Tag Archives: Dominion Virginia Power

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If the power grid goes down, blame the war on solar

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More, please. Photo credit Christoffer Reimer/Wikimedia

More, please.
Photo credit Christoffer Reimer/Wikimedia

A large number of electric utilities across the country are famously engaged in a war against customer-owned solar. Using policy barriers, “standby” charges and other tactics, utilities from Arizona to Virginia are doing everything possible to short-circuit a revolution that threatens their control of the electric sector. It won’t work. Trying to keep electric generation out of the hands of the rabble is a stop-gap solution, doomed to fail within a few years when battery storage allows customers with solar arrays (or wind turbines) to defect en masse.

But utilities won’t be the only ones hurt in the process. Stifling distributed generation and forcing grid defection is the worst possible outcome for the economy, the climate, and the security of the electric grid. The more utilities succeed, the more everyone loses.

With all its problems—and they are growing—the modern electric grid remains an efficient way of delivering competitively-priced power to American homes and businesses. Utilities, generators, and grid operators engage in a complicated dance that delivers power economically where it is needed, when it is needed, with no shortfalls and nothing left over, better than 99.9% of the time. If one generating plant suddenly breaks down, others are swiftly brought online. When demand for electricity peaks, grid operators call up “peaker” plants or pay some customers to curtail use. The balance is maintained.

But the sheer size and interdependence of the grid, and its reliance on large, centralized generating plants, makes it vulnerable to massive power disruptions resulting from weather events, electromagnetic pulses, solar storms or physical attack. Aging infrastructure, climate change-driven mega-storms, more intense heatwaves, drought, and potential cyberattacks are growing threats to the reliability of our power supply.

Distributed generation using renewable energy offers the simplest and most efficient way to reduce many of these threats. A power grid that includes thousands of solar and wind installations scattered across a service territory is inherently more secure than one reliant on a handful of huge generating plants and transformer stations. And when the fuel is wind or solar, supply lines can’t be disrupted.

Distributed solar is especially useful when the grid is under stress. Researchers found that just 500 megawatts of widely dispersed solar energy could have prevented the massive blackout of the Northeast in August of 2003.

Add in battery storage, and some small systems can be combined to form microgrids. Microgrids can be “islanded” when the larger grid fails, producing power continuously to ensure that critical needs are met—and decreasing the incentive for hackers and terrorists to target the grid in the first place.

The businesses and residents who are installing solar arrays today aren’t just saving money on energy bills and reducing their carbon footprint. They are buying the building blocks of a more resilient power grid that will serve all of us in the future. Some utilities like NRG and Vermont’s Green Mountain Power recognize the value of distributed solar to the grid and work to encourage customers to stay connected. Others, like Dominion Virginia Power and Appalachian Power in Virginia, NV Energy in Nevada, and the Arizona Public Service Company, are energetically working to impose barriers and punish solar owners with higher costs. If they succeed, the result will be less distributed generation and greater grid vulnerability.

Worse, customers who face these utility barriers and cost penalties will have an incentive to cut themselves off from the grid. Affordable battery storage is beginning to make that an option. Within a few years, disaffected customers could be leaving in droves. Rather than pay a punitive “fair share” of the wires that cross their property, they could opt to pay no share at all.

Then, instead of a stronger grid, we’d have a weaker one. Instead of increasing the security of our power supply, we would increase our vulnerability to attack. In place of a highly efficient, low-cost, interconnected grid, we’d move towards an inefficient, high-cost, Balkanized grid.

This is the worst possible direction for our grid—and it’s the logical conclusion to the war on solar that utilities are waging today. That makes it critical that regulators, customers and state legislatures push back hard in support of customer-owned solar. Protecting the grid is too important to let utilities win this war.

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Dominion’s natural gas gamble looks risky for ratepayers

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Opposition to Dominon's planned Atlantic Coast Pipeline has spurred protests from landowners and environmental advocates and led to more than 5,000 comments to the McAuliffe Administration opposing the pipeline. Photo courtesy of Linda Muller.

Opposition to Dominon’s planned Atlantic Coast Pipeline has spurred protests from landowners and environmental advocates and led to more than 5,000 comments to the McAuliffe Administration opposing the pipeline. Photo courtesy of Linda Muller.

Dominion Resources and its regulated subsidiary, Dominion Virginia Power, are gambling big on natural gas. But while the utility giant will be a winner if gas prices stay low over the next 20 years, the risk of losing this bet is very real—and the risk is being borne disproportionately by Virginia consumers.

Ever since the shale gas boom sent natural gas prices into a tailspin beginning in 2008, Dominion has increasingly been putting its chips into gas. Its Virginia subsidiary just completed a 1,329 megawatt (MW) natural gas plant in Warren County, began construction last year on a 1,358 MW gas plant in Brunswick County, and last month announced plans for a 1,600 MW plant in Greenville County, to be operational in 2019. Virginia ratepayers will foot the bill for construction costs, plus the cost of operating and fueling these mammoth plants for decades to come.

But while Virginians tend to think of Dominion as an electricity provider, its bigger business line is in natural gas transmission and storage. According to the Dominion website, its subsidiary Dominion Transmission, Inc. maintains 7,800 miles of pipeline in six states and operates what it says is one of the largest underground natural gas storage facilities. Another subsidiary operates 1,500 miles of pipeline in South Carolina and Georgia. The company is moving aggressively to add and upgrade compressor stations and build additional pipeline capacity in West Virginia and Pennsylvania.

It is also angling to add a massive 42-inch diameter, 550-mile gas pipeline to run from West Virginia through Virginia to the coast in North Carolina. Promising a vast new supply of cheap fracked gas for industrial users, Dominion has won the support of lawmakers like Virginia Governor Terry McAuliffe while galvanizing opposition from landowners and environmentalists.

Meanwhile, Dominion has another game afoot, with plans to begin exporting liquefied natural gas from its Cove Point, Maryland facility. Upgrading the facility will cost the company $3.8 billion, and running the liquefaction facility will require 240 MW of power (using more natural gas). Natural gas is so much more expensive in foreign markets that Dominion considers the gamble worthwhile, even as it cites a U.S. Energy Information Administration study for the proposition that little or no natural gas would be exported if the U.S. price “increases much above current expectations.”

