Your bill also lists fuel as a separate charge under Electricity Supply, though fuel does not appear in the rate schedule. 

Still with me? No? All of this must make sense to the State Corporation Commission, which approved the rate schedule, but it is thoroughly opaque to customers. 

The sufficiently dogged can find a worksheet on Dominion’s website that breaks out all these costs. If you plug in the month and a number of kWh you used, it will calculate a bill. You still need to do the math yourself to arrive at the price per kWh, but you can then play with numbers to see how usage affects rates. 

Doing that confirms what I saw in my colleagues’ bills. Assuming 1,000 kWh, the number Dominion uses to represent the “typical” customer, the price works out to 14 cents in winter.  Change that to a frugal 500 kWh and you get 15 cents. Raise it to 2,000 kWh, and it goes down to about 13 cents. 

When challenged about this in the past, Dominion justified its buy-more, pay-less winter rate structure by arguing it was needed to make bills affordable for customers with electric heating, whose use can double or triple in the wintertime. The company didn’t mention that it also benefits wealthier people with large homes, and decreases the incentive for customers to conserve energy.

It also turns out that large homes do well in summer, too. According to the worksheet, a customer using 1,000 kWh in June would pay 14.6 cents per kWh. For 2,000 kWh, it rises slightly to 14.7 cents. The customer who uses only 500 kWh pays the highest rate, at 15 cents. Energy efficiency, alas, is not rewarded. 

So Dominion’s bills aren’t just confusing, they mask a perverse incentive in the rate structure that rewards people who use more electricity. This year’s utility legislation changes a lot of things, but it doesn’t require greater clarity in billing,  nor does it fix that upside-down incentive.

All utility bills are not equal

This perverse incentive is shared by some other Virginia utilities, though not all, and not all hide the ball the way Dominion does. Appalachian Power’s website shows it charges a single rate no matter how much you use. There’s neither a price break nor a penalty for higher consumption. The website provides two examples, for customers using 1,000 and 2,000 kWh, respectively. This makes it easy to calculate what you’re paying per kWh (about 16.5 cents), though you won’t find that number on either the website or the bills themselves. But neither the bill nor APCo’s website mentions the existence or amount of the basic customer charge, which can only be inferred from the website examples.

I also looked at February bills sent me by customers of Northern Virginia Electric Cooperative (NOVEC) and Rappahannock Electric Cooperative (REC). In both cases the bills were easy to understand. They identify the flat monthly charge, though in both cases the charge is unfortunately more than twice as high as Dominion’s. The bills also list the rates applicable per kWh for generation, transmission and distribution. Both utilities give a year-round volume discount on the distribution charge for higher levels of usage, another regrettable feature. However, REC’s SCC filing shows it imposes a higher electricity supply charge in summer for monthly usage over 800 kWh. I could not find current information about NOVEC’s rates online; I hope its customers have better access. 

Being able to understand your electric bill matters. Virginia’s average residential rates increased 20% between December 2021 and December 2022, according to the U.S. Energy Information Agency, mostly due to last year’s spike in the price of methane gas and coal. Even before last year, our bills were higher than those in most other states. 

Consumers have an array of options to help them lower their energy costs, including new federal and state programs and incentives for weatherization, energy efficient appliances and renewable energy. But customers who are confused about what they currently pay are less likely to act.

For the same reason, utility rate structures should incentivize customers to take steps that conserve energy. Lower rates for using more electricity undercut the value of investments in energy efficiency. 

If utilities want to help their customers, they can start by sending the right message.

This article was originally published in the Virginia Mercury on March 16, 2023.

Washington Gas loves its customers too much for their own good

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Shows a lit gas stove ring
Choose your fuel source carefully: you are likely to have to live with your decision for the next 10-20 years. Image: iamNigelMorris, CC BY 2.0 , via Wikimedia Commons

Washington Gas has been emailing its Virginia customers this month to offer them rebates if they buy new gas appliances, including home heating equipment (up to $700) and water heaters (up to $400). What the message doesn’t say is that this is a terrible deal. Customers will be able to get far bigger incentives if they wait until January and buy electric equipment instead.

Under the just-passed Inflation Reduction Act (IRA), Uncle Sam will provide tax credits of up to $2,000 per year for electric heat pumps that provide both heating and air conditioning as well as heat pump water heaters. Lower-income customers will be able to access upfront discounts of up to $8,000 for a heat pump, $1,750 for a water heater, $840 for an induction stove, and other amounts for additional upgrades. If you’re converting from gas and your electric panel isn’t sized to handle the extra electric load, the IRA will help with an upgrade. (For a full rundown of rebates and tax credits for homes, see this list from Rewiring America.)

It used to be that gas furnaces were more efficient and cheaper to operate than most electric heating options, but today the reverse is true: An EnergyStar heat pump uses energy more efficiently and costs less to operate than a fossil fuel furnace or boiler. A heat pump water heater, which I’d never even heard of until recently, is more efficient than either gas or a standard electric hot water heater and, again, saves money on operation.

Advances in heat pump technology and induction stoves, concerns about climate change and growing awareness of the dangers of burning fossil fuels indoors mean the switchover from gas to electricity would have happened without the IRA. But the IRA’s rebates are expected to goose the transition and transform the building sector.

Many consumers haven’t heard about the IRA’s rebates yet, and they may not have given much thought to home electrification. They need this information, but they sure won’t get it from their gas company.

Washington Gas is pushing its gas appliance rebates now for an even bigger reason, though, and one that makes it especially important that customers give them a pass: Installing an expensive new gas furnace locks you into the company’s fond embrace for the life of the furnace, no matter how high natural gas prices go.

It’s true that electric appliances will further tie you to your electric utility (unless you have solar panels), and electricity rates have been going up as well. But electricity rates are going up mainly because fossil fuel costs have skyrocketed. Dominion Energy Virginia, for example, cited a 100% increase in the price of natural gas when it asked for a rate hike this summer. As the electric grid gets greener year by year, lower-priced wind and solar energy will have a moderating effect on electricity prices. Your gas utility, on the other hand, will never have anything to sell you but gas.

