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. 

New laws clear away barriers to small solar projects

Edward Hicks’ “Peaceable Kingdom,” Metropolitan Museum of Art. Not shown: the 50 guys with muskets making darn sure the lions don’t try anything.

Virginia General Assembly members have an expression for when opposing interests agree on a bill: they call it “peace in the valley.”

The phrase comes from a gospel song by Thomas A. Dorsey, written for Mahalia Jackson and then later sung by a bunch of white guys including Red Foley and Elvis Presley. The lyrics, written on the eve of World War II, speak of a longing for the peace of the afterlife, where “the bear will be gentle, the wolf will be tame, and the lion will lay down by the lamb.”

I’m not sure the General Assembly has ever inspired anything quite so wonderful as the song describes. More typically, a legislator uses the expression to indicate that a bunch of special interests, having duked it out amongst themselves, have now each gotten everything they thought they could get out of negotiations and so are offering up a compromise that legislators can adopt without having to trouble themselves too much with the details.

So, not exactly the peace of God, but still a pretty good state of affairs from the point of view of committee members who have thirty or forty other bills to deal with that day.

Peace rarely used to characterize bills supporting distributed solar generation. The lion had no reason to lie down by the lamb. Indeed, more typically the lamb was lunch.

But the November election shifted the balance of power in the General Assembly. At first it wasn’t clear how much power the lion and bear were going to have to cede. In fact, no one is quite sure even now where the balance of power lies, even after weeks of intense skirmishing finally produced the flawed but-still-transformational Clean Economy Act. The bill passed, and the parties all claimed victory, but anyone who thinks there might be peace in the energy valley is advised to stick around for next year.

The skirmishing over distributed solar was decidedly less intense. Advocates and utilities achieved peace on a number of provisions removing barriers to rooftop solar, dramatically increasing program caps for third-party power purchase agreements (PPAs), raising the net metering cap, establishing shared solar programs, and making it easier for customers in homeowner’s associations to install solar.

Much work remains. Removing barriers is a necessary first step, but now the challenge is to make small-scale solar a priority for Virginia. The Clean Economy Act focused on cheap utility-scale projects, but an economy that runs primarily on renewables needs solar on places other than farmland. Getting to 100 percent carbon-free energy means putting solar on as many sunny homes and businesses as possible—not to mention government buildings, warehouses, data centers, parking lots, highway rest areas, closed landfills, brownfields, former mining sites and vacant land around airports.

Solar Freedom and the Clean Economy Act

The final version of the Solar Freedom bill, HB572 (Keam) and SB710(McClellan), made eight changes affecting customers of investor-owned utilities. Customers of electric cooperatives are excluded; a law passed last year addressed many of these issues.

• It raises the cap on the total amount of net metered solar allowed from 1 percent currently to 6 percent (broken out as 1 percent for low and moderate income customers and 5 percent for everyone else). This means customers installing rooftop solar will continue getting credit for surplus energy at the retail rate. When net-metered projects reach 3 percent, or in 2024 for APCo or 2025 for Dominion, the State Corporation Commission will conduct a solar study to determine the appropriate rate structure for new net metering customers. Existing net metering customers will not be affected.

• It raises the program cap on third-party power purchase agreements (PPAs). PPAs are the financing mechanism that schools, local governments, universities and other customers have been using to install solar on-site with no money down. The original program cap of 50 MW in Dominion territory was reached this fall, halting projects across the state. In Dominion territory, the limit will now go to 500 MW for jurisdictional customers (that’s most people) and 500 MW for non-jurisdictional customers (including local governments and public schools). The new cap in Appalachian Power territory is 40 MW for all customers, and there will be no limit in Old Dominion Power (Kentucky Utilities) territory. In addition, the legislation broadens who can take advantage of this program to any tax-exempt customer, and all other customers with projects over 50 kW.

• It increases the allowable size of net-metered commercial projects from 1 MW today to 3 MW.

• It increases the allowable size of residential net-metered projects to 25 kW, from 20 kW today.

• It removes standby charges for residential customers with solar facilities of less than 15 kW in Dominion territory, and removes them entirely for customers of Appalachian Power and Old Dominion Power.

• It allows residents of apartment buildings and condominiums in Dominion Energy and Old Dominion Power territories to share the output of on-site solar facilities.

• In Dominion territory, it allows customers to install enough solar to meet 150 percent of their previous year’s demand, recognizing the needs of growing families and EV owners. In APCo territory the limit remains at 100 percent of previous demand.

• Finally, it allows Fairfax County to move forward on a 5 MW solar project on a closed landfill, with the electricity serving government facilities. This will be the first such project in the state.

Solar Freedom overlaps with the Clean Economy Act, HB1526 (Sullivan) and SB851 (McClellan), on several of these provisions, including the net metering cap and PPAs. The Clean Economy Act also creates a Renewable Portfolio Standard (RPS) focused on utility-scale projects, but with a small carve-out for distributed “wind, solar and anaerobic digestion resources of one megawatt or less located in the Commonwealth.” The carve-out is limited to 1 percent of Dominion’s RPS targets. This level is so modest it probably won’t act as a market stimulus, especially for projects not owned by Dominion itself, and the addition of anaerobic digestion should give anyone pause. Also, there is no carve-out in APCo territory.

The failure of the Clean Economy Act to drive small-scale solar growth is a missed opportunity that will need to be addressed in the future if the General Assembly truly wants to achieve a clean energy economy. I recommend taking away the appalling subsidies for paper companies and letting those millions fund distributed solar.

Community solar

The provision in Solar Freedom that allows residents of multifamily buildings to share onsite solar arrays looks favorable to customers but requires an SCC proceeding this year to determine the bill credit rate for subscribers. The rate “shall be set such that the shared solar program results in robust project development and shared solar program access for all customer classes.” Further, “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 charge, and any applicable riders or other charges to the customer.”

While the Solar Freedom provision is restricted to multifamily residential buildings, the General Assembly also passed legislation more generally allowing for third-party owned community solar, rebranded as “shared solar.”

SB629 (Surovell) and HB1634 (Jones) instruct the SCC to set up a shared solar program for customers of Dominion and Old Dominion Power by Jan. 1, 2021. Shared solar projects must be no larger than 5 MW, can be owned by any for profit or nonprofit entity, and require at least three subscribers. The program is capped at a total of 150 MW, with an additional 50 MW possible if the utility demonstrates that 45 MW of shared solar has gone to low-income consumers.

The success of a shared solar program ultimately depends on whether project owners can make money and customers can save money. It remains to be seen whether that will happen. The provisions in these bills are less favorable to customers than the multifamily solar provisions of Solar Freedom. Customers will have to pay a minimum bill amount (waived for low-income customers), and there is no requirement that the bill credit rate be set at a rate than results in “robust project development.”

Finally, HB573 (Keam) requires that community solar projects owned by investor-owned utilities must include higher-cost facilities located in low-income areas.

Homeowner associations

Another successful piece of legislation is HB414 (Delaney) and SB504(Petersen), clarifying the respective rights of homeowners and HOAs when it comes to solar panels.

Since 2014, Virginia law has prohibited HOAs from banning solar panels unless the ban appears in the association’s recorded declaration. However, the law respects the right of HOAs to place “reasonable restrictions” on the size, place, and manner of placement of solar facilities on members’ property.

The fact that the law did not define “reasonable” turned out to be a problem. Some HOAs decided it was “reasonable” to insist solar panels be confined to the rear of a roof, whether there was sunshine back there or not. The result has been acrimony, added expense and blocked projects.

Aaron Sutch of Solar United Neighbors of Virginia estimates that since the 2014 legislation, HOAs have blocked over 300 Virginia installations with a value of over $6 million. Sutch negotiated with lobbyists for homeowners associations to achieve peace in this particular valley.

The new legislation provides that a restriction is not reasonable if it increases the cost of installation of the solar panels by 5 percent over the projected cost of the initially proposed installation, or reduces the energy production by 10 percent below the projected production. The owner must provide documentation prepared by an independent solar panel design specialist to show that the restriction is not reasonable by these criteria.

Other legislation

A few other bills should help customers finance solar panels.

