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.

Questions Dominion didn’t answer at its shareholder meeting

Dominion Energy headquarters, Richmond, VA

Dominion Energy held its annual shareholder meeting virtually on May 5. Prior to the meeting, some shareholders submitted questions to the company in hopes of getting better transparency about its thinking regarding a range of pressing questions facing both the company and society at large. In an article that ran in the Virginia Mercury the week before the meeting, I offered a list of questions I’d really like answers to as well. 

I wasn’t able to attend the shareholder meeting, but I understand the questions mostly did not get answers at that time, with the exception of a non-sequitur CEO Bob Blue offered up in response to a question about third-party sales of renewable energy (read on!).  The company has promised to email responses to the people who submitted questions. 

Here are my questions:

1. We learned in Dominion’s Integrated Resource Plan (IRP) case last year that the Virginia City Hybrid Energy Center, the coal plant it owns in Wise County, has a 10-year net present value of negative $472 million. Why isn’t Dominion retiring it immediately to save money and reduce the number of emission allowances it has to buy now that Virginia has joined the Regional Greenhouse Gas Initiative?

2. In last year’s IRP, Dominion’s preferred scenario would have it keeping its gas plants open indefinitely, even past 2045, when the Virginia Clean Economy Act requires them to be closed. The refusal to plan for full compliance with the law almost certainly impacts the decisions Dominion is making today. Now that Bob Blue has taken over the reins of Dominion from former CEO Tom Farrell, has that changed, and can we expect Dominion to take actions consistent with a full phase-out of fossil fuels before 2045?

3. The energy transition will require construction of tens of thousands of megawatts of solar on hundreds of thousands of acres of land across Virginia. However, community resistance to utility-scale solar farms in Virginia is growing, in large part because they look more like industrial uses than like agricultural uses. As a result, some projects are not being permitted, a costly waste of the company’s time and resources. It’s possible to combine solar with traditional agricultural uses like animal grazing, or to install native plants to support pollinators and provide wildlife habitat, both of which would increase community acceptance. Dominion installs pollinator plantings along some of its transmission line rights-of-way, so the company has experience in this area. Will Dominion begin doing this at its solar projects? If not, what is Dominion doing to “sweeten the pot” for local communities in order to secure permits? 

4. Dominion offers residential customers the option of a renewable energy product that includes biomass energy, a source that is not carbon-free and produces more air pollution than coal. The inclusion of biomass also makes the tariff more expensive than it would be without biomass. In contrast to this unattractive option, two years ago Dominion received SCC approval to sell solar to residential customers via a “community solar” product. This would have appealed to far more customers, but Dominion never followed through.  Why not? 

5. With no solar option available, residents who don’t own a house with a sunny roof are currently shut out of the solar market in Dominion’s Virginia territory. In 2019 and 2020 the General Assembly considered legislation that would have allowed customers to buy renewable energy from third party providers. The bill passed the House each year but failed in a Senate committee due to Dominion’s opposition. If Dominion isn’t interested in selling solar to its customers today, why not let them buy it from others? 

Mr. Blue reportedly answered this question at the meeting by exclaiming, “Because deregulated markets don’t work, they fail! Look at Texas!” 

I can, with difficulty, draw a line from the question to Blue’s answer, but it is not a straight one. Nor is it an honest one, since the causes of the Texas debacle don’t apply here (beyond a similar overreliance on natural gas). 

Here is the answer that is most probably true: “We threw together our so-called renewable energy offering for the sole purpose of blocking out competitors, and the SCC stupidly let us get away with it. If we cared about climate change, we would offer a clean renewable energy product people actually want, but we only care about profit. That requires us to keep our customers locked in, but nothing says we have to make them happy.”

But because hope springs eternal, I’ll also add an answer that I would much prefer Mr. Blue to give: “Under my new leadership, we are taking climate science seriously and will develop the renewable energy options our customers want. My goal is to offer a solar tariff so good that none of our customers will want to look elsewhere, and the question will become moot.”

6. According to Dominion’s 2020 IRP, data centers make up 12 percent of Dominion’s load in Virginia, a number that has been increasing by 20 percent per year. Data center operators say they want renewable energy but have trouble getting it from Dominion. The biggest tech companies negotiate deals for solar, but smaller customers have fewer attractive options. What is Dominion doing to ensure that data centers have access to solar energy at attractive market rates?

Notice how the answers to the previous question apply here. Dominion has a huge opportunity to lead on climate, requiring only that the company actually care.