It gets worse. Gas companies have to maintain their network of pipelines and other infrastructure regardless of how many customers they have. Those costs will be spread over a shrinking rate base as more and more customers switch over to electricity, raising rates for the remaining customers. If you buy a new gas furnace now, you will be trapped in that shrinking pool of customers, paying ever more to maintain pipelines.

Today, Washington Gas charges customers a flat “system charge” of $11.25 per month, plus supply and distribution costs based on how much gas is used that month. Customers who electrify their homes escape the monthly system charge and gain the convenience of dealing with just one utility. But the real savings come in not being part of a shrinking rate base paying an ever-larger share of the gas company’s fixed costs.

That makes Washington Gas’s rebate offer doubly dangerous for customers who don’t know about the IRA. Someone whose old gas furnace is on the fritz might see the email and decide to use that small rebate to buy a new gas furnace, when they would be far better off keeping the old one limping along for a few more months. Come 2023, they would then reap the benefit of an electric heat pump with a much larger rebate or tax credit.

Consumers are set to save a lot of money and energy under the IRA’s incentives for home electrification — but not if they get locked into fossil fuels first.

This post was originally published in the Virginia Mercury on October 28, 2022.

The other shoe drops: APCo follows Dominion in seeking rate increase due to high fossil fuel costs

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Virginia residents who buy electricity from Appalachian Power will see a rate increase of almost 16% this year if the State Corporation Commission approves the utility’s request to recover more than $361 million it has spent on higher-than-expected coal and natural gas prices. APCo proposes to recover the excess over two years, meaning rates will remain elevated even if fossil fuel prices drop. According to the filing, a customer who uses 1,000 kWh per month would see an increase of $20.17.

The SCC is likely to approve the request because it has little room to do otherwise. Virginia law allows utilities to recover their spending on fuel dollar-for-dollar, though they cannot tack on a profit for themselves. Last month, the SCC approved Dominion’s request to increase rates by an average of nearly $15 per month for the next three years to cover past excess fuel costs. 

The good news, says APCo, is that Virginia customers will see lower bills in the future because the utility is investing in renewable energy. “Incorporating more renewable sources of power into the company’s energy mix is another step in reducing customer fuel costs,” declares the company’s press release, issued the same day as its SCC filing. “As Appalachian Power adds more renewables, there is less need for coal and natural gas to generate power.”

Well, yes, but wouldn’t it have been nice if APCo had come to this conclusion before now? The current situation was entirely predictable. A supply glut kept natural gas prices low for almost a decade, but drilling companies weren’t making money. Today’s higher prices make it profitable to drill for gas, but oil and gas companies don’t trust that the market will stay strong, so they are returning profits to shareholders rather than investing in new wells. So tight supplies may keep prices high. Or not! Nobody knows. (As for coal, natural gas generation and coal are ready substitutes for each other, so coal prices track natural gas prices.) 

For years clean energy advocates like me have been urging utilities and the SCC to value price stability in generation planning, only to be ignored. Other states took the lead in installing price-stable renewable energy, while Virginia added more gas plants. When I dug into the data this summer, it became clear that the great majority of states with lower rates than Virginia also had higher amounts of renewable energy in their generation mix. I’ve reprinted a summary table here. 

StatePrice cents/kWh% REsource of RE
Virginia12.837biomass, hydro, solar
Idaho9.8674mostly hydro
Washington10.1275mostly hydro
North Dakota10.4840mostly wind
Utah10.6615mostly solar
Montana11.0052mostly hydro
Wyoming11.0619mostly wind
Nebraska11.1128mostly wind
Oregon11.2268mostly hydro, some wind
Missouri11.5412mostly wind
Arkansas11.7510mostly hydro
Louisiana11.984biomass
South Dakota12.0382wind, hydro
Iowa12.0960almost all wind
North Carolina12.2616mostly solar and hydro
Oklahoma12.3845mostly wind
Kentucky12.637hydro

I compiled this table in July, using then-current Energy Information Agency data. Now EIA has updated its data, and Virginia’s position is worse than ever. As of July 2022, Virginia’s average residential electricity rate has now hit 14.42 cents/kWh. This puts us above every state in the South Atlantic except Georgia. (Poor Georgia comes in at 16.02, but that’s what building nuclear plants will do for your rates.) Meanwhile, the states whose rates increased the least are those with high levels of wind, solar and hydro. 

This isn’t rocket science, folks. Wind and solar have lower levelized costs than coal and gas, and they insulate consumers from the volatility of the world oil and gas markets. You don’t have to be a climate advocate to understand this, but apparently it helps.

Your electric bills are skyrocketing. Blame our failure to invest in renewable energy.

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Photo by Pixabay on Pexels.com

Fossil fuel prices are higher everywhere, and the effect is hitting electric bills as well as prices at the gas pump. 

Utilities that generate power from natural gas and coal face fuel costs two or three times as high as they were just a couple of years ago —and those costs are passed on to customers. Some utilities employ hedging strategies and long-term contracts to reduce the impact of price spikes. But as a general matter, how painful your bill increase will be is a function of how much electricity your utility generates from fossil fuels. 

Gee, don’t you wish we had more renewable energy in Virginia? 

Let’s review the problem. Dominion Energy Virginia, our largest utility, generates most of its electricity from gas and coal, with 29 percent from nuclear and a tiny percentage from solar and biomass. Our second-largest utility, Appalachian Power, derives 85 percent of its power from coal and gas and only 15 percent from renewable energy, primarily wind and hydro. 

Both utilities are investing more in renewables now, but for years they lagged other states even as wind and solar became the lowest-cost sources of energy nationwide. Because the “fuel” for wind turbines and solar panels is free, those sources generate electricity at a stable price that looks even better when coal and gas prices go up. (Nuclear reactors are fueled by uranium, so they aren’t affected by the fossil fuel crunch either; even so, most of them need subsidies to compete in the wholesale market.) 