B654 (Guy) authorizes DMME to sponsor a statewide financing program for commercial solar, energy efficiency and stormwater investments. The effect will be to boost the availability of low-interest financing through Commercial Property Assessed Clean Energy (C-PACE) in areas of the state where the locality has not developed a program of its own.

B754 (Marsden) authorizes (though it does not require) electric cooperatives to establish on-bill financing of energy efficiency and renewable energy. The program allows for the costs to be paid for out of the savings these improvements deliver. The coops asked for this authority, so presumably at least one plans to follow through.

Finally, B542 (Edwards) repeals the sunset date on crowdfunding provisions and provides fixes for obstacles to a financing approach that, to my knowledge, has been used only once for solar projects in Virginia.

This article appeared first in the Virginia Mercury on March 18,2020. 

It was a messy, chaotic General Assembly Session. It also worked out pretty well.

Solar arrays on Richmond Public Schools were some of the last projects to go forward before a statutory limit on PPAs halted similar projects across the state. Legislation this year raises the cap on PPAs. Photo credit Secure Futures.

This time last year, I didn’t have much good to say about the General Assembly session that had just concluded. This year, try as I might to be cynical and gloomy (and I do make a good effort), I see mostly blue skies. Or at worst, light gray. What follows is a brief run-down of the bills that passed.

Bills that were still alive at the time of my halftime report but that don’t appear in today’s roundup are dead for the year.

Most of these bills don’t yet have the Governor’s signature. Virginia allows the Governor to propose amendments, so what you see here may not be the final word. Bills that do get signed take effect July 1.

Energy Transition

HB1526/SB851, the Clean Economy Act, is an omnibus energy bill that contains a two-year moratorium on new fossil fuel plants, mandatory carbon reductions, mandatory energy efficiency savings, mandatory construction of wind, solar and offshore wind, mandatory energy storage acquisition targets, mandatory closures of some coal and biomass plants, and a mandatory renewable portfolio standard, along with cost recovery provisions, a new program to limit utility bills of low-income earners, and some loosening of restrictions on net metering and third-party power purchase agreements.

The bill is not perfect, and the clean energy transformation it strives for is incomplete. Its provisions mostly don’t apply to electric cooperatives, and while it forces the eventual closure of Dominion’s biomass plants, it actually requires utility customers to subsidize biomass use by paper companies. Dominion is given too free a rein on spending, the energy efficiency targets are weak, and the bill focuses on utility-scale projects to the almost total exclusion of customer-sited projects.

For all that, the legislation is groundbreaking and transformational. Advocates will be back next year with refinements to the bill and proposals to fill the gaps, but putting this necessary framework in place is a huge achievement for Virginia.

SB94 (Favola) and HB714 (Reid) rewrites the Commonwealth Energy Policy to bring it in line with Virginia’s commitment to dealing with climate change, and even to challenge leaders to do more. The bill sets a target for net-zero greenhouse gas emissions economy wide by 2045, and in the electric sector by 2040. These targets are more ambitious than what is in the Clean Economy Act; not only is the electric sector decarbonization deadline earlier (and inclusive of the coops), this is the first legislation to set a target for the economy as a whole. The Commonwealth Energy Policy is advisory and tends to be ignored in practice; however, the bill also requires that the Virginia Energy Plan, developed every four years in the first year of a new governor’s term, include actions to achieve a net-zero economy by 2045 for all sectors.

HB672 (Willett) establishes a policy “to prevent and minimize actions that contribute to the detrimental effects of anthropogenic climate change in the Commonwealth.” State agencies are directed to consider climate change in any actions involving state regulation or spending. Local and regional planning commissions are required to consider impacts from and causes of climate change in adapting comprehensive plans.

RGGI

The Democratic takeover of the General Assembly means Virginia will finally join the Regional Greenhouse Gas Initiative (RGGI). HB981 (Herring) and SB1027 (Lewis), the Clean Energy and Community Flood Preparedness Act, directs DEQ to enter the RGGI auction market. Auction allowances are directed to funds for flood preparedness, energy efficiency and climate change planning and mitigation. As with the Clean Economy Act, votes for the RGGI fell along partisan lines but for one Republican senator, Jill Vogel, who voted for both.

RPS

The Clean Economy Act contains a mandatory renewable portfolio standard (RPS) requiring utilities to include in their electricity mix a percentage of renewable energy that ratchets up over time. It’s weak, especially for distributed solar, and it allows paper company biomass to qualify—an inexcusable corporate welfare provision for politically powerful WestRock and International Paper.

Customer-sited solar/net metering

Watch this space for a post dedicated to net metering, PPAs and community solar bills. Meanwhile, here’s the short version:

Solar Freedom SB710 (McClellan), HB572 (Keam) and HB1184 (Lopez) lift barriers to customer-sited renewable energy such as rooftop solar. HB1647 (Jones) contains some of the elements of Solar Freedom, but a few provisions are in conflict. Advocates have asked the Governor to sign the first three bills but not the fourth. Some Solar Freedom provisions are also in the Clean Economy Act. The new provisions lift the net metering cap to 6% for IOUs; raise the PPA cap to 1,000 MW in Dominion territory and 40 MW in APCo territory; remove standby charges below 15 kW in Dominion territory and completely for APCo; raise the residential size cap to 25 kW and the commercial project size cap to 3 MW; allow Dominion customers to install enough solar to meet 150% of the previous year’s demand (APCo stays at 100%); allow shared solar on multifamily buildings; and enable a 5 MW landfill solar project in Fairfax County to move forward. The provisions do not apply to electric cooperatives.

HOAs HB414 (Delaney) and SB504 (Petersen) clarifies the respective rights of homeowners associations (HOAs) and residents who want to install solar. The law allows HOAs to impose “reasonable restrictions,” a term some HOAs have used to restrict solar to rear-facing roofs regardless of whether these get sunshine. The bill clarifies that HOA restrictions may not increase the cost of the solar facility by more than 5%, or decrease the expected output by more than 10%.

Community solar

SB629 (Surovell) and HB1634 (Jones) creates a program for shared-solar that allows customers to purchase subscriptions in a solar facility no greater than 5 MW.

HB573 (Keam) requires that an investor-owned utility that offers a so-called “community solar” program as authorized by 2017 legislation must include facilities in low-income communities “of which the pilot program costs equal or exceed the pilot program costs of the eligible generating facility that is located outside a low-income community.”

Offshore wind

The Clean Economy Act contains detailed provisions for the buildout and acquisition of offshore wind. SB998 (Lucas), SB860 (Mason) and HB1664 (Hayes) puts the construction or purchase of at least 5,200 MW of offshore wind in the public interest and governs cost recovery for the wind farms under development by Dominion. The bills appear to have the same language that is in the Clean Economy Act.

HB234 (Mugler) establishes a Division of Offshore Wind within the Department of Mines, Minerals and Energy. Its role is to help facilitate the Hampton Roads region as a wind industry hub, coordinate the word of state agencies, develop a stakeholder engagement strategy, and basically make sure this industry gets underway.

Nuclear

SB828 (Lewis) defines “clean” and “carbon-free” energy to include nuclear energy for purposes of the Code. SB817 (Lewis) declares that nuclear energy is considered a clean energy source for purposes of the Commonwealth Energy Policy.

HB1303 (Hurst) and SB549 (Newman) direct DMME to develop a strategic plan for the role of nuclear energy in moving toward renewable and carbon-free energy.

Energy Efficiency

HB1526/SB851, the Clean Economy Act, contains a mandatory energy efficiency resource standard (EERS) and other provisions for spending on low-income EE programs. HB1450 (Sullivan) appears to be the same as the efficiency provisions of the Clean Economy Act. A sentence added late in the process provides that the bill won’t take effect until passed again in 2021. Presumably the passage of the Clean Economy Act makes this bill moot.

HB981 (the RGGI bill) specifies that a portion of the funds raised by auctioning carbon allowances will fund efficiency programs.

HB1576 (Kilgore) makes it harder for large customers to avoid paying for utility efficiency programs. In the past, customers with over 500 kW of demand were exempt; this bill allows only customers with more than 1 MW of demand to opt out, and only if the customer demonstrates that it has implemented its own energy efficiency measures.

