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

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

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 

solar panels on a house
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

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?

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

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.

Is a new pumped hydro project needed for the energy transition, or one more Dominion boondoggle?

Back in 2017, two Republican legislators from Southwest Virginia helped Dominion Energy Virginia secure legislation allowing the utility to charge ratepayers for a new pumped hydro storage facility to be built in the coalfields region. 

Dominion Energy headquarters, Richmond, VA
Dominion Energy’s new headquarters building in Richmond, Virginia

The law even deemed the project “in the public interest.” Three years later, Dominion included a new pumped hydro project in its 2020 Integrated Resource Plan. The 300-megawatt facility would be built in Tazewell County and come online in 2030.

But — surprise, surprise — details in the IRP reveal the project to be unneeded and its price exorbitant. That leaves just one question: Will the State Corporation Commission approve the IRP anyway?

Pumped hydro stores surplus energy using two reservoirs, one at the top of a hill and one at the bottom. When you need energy, you release water from the upper reservoir and let it flow down through a hydroelectric turbine to the lower reservoir. When you have a surplus of energy, you use it to pump water uphill to fill the upper reservoir. Repeat as needed. It’s not high-tech, but it gets the job done.

Today pumped storage is used mostly to store surplus energy at night from baseload fossil fuel and nuclear plants that run 24/7, then use the energy to meet the surge in demand during daylight and early evening hours. As wind and solar become bigger players, pumped storage can also help integrate these variable resources in much the same way that batteries can. 

But pumped storage is land-intensive, and each project has to be designed for its own particular site, making it expensive to develop. Or in this case, very expensive. In its 2017 Annual Report, Dominion said its project would cost up to $2 billion and provide up to 1,000 MW of storage capacity ($2 million per megawatt, not terrible for this kind of storage). Three years later the size has shrunk by 70 percent but the cost has actually gone up and now stands at $2.3 billion ($7.7 million per megawatt, genuinely terrible). 

That didn’t stop Dominion from including the 300 MW of new pumped storage hydro in every scenario of its IRP, not allowing its modeling software the option of rejecting it as unneeded or as more expensive than other options.

What was once an interesting project idea now looks a heck of a lot like another Dominion boondoggle.

As Virginia embarks on a transition to 100 percent carbon-free electricity, the ability to store energy has become a hot topic of discussion. How much do we need, and can batteries do it all? The one advantage that pumped storage has over batteries is that a pumped storage facility can supply energy over a longer duration: 10 hours as opposed to the four hours typical of most batteries. For the rare occasions when you really need those extra hours, pumped hydro can be a solution.

As it happens, though, Dominion is already the majority owner of the world’s largest pumped hydro project. The 3,000 MW facility in Bath County, Virginia, has been in operation since 1985. Dominion earns money by selling its energy storage service to the operator of the regional transmission grid, PJM Interconnection. 

Three thousand megawatts is a lot of storage; the Bath County facility is even nicknamed “the world’s largest battery.” So building more pumped storage would only be reasonable if the Bath County facility were already being used to its maximum capacity (or was projected to max out in the future), and if a new facility could meet a need that can’t be met by alternatives like batteries. Unfortunately for Dominion, neither of those is true. Tazewell is a solution in search of a problem. 

Consumers smell a rat. Dominion customer Glen Besa intervened in the IRP case this summer to challenge the inclusion of the Tazewell project. Besa retired a few years ago as director of the Virginia Chapter of the Sierra Club; he is acting on his own behalf in this case, represented by attorney William Reisinger of the firm ReisingerGooch. 

The firm hired energy storage expert Kerinia Cusick. Her testimony points out that the IRP shows the Bath County facility is expected to be used lessover the coming years, not more. The IRP projects capacity factors for the facility will decline steadily from 10.7 percent in 2021 to 7.5 percent in 2035. If an existing facility has spare capacity, there is no good case for building another facility like it.