All of these ventures depend on one crucial assumption: that natural gas prices will remain low for as many years as it takes to fully recover the cost of these investments, and then some. For electric generation, moreover, gas has to be able to outcompete other fuel sources. That includes not just coal and nuclear, both of which are being abandoned in droves in the face of cheap gas, but also new sources like solar and wind, which have trended steadily downward in price over the past two decades. In some regions of the country (although not yet Virginia), wind and solar prices already outcompete natural gas.

Gas does have the advantage of dispatchability—the ability to provide power according to the peaks and valleys of demand, allowing it to fill in around variable energy sources like wind and solar. That makes gas vital for backup generation, at least until power storage technologies become cheaper. But it wouldn’t justify the large-scale shift to gas for baseload generation, as Dominion’s plans envision, unless the company is right that gas prices will stay low.

If Dominion’s assessment of the market is wrong, its shareholders will take a hit. Higher natural gas prices could make the export business fizzle, and there might not be enough customers to justify the pipeline buildout. That’s why the company is moving so quickly to build the three massive new natural gas generating plants in Virginia under the ownership of its regulated subsidiary. Dominion is protecting its bet by locking Virginia electricity customers into gas for the long term, guaranteeing itself a market not just for its natural gas generating plants but also for its pipeline business. If the shale boom becomes a bust, or if prices rise to pre-boom levels, it will be Virginia ratepayers who pay through the nose or get stuck with stranded assets.

How big the risk is depends on whom you ask. The gas industry claims supplies will be sufficient to meet demand for decades to come. The U.S. Energy Information Agency, that voracious consumer of yesterday’s news, largely agrees (though it has more recently begun tempering its enthusiasm). If the optimists are right, production from the major shale gas plays will increase 40% by 2030 over today’s production levels, enough to support the mad rush to gas by Dominion and other utilities like it, without upward pressure on prices.

But a more pessimistic view is gaining adherents. As described in the December 2014 issue of the journal Nature, a team of a dozen geoscientists, petroleum engineers and economists at the University of Texas at Austin (UTA) has been analyzing assumptions behind the industry’s rosy outlook, and concludes it is wrong. Instead, the UTA study indicates production of natural gas from the “big four” shale plays will slow significantly after 2016, peak by about 2020, and then decline, dropping 20% from current levels by 2030. If so, the amount of natural gas coming to market in the U.S. will be less than half of what the optimists expect. The upward pressure on prices will be enormous.

The UTA team joins a growing chorus of doubters, whose studies suggest that the shale juggernaut can’t be maintained profitably. If these pessimists are correct, we should begin seeing evidence of it well before 2020. For now, there is at the least a very serious risk that cheap gas won’t last, and anyone who can’t afford to lose big would be well advised to wait it out.

IMG_0634There are other reasons Virginians should be wary of over-investment in natural gas infrastructure, both generating plants and pipelines. The need to fill pipelines will put pressure on the state to welcome fracking companies, both in the Marcellus shale in the western part of the state, and in the Taylorsville Basin in the east. Until 2010, Dominion itself owned gas drilling leases, and according to the Center for Media and Democracy, “Dominion is a member of several special interest groups that push for expanded drilling rights and limited or no regulation of fracking.”

With pollution of air and water a serious concern, and given the state’s tradition of lax regulation on industry, some localities are already looking for ways to exclude drilling companies from their borders. If we are going to have this fight, it shouldn’t be because one powerful corporation made a bad bet.

Finally, of course, there is the climate cost of natural gas. As we congratulate ourselves for leaving coal in the rear-view mirror, we need to recall that we have a long way to go to reach the carbon-free grid, and stalling out at the halfway point isn’t grounds for celebration.

Natural gas has a role to play in the transition period before wind, solar, and other carbon-free sources take over permanently, and it will remain useful as a back-up source when wind and solar aren’t producing power. But a wise energy policy today focuses on developing those renewable sources as fast as possible, reducing demand through investments in energy efficiency, and using natural gas as a backstop rather than as a primary source of power.

This approach reduces risk to the national economy if shale gas production declines, and it reduces risk to ratepayers stuck paying whatever the price of natural gas may be when demand outstrips supply.

Dominion Resources is an investor-owned corporation. As such, it is entitled to place risky bets in the hopes of making a killing for its shareholders. What it is not entitled to do is to shift the risk of losing the bet onto its captive ratepayers in Virginia.

With the odds so stacked against consumers, Virginia should refuse to play.

Thanks go to Richard Ball, PhD., Energy Chair of the Virginia Sierra Club, for his research and analysis of shale gas supplies.

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Virginia’s General Assembly likes solar energy. Will that be enough?

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Emojione_1F31E.svgVirginia’s General Assembly broke new ground in February when it passed legislation declaring up to 500 megawatts of utility solar power “in the public interest.” The language will help projects gain regulatory approval from the State Corporation Commission, which has been hostile to renewable energy. Dominion Virginia Power wants to build up to 400 MW of solar by 2020.* If the utility follows through, Virginia will finally join the solar revolution underway across the U.S.

Emojione_umbrella.svgIt’s important to acknowledge the limitations of the legislation, though. It was written by and for Dominion, not for the solar industry or Virginia residents. The utility does not want its customers installing solar power for themselves or buying it from anyone else, hence the limitation to utility-owned projects of at least 1 MW. So people who want to see more distributed generation, especially customer-owned, rooftop solar, found little to cheer about in this legislation.

Twemoji_exclamation question.svgOthers took a glass-half-full view. For climate activists, all solar is good solar, and big projects produce more than little projects. It would take 4,000 houses, each with an average 5-kW system, to produce as much power as a single 20-MW project like the one Dominion plans for Remington, Virginia. (The Remington facility is the only solar project Dominion has identified so far in the commonwealth.)

But of course, if you can get 4,000 houses with solar in addition to a 20-MW solar farm, then you’ve got twice as much solar altogether. Glass totally full: insert your happy emoji here.

The optimists hope that success with utility-scale solar will demonstrate the value of the resource and lead to better policies for distributed solar as well. A look at the experience of other states shows that is not inevitable. States with policies that promote residential and commercial solar, like New York and New Jersey, see a lot of those projects. States that mainly incentivize utility ownership, like North Carolina and Nevada, haven’t seen much else.