HB575 (Keam) beefs up the stakeholder process that Dominion and APCo engage in for the development of energy efficiency programs.

SB963 (Surovell) establishes the Commonwealth Efficient and Resilient Buildings Board to advise the Governor and state agencies about ways to reduce greenhouse gas emissions and increase resiliency. Every agency is required to designate and energy manager responsible for improving energy efficiency and reducing greenhouse gas emissions.

SB628 (Surovell) requires the residential property disclosure statement provided by the Real Estate Board on its website to include advice that purchasers should obtain a residential building energy analysis as well as a home inspection prior to settlement.

Energy storage

The Clean Economy Act requires that by 2035, Appalachian Power will construct 400 MW of energy storage and Dominion 2,700 MW. None of the projects can exceed 500 MW, except for one project of up to 800 MW for Dominion (a possible reference to the pumped storage project Dominion is reportedly considering). Projects must meet competitive procurement requirements, and at least 35% of projects must be developed by third-party developers.

SB632 (Surovell) has a fair amount of overlap with the Clean Economy Act, but the details are different, and it will be interesting to see what the Governor does about that. SB632 makes it in the public interest to develop 2,700 MW of energy storage located in Virginia by 2030. At least 65% must take the form of a “purchase by a public utility of energy storage facilities owned by persons other than a public utility or the capacity from such facilities.” Up to 25% of facilities do not have to satisfy price competitiveness criteria “if the selection of the energy storage facilities materially advances non-price criteria, including favoring geographic distribution of generating facilities, areas of higher employment, or regional economic development.” Utility Integrated Resource Plans must include the use of energy storage and must include “a long-term plan to integrate new energy storage facilities into existing generation and distribution assets to assist with grid transformation.”

SB632 also fixes a problem introduced a couple of years ago, when the ownership or operation of storage facilities was added to the definition of a utility in one chapter of the Code (§56.265.1), though not in others. With the fix, a public utility may own or operate storage, but so can third parties without them thereby becoming utilities.

HB1183 (Lopez) requires the SCC to establish a task force on bulk energy storage resources.

Siting, permitting, and other issues with utility-scale renewable energy 

HB1327 (Austin) allows localities to impose property taxes on generating equipment of electric suppliers utilizing wind turbines at a rate that exceeds the locality’s real estate tax rate by up to $0.20 per $100 of assessed value. Under current law, the tax may exceed the real estate rate but cannot exceed the general personal property tax rate in the locality.

HB656 (Heretick) and SB875 (Marsden) allow (but do not require) local governments to incorporate into their zoning ordinances national best practices standards for solar PV and batteries.

HB1131 (Jones) and SB762 (Barker) authorize localities to assess a revenue share of up to $1,400 per megawatt on solar PV projects, in exchange for which an existing tax exemption is expanded.

HB657 (Heretick) exempts solar facilities of 150 MW or less from the requirement that they be reviewed for substantial accord with local comprehensive plans, if the locality waives the requirement.

HB1434 (Jones) and SB763 (Barker) provides a step-down of the existing 80% machinery and tools tax exemption for large solar projects, and eliminates it after 2030 for projects over 5 MW.

SB870 (Marsden) authorizes local planning commissions to grant special exceptions for solar PV projects in their zoning ordinances and include certain regulations and provisions for conditional zoning for solar projects.

HB1675 (Hodges) requires anyone wanting to locate a renewable energy or storage facility in an opportunity zone to execute a siting agreement with the locality.

Grants, tax deductions, tax credits and other financing

HB654 (Guy) authorizes DMME to sponsor a statewide financing program for commercial solar, energy efficiency and stormwater investments. The effect would be to boost the availability of Commercial Property Assessed Clean Energy (C-PACE) in areas of the state where the locality has not developed a program of its own.

SB754 (Marsden) authorizes electric cooperatives to establish on-bill financing programs for energy efficiency and renewable energy.

HB1656 (O’Quinn) authorizes Dominion and APCo to design incentives for low-income people, the elderly, and disable persons to install energy efficiency and renewable energy, to be paid for by a rate adjustment clause.

HB1707 (Aird) makes changes to the Clean Energy Advisory Board, which is (already) authorized to administer public grant funding.

SB1039 (Vogel) allows a real property tax exemption for solar energy equipment to be applied retroactively if the taxpayer gets DEQ certification within a year.

SB542 (Edwards) repeals the sunset date on crowdfunding provisions and provides fixes for certain existing obstacles to this financing approach.

Customer rights to shop for renewable energy

HB868 (Bourne) allows customers to buy 100% renewable energy from any licensed supplier, regardless of whether their own utility has its own approved tariff. The Senate killed a companion bill, and Commerce and Labor passed HB868 only with an amendment that requires the bill to be reenacted in 2021. (Credit Edwards, Deeds, Ebbin and Bell for not going along with the amendment.) After Senate passage the bill went to conference, and the House conferees caved. So technically the bill passed, but it has no effect. Interesting note: 41 House Republicans still voted against it in the end.

HB 889 (Mullin) was originally broader than HB868, but after the Senate got through with it, the bill is now a pilot program for the benefit of just those large corporations that, as of February 25, 2019, had filed applications seeking to aggregate their load in order to leave Dominion and buy renewable energy elsewhere. The pilot program is capped at 200 MW, and the SCC will review it in 2022.

Other utility regulation

HB528 (Subramanyam) requires the SCC to determine the amortization period for recovery of costs due to the early retirement of generating facilities owned or operated by investor-owned utilities. In the absence of this legislation, Dominion would have been allowed to use excess earnings for immediate payoffs of the costs of early fossil fuel plant closures; this puts the SCC back in charge of the schedule. The fact that this bill passed is nothing short of miraculous. House Republicans voted against it en masse, and it made it through Senate Commerce and Labor over the objections of Dominion’s best friends from both parties (though most came around for the floor vote when it was clear it would pass).

SB731 (McClellan) affects a utility’s rate of return. The SCC determines this rate by looking first at the average returns of peer group utilities, and then often going higher. The bill lowers the maximum level that the SCC can set above the peer group average. Note that although this bill is recorded as having passed both chambers, it looks like there were amendments that do not appear on the Legislative Information Service website.

HB167 (Ware) requires an electric utility that wants to charge customers for the cost of using a new gas pipeline to prove it can’t meet its needs otherwise, and that the new pipeline provides the lowest-cost option available to it. (Note that this cost recovery review typically happens after the fact, i.e., once a pipeline has been built and placed into service.) Ware acceded to some amendments that Dominion wanted, and eventually Dominion told legislators the company was not opposed to the bill. Hence it passed both chambers unanimously. Notwithstanding Dominion’s happy talk, this bill makes cost recovery for the Atlantic Coast Pipeline much, much more difficult, one more indication that Dominion may be preparing to fold up shop on this project.

[Updated March 17 to correct an error–I had included a bill as having passed that in fact died in the House. Bummer.]

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.

Yeah, I’m not perfect either. Pass the Clean Economy Act.

People gathered with signs supporting climate action

Grassroots activists gather at the steps of the Virginia Capital on January 14. Photo courtesy Sierra Club.

When it was first introduced, and before the utilities and special interests got their grubby little paws on it, the Clean Economy Act was an ambitious and far-reaching overhaul of Virginia energy policy that turned a little timid when it came to particulars.

Sausage-making ensued.

The bill that emerged from the grinder inevitably allows Dominion Energy to profit more than it should. (Welcome to Virginia, newcomers.) The energy efficiency provisions, which I thought weak, became even weaker, then became stronger, then ended up somewhere in the middle depending on whether you were looking at the House or Senate version. The renewable portfolio standard, complicated to begin with, is now convoluted to the point of farce — and to the extent I understand it, I’m not laughing.

Yet the bill still does what climate advocates set out to do: It creates a sturdy framework for a transition to 100% carbon-free electricity by 2045 (the House bill) or 2050 (the Senate bill).

It’s worth taking a moment to marvel at the very idea of a strong energy transition bill passing in a state that still subsidizes coal mining. Even a year ago, this would not have been possible. That we have come this far is a tribute not just to the Democrats who are making good on their pledge to tackle climate, but to the thousands of grassroots activists who worked to elect them and then stayed on the job to hold them to their promises.