Cusick also compared the $2.3 billion cost of the Tazewell project to an equivalent amount of battery storage. Not surprisingly, the battery storage won hands down. Indeed, Cusick noted, the cost of battery storage has fallen over the years and is projected to continue doing so. By contrast, she found Dominion had understated the costs of the pumped storage project by excluding items like land costs and taxes. (The real number she calculated, unfortunately, is not available to us. It has been redacted from the public version of Cusick’s testimony.)

In sum, there is no need for the Tazewell project, and no economic case to support it. Adding billions of dollars in unneeded infrastructure to Dominion’s rate base will add profit for Dominion shareholders but drive up electricity bills for consumers.

There’s no way the SCC would let Dominion get away with this if legislators hadn’t used the magic words “in the public interest.” Now the question is whether those magic words are all it takes to ram a project through.

The SCC takes its job of protecting ratepayers seriously; it does not welcome legislative interference. Only grudgingly did the SCC allow itself to be coerced into approving Dominion’s offshore wind pilot when the legislature proclaimed the pilot project in the public interest. In that case, after pointing out the high cost and risks borne by ratepayers, the SCC order concluded by grumbling, “Recent amendments to Virginia laws that mandate that such a project be found to be ‘in the public interest’ make it clear that certain factual findings must be subordinated to the clear legislative intent expressed in the laws governing the petition.”

But the offshore wind pilot was just that, a pilot, and its $300 million price tag represented an investment in a new industry that is expected to become a mainstay of Virginia’s future energy supply. Legislators knew the costs, and judged them acceptable. 

Pumped hydro, on the other hand, is a mature technology. The proposed Tazewell project won’t lead to bigger and better things, driving costs down along the way. Legislators deemed it “in the public interest” for Dominion to locate a pumped storage project in the coalfields because they are desperate for jobs there. But they were misled about the actual cost. That ought to matter.

If it doesn’t matter — if the SCC decides “in the public interest” always means a blank check to Dominion, written by the General Assembly but charged to the account of customers — then legislators need to change the law. We can’t afford another boondoggle.

This article originally appeared in the Virginia Mercury on October 7, 2020.

What part of ‘zero’ doesn’t Dominion understand?

Photo courtesy os the Sierra Club.

The more things change, the more they stay the same.

Dominion Energy Virginia filed its 2020 Integrated Resource Plan on May 1. Instead of charting the electric utility’s pathway to zero carbon emissions, it announced its intent to hang on to all its gas plants, and even add to the number. In doing so, it revealed a company so thoroughly wedded to fracked gas that it would rather flout Virginia law and risk its own future than do the hard work of transforming itself.

The Virginia Clean Economy Act may be new, but Dominion can hardly claim to be surprised by the commonwealth’s move away from fossil fuels. Gov. Ralph Northam’s executive order last September set a statewide target of zero carbon emissions from the electric sector by 2050. “Challenge accepted,” said a Dominion spokesman at the time, and in February of this year the company claimed it was embracing a 2050 net-zero-carbon goal company-wide. A month later, passage of the Clean Economy Act moved the deadline up to 2045 for Dominion, keeping it at 2050 for utilities that lack Dominion’s head start of 30 percent nuclear power.

Dominion’s IRP, however, does not accept the challenge to get off fossil fuels. It rejects the challenge, directing a giant middle finger at the governor and the General Assembly. Dominion’s “preferred” plan keeps the utility’s existing fracked gas generating plants — currently 40 percent of its electric generation — operating through 2045. The IRP acknowledges this violates the law, so it argues against the law.

The IRP posits that if Dominion stops burning gas in Virginia, it will instead simply buy electricity from out of state, some of which will be generated by gas, and this will cost more money without reducing carbon emissions at the regional level. Better, then, to keep burning gas in Virginia.

It gets worse. The IRP actually proposes increasing the number of gas combustion turbines in Dominion’s fleet. The VCEA imposes a two-year moratorium on new fossil fuel plants, so Dominion’s timetable has these gas peaker plants coming online in 2023 and 2024. The justification is vague; the IRP cites “probable” reliability problems related to adding a lot of solar, but it offers no analysis to back this up, much less any discussion of non-gas alternatives.