Dominion unquestionably won this round in the General Assembly, getting a seal of approval for its own projects while locking out most of the competition. Only two bills passed this year lowering hurdles to customer-owned renewables, and neither of them help homeowners. One bill raises the project size limit on net-metered facilities from 500 kW to 1 MW, a change sought by Virginia’s universities and by the solar developer Secure Futures LLC, whose business model focuses on large nonprofit institutions. The other enables localities to help finance energy efficiency and renewable energy projects on commercial properties using what are known as property-assessed clean energy, or PACE, loans.

Many more bills sought by renewable energy advocates went down to defeat in the face of utility opposition, including things like a grant program and a community net-metering bill that could have had a transformational impact on the industry.

That leaves just one initiative that advocates will be watching closely to see if it produces any opportunities for customer-owned solar. Legislation establishing the Virginia Solar Development Authority, HB 2267 and others, says it will “support the development of the solar industry and solar energy projects

by developing programs that increase the availability of financing for solar energy projects, facilitate the increase of solar energy generation systems on public and private sector facilities in the Commonwealth, promote the growth of the Virginia solar industry, and provide a hub for collaboration between entities, both public and private, to partner on solar energy projects.”

The bill is a little vague as to just how all this will happen. The Authority has no regulatory power and no budget. Many of its duties involve finding money, as in the paragraph empowering it to help utilities deploy 400 MW of solar projects by “providing for the financing or assisting in the financing of the construction or purchase of such solar energy projects.”

Another provision, however, empowers the Authority to “identify and take steps to mitigate existing state and regulatory or administrative barriers to the development of the solar energy industry.” Of course, one of those barriers is the anti-competitive maneuvering of our utilities to protect their monopoly positions.

The Authority should perhaps take a lesson from the DEQ-facilitated Small Solar Working Group, which I helped form in 2013 with a goal of developing pro-solar legislative proposals. The problem we ran into was that utilities were determined to ensure we did not put forth any legislative proposals, and we had made the mistake of letting them into the group. If utility executives get appointed to the Solar Authority, it could be déjà vu all over again.

Delegate Tim Hugo, for one, thinks the Authority will lead to more distributed generation as well as utility solar. “The intent of the legislation is to create an opportunity to develop a broad range of projects including distributed customer owned generation and to help facilitate a solar industry in Virginia,” he told me.

Hugo, one of the sponsors of the Authority bill, is one of the Commerce and Labor committee members who helped defeat other bills sought by the solar industry. But if distributed solar is to thrive in Virginia, it will require legislators like Hugo to become its champions.

Hugo, a Republican, considers himself a staunch solar advocate, going back many years. “In 2007,” he reminded me, “I sponsored HB2708 dealing with net metering, which would require utilities to purchase excess electricity produced by a customer-generator.” Last year he sponsored bi-partisan legislation exempting from real and personal property taxes solar equipment that generates 20 megawatts or less, a change critical to the economics of commercial solar projects.

But relatively few legislators from either party are willing to oppose Dominion, and therein lies the rub. The company considers monopoly control its right, and it doesn’t yield an inch without getting something for it. On the other hand, this was a bad year in the press for Dominion. Editorial boards across the state lambasted the company over legislation that will let it shield excess profits for the next several years. The public, too, is irritated with the slow pace of solar, and it knows whom to blame. That provides an opening for pro-solar legislators. We’ll see if they take it.

 

*Dominion was the moving force behind this legislation, but it applies as well to Appalachian Power Company. When I asked an APCo lobbyist whether its passage means more solar in APCo’s future, he merely referred me to the company’s 2014 Integrated Resource Plan, written a year ago. It lays out plans for small additions of utility solar beginning in 2019, scaling up gradually to a cumulative total of 500 MW in 2028—or about half as much as North Carolina already has today.

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Dominion gets what it wants, but Virginia doesn’t get what we need

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DominionLogoNo, you can’t always get what you want.   You can’t always get what you want.   You can’t always get what you want.     But if you try sometime you find,           You get what Dominion Power wants.

—With apologies to the Rolling Stones

I guess there’s a reason I never made it as a songwriter. That last line is a disaster. But that, in a nutshell, is what happened to SB 1349, known as the rate-freeze bill, the ratepayer rip-off, or the Dominion bill, depending on whether you were pro, con, or still trying to figure it out.

The bill began and ended as a way for Dominion Virginia Power to shield excess profits from the possibility of regulators ordering refunds to customers. Along the way, Appalachian Power jumped on board, even though its president had already admitted the company had been earning more than it should.

When we last looked, SB 1349 was undergoing radical rewriting on the floor of the Senate, in real time. Conflicting amendments were being passed around. Outside the chamber, lawmakers from both parties were huddled in hallways with Dominion lobbyists. The coal caucus had already tacked on language making it harder to close coal-fired power plants. Now the Governor, progressive leaders and clean energy supporters were pushing amendments guaranteeing more solar and energy efficiency programs.

To get a sense of how impossible it was for the rank and file to follow, check out the bill history with its amendments offered and rejected, and the readings of the amendments waived.

With cameras rolling and the clock ticking, senators made speeches about provisions other people told them were now in the bill, but without anyone having the time to read the language they were expected to vote on. That being normal, they voted on the strength of promises made and assurances given.

With Dominion Power insisting on passage, the result was never in real doubt. Few legislators want to cross the most powerful force in Virginia politics, and the source of so much campaign cash, perks, and donations to local charities. But they needed to hear those promises made and assurances given; otherwise, what would they tell their constituents, when newspapers across the state had been blasting this bill?

The promises made and assurances given also quieted the environmentalists who had led the opposition. Consumers, we were told, would now see investments in solar and energy efficiency that would bring long-term savings, energy diversity and greater price stability, as well as lower pollution and new jobs. The bill would contain firm commitments and produce meaningful investments in energy efficiency and solar power.

The Senate passed the bill, and then finally everyone read what had been voted on. Yes, Dominion had got what it wanted, but then it got . . . even more of what it wanted!