As previously reported in the Mercury, Dominion filed a request with the State Corporation Commission in May to increase the “fuel factor” portion of its customer bills, citing the higher prices. In the past year, according to Dominion, the price of the natural gas it bought has gone up 100 percent. High gas prices cause utilities to switch to coal generation when it’s cheaper, so the price of coal also rose by 92 percent. In all, the company said it incurred more than a billion dollars more in fuel costs over the past year than it budgeted for a year ago. 

Under Virginia law, Dominion and APCo “pass through” the costs of fuel directly to customers. They don’t collect a profit, but they don’t have to swallow unexpected increases themselves. Customers will have to pay higher rates for as long as it takes Dominion to recoup the extra spending. The only question for the SCC is how quickly Dominion should collect the money.

Consumers in other states are also being hit by higher electricity bills, but the effect is uneven across the country. States that built more renewable energy protected their residents from fuel price increases. 

Data collected by the U.S. Energy Information Agency shows that with few exceptions, states with lower electricity rates than Virginia’s have more renewable energy than we do. Since the EIA data doesn’t reflect all the planned increases due to rising coal and gas prices, the disparity will become even more pronounced over the coming year. 

States in the Pacific Northwest with a lot of inexpensive hydroelectric power have especially low rates, but wind and solar are the cheapest forms of new energy. The higher fossil fuel prices go, the better wind and solar look by comparison. 

States in the Great Plains have been building wind for years because it outcompetes everything else, so their rates are low and increasingly insulated from fossil fuel volatility. South Dakota residents pay less per kilowatt-hour than Virginians do, and the state gets a whopping 83 percent of its electricity from renewable energy, primarily wind. Even North Dakota, a deep red state wedded to fossil fuels, gets more than 35 percent of its electricity from wind and another 5 percent from hydro. Its rates are already much lower than Virginia’s, and its renewable energy will cushion fuel cost increases. 

Investments in solar are also paying off. Take Utah for example, where residential rates are also far lower than Virginia’s. Utah has a coal problem, with 61 percent of its electricity from that one dirty source, and another 24 percent from natural gas. But, as EIA reports, “almost all the rest of in-state generation came from renewable energy, primarily solar power.” Moreover, “solar energy powers about 93 percent of Utah’s electric generating capacity added since 2015.” Evidently, Utah spent the past seven years working to future-proof its energy supply, while Dominion kept building more gas plants. 

Virginia’s slow start on the transition to renewable energy is the direct result of poor investment decisions by our utilities and a disgraceful myopia on the part of the State Corporation Commission. Environmental advocates pointed out for years that our over-commitment to fracked gas meant we’ve been gambling on fuel costs and undervaluing price stability. But the SCC kept approving new fossil fuel projects, and actually urged Dominion to build more gas plants.

Indeed, our situation would be even worse if the General Assembly had not passed the Virginia Clean Economy Act in 2020. The VCEA requires our utilities to transition to carbon-free electricity by 2050 and establishes wind and solar targets for Dominion and APCo to achieve by 2035. The targets are still too low to meet the climate emergency — but until the VCEA became law, Dominion was planning to build even more gas plants. 

Now customers have to pay for Dominion’s folly. Dominion’s filing states that if it recovers the entire $1 billion shortfall over the coming year, residential bills would have to go up by 19.8 percent. Dominion instead proposes to spread the higher charges over three years to ease the shock, making the bill increase 12.2 percent.  The effect would be further moderated this year by other adjustments the company proposes, like moving the costs of participating in the Regional Greenhouse Gas Initiative into base rates, where they can be absorbed because those rates are so inflated. (On the other hand, the SCC just granted Dominion a separate rate increase for spending to extend the life of its aging nuclear plants—an undertaking projected to cost nearly $4 billion.) 

An SCC hearing examiner heard testimony in Dominion’s rate case on July 6 and 7. A ruling is expected later this summer, and the SCC seems likely to approve the three-year plan. 

Spreading the cost of higher fuel prices out over a longer time may reduce the rate shock, but there are drawbacks to this approach. First, Dominion will charge customers the financing costs of deferring collection on the full amount, adding to the total cost burden. (What, did you think the company was offering to absorb that cost itself?) The way it works is that ratepayers will borrow money to pay off our debt to Dominion, then repay the loan with interest over the next three years. 

The second problem is that if the high cost of fossil fuel isn’t temporary, extending the recovery period will lead to even greater shocks in coming years. If prices stay high and we keep kicking the can down the road, we will pay more financing costs and pile up more debt. Where does this end?

This is not mere speculation. Dominion’s filing already projects that “fuel costs will remain elevated over the next year,” and expert witness testimony in the case notes that Dominion revised its natural gas price projections upwards after it filed its request, without updating the amount it is seeking to collect to reflect the higher projections. 

Over at Appalachian Power the situation may not be any better. APCo typically seeks its fuel factor rate increases in September of each year. Last year the utility sought a $3 average increase in residential bills to cover higher fuel costs, at a time when coal and gas prices were still well below this year’s prices. When the company files for its next fuel factor increase two months from now, the rate increase it seeks is likely to pack a much bigger punch. 

What of other Virginia utilities? Our smallest publicly-owned utility, Kentucky Utilities (Old Dominion Power, which serves five counties in southwest Virginia), is also heavily dependent on fossil fuels although now planning to build more renewables. ODP filed for a modest rate increase in February of this year, just before Russia invaded Ukraine and sent world natural gas prices to heights not seen since the start of the fracking revolution. 

Chris Whelan, vice president for communications and corporate responsibility, told me ODP is able to dampen the effect of fuel price volatility through a “flexible fuel procurement strategy that includes long-term contracts to help hedge against price swings as well as the ability to purchase fuel on the spot market when prices drop.” Still, ODP will have to seek another increase next February unless prices suddenly plummet. The utility recovers excess fuel costs (or lowers rates if fuel costs fall) on an annual basis, so customers would pay off the full amount over 12 months. 