Dominion’s flat-out refusal to abandon gas by 2045 poisons the rest of the document. The IRP is supposed to show a utility’s plans over a 15-year period, in this case up to 2035. And for those years, the IRP includes the elements of the VCEA that make money for Dominion: the build-out of solar, offshore wind and energy storage projects. It also includes money-saving retirements of outmoded coal, oil and biomass plants, as the VCEA requires. Heck, it even includes plans to close a coal plant the VCEA would allow to stay open in spite of its poor economic outlook (the Clover plant, half-owned by Old Dominion Electric Cooperative.)

But the IRP proposes no energy efficiency measures beyond those mandated by the VCEA between now and 2025. Dominion hates energy efficiency; it reduces demand, which is bad for business. So the company has made no effort to think deeply about how energy efficiency and other demand-side measures can support a zero-carbon grid — or, for that matter, how customer-owned solar can be made a part of the solution, rather than part of the problem.

This isn’t surprising: a plan that contemplates keeping gas plants around indefinitely looks very different, even in the first 15 years, from a plan that closes them all within 10 years after that.

A company that really accepted the challenge of creating a zero-carbon energy supply would not just get creative in its own planning; it would look beyond generating and supplying electricity, at the larger universe of solutions. It would advocate for buildings constructed to need much less energy, including for heating and cooling, to lessen the seasonal peaks in energy demand.

It would want the state to embrace strong efficiency standards. It would press its corporate and institutional customers to upgrade their facilities and operations to save energy, especially at times of peak demand. It would partner with communities to create microgrids. It would invest in innovation.

In short, it would ask “How can we achieve our fossil-free goal?” instead of asking “How can we keep burning gas?”

It’s not hard to understand why Dominion clings to gas; its parent company is fighting desperately to keep the Atlantic Coast Pipeline project alive in the face of spiraling costs (now up to $8 billion), an increasingly uphill battle at the State Corporation Commission to stick utility ratepayers with the costs of a redundant gas supply contract and a dearth of other customers anywhere along the route.

What is really hard to understand, though, is why Dominion chose to be quite so transparent in its disdain for the VCEA. Senator Jennifer McClellan and Delegate Rip Sullivan, both Democrats, who introduced the law and negotiated its terms with Dominion lobbyists and other stakeholders through many long days and nights, reacted to the IRP with entirely predictable outrage. In a statement they responded:

“The VCEA requires Virginia utilities to step up to the plate and be active leaders in carbon reduction. Dominion Energy’s IRP is tantamount to quitting the game before the first pitch is thrown. The law sets clear benchmarks for Virginia to reach 100 percent clean energy by 2045, not for utilities to plan to import carbon-polluting energy from West Virginia or Kentucky.”

Senator McClellan, it might be pointed out, could be on her way to becoming Virginia’s next governor. Most companies would hesitate to offend a leader of her stature, as well as such a prominent Democratic leader as Delegate Sullivan.

A growing number of legislators also seem interested in ending Dominion’s monopoly and bringing retail choice to Virginia. Though the bill that would have done that didn’t make it out of committee this year, the high-handed tone of the IRP will push more legislators into the anti-monopoly camp.

Arrogance and complacency seem like dangerous traits in times like these, but that’s Dominion for you. It will rise to any challenge, as long as the challenge doesn’t require anything the company didn’t already want to do.

A version of this article appeared in the Virginia Mercury on May 14, 2020.

Want a better understanding of how this year’s legislation works? I’m presenting the ins and outs of over a dozen bills in these three webinars:

  • What to expect when you’re expecting an energy transition, May 14, 2020 (recording available here)
  • New solar opportunities for homeowners, businesses and nonprofits, May 21, 2020, 5:30 p.m., register here
  • New tools for local governments to cut carbon, May 28, 2020, 5:30 p.m., register here

With a framework for Virginia’s energy transition in place, here’s what happens next

workers installing solar panels on a roof

One expected effect of the Clean Economy Act will be a boom in solar jobs across Virginia. Photo courtesy of NREL.