The bill contains a solar provision that smooths the way for utilities to develop or buy up to 500 megawatts of solar power, using Virginia suppliers. But it doesn’t require any minimum solar investment or contain a deadline for getting that solar power on the grid.

As for efficiency, SB 1349 does now contain a provision requiring utilities to create ”pilot programs” for energy assistance and weatherization for low-income, elderly and disabled customers, but it doesn’t say how big a program has to be or how much money must be spent. A “pilot program,” by definition, is small and experimental. It is a baby step, when we were expecting adult strides.

While clean energy advocates were still trying to figure out what happened to the promise of firm commitments and deadlines on solar power, SB 1349 blew through the House.

In short, the final bill language now on the Governor’s desk gives Dominion the authority, but not the obligation, to make clean energy investments.

Virginia law gives our governor an option that most states don’t offer: rather than sign it or veto a bill outright, he can amend it and send it back to the legislature for a final vote. That makes Governor McAuliffe the one person who can still salvage something from this miserable bill. He can put in the solar numbers and dates that went missing—or raise them further—and put hard targets into the efficiency programs. Doing so would finally put McAuliffe on the path to creating all those clean energy jobs he campaigned on.

Dominion will still get what it wants, but if McAuliffe will try, we might get what we need.

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Criticism mounts over Dominion’s effort to lock in earnings, lock out audits

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Dominion buildingSenator Frank Wagner’s bill to permit Virginia’s largest utility to keep its books closed until 2023 cleared a Senate subcommittee last week, but not without a bruising. What Dominion Virginia Power thought would be an easy sell—a promise to freeze rates at their current level—is being widely criticized as another money grab from a company known for resorting to legislative maneuvers to hang on to overearnings. As a result, SB 1349 faces an uncertain future in full committee today, and if it passes, should expect rough treatment on the Senate floor.

As I explained last week, the bill plays on fears that the EPA’s carbon-cutting Clean Power Plan will be costly to implement. According to Senator Wagner and Dominion spokesman Dan Weekly, ratepayers need protection from jarring rate increases.

Of course, if the Clean Power Plan were really likely to raise costs, a for-profit company like Dominion would hardly want to give up the ability to raise rates. Dominion’s eager embrace of a rate freeze puts me in mind of Brer Rabbit’s pleading not to be thrown into the briar patch.

Last year Dominion got away with legislation allowing it to keep hundreds of millions of dollars in over-earnings, catching the press, the new Administration and many legislators flat-footed. It may get away with it again this year, but it won’t be pretty.

For one thing, the press is fully awake this time around. Several papers raised questions, and a hard-hitting article in the Washington Post correctly reframed the issue as whether Dominion should be allowed to escape routine public financial audits. The Post article also hit one of my favorite themes, the outsized influence Dominion wields in the state due to the campaign cash it lavishes on Republicans and Democrats alike. But then it did me one better, noting that Senator Wagner owns stock in Dominion Resources.

An article in the Virginian-Pilot put the value of that stock at $250,000. [Update: a February 2 AP story put the value of Wagner’s stock at only $5,000. Regardless of the actual amount, on February 3, the AP reported that, in response to the story, Wagner sold his Dominion stock.]

Meanwhile the Capital News Service had caught on that the “rate freeze” actually puts a floor, not a ceiling, on utility bills. “Proposal would let Dominion hike electric bills,” ran the headline in multiple newspapers.

So when a small subcommittee of Senate Commerce and Labor* met to consider the bill on Thursday, it was not the easy pass that Senator Wagner and Dominion expected. Lining up against the bill were environmental groups, the Attorney General’s office, SCC staff, and the Virginia Citizens Consumer Council.

Even Senator Dick Saslaw, usually a reliable ally of Dominion, expressed his discomfort with the bill and told Dominion spokesman Dan Weekly that he had better answer the concerns that had been expressed.

But then Saslaw and the other senators voted to move it along. Apparently, just being a bad bill wasn’t enough to kill it.

Update: the full committee of Senate Commerce and Labor reported SB 1349 on a 14-1 vote, with only Senator Newman dissenting. Action now moves to the full Senate, which has many saner heads. But lest optimism get the better of us, I should note that pretty much all of them take Dominion money too.

———————————————

*This is the little hand-picked group I reported on that was supposed to form a joint subcommittee with House members to review all Clean Power Plan legislation. That’s not what happened. The joint subcommittee held two meetings that could best be described as EPA bash-fests, but only Wagner’s bill ended up assigned to the subcommittee, and only the Senate members met to consider his bill. The House members seem to have been unceremoniously dropped from the process altogether.

So what happened to the other climate bills? The Senate bills mostly ended up in Agriculture and Natural Resources, and the House bills mostly in Commerce and Labor (where they have been assigned to the Energy subcommittee). Why the change in plan? Beats me.

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Your 2015 legislative session cheat sheet, part 3: climate bills

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Photo credit: Corrina Beall

Photo credit: Corrina Beall

Anti-Clean Power Plan bills

When the EPA released its Clean Power Plan last June, clean energy advocates celebrated America’s first serious response to rising carbon emissions. At hearings held across Virginia, supporters of the plan outnumbered opponents by as much as five to one, making it clear the public welcomes EPA’s plan as a way to break the rise in carbon emissions while opening the door to new economic opportunities in solar, wind, and energy efficiency.

Alas, the response of most Republican legislators was to man the barricades and protect the fossil fuel status quo. That impulse to panic translated into a spate of bills aimed at rejecting or undermining EPA authority and hobbling the ability of the state to implement the Clean Power Plan.

SB 740 (Carrico), SB 1365 (Watkins and Chaffin), and HB 2291 (O’Quinn) instruct the state Department of Environmental Quality (DEQ) to hold hearings and examine witnesses in the development of its compliance plan and take a “least-cost” approach to compliance. DEQ is also required to get approval from the General Assembly for the plan before it can submit it to the EPA for approval—and if either chamber doesn’t like it, DEQ has to do it over again, until the time allowed for state compliance runs out.

SB 1202 (Wagner) goes further. Before DEQ can even write its plan, the State Corporation Commission has to find that the EPA has made changes to the Clean Power Plan that fix all the things the SCC staff claim are wrong with it. The SCC staff have already accused the EPA of acting illegally, arbitrarily, and capriciously, so it’s safe to say that under Wagner’s bill, we’ll see pigs fly before DEQ writes a carbon plan.