Electric cooperatives that buy electricity from Old Dominion Electric Cooperative also face price increases due to high fossil fuel prices and a paucity of renewables. ODEC’s 2021 energy profile shows it generates 38 percent of its electricity from gas, 14 percent from nuclear, and 4 percent from coal. It purchases the rest from the wholesale market (38 percent) and from renewable energy projects (6 percent). Electricity sold on the PJM wholesale market is generated mainly by natural gas, nuclear and coal, so wholesale market prices are also higher now.

According to Kirk Johnson, ODEC’s senior vice president for member engagement, ODEC has had to raise energy prices twice since the beginning of the year, effective May 1 and July 1. Assuming individual distribution cooperatives passed those costs through immediately, residential co-op customers will have seen a 16 percent increase in their electricity rates since Jan. 1. That’s a really steep increase, but Johnson notes ODEC will collect the full amount of the excess cost by Jan. 1, 2023. 

ODEC’s increase for six months is almost four percentage points lower than the increase Dominion would impose for 12 months if it were to collect its full $1 billion in the shortest time possible. Johnson said ODEC engages in a hedging strategy that acts like an insurance policy to limit the effect of fuel price volatility, and that this strategy has saved their ratepayers hundreds of millions of dollars.

So hedging and long-term contracts can smooth out fossil fuel volatility, but rates are going up everywhere in Virginia. The lesson is clear enough: “cheap” fracked gas was a bad bargain. Our utilities should have been building wind and solar over the last several years to protect us from fossil fuel price volatility, rather than waiting for the General Assembly to force them to act. 

Going forward, the more we invest in wind and solar, the more price stability we will have in our electricity rates, and the less we will have to worry about high fossil fuel prices in the future.  

This article originally appeared in the Virginia Mercury on July 18, 2022. I’ve corrected information for Utah.

*EIA’s webpage lists each state’s average residential price of electricity per kilowatt-hour, but finding the fuel mix for each state requires looking up each one separately. For those of you who like to dive into these details, I’ve assembled the information for you. Note that most of EIA’s data is for 2021, but some state data is for 2020. Unfortunately this includes Virginia.

StatePrice cents/kWh% REsource of RE
Virginia12.837biomass, hydro, solar
Idaho9.8674mostly hydro
Washington10.1275mostly hydro
North Dakota10.4840mostly wind
Utah10.6615mostly solar
Montana11.0052mostly hydro
Wyoming11.0619mostly wind
Nebraska11.1128mostly wind
Oregon11.2268mostly hydro, some wind
Missouri11.5412mostly wind
Arkansas11.7510mostly hydro
Louisiana11.984biomass
South Dakota12.0382wind, hydro
Iowa12.0960almost all wind
North Carolina12.2616mostly solar and hydro
Oklahoma12.3845mostly wind
Kentucky12.637hydro

Dear readers: Many of you know that although I write independently of any organization, I also volunteer for the Sierra Club and serve on its legislative committee. The Sierra Club’s Virginia Chapter urgently needs funds to support its legislative and political work towards a clean energy transition. So this summer I’m passing the hat and asking you to make a donation to our “Ten Wild Weekends” fundraising campaign. Thanks!

West Virginia wants to raise Virginia power bills

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photo of mountain scraped of soil for coal mining
Under the West Virginia order, customers will pay more to support the state’s coal industry. Sierra Club photo.

Most people are aware by now that inflation has hit the energy sector hard, with fossil fuels in particular skyrocketing in price over the past year. 

Dominion Energy Virginia, the state’s dominant utility, says it needs to charge residential customers an extra $14.93 per month on average to cover higher natural gas prices. Appalachian Power, which serves Southwest Virginia as well as West Virginia, has already asked the West Virginia Public Service Commission for permission to increase residential bills by an average of $18.41 to cover higher coal and gas prices, and is likely to seek a similar increase from Virginia customers this summer.  

But for residents of Southwest Virginia, that could be just the beginning of the rate increases: West Virginia wants to force APCo customers to pay even more, and not just in West Virginia. If the West Virginia PSC has its way, Virginia customers would have to shoulder their “share” of the cost of propping up two money-losing West Virginia coal plants. 

The PSC’s order of May 13 reiterates previous instructions to APCo to keep its West Virginia coal plants running at least 69 percent of the time, even when the plants lose money. This decision comes on top of a decision in October of 2021 allowing APCo to charge customers for hundreds of millions of dollars in costs to prolong the life of these coal plants out to 2040. An expert hired by the Sierra Club found it would cost up to $1.1 billion more to keep the plants operating until 2040 instead of retiring them in 2028. 

For Virginia customers, the problem is that these West Virginia coal plants, Amos and Mountaineer, also provide electricity to Southwest Virginia, so Southwest Virginia residents have to pay for them. Even before the fuel price spikes of the past year and a half, APCo wanted to charge its Virginia customers for the upgrades approved by the West Virginia PSC. The company will certainly also want Virginians to pay for the even higher costs that will follow from the 69 percent run requirement.

Virginia’s State Corporation Commission has so far held off on approving the millions of dollars that would be Virginia’s share of the costs to upgrade Amos and Mountaineer. But with the West Virginia PSC plowing ahead to support its state’s favored industry, it’s not at all clear the SCC will stand its ground. 

APCo’s study claims that closing Amos and Mountaineer will cost ratepayers more than keeping them open, ensuring there will be a battle of the experts come the September hearing. The study is opaque in its methodology and reasoning. But APCo almost certainly didn’t assume the plants would have to run 69 percent of the time regardless of market conditions, and it probably also didn’t factor in today’s sky-high fossil fuel costs that further support retiring the coal plants and investing in cheaper, price-stable wind and solar.

Obviously, the biggest losers here are West Virginia residents. They will bear the largest share of these costs, one more price of living in a state run by fossil fuel oligarchs.

In an alternate universe, West Virginia would have developed an economy that took advantage of its extraordinary natural beauty, one based on small farms, four-season tourism, artist enclaves and vacation homes: think Vermont but with better weather. Instead, fossil fuel and mining barons bought up mineral rights, paid off politicians, and despoiled vast swaths of the state, leaving most residents dependent on dirty jobs or piecing together a living from low-wage work. 