7. A year ago Dominion canceled the Atlantic Coast Pipeline, losing the almost $3 billion already spent on the project but saving the additional $5 billion-plus it would have cost to complete the project. About the same time, Dominion sold off its entire gas transmission business, indicating it had come to see pipelines as poor investments. This makes sense since the company already gets all the gas it needs through existing pipelines, and going forward, climate policies and the increasing competitiveness of renewable energy and battery storage mean gas use will decline. But then the company contracted for 12.5% of the shipping capacity of the Mountain Valley Pipeline through its subsidiary Public Service Company of North Carolina, at a cost of at least $50 million per year. How can the company justify this investment? Is there an exit clause in the contract, or will shareholders suffer in the event the company is not allowed to pass this cost on to ratepayers?

8. Dominion is currently pursuing relicensing of its two aging nuclear reactors at North Anna, which are already beyond their 40-year design life. According to the 2020 IRP, Dominion plans to run the North Anna reactors, as well as its two reactors in Surry County, at least through 2045, the period covered by the IRP. Nuclear is a carbon-free resource, but so are wind and solar, and nuclear plants in other states are closing because they are no longer economically competitive. What will it cost Dominion to refurbish these nuclear plants to keep them in operation safely so far beyond their design life? And what will it cost the company if, in spite of refurbishing, one or more of the reactors can’t pass a safety inspection, or even suffers a major failure?

9. Millions of customers in Virginia, North Carolina and South Carolina are at risk from hurricanes and other weather events that can knock out power for many days at a time. Today, onsite solar-plus-storage can keep critical facilities operating and allow community centers and schools to serve local residents who have lost power, ensuring they have a place to store medicines that need refrigeration and to charge cellphones, motorized wheelchairs and other devices. If Dominion were to supply the batteries for these facilities, the company could access them for grid storage and services when they are not needed as backup power. In addition to offering a new profit center, it would relieve some of the pressure on line crews who work to restore power after a storm. When will Dominion offer this lifesaving service to its customers? 

10. Electric vehicle charging will increase demand for electricity in Virginia, and it also offers an opportunity for the company to deploy vehicle-to-grid technology, making use of the batteries in buses and private vehicles to help balance the grid. Virginia’s General Assembly rejected legislation that would have allowed Dominion to own and control the batteries in school buses in Virginia, but it passed a bill to help local school districts buy electric buses. Will Dominion now support the ability of the school districts to buy electric school buses and own the batteries themselves, and work with them to implement a vehicle-to-grid program? 

The SCC’s vanishing trick: turning shared solar into no solar

Photo courtesy of Department of Energy, via Wikimedia Commons.

With Virginia fully committed to the clean energy transition, you would think that by now, residents would be able to check a box on their utility bill to buy solar energy, or at least be able to call up a third-party solar provider to sell them electricity from solar.

Not so. Sure, if you’re fortunate enough to own your own house or commercial building, and it’s in a sunny location and the roof is sound, you can install solar panels for your own use. Renters, though, are completely out of luck, which means almost all lower and moderate-income people are shut out of the solar market.

Actually, we were all supposed to be able to buy solar by now. A 2017 law required utilities to offer a “community solar” program. Utilities would buy electricity from solar facilities and sell it to customers. At least one electric cooperative followed through, but although Dominion Energy, Virginia’s biggest utility, created a program and had it approved by the SCC in 2018, the company has never offered it.

So this year the General Assembly passed two bills that would finally bring the benefits of solar energy to a broader range of customers. One would be community solar but under a different name. It would let anyone buy electricity from a “shared solar” facility, with at least 30 percent of the output reserved for low-income customers.

The other, the leadoff section of the Solar Freedom legislation, would let residents of apartment buildings and condominiums share the output of a solar array located on the premises or next door.

The bills were narrowed in committee to apply only in Dominion Energy territory (and for the multifamily program, to a part of Southwest Virginia served by Kentucky Utilities). Dominion also lobbied successfully for changes to the shared solar bill that raised red flags with solar industry members and advocates. Dominion has a long history of putting barriers in the way of customers who want solar, and the final language of the shared solar legislation pretty much invited that sort of mischief.

Still, it was left to the State Corporation Commission to write rules implementing the programs, so customers had reason to hope Dominion would not be allowed to make the programs unwieldy and expensive.

Ha. What has emerged from the SCC in the form of proposed rules manages to be both incoherent and everything Dominion wants. The reason for that is clear: most of the rules are copied and pasted from proposals Dominion submitted in August.

Adopting the recommendations of a company that failed to follow through on its own program seems like a bad idea. Hasn’t Dominion abdicated its right to tell other companies how to execute community solar?