HJ 608 (Kilgore) is a resolution asserting that electricity regulation is a sovereign state function and complaining that EPA is infringing on state turf. The resolution is silly on its face; Virginia’s grid is part of an interstate transmission system (PJM), our utilities operate in multiple states, much of our electricity is generated outside our borders, and all of our generating plants, transmission lines, and everything else associated with providing power in Virginia are covered by federal regulations of one sort or another. HJ 608 has nothing to do with reality. But reality is not the point. The point is that Terry Kilgore and the fossil fuel companies he represents are loaded for bear and want to prove it.

SJ 273 (Wagner) directs DEQ to study whether the health benefits of the Clean Power Plan are really any different from those already expected from compliance with other air quality regulations. The reason, according to the bill, is that “if the EPA is claiming the same health benefits under two different sets of regulations, its effort to attribute future pollution reductions to the proposed Plan amounts to ‘double counting.’” If you’re wondering how that is relevant to Virginia’s obligation to comply with the Clean Power Plan, then once again you’re missing the point. This is about posturing, not compliance.

SJ 308 (Wagner yet again!) would let the GA’s Joint Rules Committee hire its own counsel to sue the EPA to block the Clean Power Plan if the Attorney General won’t do it. HJ 529 (Bob Marshall) would have a similar effect, though his bill is more of an all-caps version aimed at anything the federal government does that he opposes.

Virginia Republicans didn’t invent the attack-challenge-delay approach that is the common theme of these bills. The strategy comes from the American Legislative Exchange Council (ALEC), the conservative “bill mill” heavily funded by fossil fuel interests, and of which Dominion Power is a member. ALEC developed a game plan for state-by-state resistance to the EPA plan.

ALEC’s model bill, called the RASP Act, forbids a governor from complying with the EPA regulations without getting approval from the legislature. Sound familiar? And yet it’s a cut-off-your-nose-to-spite-your-face reaction. The longer a state delays, the harder compliance becomes. Delay too long, and EPA writes your plan for you. That’s not a good outcome for either Virginia or the climate.

Coastal Protection Plan

The EPA Clean Power Plan allows multiple pathways to compliance. On of them is the regional compliance plan: states can band together on a market approach to reduce cost and disruption. Several northeastern states already have this cap-and-trade approach in place, known as the Regional Greenhouse Gas Initiative (RGGI). Similar regional efforts exist for some Midwestern and Western states as well. These all predate the Clean Power Plan, but a recent analysis by PJM, the regional transmission operator that runs Virginia’s grid, found that a regional cap-and-trade approach would cost 30% less than a state-by-state approach to meeting carbon regulations.

Even many Virginia Republicans have said they favor a regional approach to compliance with the Clean Power Plan, once they have done challenging everything they can about it.

One of the attractive elements of RGGI is the market mechanism. Polluters must buy carbon allowances, generating money for the state. HB 2205 (Villanueva) and SB 1428 (McEachin), the Coastal Protection Plan, would have Virginia join RGGI, and use half of the money generated to address the problems created by sea level rise. SB 1323 (Lewis) would merely have DEQ study the idea.

For a fuller explanation of the bill, see Dawone Robinson’s guest post here. The Coastal Protection Act is already picking up endorsements, from the Washington Post to the Virginia Housing Coalition and local governments including Norfolk.

The Dominion Power Ratepayer Rip-Off Act of 2015

When Dominion Virginia Power offers to do something to protect ratepayers, watch your wallet. Last year’s act of generosity cost us hundreds of millions of dollars to cover Dominion’s initial expenses for a nuclear plant it may never build.

This year it’s a bill, SB 1349 (Wagner), that would freeze rates (but notably not utility bills) until at least 2023. Like last year’s money bill, this one prevents the State Corporation Commission from requiring the utility to refund money to ratepayers and/or lower rates if the utility earns more than the law entitles it to. In other words, it lets Dominion keep the windfall.

Senator Wagner presents his bill as a protection for ratepayers in the face of the EPA’s Clean Power Plan, which he claims will be costly for ratepayers. But here’s the thing: Dominion’s obligation to its shareholders is to maximize profit. The company wouldn’t support a rate freeze if it meant losing money. Dominion’s support for Wagner’s bill can only mean the utility expects to make a lot of money at current rates, even under the EPA plan.

This makes sense to the clean energy advocates, who point to analyses showing the Clean Power Plan will benefit consumers rather than costing them more. That’s because energy efficiency—a major component of the plan—saves money. If Virginia consumers do save money under the plan, though, the Wagner bill makes sure they won’t see the benefit.

Indeed, it doesn’t even protect them from higher bills, because Dominion can still increase other charges that make up customers’ bills. The “rate freeze,” in other words, will set a floor on electric utility bills, but not a ceiling.

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Your 2015 Virginia legislative session cheat sheet, part one: Clean energy bills

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photo credit: Amadeus

photo credit: Amadeus

I’m starting my review of 2015 energy legislation with a look at bills dealing with renewable energy and energy efficiency. Most of these bills will be heard in the committees on Commerce and Labor, though bills that cost money (tax credits and grants) usually go to Finance.

Bills referred to Senate Commerce and Labor are heard by the full committee, which meets on Monday afternoons. It consists of 14 members: 11 Republicans and 3 Democrats. They form a tough lineup; none of these senators received better than a “C” on the Sierra Club’s Climate and Energy Scorecard.

The House bills are typically assigned to the 13-member Special Subcommittee on Energy (10 Republicans and 3 Democrats, no fixed schedule). Bills that do not meet the approval of Dominion Power can expect a quick death here on an unrecorded voice vote, never to be heard from again. But on the plus side, the meetings are often quite lively, like old-fashioned hangings.

Net metering bills

Net metering is the policy that allows owners of solar (or other renewable) energy systems to be credited for the excess power they feed back into the grid when the systems produce a surplus; the owners use the credits when their systems aren’t supplying power and they need to draw electricity from the grid. Virginia law restricts who can use net metering, and how much. Expanding net metering is a major goal of renewable energy advocates, who argue it offers a free market approach to growth—give customers the freedom to build solar projects, get the utility out of the way, and solar will thrive.