With Democrats in charge, Virginia passed a suite of bills that establish a sturdy framework for a transition to renewable energy in the electric sector.

At the center of this transformation are the Clean Economy Act, HB1526/SB851, and the Clean Energy and Community Flood Preparedness Act, HB981/SB1027. Other new laws direct further planning, make it easier for customers to install solar, improve the process for siting wind and solar farms, and expand financing options for energy efficiency and renewable energy.

Gov. Ralph Northam has signed some bills already, and has until April 11 to sign the others or send them back to the General Assembly with proposed amendments. Once signed, legislation takes effect on July 1.

I assume the Governor has other things on his mind right now than asking the General Assembly to tinker further with a bill like the Clean Economy Act, though bill opponents may be using the virus pandemic to argue for delay. That would be a self-defeating move; as the economy restarts, Virginia is going to need the infusion of jobs and investment that come with the build-out of clean energy. And one of the strongest arguments in support of our energy transition, after all, is that it will save money for consumers.

So what happens after July 1? How does this all work? Let’s look at the way these major pieces of legislation will change the energy landscape in Virginia.

Virginia joins RGGI, and CO2 emissions start to fall. 

Virginia’s Department of Environmental Quality has already written the regulations that call for Virginia power plants to reduce emissions by 30 percent by 2030. The mechanism for achieving this involves Virginia trading with the Regional Greenhouse Gas Initiative, a regional carbon cap and trade market.

The regulations have been on hold as the result of a budget amendment passed last year, when Republicans still ruled the General Assembly. After July 1, DEQ will be able to implement the regulations, with the commonwealth participating in carbon allowance auctions as early as the last quarter of this year or the first quarter of 2021.

In addition to joining RGGI, the Clean Energy and Community Flood Preparedness Act also allows the commonwealth to earn money from the allowance auctions. The Department of Housing and Community Development will spend 50 percent of auction proceeds on “low-income efficiency programs, including programs for eligible housing developments.”

The Department of Conservation and Recreation will get 45 percent of the auction proceeds to fund flood preparedness and climate change planning and mitigation through the Virginia Community Flood Preparedness Fund. The last 5 percent of proceeds will cover administrative costs, including those for administering the auctions.

Energy efficiency savings become mandatory, not just something to throw money at.

Two years ago, the Grid Transformation and Security Act required Dominion and Appalachian Power to propose more than a billion dollars in energy efficiency spending over 10 years, but the law didn’t say the programs had to actually be effective in lowering electricity demand.

This year that changed. For the first time, Virginia will have an energy efficiency resource standard (EERS) requiring Dominion to achieve a total of 5 percent electricity savings by 2025 (using 2019 as the baseline); APCo must achieve a total of 2 percent savings. The SCC is charged with setting new targets after 2025. At least 15 percent of the costs must go to programs benefiting low-income, elderly or disabled individuals, or veterans.

The EERS comes on top of the low-income energy efficiency spending funded by RGGI auctions.

Dominion and Appalachian Power ramp up renewables and energy storage. 

The Clean Economy Act requires Dominion to build 16,100 megawatts of onshore wind and solar energy, and APCo to build 600 megawatts. The law also contains one of the strongest energy storage mandates in the country: 2,700 MW for Dominion, 400 MW for Appalachian Power.

Beginning in 2020, Dominion and Appalachian must submit annual plans to the SCC for new wind, solar and storage resources. We’ll have a first look at Dominion’s plans just a month from now: the SCC has told the company to take account of the Clean Economy Act and other new laws when it files its 2020 Integrated Resource Plan on May 1.

The legislation provides a strangely long lead time before the utilities must request approval of specific projects: by the end of 2023 for APCo (the first 200 MW) or 2024 for Dominion (the first 3,000 MW). But the build-out then becomes rapid, and the utilities must issue requests for proposals on at least an annual basis.