And of course, with Dominion writing the rules, the programs won’t work. The shared solar option doesn’t kick in until at least 2023, and customers won’t be told what it will cost them. The SCC proposes to hold an “annual proceeding” to decide each year how much subscribers will have to pay in the form of a minimum bill, an amount that can then change from year to year.

This minimum bill is not the eight or nine dollar fixed charge that all customers pay today; it’s a whole new charge representing various of Dominion’s real or imagined costs of doing business, which Dominion says it needs to recover from the subscribers to compensate it for the fact that some other company is now selling them electricity.

How much might this be? No one knows. And because no one knows, it’s also impossible for solar companies or other third-party providers to offer the program. They can’t sell a product whose price is unknown, and banks aren’t going to loan them money to build a solar facility with no assurance that there will be customers.

There are really only two ways to save this program. The SCC could hold an evidentiary hearing upfront to examine the costs Dominion claims it needs to recover and then decide what the minimum bill ought to be. If that number is so high that the program can’t work, the SCC gets the privilege of telling the General Assembly there won’t be a shared solar program after all.

Alternatively, the SCC can follow the lead of states that already have successful programs and set the minimum bill (upfront) at a level that still saves customers money, so projects have a fighting chance of getting off the ground. If Dominion thinks it is losing money on the deal, that’s a claim it can pursue in its next rate case — which is where the dispute belongs.

Either way, the industry needs clarity, and it needs it now.

Multifamily solar: from straightforward to hopeless

The drafters of Solar Freedom thought they’d avoided the mess that threatens to tank the shared solar program. The multifamily provision of Solar Freedom is simply a way to let residents of apartment buildings and other multifamily units enjoy the same benefits available to homeowners who install solar under the net metering program. Instead of putting solar on a roof they own, they can buy the output of solar panels on the roof of the building where they live. It’s not net metering, but that’s the model.

Since the solar is onsite, none of these projects will be big. Keeping it simple and inexpensive is important. The law provides that utilities will credit participating customers for their share of solar at a rate “set such that the shared solar program results in robust project development and shared solar program access for all customer classes.” More specifically, the commission “shall annually calculate the applicable bill credit rate as the effective retail rate of the customer’s rate class, which shall be inclusive of all supply charges, delivery charges, demand charges, fixed charges and any applicable riders or other charges to the customer.”

The law couldn’t be clearer: there is to be no minimum bill, and the utility cannot load up a customer’s bill with lots of miscellaneous extra charges. All those charges that the SCC loads into the shared solar program’s minimum bill are, for the multifamily program, already included in the retail rate.

End of discussion? Not hardly. The SCC’s implementing rules — which are Dominion’s rules — get around this problem by dumping all the minimum bill elements from the shared solar rules onto the program provider instead (that is, the company that owns the solar panels).

Solar Freedom doesn’t actually allow that, either, so the SCC has decided these costs should be part of the one fee the utility is allowed to collect, for “reasonable costs of administering the program.” Never mind that items like “standby generation and balancing costs” have nothing to do with administering the program.

Oh, and the SCC won’t decide what the administrative charge will be until it holds an annual proceeding. And the amount can change every year. So once again, the SCC has designed a program that no solar company will be able to offer.

The SCC rules are so blatantly contrary to the program mandate set out in Solar Freedom that one can’t help but wonder whose side the SCC is on.

It is certainly not the customers’. We want solar.

The SCC is accepting comments on the proposed rules for both the shared solar and multifamily programs through Monday.

This article originally appeared in the Virginia Mercury on October 30, 2020.

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.

The facts about coal plants Dominion didn’t want you to know

smokestack

Photo credit Stiller Beobachter

Last winter, during the fight to pass the Virginia Clean Economy Act, Dominion Energy lobbyists went out of their way to save the company’s youngest coal plant in Wise County. It worked. Legislators exempted the Virginia City Hybrid Energy Center from closure until 2045, when Dominion has to shutter all its fossil fuel generation.

VCHEC was approved in 2008 and built in 2013 as a boondoggle for Dominion, earning the company an enhanced rate of return. It was also intended as an expensive gift from then-Gov. Tim Kaine to coalfield Democrats, who went on to lose their seats anyway. Even then, it was a terrible deal for Dominion’s customers and the climate, with all the carbon pollution you expect from coal and a cost that was twice that of cleaner alternatives.

No wonder it proved to be one of the last coal plants ever built in the U.S.

Knowing this, and knowing the determination of this year’s General Assembly to turn the commonwealth in the direction of clean energy, you might not have expected VCHEC to have a lot of friends left in Richmond. But Dominion never told legislators what it would cost consumers to keep its coal plants running. Among all the criticism of the price tag associated with Virginia’s energy transition — much of that criticism coming from Dominion itself — one crucial fact gets lost: It’s coal that is hitting consumers the hardest.