This year’s initiatives include:

  • SB 833 and SB 764 (Edwards—apparently identical bills), HB 1950 (McClellan), and HB 1912 (Lopez) raise the maximum size of a commercial project eligible for net metering, from 500 kilowatts (kW) currently to 2 megawatts (MW). This is a much-needed expansion of the net metering program if Virginia is going to make real headway with solar. We are told Edwards plans to conform his legislation to HB 1622, below.
  • HB 1622 (Sullivan) raises the maximum size of a commercial project to 1 MW, and the maximum size of a residential system from the current 20 kW to a whopping 40 kW. But note that it does nothing to limit the standby charges utilities can charge for residential projects over 10 kW. Given that these charges are so punitive as to kill the projects, raising the cap wouldn’t create new market opportunities unless it is accompanied by a limit on the amount of standby charges that utilities can tack on.
  • HB 1911 (Lopez) amends the language allowing utilities to impose standby charges on residential and agricultural customers with systems over 10 kW to add the requirement that the State Corporation Commission conduct a “value of solar” analysis prior to approving the charges. Most solar advocates would rather see the legislature repeal the standby charge provision altogether, given how the utilities have abused it. Barring that, legislators should set a dollar limit of no more than five or ten bucks a month. But in the absence of any such reforms, it does make sense to at least require the SCC to do this more substantive analysis, ideally building on the framework developed over the summer by the Solar Stakeholder Group.
  • HB 1636 (Minchew) establishes “community net metering” as well as increasing the commercial project cap to 2 MW. This bill is a high priority for the solar industry and the environmental community. It provides the solution for owners with shaded roofs, renters and others who can’t install solar themselves by letting them subscribe to a community generation facility in their own or a neighboring county. Other forms of renewable energy are also allowed, so residents in windy areas could go in on a small wind turbine that wouldn’t make sense for a single household.
  • HB 1729 (Sullivan) creates “solar gardens” consisting of community organizations with 10 or more subscribers. The generation facility can be as large as 2 MW. The bill seems intended to accomplish much the same purpose as Minchew’s bill, although it is limited to solar. However, it allows the utility to impose “a reasonable charge as determined by the [State Corporation Commission] to cover the utility’s costs of delivering to the subscriber’s premises the electricity generated by the community solar garden, integrating the solar generation with the utility’s system, and administering the community solar garden’s contracts and net metering credits.” Boy, we’ve seen that movie before. Given what we’ve seen the SCC do with standby charges, the bill should be amended to put a cap on the amount of that “reasonable charge” so legislators know they aren’t writing a blank check.
  • SB 350 (Edwards) authorizes programs for local governments to use net metering for municipal buildings, using renewable energy projects up to 5 MW. It also allows a form of community net metering targeted to condominiums, apartment buildings, homeowner associations, etc., with a renewable energy facility located on land owned by the association. These customers would be exempt from standby charges.

Third-party power purchase agreements (PPAs)

HB 1925 (Lopez) and SB 1160 (Edwards) replace the current PPA program in Dominion territory with one that applies to both Dominion and APCo territories. It increases the project cap from the current 500 kW to 1 MW, and raises the overall program size to 100 MW from (50 MW). As with the current program, projects under 50 kW aren’t eligible unless the customer is a tax-exempt organization.

Utility-scale solar

HB 2219 (Yost) declares it to be in the public interest for Dominion Virginia Power or Appalachian Power to build up to 500 MW of solar power—a truly welcome objective—and authorizes the utilities to apply to the SCC for a certificate of public convenience and necessity for individual facilities of at least 20 MW in size, regardless of whether the facility is located in the utility’s own service territory.

“In the public interest” are the magic words that push the SCC to approve something it might not otherwise. Both utility giants have shown an interest in building and owning utility-scale solar, even as they have taught the SCC to believe that solar owned by anyone else burdens the grid. The magic words let them escape the corner they backed themselves into. That would be necessary here, given that our SCC wrongly believes the public interest requires the lowest cost energy regardless of the consequences to public health, the environment, national security, and the economy.

The solar industry has two concerns about HB 2219: the effect on ratepayers, since Dominion’s previous solar efforts have cost well above market rates; and the effect on the Virginia solar industry—or rather, the lack of an effect, since Dominion has hired only out-of-state companies. Virginia ratepayers could save money and the state could build more solar if legislation simply required the utilities to buy 500 MW of solar, and let the market decide who builds it. But of course, that’s now how things work in Virginia.

I also think it is unfortunate that the bill allows utilities to build solar plants that are not in the utilities’ own service territories, and that it does not require them to use Virginia contractors. Surely there would be more support for a bill promising projects that support local economies with jobs and tax revenues, and that requires the hiring of local installers. These seem like small enough things to ask.

HB 2237 (Yancey) allows Dominion or APCo to recover the costs of building or buying a solar facility in the state of Virginia of at least 5 MW, plus an enhanced rate of return on equity, through a rate adjustment clause. It also states that construction or purchase of such a facility, and the planning and development activities for solar energy facilities, are in the public interest. (The magic words again.)

This bill doesn’t require anything or make huge changes. It simply treats solar the way the Code currently treats other forms of generation, with the exception that the “in the public interest” language was previously used only to endorse a coal plant (what became the Virginia City Hybrid Energy Plant in Wise County). And note that this bill requires that the facility be in Virginia, and opens up the possibility of our utilities buying the facility rather than constructing it themselves, which could open the door to competition. This seems like a good way to proceed.

Grants and tax credits

HB 1728 (Sullivan) establishes a tax credit for renewable energy. Great idea, but last year the Senate Finance Committee made it clear they would not pass a new tax credit, so I assume this is a non-starter.

Last year’s renewable energy tax credit bill was amended to create a grant program instead. It passed both houses, but without funding and with the requirement that it be passed again this year. It is back this year as HB 1650 (Villanueva). (It has been assigned to House Committee on Agriculture, Chesapeake and Natural Resources and is on the docket for 8:30 a.m. Wednesday, January 21. Odd: it ought to be in Finance.) The grant would equal 35% of the costs of a renewable energy facility, including not just wind and solar, but also things like biomass, waste, landfill gas, and municipal waste incinerators. Facilities paid for by utility ratepayers are not eligible, and the grant total is capped at $10 million per year. Prospects for the program aren’t great given the state’s tight budget situation, but the bill is a high priority for the solar industry.