The Clean Economy Act works by tackling the problem from multiple directions in a belt-and-suspenders approach:

• The legislation puts an immediate two-year moratorium on any new carbon-emitting plants. The concept came straight from the grassroots-led Green New Deal, and it creates space for the other provisions to kick in.

• It requires DEQ to implement regulations cutting carbon emissions through participation in the Regional Greenhouse Gas Initiative. RGGI uses market incentives to cut carbon emissions from power plants 30 percent by 2030. The Department of Environmental Quality will auction carbon allowances to power plant owners and use the auction money primarily for coastal resilience projects and energy efficiency projects for low-income residents. The Department of Housing and Community Development will be in charge of this efficiency spending, not Dominion.

• The Clean Economy Act takes RGGI out further, ensuring that Virginia reaches zero emissions by 2045 (House bill) or 2050 (Senate bill).

• It requires the closure of most coal plants in Virginia by the end of 2024. The newest of these, the Virginia City Hybrid coal plant, must close by the end of 2030 unless it achieves 83 percent emission reductions through carbon capture and storage, the technology it was allegedly designed for. Biomass plants have to close by the end of 2028.

• In place of fossil fuels, utilities have to build or buy thousands of megawatts of solar, on-shore wind, offshore wind and energy storage. Yearly solicitations for wind and solar will ensure sustained job creation employing thousands of workers. Thirty-five percent of all this must be competitively procured from third-party developers, a requirement that lowers costs and makes it harder for utilities to overcharge for the projects they build themselves.

• The storage requirement in particular is notable because batteries compete directly with gas combustion turbines to serve peak demand. The more storage a utility builds, the weaker its case for building new gas peakers becomes.

• For the first time, Virginia utilities will have to achieve energy efficiency savings, not just throw money at the problem. Under the stronger House bill, Dominion must achieve 5 percent cumulative energy savings by 2025. Appalachian Power must achieve 2 percent. Starting in 2026, the SCC will set efficiency goals every three years. Achieving savings ought to be easy; a new ranking of progress on efficiency puts Dominion at 50th out of 52 utilities. Low-hanging fruit, anyone? The Clean Economy Act also calls for 15 percent of efficiency spending to be allocated for programs benefiting low-income, elderly, disabled individuals and veterans.

• Also for the first time, the legislation requires the State Corporation Commission to consider the “social cost of carbon.” That puts one more thumb on the scales weighing against fossil fuels.

• If by January of 2028 we are still not on track, the House bill empowers the secretaries of natural resources and commerce and trade to put a second moratorium on new fossil fuel facilities.

One other element of the bill is worth mentioning, given the questions about how much all these new projects and programs will cost. The legislation creates a “percentage of income payment program” for low-income ratepayers to cap electricity costs at 6 percent of household income, or 10 percent if they use electric heat. The program includes provisions for home energy audits and retrofits.

As I said at the outset, the bill is not without its flaws. The cost of offshore wind energy is “capped” in the bill at 1.6 times the cost of energy from a gas peaker plant, though I’m told negotiations continue and the adder may be reduced. Regardless of the number, this makes as much sense as capping the cost of apples at some number above the cost of Cheetos. Why are we comparing a carbon-free source of energy that is getting cheaper every year with one of the dirtiest and most expensive fossil fuel sources? On behalf of the offshore wind industry: Please, I’m insulted.

Virginia will be a leader on offshore wind, but we are not the first, and we know the price of electricity from the other U.S. projects already under contract. Prices are already well below gas peaker plant levels. The CEA ought to cap the cost of the Virginia project at 10 or 20 percent above the lowest-priced comparable offshore wind project, which would allow plenty of room for differences in wind speeds, distance from shore and other variables.

On second thought, as a point of pride, Dominion should reject any adder at all, and insist on capping its costs below those of all the northeastern projects. Have some confidence in yourselves, people!

My other complaint is that the Clean Economy Act’s nearly incomprehensible renewable portfolio standard fails to deliver. Yes, other provisions of the bill require the utilities to build a lot of wind and solar. But nothing requires them to use the renewable energy certificates (RECs) associated with those facilities for the RPS.

If I totally lost you with those acronyms, it’s okay. Just know that RECs are the bragging rights associated with renewable energy, and they can be bought and sold separately from the electricity itself. If Dominion builds a solar farm in Virginia and sells the RECs to Microsoft or the good people of New Jersey, those folks have bought the right to claim the renewable energy regardless of whether they actually get their electrons straight from the solar farm. Virginia would be left with a solar farm, but legally, no solar energy.

RECs also fetch different prices according to the kind of renewable energy they represent and how many are on the market. Everyone wants solar, so solar RECs cost more. RECs from hundred-year-old hydroelectric projects are not in demand, so they are cheap.

As written now, the Clean Economy Act sets up an RPS that doesn’t require any wind or solar RECs at all (excepting a miniscule carve-out for small wind and solar that can also be met with “anaerobic digestion resources,” possibly a reference to pig manure).

The RPS can be met with RECs from several sources less desirable than solar, and therefore cheaper. These include old hydro dams, Virginia-based waste-to-energy and landfill methane facilities and biomass burned by paper companies WestRock and International Paper. As a result, utilities will buy RECs from those sources to meet the requirements.

Only once utilities run out of cheaper RECs from eligible sources will they be forced to apply RECs from any of the wind and solar they are building. Until that time, Dominion and APCo will sell the RECs from the new solar farms to the highest bidder, while Virginia customers shell out potentially hundreds of millions of dollars for RECs no one really wants.

That’s not fair to the Virginians who are paying for the wind and solar projects to be built and who have a right to expect wind and solar will be a part of their energy supply as a result. Legislators can correct this with a very simple requirement that RECs from the new facilities mandated by the law be applied to the RPS.

And, while I am telling legislators what to do, they ought to remove the eligibility of paper company biomass. This provision seems to have been added to the bill (in obscure, coded language) simply because WestRock has talented lobbyists and the political power to demand a cut of the action. But do we ratepayers want to buy their RECs? No, we do not.

WestRock is doubtless unhappy about losing the nice stream of unearned income it’s been getting from selling thermal RECs to Dominion under Virginia’s voluntary RPS. But there is no good reason for electricity customers to subsidize a Fortune 500 corporation whose CEO earned $18 million last year and whose Covington mill, according to EPA data, spews out more toxic air emissions than any other facility in Virginia including Dominion’s Chesterfield coal plant. That’s not clean energy.

Fortunately (I guess), the RPS is not the heart and soul of the Clean Economy Act. For the next several years, its slow ramp-up makes it barely even relevant, and it is the next several years that matter most in our response to the climate crisis.

Joining RGGI, cutting emissions, implementing energy efficiency, building renewable energy and storage, closing coal and biomass plants: those are the mechanisms of the Clean Economy Act that will drive Virginia’s transition to 100% clean energy.

And so, having offered my helpful suggestions to improve the nutritional content of this sausage, I will add just one more thing:

Pass the bill.

This column originally ran in the Virginia Mercury on February 24, 2020. That afternoon, the Senate Commerce and Labor committee conformed the House version of the bill to the weaker Senate version and passed it out of committee. House Labor and Commerce meets today and is expected to conform the Senate bill to the stronger House language. Assuming both chambers pass the bills without further amendments, the bills will then go to a conference committee (three senators, three delegates) to resolve the differences, and the resulting language will go to the Governor. 

It’s halftime at the GA, and do we ever have a show!

battle scene

Tense negotiations over the Clean Economy Act. (Aniello Falcone, Metropolitan Museum of Art)

Welcome to “Crossover,” the day on which the Virginia House and Senate have to finish the work on their bills and send them over to the other chamber. This is sudden death time; if a bill didn’t get across the finish line in time, it is dead for the year.

In past years, henceforth to be known as “the bad old days,” almost nothing good even got out of committee, much less reached Crossover. Clean energy advocates could pretty much plan vacations for the second half of February.

This year the Democrats are on a tear, especially in the House. Yes, a lot of good bills have been heavily watered down. This is still the Old Dominion, with the emphasis on Dominion. And it is definitely too early to break out the champagne, because the action isn’t over for the bills still in play. But overall, 2020 is shaping up to be a watershed year for clean energy.