I’m rooting for West Virginia to change course for a post-coal world, but that’s not easy for a state where politicians, bureaucrats and industry conspire to maintain the power of extraction industries. Virginians, however, shouldn’t be forced to enable this misuse of power. The SCC should reject West Virginia’s effort to make Virginia customers pay to prop up West Virginia coal.

This article originally appeared in the Virginia Mercury on June 10, 2022.

Dear readers: Many of you know that although I write independently of any organization, I also volunteer for the Sierra Club and serve on its legislative committee. The Sierra Club’s Virginia Chapter urgently needs funds to support its legislative and political work towards a clean energy transition. So this summer I’m passing the hat and asking you to make a donation to our “Ten Wild Weekends” fundraising campaign. Thanks!

Increasing fixed charges on electricity bills hurts customers–and society 

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SVEC’s fixed charges would discourage customers from pursuing net zero homes like this one. Photo by Ivy Main

Okay, folks, the kids are back in school, so in their honor we are all going to do a word problem! 

Bob Rich lives in a sprawling subdivision of large, single-family homes. Bob has a pool and a hot tub and outdoor lights he keeps on all night. Bob’s four children have loads of electronic gadgetry, plus a habit of leaving windows open when the air conditioner is blasting. Needless to say, the Rich family uses a lot of electricity. But Bob doesn’t worry too much about his utility bill. It’s really not that much compared to all the other bills he pays; and fortunately, his wife is a hedge fund lawyer so he can afford it. 

John Poore, on the other hand, lives in a small apartment and uses as little electricity as possible to save money. He works a low-wage job, and his best efforts to attract a wealthy spouse have not yet panned out. John uses air conditioning only on the hottest summer days. He switched out his incandescent lightbulbs for LEDs, caulked the cracks around his windows where air leaked in, and when his old refrigerator broke, he replaced it with an EnergyStar model. 

Bob and John are both customers of Shenandoah Valley Electric Cooperative, in western Virginia. SVEC says its costs are going up, so it has been “adjusting” its rates. What would you expect the effects to be?

A) Bob’s bills go up more than John’s. 

B) Both Bob and John’s bills go up by the same amount. 

C) John’s bills go up more than Bob’s (and Bob’s might even go down).

You probably already figured out it’s a trick question. We’re dealing with a Virginia utility, so the answer can’t be (A) regardless of that being the obvious and rational answer. 

Indeed, answer (A) is how most utilities operate: Every customer pays a small fixed fee, typically under $10, and the rest of the bill is determined by how much electricity the customer uses. People who use a lot of electricity pay the most. They are usually better able to afford it, but if they don’t like the size of their bills, they can turn off the lights in empty rooms, change their thermostat setting, invest in energy efficiency, or put solar panels on the roof. Conserving energy and adding renewable energy happen to be public policy priorities, so the incentives are aligned with the behavior society wants to encourage. 

But SVEC notes that a lot of its costs aren’t dependent on how much electricity customers use; it has wires to maintain and so forth, plus it recently “invested” in a beautiful and spacious new headquarters that it swore wouldn’t mean rate increases (but, well, you know how that goes). SVEC says Bob and John benefit equally from all these investments, and wants their bills to reflect that. Early last year SVEC “adjusted” its rate structure to increase the fixed customer fee from $13 to $25 and decrease the rate per kilowatt-hour of electricity used. If you chose answer (C), you were correct!

This year, to raise more revenue, SVEC proposes to increase everybody’s fixed fee again, this time to $30. For customers who don’t use much electricity, that fixed fee could become the biggest charge on the bill, and one that can’t ever be reduced by any amount of energy conservation, efficiency or solar panels. They may also wonder whether $30 is just a stop on the way to even higher fixed fees that will further undercut their energy-saving investments.

SVEC didn’t need anyone’s approval when it almost doubled the fixed fee last year. But this year, the State Corporation Commission has to approve the additional changes, so customers finally have a chance to challenge them. Utilities around the state are watching what the SCC does. If SVEC gets approval to shift more of its costs away from customers who use a lot of electricity and onto those who use the least, other utilities will see that as a green light to do the same. 

Utilities prefer fixed charges because they provide revenue certainty; left to their own devices, they will move as much of their revenue into the fixed-cost category and increase fixed charges as high as they can. Unfortunately, doing so creates an incentive for utilities to spend as much as possible on infrastructure costs that can be recovered through fixed rates. That will raise costs for everyone and produce a further perverse incentive for the utility to encourage energy consumption (and waste) in order to make maximum use of the infrastructure.

This isn’t the result anyone should want, and especially a nonprofit electric cooperative. More affluent, high-use customers will benefit from lower rates per kilowatt-hour, while low-income customers will be less able to control their bills, an inequity that flies in the face of Virginia’s efforts to limit the energy burden on low-income residents. And customers who are considering investing in energy efficiency or solar will find they are looking at a longer payback time, discouraging the energy-saving measures that Virginia strives to promote.

The SCC is holding a hearing today to consider SVEC’s proposed rate increase. The commission should reject SVEC’s efforts to raise fixed charges for customers and send the utility back to the rate-drawing board. 

This article originally appeared in the Virginia Mercury on October 5, 2021.

Dominion-funded group adds more fuel to its campaign against utility reform, and a legislator responds

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Four things happened after I wrote last week about Power for Tomorrow’s strange advertising campaign attacking Clean Virginia: the Fredericksburg Freelance-Star ran an op-ed from Power for Tomorrow’s executive director, Gary C. Meltz, opposing deregulation in the electric sector; the Virginia Mercury ran a response to my article from Mr. Meltz; another mailer arrived from Power for Tomorrow, even more unhinged about Clean Virginia and what it calls “their Texas-style policies”; and the Roanoke Times ran an op-ed from Republican Senator David Sutterlein in favor of electricity choice. 

Mr. Meltz’ Freelance-Star op-ed argues that regulated monopolies produce lower cost power for consumers than competitive markets. Instead of developing the argument, however, most of the op-ed is devoted to horror stories about Texas and Maryland.