Another tax-related bill is HB 1297 (Rasoul), which authorizes localities to charge a lower tax on renewable projects than on other kinds of “machinery and tools.” Last year, you may recall, the solar industry was successful in getting passage of a bill that exempted solar equipment entirely from local machinery and tools taxes. Proponents are trying to ensure that Delegate Rasoul’s well-intentioned bill doesn’t reverse last year’s victory on solar.

Bills specific to energy efficiency

HB 1730 (Sullivan) establishes energy efficiency goals for electric and natural gas utilities. The good news: the goals are mandatory. The bad news: the goals are modest to a fault: a total of 2% energy savings by 2030 for electricity and 1% for natural gas.

HB 1345 (Carr) extends the sales tax holiday for Energy Star and WaterSense products to include all Energy Star light bulbs; currently only compact fluorescent light bulbs are eligible.

PACE bills

PACE (Property Assessed Clean Energy) is a way to finance energy efficiency, renewable energy and water conservation upgrades to commercial and non-profit-owned buildings. Local governments sponsor the financing for improvements and collect payments via property tax bills. Since the energy savings more than pay for the increased assessments, PACE programs have been hugely successful in other states.

Last year a bill that would have let localities extend “service districts” to cover clean energy (PACE by another name) failed in the face of opposition from the banking industry. This year’s bills are also not labeled PACE bills, but they achieve the same end. Apparently the parties have worked out the problems, a hopeful sign that a multi-year effort will finally meet with success.

SB 801 (Watkins) and HB 1446 (Danny Marshall) are companion bills that would authorize local governments to work with third parties to offer loans for clean energy and water efficiency improvements, creating “voluntary special assessment liens” against the property getting the improvements. The Department of Mines, Minerals and Energy would develop underwriting guidelines for local loans to finance the work. HB 1665 (Minchew) is similar, and we are told it will be conformed to HB 1446.

Virginia Solar Energy Development Authority

HB 1725 (Bulova) and SB 1099 (Stuart) establish the Virginia Solar Energy Development Authority to “facilitate, coordinate, and support the development of the solar energy industry and solar-powered electric energy facilities in the Commonwealth.” This implements a proposal in the 2014 Virginia Energy Plan and is not expected to be controversial.

Virginia SREC registry

HB 2075 (Toscano) requires the SCC to establish a registry for solar renewable energy certificates (SRECs). It would not suddenly make Virginia SRECs valuable, but it would put the administrative framework in place to support a voluntary SREC market, or even a real one if Virginia were to adopt legislation requiring utilities to buy solar power.

Cross-cutting approaches to clean energy

A few bills would have a more sweeping effect on energy efficiency and renewable energy. HB 2155 (Sickles) is billed as an “Energy Diversity Plan.” It was supposed to be a “grand bargain” between utilities and the clean energy industries, with the McAuliffe administration participating as well, but we understand there are outstanding issues that make the bill’s future uncertain.

The big idea is to put all non-emitting energy sources into one category: primarily wind, solar, hydro and nuclear, but also adding in combined heat and power, demand response and energy efficiency. The bill creates a timeline that requires utilities to ramp up use of new, non-emitting sources gradually, beginning with 0.25% of retail sales in 2016 and ramping up to 35% in 2030.

The bill has the support of clean energy industries, but the idea of treating nuclear as a benign source of power on an even footing with efficiency and renewables concerns the environmental community.

I’ll write more about this bill if it looks like it has legs.

HB 1913 (Lopez) is the only bill of the bunch that directly targets Virginia’s Renewable Portfolio Standard (RPS). Maybe that shouldn’t be a surprise. Our RPS is a poor, sickly thing that most people have left for dead. To his credit, Lopez keeps trying. His bill keeps the RPS voluntary but beefs up the provisions to make the program meaningful, if a utility chooses to participate. Instead of mostly buying renewable energy certificates from things like old, out of state hydro dams, the bill would ensure that actual, real-world renewable projects get built. You know, what an RPS is supposed to do.

In addition, the bill folds into the RPS the state’s existing goal of 10% energy efficiency gains by 2022. Utilities have done very little toward meeting this goal. Putting it into the voluntary RPS might be the prod needed to get more efficiency programs underway.

Or it might cause a utility to drop out. Either way, the result would be better than what we have now, where Virginia pretends to have an RPS, and utilities pretend to care.

Update: Another net metering bill has been filed. SB 1395 (Dance) raises the commercial net metering cap from 500 kW to 2 MW.

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Virginia’s amazing year in energy: gas rises, coal falls, and solar shines (but it’s still not okay to say “climate change”)

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Virginians rally in front of U.S. EPA Headquarters in Washington, DC in support of the Clean Power Plan

Virginians rally in front of U.S. EPA Headquarters in Washington, DC in support of the Clean Power Plan

Nobody laughed a few years ago when former governor Bob McDonnell dubbed Virginia the “Energy Capital of the East Coast”; we were all too astounded by the hyperbole. And today, even “Energy Suburb” still seems like a stretch. Yet, if you measure achievement by the sheer level of activity, Virginia is making a play for importance. The year’s top energy stories show us fully engaged in the worldwide battle between fossil fuels and renewable energy. Of course, while the smart money says renewables will dominate by mid-century, Virginia seems determined to drown rather than give up its fossil fuel addiction.

Coal falls hard; observers disagree on whether it bounces or goes splat. Nationwide, 2014 was a bad year for the coal industry. Coal stocks fell precipitously; mining jobs continued to decline; and the one thing electric utilities and the public found to agree on is that no one likes coal. Even in Virginia, with its long history of mining, coal had to play defense for what may have been the first time ever. So when Governor McAuliffe released the state’s latest energy plan in October, what was otherwise a paean to “All of the Above” omitted the stanza on coal. And this month, the governor proposed a rollback of the subsidies coal companies pocket by mining Virginia coal.