An analysis Dominion reluctantly made public last month as part of its Integrated Resource Planning case shows that VCHEC is far and away the worst performing economically of all the utility’s fossil fuel-burning plants. This one coal plant carries a 10-year net present value of negative $472 million. (The analysts didn’t extend their calculations out to 2045, where it would certainly cross a billion dollars; maybe they were running low on red ink.)

VCHEC isn’t the only coal plant in Dominion’s fleet with a negative valuation, just the worst. In fact, all the Virginia coal plants have negative values.

These are Dominion’s numbers, not those of the Sierra Club or the other environmental and consumer groups challenging Dominion’s plans. The Sierra Club hired a consulting company to run its own analysis, using a standard utility model. That analysis concluded it would be cheaper for customers to build more solar now and speed up the closure not just of VCHEC but of all Dominion’s coal plants. This includes even the company’s Mount Storm coal plant in West Virginia, the only one assigned a positive economic value in Dominion’s analysis. From a customer standpoint, all of them should go.

Maybe that’s not too surprising. We already knew coal was dead. But how many of us knew we were paying to prop up the corpse?

Dominion’s lawyers tried to keep the terrible cost numbers out of the public’s hands, contending it was “confidential commercial and financial information that other entities could use to their competitive advantage in future negotiations.” I can imagine these future meetings: the other entities would be so busy mocking Dominion that, indeed, negotiations might stall permanently.

Fortunately for all of us, the Attorney General’s Office of Consumer Counsel persuaded the SCC the information should be public. Some information truly is confidential; this is merely embarrassing. Dominion’s customers—and the General Assembly—should know what it’s costing us to prop up coal.

This article originally appeared in the Virginia Mercury on September 24, 2020.

The analysis Dominion ultimately produced, showing 10-year Net Present Values for certain of its generating units, under various scenarios. Notice biomass doesn’t do too well either. The analysis omits some additional units, apparently because they are already scheduled for retirement.

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

COVID-19 throws a lemon at Virginia’s plan for an energy transition. It’s time for lemonade.

solar panels on a school roof

The solar panels on Wilson Middle School are saving money for Augusta County taxpayers. Photo courtesy of Secure Futures.

In mid-March, the Virginia General Assembly passed legislation to transition our economy from fossil fuels to clean energy over the coming years. Two weeks later, Virginia shut down in response to the COVID-19 pandemic. Among the businesses whose very existence is now in peril are the energy efficiency companies and solar installers we will be counting on to get us off fossil fuels.

Home weatherization and energy efficiency programs have come to an almost complete halt in Virginia, including programs run by Dominion Energy Virginia. Nationwide, the energy efficiency sector has lost almost 70,000 jobs. Meanwhile, companies that install solar, especially rooftop systems, report plummeting sales. The Solar Energy Industries Association reports that nationally, 55 percent of solar workers are already laid off or suffering cutbacks.

The timing seems terrible — although to be fair, there’s no good time for an economy-crushing, worldwide pandemic. Eventually, however, the virus will run its course or be defeated through vaccine or cure. At that point, we will face a choice: we can stagger blinking out into the sunlight aimlessly wondering now what?, or we can execute the well-developed plan we have spent these weeks and months formulating.

Let’s go with the second option.

First, it’s worth remembering that nothing happening now will change the trajectory of clean energy. Solar and wind had banner years in 2019, continuing their steady march to dominance. Wind has become the largest single source of electricity in two states, Iowa and Kansas. The island of Kauai in Hawaii is now 56 percent powered by renewable energy, mostly solar. Across the U.S. wind, solar and hydro produce more electricity than coal. Wind is the cheapest form of new electric generation nationally; solar takes pride of place in Virginia.

Meanwhile, fossil fuel is even more firmly on its way out. Six of the top seven U.S. coal companies have gone into bankruptcy since 2015. That was before the lockdown sent energy demand down, further hurting high-priced coal.

Fracked gas helped kill coal but is itself vulnerable to price competition from renewables. Odd as it sounds, the collapse in oil prices will make natural gas more expensive. That’s because oil producers in Texas and North Dakota are closing wells that produced natural gas along with oil. The tightening supply of gas may finally make fracking companies in Appalachia profitable, but it means higher prices for utilities. Wind and solar will just keep looking better.