In both states, poor regulation unquestionably led to high bills, in Texas because customers were allowed to choose “low-cost” billing options that charged them astronomical real-time power costs during the winter freeze, and in Maryland because unscrupulous power providers lured low-income customers into overpriced contracts with up-front goodies like gift cards. Power for Tomorrow would like you to think these abuses are the inevitable result of deregulated markets, but it doesn’t follow.

Coming from the opposite direction, Senator Sutterlein’s op-ed argues that Dominion has abused its political power for private gain. He cites legislation like the notorious 2015 “rate freeze” bill that allowed the company to hang on to over-earnings it would otherwise have had to refund to customers. His cure for these abuses is deregulation, allowing customers to choose other electricity providers. But again, it’s not obvious that curbing Dominion’s excessive profits requires deregulation, rather than better regulation by the General Assembly and the SCC.

Personally, I’m agnostic on this issue. I would welcome a data-driven discussion of whether carefully-designed free markets deliver more for the public than a well-regulated monopoly system coupled with a ban on campaign contributions from public utilities. 

But if Power for Tomorrow is really interested in consumer protection, it’s just plain weird that its ads are so squarely focused on trying to take down Clean Virginia, an organization whose entire purpose is to secure lower costs for consumers. It’s hard not to suspect that the real point of the attack ads is to protect the high profits of Power for Tomorrow’s utility funders. 

According to Mr. Meltz, those over- the-top mailers are indeed getting results for Power for Tomorrow. In his Virginia Mercury letter, Meltz says his organization’s “education campaign” has produced 4,324 letters to elected officials and 1,607 petition signatures. Meltz also says Power for Tomorrow’s funding (and spending) will become a public record when they submit paperwork to the IRS. He doesn’t say when that will be; and he isn’t telling us the answers now.

What’s with the scary ads about threats to your power service?

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A mailer sent out to Virginia residents from “Power for Tomorrow”

It’s campaign season in Virginia, with primary elections coming up on June 8. But in addition to all the candidate flyers arriving in mailboxes, Virginia residents have been receiving another kind of mailer with a message unrelated to the election.

Oversized, campaign-style postcards from an entity calling itself Power for Tomorrow warn, “Clean Virginia wants to end customer protections on electricity — leaving Virginians stuck with #BigBills like Texas!” Quotes from headlines about last winter’s disastrous power outage in Texas sprinkle the page to drive home the message that “It happened in Texas. Don’t let it happen in Virginia.” 

The flip side of the postcard reads, “We can’t allow so-called ‘Clean Virginia’ to spend millions to influence Richmond politicians and make hardworking Virginians pay more for electricity.” The cards then urge people to join a texting campaign targeting legislators. 

What’s going on here? According to the nonprofit Energy and Policy Institute, Power for Tomorrow is a utility front group that is “Virginia-based and Dominion Energy-connected.” Power for Tomorrow “opposes efforts to introduce greater competition to monopoly utilities and provides a platform for former regulators to advocate for utility interests.” Its directors and experts are mostly lawyers and lobbyists who represent utility interests. Its website claims the Texas power outage “catalyzed the launch” of the group, but Energy and Policy Institute notes that the website first launched in 2019, and only re-launched this year following the Texas debacle. 

In addition to the postcard mailer, Power for Tomorrow has also run television and Facebook ads. According to Virginia Public Media, as of May 14 the organization had spent at least $220,000 on TV ads and at least another $90,000 on Facebook ads. Dominion Energy spokesperson Rayhan Daudani told Virginia Public Media that Dominion is “proud to support Power for Tomorrow and its efforts to educate people about the dangers of electric deregulation.” He also asserted Dominion’s political contributions, including those to Power for Tomorrow, were “bipartisan and transparent.” 

The bipartisan part is true; Virginia Public Access Project records show Dominion gives money to both Democrats and Republicans. Doing so ensures the company has influence no matter which party holds power. Dominion’s political donations to Virginia elected leaders add up to over $3 million in just the last year and a half (making its criticism of Clean Virginia’s spending more than a little hypocritical). “Transparent” is another matter, however; neither VPAP nor any other source I could find reveals how much money Dominion has provided to Power for Tomorrow.  

As for the claims about customer protections, the mailer’s message stands Clean Virginia’s purpose on its head. Clean Virginia advocates for decreasing the influence of utilities on the General Assembly and increasing regulatory oversight by the State Corporation Commission. The legislation it supported in 2021 uniformly would have returned more money to customers.  The reason Clean Virginia “spends millions to influence Richmond politicians” is to counter Dominion Energy’s spending and political influence in Richmond. There would be no need for Clean Virginia if the General Assembly weren’t already under the utility’s thumb. 

According to Clean Virginia’s website, the five energy reform bills the group supported in 2021 were:

  • HB2200, restoring SCC discretion over Dominion rate-setting and accounting practices
  • HB1984, allowing the SCC to set future rates to reflect the true cost of service
  • HB1914, giving the SCC the ability to set the time period for utilities to recover large one-time expenses, eliminating an accounting gimmick that benefited utilities at the expense of customers
  • HB2160, requiring utilities to return 100% of overcharges to customers, instead of being allowed to keep 30 percent
  • HB2049, also aimed at supporting rate reductions or refunds

All of these bills passed the House with bipartisan support but failed in the Senate, where the Commerce and Labor committee remains Dominion-friendly. 

The Power for Tomorrow ads don’t try to defend Dominion’s opposition to customer-friendly legislation. Instead, they reference a broader effort by Clean Virginia and an unusual alliance of several progressive and conservative free-market groups to restructure Virginia’s utilities. Calling themselves the Virginia Energy Reform Coalition, the allies supported legislation in 2020 that would have separated the generation and transmission functions of Dominion and Appalachian Power and introduced competition in the sale of electricity. 

Whether the long-term effects of this kind of energy deregulation would be good or bad for Virginia residents is a matter of furious debate, but clearly the legislation would have hurt Dominion’s profits. In any event, the bill never even got a vote last year, and was not brought back in 2021. 