In addition to the solar and land-based wind, Dominion now has the green light for up to 3,000 MW of offshore wind from the project it is developing off Virginia Beach, and which it plans to bring online beginning in 2024. All told, the Clean Economy Act proclaims up to 5,200 MW of offshore wind by 2034 to be in the public interest.

Dominion’s plans for new gas plants come to a screeching halt.

Before the 2020 legislative session, Dominion’s Integrated Resource Plan included plans for as many as 14 new gas combustion turbines to be built in pairs beginning in 2022. In December, the company announced plans to build four gas peaking units totaling nearly 1,000 MW, to come online in 2023 and 2024.

But that was then, and this is now. The Clean Economy Act prohibits the SCC from issuing a certificate of convenience and necessity for any carbon-emitting generating plant until at least January 1, 2022, when the secretaries of natural resources and commerce and trade submit a report to the General Assembly “on how to achieve 100 percent carbon-free electric energy generation by 2045 at least cost to ratepayers.”

Even with no further moratorium, Dominion will find it hard to sell the SCC on the need for new gas plants on top of all the renewable energy and energy storage mandated in the Clean Economy Act. Solar and battery storage together do the same job that a gas peaker would have done — but they are required, and the gas peaker is not. Meanwhile, the energy efficiency provisions of the act mean demand should start going down, not up.

Dominion has already signaled that it recognizes the days of new gas plants are largely over. On March 24, Dominion filed a request with the SCC to be excused from considering new fossil fuel and nuclear resources in its upcoming Integrated Resource Plan filing, arguing that “significant build-out of natural gas generation facilities is not currently viable” in light of the new legislation.

Fossil fuel and biomass plants start closing.

By 2024, the Clean Economy Act requires the closure of all Dominion or APCo-owned oil-fueled generating plants in Virginia over 500 MW and all coal units other than Dominion’s Virginia City Hybrid plant in Wise County and the Clover Station that Dominion co-owns with Old Dominion Electric Cooperative.

This mandate is less draconian than it sounds; it forces the closure of just two coal units, both at Dominion’s Chesterfield plant. Other Dominion coal plants in Virginia have already been retired or switched to using gas or biomass, and one additional coal plant in West Virginia lies beyond the reach of the legislation. Oil-fired peaking units at Yorktown and Possum Point were already slated for retirement in 2021 and 2022. APCo owns no coal or biomass plants in Virginia.

Although the exceptions might appear to swallow the rule, the truth is that coal plants are too expensive to survive much longer anyway. One indication of this is a March 24 report Dominion filed with the SCC showing its fuel generation sources for 2019: coal has now fallen to below 8 percent of generation.

By 2028, Dominion’s biomass plants must shut down, another victory for consumers. All other carbon-emitting generating units in Virginia owned by Dominion and APCo must close by 2045, including the Virginia City plant and all the gas plants.

As of 2050, no carbon allowances can be awarded to any generating units that emit carbon dioxide, including those owned by the coops and merchant generators, with an exception for units under 25 MW as well as units bigger than 25 MW (if they are owned by politically well-connected multinational paper companies with highly-paid lobbyists).

Solar on schools and other buildings becomes the new normal.

In December, Fairfax County awarded contracts for the installation of solar on up to 130 county-owned schools and other sites, one of the largest such awards in the nation. Using a financing approach called a third-party power purchase agreement (PPA), the county would get the benefits of solar without having to spend money upfront. The contracts were written to be rideable, meaning other Virginia jurisdictions could piggyback on them to achieve cost savings and lower greenhouse gas emissions.

Fairfax County’s projects, along with others across the state, hit a wall when, on Jan. 7, the SCC announced that the 50 MW program cap for PPAs in Dominion territory had been reached. But with the passage of the Clean Economy Act and Solar Freedom legislation, customers will be able to install up to 1,000 MW worth of solar PPAs in Dominion territory and 40 MW in APCo territory.

Fairfax County schools will soon join their counterparts in at least 10 other jurisdictions across the state that have already installed solar. With the PPA cap no longer a barrier, and several other barriers also removed, local governments will increasingly turn to solar to save money and shrink their carbon footprints.