The Trump administration is still trying futilely to hold back the tide, but the U.S. will get a lot farther riding the wave than struggling against it. Congressional leaders should declare the country “all in” on clean energy. Instead of bailing out the highly polluting fossil fuel industries, they should put that money to work creating more jobs and economic development — and actually doing something about climate change — with energy efficiency and renewables.

Congress should return the Investment Tax Credit for solar (and offshore wind) to the 30 percent level in effect last year and keep it there, instead of continuing the phase-out now in effect. Congress should also give solar owners the option of taking the credit as a cash grant, as it did during the last recession, and for the same reason: tax-based incentives are less useful in a recession, when companies can’t use the credits.

Virginia’s Sens. Tim Kaine and Mark Warner have a critical role to play in convincing their colleagues to support solar. So far neither is rising to the task.

On the state level, Northam did the right thing in signing this year’s energy legislation, allowing utilities and industry members to start planning for the future. But the Clean Economy Act gets wind and solar off to a very slow start; Dominion doesn’t have to build Virginia solar for five years yet. And though the new laws remove many policy constraints on customer-sited solar, they offer next to nothing in the way of financial incentives.

Governor Northam should make it clear he intends to make rooftop solar a priority for next year, along with projects on closed landfills, former coal mine areas, and other brownfields, with a special focus on areas hardest-hit economically. He can also encourage corporations that do business in Virginia to meet their sustainability goals with Virginia wind and solar, starting right now.

The governor should also prioritize building efficiency. Virginia will be adopting a new residential building code this year, and if past years are any indication, its energy efficiency provisions will fall short of the most recent model code standard. It’s up to the governor to make sure Virginia adopts the full code.

Local governments are already taking advantage of suddenly-empty buildings to accelerate maintenance and repairs. But it’s a good time to think bigger, with new financing tools available that make energy efficiency retrofits and solar facilities cash-positive right from the start.

Energy performance contracting allows the energy savings to pay for retrofits. The Department of Mines, Minerals and Energy keeps a list of pre-qualified energy service companies and offers expertise to help local government employees navigate the process.

This year’s legislation also greatly expanded local governments’ ability to finance on-site solar through third-party power purchase agreements, effective July 1. The PPAs are structured so that a school district, municipality or any commercial or non-profit customer can have a solar array installed at no cost, paying just for the energy produced.

In December, Fairfax County awarded contracts for PPAs to install solar on more than a hundred sites, including schools and other government buildings. The county’s contract is “rideable,” which allows other counties and cities to piggyback, getting the same terms without the need for new contract negotiations.

Unfortunately, local governments in southwest Virginia are prevented from pursuing PPAs — not by state legislation, which allows it starting July 1, but by a contract with Appalachian Power that governs their electricity purchases from the utility. The contract is up for renewal this year; disgracefully, APCo is refusing to agree to new terms allowing the localities to use solar PPAs. APCo should back off, and let local governments in economically depressed southwest Virginia start saving money and supporting solar jobs this year.

Arlington County has gone beyond on-site solar, contracting for a share of a large solar farm in southern Virginia that will provide more than 80 percent of the electricity for county government operations. It’s a model any locality can adopt.

Virginia residents and businesses also have good reasons to focus on clean energy. The enforced down-time many people are experiencing means more time to research options, and companies are motivated to offer low prices on energy efficiency upgrades and rooftop solar.

The federal government offers more generous tax credits this year than next. Credits for residential energy efficiency equipment and a deduction for energy efficient commercial buildings expire at the end of this year.

The investment tax credit for solar (as well as for geothermal heat pumps, fuel cells and small wind turbines) stands at 26% for projects placed in operation this year, but it will drop to 22% in 2021. It falls to 10% for commercial customers and disappears altogether for residential customers in 2022. If Congress acts to raise the credit to 30%, buyers will get an even bigger boost. If it doesn’t, there will be a rush this year to get projects done by the end of the year, so customers should secure their place in line now.

Virginia nonprofits have helped hundreds of residents and businesses save money on solar and EV chargers through bulk purchasing programs. Virginia Solar United Neighbors just announced a series of virtual information sessions to promote the Arlington Solar EV Co-op. And LEAP, which closed operations temporarily due to the virus, reports it has restarted two programs, Solarize NOVA and Solarize Piedmont.

In an ideal world, the U.S. would already be well along in executing a comprehensive plan for a clean energy transition, one that includes job retraining for workers, and that resists counterproductive efforts to save the fossil fuel industry. But we can do the next best thing, and use the tools of government, the market and consumer choice to speed us in the right direction.

COVID-19 has handed all of us a big, fat lemon. Let’s make some lemonade.

 

A version of this article appeared originally in the Virginia Mercury on April 30, 2020.

 

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.