The Power for Tomorrow campaign deliberately muddies the water. While mentioning only the stillborn deregulation effort, its attacks on Clean Virginia are meant to undercut support for other legislation that increases utility regulation. 

So what about the threat of Texas-style power outages? Where is the connection? Power for Tomorrow would like you to believe that competition leads to disaster. But the mailer is vague about how what happened in Texas might happen here, and for good reason: It won’t. 

What happened in Texas was due to generating facilities (mostly natural gas) freezing up and failing to deliver electricity to the state’s isolated power grid. With too much demand and not enough supply, short-term power costs soared, and people who’d opted for electricity plans that tracked real-time prices received astronomical bills. Simple regulatory fixes could have avoided both the blackouts and the sky-high bills, but Texas politicians and grid operators shied away from imposing those requirements. Failure to regulate, not deregulation, was to blame. 

When the lights go out in Virginia, by contrast, downed power lines and blown transformers are typically to blame. In other words, the problem is in the delivery, not the generation. Our electricity supply is more secure than Texas’ because Virginia is part of the larger PJM transmission grid that covers all or parts of 13 states from the East to the Midwest. Not only does PJM have a huge excess of generating capacity, but generators have to guarantee they will deliver electricity when called on, and would be penalized by failure to winterize their facilities. Those guarantees are absent in Texas.

Introducing competition to the Virginia utility market would not change any of this. Some states within PJM have deregulated utilities, others have vertically-integrated utilities like Virginia’s. The Texas blackouts were scary; they are also a red herring.  Apparently the cynics at Power for Tomorrow think there is nothing wrong with a non sequitur if it gets people’s attention. 

But is it getting their attention? I checked with a couple of legislators, neither of whom had received any texts or emails from constituents generated by the advertising. Either the campaign isn’t working, or Power for Tomorrow is just building out a mailing list to deploy later, perhaps in the next legislative session when regulatory reform bills come up again.  

At that point we may find out whether Dominion has built an anti-reform constituency with these misleading ads, or just added fuel to the fire. 

This article originally ran in the Virginia Mercury on June 2, 2021. It has been updated to correct the day of the June primary. It is June 8, not June 6.

Why most ‘renewable energy’ options don’t add new wind and solar to the grid

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bucket of green paint with spill
Photo credit: Neep at the English Language Wikipedia.

Virginia residents who want to do right by the planet are confronted with a bewildering array of renewable energy and “green power” options. Unfortunately, few of these programs actually deliver renewable energy. People who want the gold standard — electricity from new wind and solar projects — are completely out of luck if their utility is Dominion Energy Virginia or Appalachian Power. 

To understand how there can be so many options and none of them good, we first have to talk about renewable energy certificates.  RECs are a topic that is way more interesting than it sounds because — well, it would have to be, wouldn’t it? RECs are how we know that some electricity can be attributed to a renewable source. If you want to know what kind of renewable energy your utility is buying, or if you yourself want to buy renewable energy, RECs matter.

RECs are not electricity; they aren’t even real certificates. They were conceived of as an accounting tool enabling a utility to show it is in compliance with a state mandate to include a percentage of renewable energy in its mix. A utility amasses RECs associated with its own renewable generating sources, or buys them from renewable sources it doesn’t own, and then “retires” them to show compliance with the law. Since RECs are separate from the electricity itself, they can be bought and sold independently. There is even an online marketplace for your REC shopping convenience. 

RECs are also how voluntary buyers of renewable energy, like customers of Arcadia or Dominion’s Green Power Program, know they’re actually getting what they pay for —assuming they understand that what they pay for is not actually energy, and may have no relationship to the electricity powering their home or business. If you buy RECs, you are still using whatever electricity your utility provides, but you are also paying a premium on top of your regular bill. 

There is no nationwide, generally accepted definition of “renewable energy,” just as there is no definition of “natural” in food labeling. In Virginia, there is a state law defining what counts as renewable, and it includes not just solar, wind and hydro, but also a range of burnable fuels like biomass and municipal solid waste that foul the air and contribute to climate change. Buyer beware!  

The Virginia Clean Economy Act narrowed the list of sources that Dominion and APCo can use to meet the law’s new renewable portfolio standard, and also limited the locations of qualifying facilities. After 2025, happily, most of the RECs retired by Dominion and APCo under the VCEA will come from Virginia wind and solar facilities. 

But crucially, the VCEA didn’t change the definition of renewable energy in the code. Dominion won’t be able to use RECs from its biomass plants to meet the VCEA, but it can still sell them to anyone else and label the product “renewable” without falling afoul of the law. Anyone buying a renewable energy product from Dominion had better check the list of ingredients. 

It’s not just Dominion. Anyone buying RECs from Arcadia or anywhere else should take a good look at what they are getting, and ask themselves if the money they spend means new renewable energy will be added to the grid. 

The answer is probably no. If the RECs come from a wind farm in Texas or Iowa, the electricity from those turbines doesn’t feed into the grid that serves Virginia, so you can’t even pretend it is powering your house. It also doesn’t mean anyone built a wind farm because of REC buyers like you. Wind energy is already the cheapest form of new energy in the central part of the U.S. People build wind farms because they are profitable, not because they can sell RECs. In fact, those wind farms are swimming in surplus RECs, because states in the center of the country don’t have renewable energy mandates to make their own utilities buy them.  

For that matter, a lot of RECs come from facilities that were built before the idea of RECs even existed. Hundred-year-old hydroelectric dams can sell RECs; so can fifty-year-old paper mills that sell biomass RECs from burning wood. 

With this background, let’s look at the offerings available in Virginia and see which are worth paying more for. 

Dominion Energy Virginia

In theory, Dominion customers will have the ability to buy real solar energy directly from independent providers beginning as early as 2023, thanks to shared solar legislation sponsored by Sen. Scott Surovell and Del. Jay Jones and passed in 2020. The law envisions independent solar developers building solar facilities in Virginia and selling the electricity (and the RECs) to subscribers who are Dominion customers. But the SCC opened a Pandora’s box last fall by allowing Dominion to propose the rules, and in an act of classic Dominion overreach, the utility has now proposed to collect an average of $75 a month as a “minimum bill” from every customer who buys solar energy from someone else. A fee like that would end the program before it ever started.