BILLS STILL ALIVE

Energy Transition

HB1526/SB851, the Clean Economy Act, has been the subject of intense and continuous negotiation. First there were a bunch of amendments that weakened it; then there were a bunch that strengthened it. It’s been a wild ride, and we may still see more changes during the second half of Session. But it’s alive! (HB1526 passed the House 52-47; Democrats Rasoul and Carter voted no. SB851 passed the Senate on a party-line vote of 21-19.)

SB94 (Favola) rewrites the Commonwealth Energy Policy to bring it in line with Virginia’s commitment to dealing with climate change. The bill sets a target for net-zero greenhouse gas emissions economy wide by 2045, and in the electric sector by 2040. This section of the Code is for the most part merely advisory; nonetheless, it is interesting that Dominion Energy supported the bill. (Passed the Senate 21-18, on party lines.)

Delegate Reid’s HB714 is similar to SB94 but contains added details, some of which have now been incorporated into SB94. (Passed the House 55-45 with a substitute.)

HB672 (Willett) establishes a policy “to prevent and minimize actions that contribute to the detrimental effects of anthropogenic climate change in the Commonwealth.” State agencies are directed to consider climate change in any actions involving state regulation or spending. Local and regional planning commissions are required to consider impacts from and causes of climate change in adapting comprehensive plans. (Passed the House 55-44 with a substitute.)

HB547 (Delaney) establishes the Virginia Energy and Economy Transition Council to develop plans to assist the Commonwealth in transitioning from the use of fossil fuel energy to renewable energy by 2050. The Council is to include members from labor and environmental groups. (Passed the House 54-45.)

RGGI bills, good and bad

The Democratic takeover of the General Assembly means Virginia will finally join the Regional Greenhouse Gas Initiative (RGGI), either according to the regulations written by DEQ or with a system in place that raises money from auctioning carbon allowances.

HB981 (Herring) and SB1027 (Lewis) is called the Clean Energy and Community Flood Preparedness Act. It implements the DEQ carbon regulations and directs DEQ to enter the RGGI auction market. Auction allowances are directed to funds for flood preparedness, energy efficiency and climate change planning and mitigation. We are told this is the Administration’s bill. A similar bill, HB20 (Lindsey), was incorporated into HB981. (HB981 passed the House 53-46. SB1027 passed the Senate 22-18.)

SB992 (Spruill) requires the Air Board to give free allowances for three years to any new power plant that was permitted before June 26, 2019, the effective date of the carbon trading regulations. Essentially it gives special treatment to two planned gas generation plants that aren’t needed and therefore have sketchy economics unless they get this giveaway. Clean energy advocates will be looking to kill this one in the House. (Passed the Senate 27-13. A number of Democrats who should know better voted for the bill.)

RPS

The Clean Economy Act contains a renewable portfolio standard (RPS) requiring utilities to include in their electricity mix a percentage of renewable energy that ratchets up over time. In addition, HB1451 (Sullivan) is a stand-alone RPS bill that also includes an energy storage mandate. It appears to be identical to the RPS and storage provisions of the CEA (of which Sullivan is also the patron). (Passed the House 52-47.)

Customer-sited solar/net metering

Solar Freedom SB710 (McClellan) and HB572 (Keam) lifts barriers to customer-sited renewable energy such as rooftop solar. The changes include lifting the caps on PPAs and net metering, and eliminating standby charges. Nearly identical versions were filed by Delegates Lopez (HB1184) (rolled into HB572) and Simon (HB912) (ditto). SB532 (Edwards), a stand-alone bill to make PPAs legal, was rolled into SB710. (SB710 passed the Senate 22-18 with a substitute that is much more limited than the original bill. HB572 passed the House with just a minor substitute 67-31. HB1647 (Jones) is a Solar Freedom bill that also includes community solar. (Passed the House 55-45.) Several provisions of Solar Freedom also appear in the Clean Economy Act.

HOAs HB414 (Delaney) and SB504 (Petersen) clarifies the respective rights of homeowners associations (HOAs) and residents who want to install solar. The law allows HOAs to impose “reasonable restrictions,” a term some HOAs have used to restrict solar to rear-facing roofs regardless of whether these get sunshine. The bill clarifies that HOA restrictions may not increase the cost of the solar facility by more than 5%, or decrease the expected output by more than 10%. (HB414 passed the House 95-4. SB504 passed the Senate 40-0.)

Community solar

HB1647 (Jones) (see above) includes community solar in a bill that otherwise looks like Solar Freedom.

SB629 (Surovell) creates a program for “solar gardens.” (Substitute passed the Senate 39-0.)

HB1634 (Jones) requires utilities to establish shared-solar programs that allows customers to purchase subscriptions in a solar facility no greater than 5 MW. (Amended with a substitute; it now looks a lot like SB629. Passed the House 99-0.)

HB573 (Keam) affects the utility-controlled and operated “community solar” programs required by 2017 legislation. The bill requires that “an investor-owned utility shall not select an eligible generating facility that is located outside a low-income community for dedication to its pilot program unless the investor-owned utility contemporaneously selects for dedication to its pilot program one or more eligible generating facilities that are located within a low-income community and of which the pilot program costs equal or exceed the pilot program costs of the eligible generating facility that is located outside a low-income community.” (Passed the House 90-8.)

Offshore wind

The CEA contains detailed provisions for the buildout and acquisition of offshore wind. HB234 (Mugler) directs the Secretary of Commerce and Trade to develop an offshore wind master plan. (Passed House unanimously with substitute.)

SB860 (Mason) and HB1664 (Hayes) puts the construction or purchase of at least 5,200 MW of offshore wind in the public interest. (SB860 passed the Senate 22-18. HB1664 amended to incorporate HB1607, but with less gold-plating than the other bill. HB1664 passed the House 65-34.)

HB1607 (Lindsey) and SB998 (Lucas) allows Dominion to recover the costs of building offshore wind farms as long as it has a plan for the facilities to be in place before January 1, 2028 and that it has used reasonable efforts to competitively source the majority of services and equipment. All utility customers in Virginia, regardless of which utility serves them, will participate in paying for this through a non-bypassable charge. Surely this bill came straight from Dominion. (HB1607 amended to incorporate HB1664; only 1664 moves forward. SB998 passed the Senate 40-0.)

Nuclear and biomass

SB828 and SB817 declare that any time the Code or the Energy Policy refers to “clean” or “carbon-free” energy, it must be read to include nuclear energy. In subcommittee, Senator Lewis suddenly announced he was amending the bills to add “sustainable biomass” as well. After an uproar and a crash course on biomass, both bills eventually went back to being only about nuclear. (Both bills passed the Senate unanimously.) Unfortunately, some biomass from paper companies did creep into the Clean Economy Act in spite of the best efforts of clean energy advocates.

Energy Efficiency

HB1526/SB851, the Clean Economy Act, contains a mandatory energy efficiency resource standard (EERS) and contains other provisions for spending on low-income EE programs. HB981 (the RGGI bill) specifies that a portion of the funds raised by auctioning carbon allowances will fund efficiency programs.

There are also a few standalone efficiency bills. HB1450 (Sullivan) and SB354 (Bell) appear to be the same as the efficiency provisions of the CEA, though the standalone applies only to Dominion and APCo. (HB1450 passed House 75-24,picking up a respectable number of Republicans. SB354 stricken at request of patron in C&L.)

HB1576 (Kilgore) doesn’t set new efficiency targets, but it makes it harder for large customers to avoid paying for utility efficiency programs. In the past, customers with over 500 kW of demand were exempt; this bill allows only customers with more than 1 MW of demand to opt out, and only if the customer demonstrates that it has implemented its own energy efficiency measures. (Passed the House, 99-0.)

HB575 (Keam) beefs up the stakeholder process that Dominion and APCo engage in for the development of energy efficiency programs. (Passed the House 99-0 and referred to Senate C&L.)