Virginia agencies start working on decarbonizing the rest of the economy. 

In spite of its name, the Clean Economy Act really only tackles the electric sector, with a little spillover into home weatherization. That still leaves three-quarters of the state’s greenhouse gas emissions to be addressed in transportation, buildings, agriculture and industry. Ridding these sectors of greenhouse gas emissions requires different tools and policies.

Other legislation passed this session starts that planning process. SB94(Favola) and HB714 (Reid) establish a policy for the commonwealth to achieve net-zero emissions economy-wide by 2045 (2040 for the electric sector) and require the next Virginia Energy Plan, due in 2022, to identify actions towards achieving the goal. Depending on who the next governor is, we may see little or nothing in the way of new proposals, or we may see proposals for transportation and home electrification, deep building retrofits, net-zero homes and office buildings, carbon sequestration on farm and forest land and innovative solutions for replacing fossil fuels in industrial use.

Collateral effects will drive greenhouse gas emissions even lower.

Proposed new merchant gas plants are likely to go away. With Virginia joining RGGI and all fossil fuel generating plants required to pay for the right to spew carbon pollution, the developers of two huge new merchant gas plants proposed for Charles City County will likely take their projects to some other state, if they pursue them at all.

Neither the 1,600 MW Chickahominy Power Station and the 1,050 C4GT plant a mile away planned to sell power to Virginia utilities; their target is the regional wholesale market, which currently rewards over-building of gas plant capacity even in the absence of demand. The Chickahominy and C4GT developers sought an exemption from RGGI through legislation; the bill passed the Senate but got shot down in the House.

If the C4GT plant goes away, so too should Virginia Natural Gas’ plans for a gas pipeline and compressor stations to supply the plant, the so-called Header Improvement Project.

Other coal plants will close. Although the CEA only requires Dominion to retire two coal units at its Chesterfield Power Station, other coal plants in the state will close by the end of this decade, too. That’s because the economics are so heavily against coal these days that it was just a matter of time before their owners moved to close them.

Adding the cost of carbon allowances under RGGI will speed the process along. That includes the Clover Station, which Dominion owns in partnership with Old Dominion Electric Cooperative (ODEC), and the Virginia City Hybrid Electric plant in Wise County, Dominion’s most expensive coal plant, which should never have been built. 

The Atlantic Coast and Mountain Valley Pipelines find themselves in more trouble than ever. If I had a dollar for every time a Dominion or Mountain Valley spokesperson said, “Our customers desperately need this pipeline,” I would not be worried about the stock market right now.

The fact is that no one was ever sure who those customers might be, other than affiliates of the pipeline owners themselves—and that doesn’t exactly answer the question. With Virginia now on a path away from all fossil fuels, neither pipeline has a path to profitability inside Virginia any longer, if they ever had one.

 

A version of this article originally appeared in the Virginia Mercury on March 31. 

The Wise County coal plant should never have been built. Why fight to keep it open?

smokestack

Just blowing smoke. Photo credit Stiller Beobachter

The Virginia Clean Economy Act continues to bump along towards the finish line, losing pieces of itself but picking up new and different features as it makes its tortuous way.

Most recently, and disconcertingly, Republicans representing southwest Virginia persuaded the Senate to remove a key provision requiring the closure of the Virginia City coal plant in Wise County by 2030, unless it reduces its carbon emissions by 83% through the carbon capture technology it was designed for. The change would undermine the carefully-negotiated pathway to a zero-carbon electric sector.

On Tuesday the House rejected the Senate version of the bill that would have allowed the plant to continue operating until 2050. The Senate will have the final say, but it can only save the coal plant by killing the legislation altogether.

It’s understandable that senators want to please everyone, or at least everyone with a lobbying presence at the General Assembly building. Yet the case for keeping the coal plant running is built on a lie — indeed, on a history of lies.

Coal champions call the Wise County facility “the cleanest coal plant in the country,” a claim that, at best, misses the devastating environmental and human impacts of coal mining itself. More to the point right now, the claim ignores the fact that the facility emits millions of tons of CO2 every year, the very reason it needs to be retired by 2030 in order for the Clean Economy Act to deliver on its carbon-cutting mission.