 The matter is hardly settled. The solar industry has asked for an evidentiary hearing and suggested that the minimum bill should be set at a single dollar. If all else fails, the program may go forward serving only low-income customers, whom the legislation exempts from the minimum bill. 

Dominion customers can hope for the best, but any shared solar option is still at least two years away. 

In the meantime, the utility’s website lists four renewable energy options: two that sell RECs, one that sells actual energy (and retires the RECs for you) and one that doesn’t exist. 

• The REC-based Green Power Program has been around for a decade, and as of 2019 it had more than 31,000 subscribers. Dominion’s “product content label” projected that for 2020 the program would likely consist of 56 percent wind RECs, 34 percent biomass RECs, and 10 percent solar RECs. Facilities are advertised as being “in Virginia and the surrounding region,” but the fine print reveals sources as far away as Mississippi, Georgia, Missouri and Alabama, none of which are part of the PJM transmission grid that serves Virginia.  (Side note: the biomass icon is a cow, not a tree, which is misleading but charming, unless they might be burning cows, in which case it is deeply disturbing.) With the website out of date, I contacted Dominion for current content information: solar is now up to 13 percent, but, sadly, biomass still makes up 35 percent of the mix (but now it has a leaf icon!).

• REC Select. When I say “buyer beware,” I have this offering in mind. Dominion has been authorized to go Dumpster diving to buy the cheapest RECs from around the country and from any facility that meets Virginia’s overly-expansive definition of renewable energy. The website implies that so far the company is only buying wind RECs from Oklahoma and Nebraska, an indication of just how cheap those are. But under the terms of the program, the RECs could come from 50-year-old paper mills in Ohio or hundred-year-old hydroelectric dams. No educated consumer would buy this product, and both Dominion and the SCC should be ashamed of themselves for putting it out there.

• The 100% Renewable Energy Program delivers actual energy from Virginia, and retires RECs on your behalf. That’s the good news. But only a few of the solar farms are new; the rest of the energy comes from old hydro plants and, worse, from biomass plants that are so highly polluting that they don’t qualify for Virginia’s renewable energy mandate under the VCEA. The inclusion of biomass makes the program more expensive than it would be otherwise. So why include biomass when no one wants it? Because Dominion doesn’t really care if you sign up for this program. The company only offers it to close off a provision in the law that allowed customers to buy renewable energy from competitors if their own utility doesn’t offer it.

• Dominion’s website does list one attractive program under the name “community solar.” Like the shared solar program already discussed, it would deliver actual solar energy from new facilities to be built in Virginia, while retiring the RECs on your behalf. This would pass all our tests, except that it doesn’t exist. The SCC gave Dominion the green light to offer the program more than two years ago, and we’ve heard nothing since, even though the enabling legislation appears to make it mandatoryfor both Dominion and APCo. 

Appalachian Power

APCo never developed a community solar program either, and the shared solar program discussed earlier would not be available to APCO customers even if it gets off the ground. But APCo does have two renewable energy offerings. 

• For its Virginia Green Pricing program, APCo put together wind and hydro from its own facilities. That means it’s actual energy and reasonably priced, at less than half a cent per kWh. But these are existing facilities that all its customers had been paying for until APCo figured out how to segment the market and make more money, and the hydro is old. (As with Dominion’s renewable energy program, the real purpose of the new product was to close off competition.) 

• Even cheaper is Alternative Option-REC, the RECs for which “may come from a variety of resources but will likely be associated with energy from waste, solid waste and hydro facilities.” No biomass, anyway, but I still have trouble imagining who would pay extra for (literally) garbage. 

Virginia electric coops

Some electric cooperatives offer real renewable energy to customers, and a couple have community solar programs that are quite attractive.  

• Central Virginia Electric Cooperative and BARC Electric Cooperativeoffer community solar programs that not only deliver actual solar energy, but also let customers lock in a fixed price for 20-25 years. Four other coops also offer a solar energy option, and at least one other is working on it.

• Many coops also sell RECs, of mixed quality. Shenandoah Valley Electric Cooperative offers RECs generated by wind farms owned or contracted byOld Dominion Electric Cooperative, the generation cooperative that supplies power to most Virginia coops. Rappahannock Electric Cooperative, however, sells only biomass RECs.

• Bottom line: if you are a member of an electric cooperative, you may have better options than either Dominion or APCo is offering — and if you don’t, hey, you’re an owner of the coop, so make some noise!

Arcadia

 If you like RECs, you don’t have to buy them from your own utility. The folks at Arcadia have struggled for years to offer products that put new renewable energy on the grid. In states that allow community solar, Arcadia now offers wind and solar from projects in those states. Everywhere else, they just sell RECs. The website provides no information indicating where the facilities are, meaning they could be out in the same central plains states that are awash in surplus wind RECs. Their game plan appears to be for all the nice liberals with climate guilt to throw enough money at red state RECs that eventually the day will come when demand exceeds supply and drives the price up enough to incentivize new projects. The plan sounds self-defeating to me, but in any case, buyers should keep in mind that the RECs bought before that glorious date will have incentivized precisely nothing. 

Other options

Obviously, if you have a sunny roof, you can install solar onsite and net-meter. Of all the programs available today, that’s the one that will save you money instead of making you spend more. 

If you don’t have a sunny roof, but you’d still like to see your money put solar onto the grid, consider contributing to a church, school or non-profit that is going solar, or to an organization that puts solar on low-income homes. Two that operate in Virginia are Give Solar, which puts solar on Habitat for Humanity houses, and GRID Alternatives, which trains workers to install solar on low-income homes here and abroad. If everyone in Virginia who is currently buying RECs were to choose this alternative instead, it would put millions of dollars to work building new solar in Virginia, and lowering the energy bills of people who most need the help.

And that might make it the best option of all.

A version of this article first appeared in the Virginia Mercury on May 21, 2021.