SB963 (Surovell) establishes the Commonwealth Efficient and Resilient Buildings Board to advise the Governor and state agencies about ways to reduce greenhouse gas emissions and increase resiliency. Every agency is required to designate and energy manager responsible for improving energy efficiency and reducing greenhouse gas emissions. (Passed the Senate 40-0.)

SB628 (Surovell) requires the residential property disclosure statement provided by the Real Estate Board to include advice that purchasers should obtain a residential building energy analysis as well as a home inspection prior to settlement. (Passed the Senate 26-14.)

Energy storage

HB1183 (Lopez) requires the SCC to establish a task force on bulk energy storage resources. (Passed the House 91-9 with a substitute.)

SB 632 (Surovell) creates a storage target of 1,000 MW and states that this is in the public interest.  Senator Surovell says this bill originated with the Governor’s office. (Passed the Senate 20-19 with a substitute.)

Siting, permitting, and other issues with utility-scale renewable energy

HB1327 (Austin) allows localities to impose property taxes on generating equipment of electric suppliers utilizing wind turbines at a rate that exceeds the locality’s real estate tax rate by up to $0.20 per $100 of assessed value. Under current law, the tax may exceed the real estate rate but cannot exceed the general personal property tax rate in the locality. Wind developer Apex Clean Energy helped develop the bill and supports it. (Passed the House 81-12, now goes to Senate Finance.)

HB656 (Heretick) and SB875 (Marsden) allow local governments to incorporate into their zoning ordinances national best practices standards for solar PV and batteries. (Both bills passed their chambers unanimously with substitute language.)

HB1131 (Jones) and SB762 (Barker) authorize localities to assess a revenue share of up to $0.55 per megawatt-hour on solar PV projects, in exchange for which an existing tax exemption is expanded. (HB1131 Passed the House 54-42 with a substitute. SB762 passed Senate 40-0.)

HB657 (Heretick) and SB893 (Marsden) exempt solar facilities of 150 MW or less from the requirement that they be reviewed for substantial accord with local comprehensive plans. (HB657 passed the House with a substitute, 59-41. SB893 was passed by indefinitely—killed—in Local Government.)

HB1434 (Jones) and SB763 (Barker) reduces the existing 80% machinery and tools tax exemption for large solar projects. (HB1434 passed the House 57-41. SB763 passed the Senate 40-0.) 

SB870 (Marsden) authorizes local planning commissions to include certain regulations and provisions for conditional zoning for solar projects over 5 MW. (Passed Senate 40-0 with a substitute.)

HB1675 (Hodges) requires anyone wanting to locate a renewable energy or storage facility in an opportunity zone to execute a siting agreement with the locality. (Passed House 89-7.)

Grants, tax deductions, tax credits and other financing

HB654 (Guy) authorizes DMME to sponsor a statewide financing program for commercial solar, energy efficiency and stormwater investments. The effect would be to boost the availability of Commercial Property Assessed Clean Energy (C-PACE) in areas of the state where the locality has not developed a program of its own. (Passed House 75-23. Assigned to Senate Committee on Local Government.)

SB754 (Marsden) authorizes utilities to establish on-bill financing of energy efficiency, electrification, renewable energy, EV charging, energy storage and backup generators. (Passed Senate 40-0 with a substitute.)

HB1656 (O’Quinn) authorizes Dominion and APCo to design incentives for low-income people, the elderly, and disable persons to install energy efficiency and renewable energy, to be paid for by a rate adjustment clause. (Passed the House 95-4.)

HB1707 (Aird) makes changes to the Clean Energy Advisory Board, which is (already) authorized to administer public grant funding. (Passed the House 65-33 with a substitute. Referred to Senate Ag.)

SB634 (Surovell) establishes the Energy Efficiency Subsidy Program to fund grants to subsidize residential “efficiency” measures, interestingly defined as solar PV, solar thermal or geothermal heat pumps. It also creates a subsidy program for electric vehicles. (Passed the Senate 32-7. Senator Surovell has requested a budget amendment of $1 million for the fund. )

SB1039 (Vogel) allows a real property tax exemption for solar energy equipment to be applied retroactively if the taxpayer gets DEQ certification within a year. (Passed the Senate 40-0.)

SB542 (Edwards) repeals the sunset date on crowdfunding provisions and provides fixes for certain existing obstacles to this financing approach. (Passed the Senate 40-0.)

Customer rights to shop for renewable energy

HB868 (Bourne) and SB376 (Suetterlein and Bell) allows customers to buy 100% renewable energy from any licensed supplier, regardless of whether their own utility has its own approved tariff. (HB868 passd the House 55-44. But note that its Senate companion SB376 was passed by indefinitely in C&L.)

HB 889 (Mullin) and SB 379 (McPike), the Clean Energy Choice Act, is broader than HB868. The legislation allows all customers to buy 100% renewable energy from any licensed supplier regardless of whether their utility has its own approved tariff. In addition, large customers (over 5 MW of demand) of IOUs also gain the ability to aggregate their demand from various sites in order to switch to a competitive supplier that offers a greater percentage of renewable energy than the utility is required to supply under any RPS, even if it is not 100% renewable. Large customers in IOU territory who buy from competing suppliers must give three years’ notice before returning to their utility, down from the current five years. The SCC is directed to update its consumer protection regulations. (HB889 passed the House 56-44. But its Senate companion SB379 passed by indefinitely in C&L.)

Other utility regulation

HB528 (Subramanyam) requires the SCC to decide when utilities should retire fossil fuel generation. (Passed the House 55-44.)

HB1132 (Jones, Ware) put the SCC back in control of regulating utility rates. (Passed the House 77-23.)

SB731 (McClellan) also affects rates, in this case by addressing a utility’s rate of return. The SCC determines this rate by looking first at the average returns of peer group utilities, and then often going higher. The bill lowers the maximum level that the SCC can set above the peer group average. (Passed the Senate 38-1.)

HB167 (Ware) requires an electric utility that wants to charge customers for the cost of using a new gas pipeline to prove it can’t meet its needs otherwise, and that the new pipeline provides the lowest-cost option available to it. (Note that this cost recovery review typically happens after the fact, i.e., once a pipeline has been built and placed into service.) Last year Ware carried a similar bill that passed the House in the face of frantic opposition from Dominion Energy, before being killed in Senate Commerce and Labor. (Passed the House unanimously with a substitute. It will now go to Senate C&L, where it may still have trouble from a Dominion-friendly committee.)

DEAD FOR THE YEAR

Green New Deal HB77 (Rasoul) sets out an ambitious energy transition plan and includes a fossil fuel moratorium. (Sent from Labor and Commerce to Appropriations, where it was not brought up. This is a polite way of killing a bill without anyone having to vote on it).

Undercutting RGGI HB110 (Ware) says that if Virginia joins RGGI, DEQ must give free carbon allowances to any facility with a long-term contract predating May 17, 2017 that doesn’t allow recovery of compliance costs. Rumor has it the bill was written to benefit one particular company. (Left in Labor and Commerce.)

Clean energy standard Instead of an RPS, SB876 (Marsden) proposed a “clean energy standard” that made room for some coal and gas with carbon capture. (Recognizing a number of problems with this approach, Senator Marsden rolled his bill into SB851; that’s GA-speak for killing a bill while still giving the patron points for trying).

Greenhouse gas inventory HB525 (Subrmanyam and Reid) require a statewide greenhouse gas inventory covering all sectors of the economy. (Laid on the table in a subcommittee, which also means it was killed.)

Brownfields HB1306 (Kory) directs the Department of Mines, Minerals and Energy to adopt regulations allowing appropriate brownfields and lands reclaimed after mining to be developed as sites for renewable energy storage projects. (Stricken from docket in House Ag.) HB1133 (Jones) makes it in the public interest for utilities to build or purchase, or buy the output of, wind or solar facilities located on previously developed sites. (Continued to 2021, yet another polite way of killing a bill, though it leaves them not technically dead. So should we call them the undead? Let’s hope the concept is resurrected next year, anyway.)

Local action HB413 (Delaney) authorizes a locality to include in its subdivision ordinance rules establishing minimum standards of energy efficiency and “maintaining access” to renewable energy. (Left in Cities, Counties and Towns.)