And while coalfield Republicans emphasize the coal plant’s economic benefits to the region, the fact is that the plant never made sense economically and should never have been built. Trying to keep it running will simply burden ratepayers further.

In 2007, when it sought permission from the State Corporation Commission to build the plant, Dominion projected the cost of the electricity it would generate at $93 per megawatt-hour. Yes, that’s high. Even 13 years later, wind, solar and combined cycle gas still come in at under $40.

Worse, Dominion based its cost on a projection that the plant would run at 90 percent of its full capacity. It never did. The plant is running at only 24 percent today. If Dominion had accurately represented that the capacity percentage would not exceed the mid-60s and would plummet into the 20s a mere seven years after it entered service, the cost projection would have been a good deal higher.

The SCC only granted Dominion permission to build the plant for a reason that will sound familiar to anyone following the debate over the Clean Economy Act: The General Assembly passed a law proclaiming construction of a coal plant in southwest Virginia “in the public interest,” removing the SCC’s authority to make that determination.

Yes, the General Assembly’s habit of bossing the SCC around with these magic words goes back quite a ways.

Legislators weren’t the only ones championing the coal plant back in 2007. In her book Climate of Capitulation, retired University of Virginia professor and former State Air Pollution Control Board member Vivian Thomson describes how then-Gov. Tim Kaine put enormous pressure on the Air Board to approve the air permit for the facility. Not incidentally, Dominion’s chief lobbyist, Bill Murray, worked for Kaine during these years, before he made his way through the revolving door.

Dominion has sometimes suggested that it pursued the coal plant only as a favor to legislators. I asked Thomson about that in a phone call. She responded that on the contrary, the plant is a prime example of how Virginia Democrats and Republicans alike have capitulated to Dominion’s interests over the years.

Perhaps Dominion was angling for some pot-sweetening through a show of reluctance. The General Assembly obliged, of course, promising Dominion a higher rate of return than usual. And indeed, the SCC eventually granted Dominion an enhanced rate of return of 12.12%.

The SCC’s approval of the plant outraged consumers and environmentalists alike. Attorney Cale Jaffe, who represented environmental groups in the SCC proceeding, says it was a bad decision even in the years before Virginia committed to reduce climate pollution.

“All of the concerns and risks associated with the project in 2006-2007 were fully debated and apparent to everyone,” he told me. “The fact that we would be moving to a low-carbon economy made building a coal plant and locking yourself in for decades a risky strategy. The carbon emissions should have led people to look at other options for generating electricity that don’t emit 5.3 million tons of carbon every year.”

It’s remarkable that even today, with coal plants closing across the country and mining companies going bankrupt, legislators from southwest Virginia still can’t bring themselves to break with the industry that has polluted their land and water and shattered their communities. The Sierra Club and its allies tried for years to persuade the General Assembly to redirect millions of dollars annually in coal subsidies, urging that the money could have underwritten thousands of new jobs in a more diverse economy. Legislators kept throwing taxpayer money at coal companies anyway, always with the full support of Dominion.

Now, when it comes to the Clean Economy Act, Dominion wants to have it both ways. During negotiations, the company agreed to the coal plant closures as part of a deal that gave it cost recovery for offshore wind, energy efficiency targets significantly lower than what advocates originally sought, and numerous other concessions. But it turns out company lobbyists were simultaneously working to undermine the compromise bill by encouraging southwest Virginia legislators to push for coal industry protections.

Senators should have none of it. They’ve promised Virginians a bill that responds to the climate crisis by putting the commonwealth on its way to a clean energy future. Today, it’s time to deliver.

 

This article originally appeared in the Virginia Mercury on March 5, 2020. 

Update: on March 5, the House passed the Clean Economy Act; on March 6, the Senate did also, sending the bill to the Governor’s desk. The final version of the bill does not require closure of the Wise County coal plant until 2045.