Retail choice SB842 (Petersen) provides for all retail customers of electricity to be able to choose their supplier, and instructs the SCC to promulgate regulations for a transition to a competitive market for electricity. Existing utilities will continue to provide the distribution service. The bill also requires suppliers of electricity to obtain at least 25% of sales from renewable energy by 2025, 50% by 2030, and 100% by 2050. Renewable energy is defined to include “sustainable biomass” but not waste incineration or landfill gas. (Continued to 2021.)

Resilience hubs HB959 (Bourne) directs DMME to establish a pilot program for resilience hubs. These are defined as a simple combination of solar panels and battery storage capable of powering a publicly-accessible building in emergency situations or severe weather events, primarily to serve vulnerable communities. (Continued to 2021.)

Net metering HB1067 (Kory) deals with a specific situation where a customer has solar on one side of property divided by a public right-of-way, with the electric meter to be served by the solar array on the other side. The legislation declares the solar array to be located on the customer’s premises. (Item 4 of Solar Freedom would also solve the problem.) (Continued to 2021.)

Utility restructuring

HB1677 (Keam) replaces Virginia’s current vertically-integrated monopoly structure with one based on competition and consumer choice. Existing monopoly utilities would be required to choose between becoming sellers of energy in competition with other retail sellers, or divesting themselves of their generation portfolios and retaining ownership and operation of just the distribution system. Other features: a nonprofit independent entity to coordinate operation of the distribution system; performance-based regulation to reward distribution companies for reliable service; consumer choices of suppliers, including renewable energy suppliers; an energy efficiency standard; a low-income bill assistance program; and consumer protections and education on energy choices. (This was politely continued to 2021 in Labor and Commerce with no debate. The patrons were complimented for “starting a conversation.”)

HB206 (Ware) was, I’m told, the beta version of Delegate Keam’s HB1677. (Incorporated into HB1677, which was continued to 2021.)

SB842 (Petersen) seeks to achieve the same end as HB1677 and HB206, but it puts the SCC in charge of writing the plan. The bill provides for all retail customers of electricity to be able to choose their supplier, and instructs the SCC to promulgate regulations for a transition to a competitive market for electricity. Existing utilities will continue to provide the distribution service. The bill also requires suppliers of electricity to obtain at least 25% of sales from renewable energy by 2025, 50% by 2030, and 100% by 2050. Renewable energy is defined to include “sustainable biomass” but not waste incineration or landfill gas. (Continued to 2021.)

Anti-renewable energy bills

HB205 (Campbell) adds unnecessary burdens to the siting of wind farms and eliminates the ability of wind and solar developers to use the DEQ permit-by-rule process for projects above 100 megawatts. (Laid on the table in subcommittee.)  HB1171 (Poindexter) is a make-work bill requiring an annual report of the acreage of utility scale solar development, as well as the acreage of public or private conservation easements. (Continued to 2021.) HB1636 (Campbell) prohibits the construction of any building or “structure” taller than 50 feet on a “vulnerable mountain ridge.” You can tell the bill is aimed at wind turbines because it exempts radio, TV, and telephone towers and equipment for transmission of communications and electricity. (Laid on the table in subcommittee. FWIW, we’re told it was aimed at hotels, not wind. Yeah, sure . . .) HB1628 (Poindexter) prohibits the state from joining RGGI or adopting any carbon dioxide cap-and-trade program without approval from the General Assembly. (Passed by indefinitely in subcommittee. Yep, another way to kill a bill.)

Financing

HB461 (Sullivan) establishes a tax credit of 35%, up to $15,000, for purchases of renewable energy property. It is available only to the end-user (e.g., a resident or business who installs solar or a geothermal heat pump). Unfortunately, loose drafting would have also made the credit available for wood-burning stoves and other non-clean energy applications. (Died in a Finance subcommittee on a 5-5 vote.)

HB633 (Willett) establishes a tax deduction up to $10,000 for the purchase of solar panels or Energy Star products. (Stricken from docket in a Finance subcommittee.)

HB947 (Webert) expands the authority of localities to grant tax incentives to businesses located in green development zones that invest in “green technologies,” even if they are not themselves “green development businesses.” Green technologies are defined as “any materials, components, equipment, or practices that are used by a business to reduce negative impacts on the environment, including enhancing the energy efficiency of a building, using harvested rainwater or recycled water, or installing solar energy systems.” (Continued to 2021.)

SB1061 (Petersen) allows residential customers to qualify for local government Property Assessed Clean Energy (PACE) financing programs for renewable energy and energy efficiency improvements; currently the availability of this financing tool is restricted to commercial customers. (Continued to 2021.)

HB754 (Kilgore) establishes the Virginia Brownfield and Coal Mine Renewable Energy Grant Fund, which will support wind, solar or geothermal projects sited on formerly mined lands or brownfields. (Left in Appropriations.)

[Updated February 12 to include late votes and fix a random meaningless line, and later to correct various other screw-ups that people have kindly brought to my attention.]

And finally, energy efficiency and storage bills

advocates holding clean energy signs

Hundreds of grassroots activists turned out on January 14 to lobby for clean anergy. Photo by Alex Kambis.

You’ve heard these statistics before: Virginia residents pay the 7th highest bills in the nation, due in large part to the fact that our utilities rank among the lowest in the nation for energy efficiency programs. 2018’s “grid mod” bill required massive utility investments in efficiency spending, but the legislation did not actually mandate results, and Dominion has been slow to propose programs.

That leaves Virginia with a lot of low-hanging fruit that looks mighty tempting as we seek to decarbonize our energy supply at the least possible cost.

Not surprisingly, then, spending on energy efficiency programs is central to the big energy transition bills like HB77, the Green New Deal, and HB1526/SB851, the Clean Economy Act. RGGI bills generally also specify that a portion of the funds raised by auctioning carbon allowances will fund efficiency programs.

There are also a few standalone efficiency bills. HB1450 (Sullivan) and SB354 (Bell) appear to be the same as the efficiency provisions of the CEA, though the standalone applies only to Dominion and APCo.

HB1576 (Kilgore) doesn’t set new efficiency targets, but it makes it harder for large customers to avoid paying for utility efficiency programs. In the past, customers with over 500 kW of demand were exempt; this bill allows only customers with more than 1 MW of demand to opt out, and only if the customer demonstrates that it has implemented its own energy efficiency measures.

HB413 (Delaney) authorizes a locality to include in its subdivision ordinance rules establishing minimum standards of energy efficiency and “maintaining access” to renewable energy.

HB575 (Keam) beefs up the stakeholder process that Dominion and APCo engage in for the development of energy efficiency programs.

SB963 (Surovell) establishes the Commonwealth Efficient and Resilient Buildings Board to advise the Governor and state agencies about ways to reduce greenhouse gas emissions and increase resiliency. Every agency is required to designate and energy manager responsible for  improving energy efficiency and reducing greenhouse gas emissions.

SB628 (Surovell) requires the residential property disclosure statement provided by the Real Estate Board to include advice that purchasers should obtain a residential building energy analysis as well as a home inspection prior to settlement.

Funding efficiency

These bills are also covered under the renewable energy roundup.

HB633 (Willett) establishes a tax deduction up to $10,000 for the purchase of solar panels or Energy Star products.

HB654 (Guy) authorizes DMME to sponsor a statewide financing program for commercial solar, energy efficiency and stormwater investments. The effect would be to boost the availability of Commercial Property Assessed Clean Energy (C-PACE) in areas of the state where the locality has not developed a program of its own.

HB947 (Webert) expands the authority of localities to grant tax incentives to businesses located in green development zones that invest in “green technologies,” even if they are not themselves “green development businesses.” Green technologies are defined as “any materials, components, equipment, or practices that are used by a business to reduce negative impacts on the environment, including enhancing the energy efficiency of a building, using harvested rainwater or recycled water, or installing solar energy systems.”

SB754 (Marsden) authorizes utilities to establish on-bill financing of energy efficiency, electrification, renewable energy, EV charging, energy storage and backup generators.

HB1656 (O’Quinn) authorizes Dominion and APCo to design incentives for low-income people, the elderly, and disable persons to install energy efficiency and renewable energy, to be paid for by a rate adjustment clause.

HB1701 (Aird) authorizes the Clean Energy Advisory Board to administer public grant funding, and makes small changes to the Board.

SB634 (Surovell) establishes the Energy Efficiency Subsidy Program to fund grants to subsidize residential “efficiency” measures, interestingly defined as solar PV, solar thermal or geothermal heat pumps. It also creates a subsidy program for electric vehicles.

SB1061 (Petersen) allows Property Assessed Clean Energy (PACE) loan programs to include residential as well as commercial customers.

Energy storage

HB1183 (Lopez) requires the SCC to establish a task force on bulk energy storage resources.

SB 632 (Surovell) creates a storage target of 1,000 MW and states that this is in the public interest.  Senator Surovell says this bill originated with the Governor’s office.

HB1306 (Kory) directs the Department of Mines, Minerals and Energy to adopt regulations allowing appropriate brownfields and lands reclaimed after mining to be developed as sites for renewable energy storage projects.

 

The bill roundup continues: climate, energy transition, and other utility regulation

Young woman holding sign that says Climate Action Now

An activist at the Clean Energy Lobby Day on January 14. Photo by Alex Kambis.

If you need evidence that Virginia legislators finally recognize global warming as a crisis, you could simply look at this year’s plethora of bills addressing coastal flooding and resilience. We’ve barely begun to address the greenhouse gas pollution that drives climate change and sea level rise, but already Virginia has entered the age of adaptation.

Meanwhile, however, the need for mitigation measures is more pressing than ever. The new Democratic majority has responded with a long list of bills that address the problem in various ways: by joining the Regional Greenhouse Gas Initiative (RGGI), requiring energy efficiency and renewable energy investments, offering incentives for private investments, lowering barriers to investments, or all of the above.

In an earlier post I described two omnibus energy transition bills, the Clean Economy Act, HB1526 (Sullivan) and SB851 (McClellan), and the Green New Deal Act, HB77 (Rasoul). A second post brought together all the renewable energy bills.

Now I’m moving on to the rest of the climate policy bills, as well as other utility regulation.

Climate and energy policy

 SB94 (Favola) rewrites the Commonwealth Energy Policy to bring it in line with Virginia’s commitment to dealing with climate change. The latest draft of the bill, as it passed out of subcommittee, sets a target for net-zero greenhouse gas emissions economy wide by 2045, and in the electric sector by 2040. This section of the Code is for the most part merely advisory; nonetheless, it is interesting that Dominion Energy Virginia supported the bill in subcommittee. [Update: the bill, with further amendments, passed out of Commerce & Labor on January 20 and now goes to the Senate floor.]

Delegate Reid’s HB714 is similar to SB94 but contains added details, some of which have now been incorporated into SB94.

HB672 (Willett) establishes a policy “to prevent and minimize actions that contribute to the detrimental effects of anthropogenic climate change in the Commonwealth.” State agencies are directed to consider climate change in any actions involving state regulation or spending. Local and regional planning commissions are required to consider impacts from and causes of climate change in adapting comprehensive plans.

HB525 (Subrmanyam and Reid) require a statewide greenhouse gas inventory covering all sectors of the economy.

HB547 (Delaney) establishes the Virginia Energy and Economy Transition Council to develop plans to assist the Commonwealth in transitioning from the use of fossil fuel energy to renewable energy by 2050. The Council is to include members from labor and environmental groups.

Meanwhile, efforts are already underway to undercut the effectiveness of all this great policy work. Witness the latest strategy from Dominion, involving a pair of bills put forward by Senator Lewis. SB828 and SB817 declare that any time the Code or the Energy Policy refers to “clean” or “carbon-free” energy, it must be read to include nuclear energy. In subcommittee, Senator Lewis suddenly announced he was amending the bills to add “sustainable biomass” as well, turning the bills into a mockery of science and the English language, not to mention terrible policy.

Biomass—that is, burning wood—causes more pollution than coal, it emits more carbon than coal, and it isn’t carbon neutral in the timeframe that matters to climate. Oh, and it’s very expensive energy. Insisting that the words “clean” and “carbon-free” include biomass is like saying the color blue includes the color yellow. It just doesn’t.

[Update 1/22: Both bills passed out of subcommittee, but in full committee, Lewis appears to have presented the unamended SB817, with no biomass language. It sailed through and now goes to the Senate floor. Lewis then presented additional amendments to SB828 to limit biomass to “sustainable residual” biomass, but then asked to have his bill passed by for the day instead of having it voted on. The amendments are not yet available on the LIS.]

RGGI bills (good and bad)

The Democratic takeover of the General Assembly means Virginia will finally join the Regional Greenhouse Gas Initiative (RGGI), either according to the regulations written by DEQ or with a system in place that raises money from auctioning carbon allowances.

HB981 (Herring) and SB1027 (Lewis) is called the Clean Energy and Community Flood Preparedness Act. It implements the DEQ carbon regulations and directs DEQ to enter the RGGI auction market. Auction allowances are directed to funds for flood preparedness, energy efficiency and climate change planning and mitigation. We are told this is the Administration’s bill. A similar bill, HB20 (Lindsey), is not expected to move forward.

HB110 (Ware) says that if Virginia joins RGGI, DEQ must give free carbon allowances to any facility with a long-term contract predating May 17, 2017 that doesn’t allow recovery of compliance costs. Rumor has it the bill was written to benefit one particular company.

SB992 (Spruill) requires the Air Board to give free allowances for three years to any new power plant that was permitted before June 26, 2019, the effective date of the carbon trading regulations. It’s not clear why new facilities should get special treatment; it was not exactly a secret that these regulations were in the works. And the result of this law would be to encourage companies to go ahead and build anything that has a permit, which just can’t be a good result.

HB1628 (Poindexter) prohibits the state from joining RGGI or adopting any carbon dioxide cap-and-trade program without approval from the General Assembly.

Other utility regulation

“Other” makes this section sound like an afterthought, but in fact several of the most impactful bills of the session appear here.

HB1677 (Keam) replaces Virginia’s current vertically-integrated monopoly structure with one based on competition and consumer choice. Existing monopoly utilities would be required to choose between becoming sellers of energy in competition with other retail sellers, or divesting themselves of their generation portfolios and retaining ownership and operation of just the distribution system. Other features: a nonprofit independent entity to coordinate operation of the distribution system; performance-based regulation to reward distribution companies for reliable service; consumer choices of suppliers, including renewable energy suppliers; an energy efficiency standard; a low-income bill assistance program; and consumer protections and education on energy choices.

HB206 (Ware) is, I’m told, the beta version of Delegate Keam’s bill and will be pulled, and that Delegate Ware is on board with HB1677.

HB528 (Subramanyam) requires the SCC to decide when utilities should retire fossil fuel generation.

SB842 (Petersen) seeks to achieve the same end as the House bills, but it puts the SCC in charge of writing the plan. The bill provides for all retail customers of electricity to be able to choose their supplier, and instructs the SCC to promulgate regulations for a transition to a competitive market for electricity. Existing utilities will continue to provide the distribution service. The bill also requires suppliers of electricity to obtain at least 25% of sales from renewable energy by 2025, 50% by 2030, and 100% by 2050. Renewable energy is defined to include “sustainable biomass” but not waste incineration or landfill gas.

Not ready to bust up the monopolies yet? How about at least putting the SCC back in control? The last few years have seen a steady chipping away of the SCC’s authority to regulate utility rates. HB1132 (Jones, Ware) seeks to reverse this trend and possibly get some rate relief for consumers.

SB731 (McClellan) also affects rates, in this case by addressing a utility’s rate of return. The SCC determines this rate by looking first at the average returns of peer group utilities, and then often going higher. The bill lowers the maximum level that the SCC can set above the peer group average.

And finally (but by no means least), HB167 (Ware) requires an electric utility that wants to charge customers for the cost of using a new gas pipeline to prove it can’t meet its needs otherwise, and that the new pipeline provides the lowest-cost option available to it. (Note that this cost recovery review typically happens after the fact, i.e., once a pipeline has been built and placed into service.) Last year Ware carried a similar bill that passed the House in the face of frantic opposition from Dominion Energy, before being killed in Senate Commerce and Labor.