Of course, coal is not going quietly; Senator Charles Carrico (himself heavily subsidized by Alpha Natural Resources) has already responded with a bill to extend the subsidies to 2022.

EPA opens a door to a cleaner future, and Republicans try to brick it up. Speaking of hard times for coal, in June the EPA unveiled its proposal to lower carbon emissions from existing power plants 30% nationwide by 2030. Instead of targeting plants one-by-one, EPA proposed a systemic approach, offering a suite of options for states to reach their individualized targets.

The proposal drew widespread support from the public, but Virginia’s 38% reduction target set off howls of protest from defenders of the status quo. The staff of the State Corporation Commission claimed the rule was illegal and would cost ratepayers $6 billion. Republicans convened a special meeting of the House and Senate Energy and Commerce Committees, where they tried out a number of arguments, not all of which proved ready for prime time. The rule, they said, threatens Virginia with a loss of business to more favored states like—and I am not making this up—West Virginia. Also, Virginia should have received more credit for lowering its carbon emissions by building nuclear plants back in the 1970s when no one was thinking about carbon emissions.

Meanwhile, the Southern Environmental Law Center analyzed the rule and concluded that actually, compliance will not be hard. Virginia is already 80% of the way there, and achieving the rest will produce a burst of clean-energy jobs coupled with savings for consumers through energy efficiency.

Undaunted, Republicans have already introduced a thumb-your-nose-at-EPA bill developed by the fossil fuel champions at the American Legislative Exchange Council.

The “solarize” movement takes Virginia by storm. For the last few years, solar energy has been exploding in popularity across the U.S., but Virginia always seemed to be missing the party. So it surprised even advocates this year when pent-up consumer demand manifested itself in the blossoming of local solar buying cooperatives and other bulk-purchase arrangements. “Solarize Blacksburg” made its debut in March, going on to sign up hundreds of homeowners for solar installations. It was followed in quick succession by the launch of similar programs in Richmond, Charlottesville, Harrisonburg, Northern Virginia, Halifax, Floyd, and Hampton Roads.

The main reason for the solarize programs’ success was the steep decline in the cost of solar energy. 2014 saw the cost of residential installations in Virginia fall to record low prices, making the investment worthwhile to a broad swath of homeowners for the first time.

Utilities say maybe to solar, but only for themselves. Virginia still boasts no utility-scale solar, but utilities elsewhere signed long-term power purchase contracts for solar energy at prices that were sometimes below that of natural gas: under 6.5 cents/kilowatt-hour in Georgia, and under 5 cents in Texas. Compare that to the estimated 9.3 cents/kWh cost of power from Dominion Virginia Power’s newest and most up-to-date coal plant, the Virginia City Hybrid Energy Plant, and you’ll understand why Dominion has suddenly taken an interest in solar projects. Sadly, it’s own foray into rooftop solar so far stands as an example of what not to do, and a testament to why the private market should be allowed to compete.

Yet Virginia utilities continued their hostility to customer-owned solar. Dominion put the kibosh on a bill that would have expanded access to solar energy through community net-metering, while Appalachian Power matched Dominion’s earlier success in imposing punitive standby charges on owners of larger residential systems.

Fracking, pipelines, and gas plants, oh my! Renewable energy may be the future, but the present belongs to cheap natural gas. Yes, the fracking process is dirty, noisy and polluting, and yes, methane leakage around gas wells is exacerbating climate change. But did we mention gas is cheap?

2014 saw proposals to drill gas wells east of I-95, while the Virginia government began updating its regulations to govern fracking. Dominion Power started construction on a second new gas power plant, and talked up its plans for a third. The utility giant, a major player in the gas transmission business, also got approval to turn its liquefied natural gas import terminal in Cove Point, Maryland, into an export terminal. With visions of customers dancing in its head, it also announced plans for a major new pipeline to bring fracked gas from West Virginia through Virginia and into North Carolina—one of three proposed pipelines that would cut through the Virginia countryside and across natural treasures like the Appalachian Trail. The pipeline created an instant protest movement but gained the wholehearted approval of Governor McAuliffe.

Flooding in Hampton Roads becomes the new normal; it’s still not okay to ask what’s causing it. A cooler-than-normal year for the eastern United States gulled many landlubbers into believing that global warming was taking a breather, but meanwhile the ocean continued its inexorable rise along Virginia’s vulnerable coastline. It’s one thing to shrug off the occasional storm, said residents; it’s harder to ignore seawater that cuts off your parking lot at every high tide. 2014 will go down as the year everyone finally agreed we have a problem—even in the General Assembly, which passed legislation to develop a response to the “recurrent flooding.” But while the bill recognized that the problem will just get worse, it avoided noting why.

The public gets it, though. The Richmond Times-Dispatch reports that climate change was the number one topic of interest to writers of letters to the editor in 2014. And loud cheers greeted Governor McAuliffe’s announcement that he would reestablish the state’s commission on climate change, which Bob McDonnell had disbanded. As one environmental leader quipped, “People in Tidewater are tired of driving through tidal water.”

Public corruption: in Virginia, it’s not just for politicians. Everyone can agree that it was a really bad year for the Virginia Way, that gentlemanly notion that persons of good character don’t need no stinkin’ ethics laws. But we also saw plenty to prove the adage that the real scandal is what’s legal. As we learned, Virginia law allows unlimited corporate contributions to campaigns, and puts no limits on what campaigns can spend money on. So if some legislators act more like corporate employees than servants of the public, well, that’s how the system was set up to work.

But the system only works when corporations get their money’s worth from the politicians, and that quid pro quo usually comes at the public’s expense. For example, take Dominion Power’s North Anna 3 shenanigans (please). In an exceptionally bold exploitation of the Virginia Way, Dominion Power secured passage of legislation allowing it to bill customers for hundreds of millions of dollars it had spent towards a new nuclear plant that it is unlikely to build. (And the irony is that ratepayers will still be better off throwing the money down that rathole than they will be if Dominion does manage to build it.)

So as we look ahead to 2015’s energy battles, anyone wondering who the winners and losers will be needs only one piece of guidance: in Virginia, just follow the money.

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Dominion ditches plans for onshore wind in Virginia, but grows bullish on solar

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Not for you, Virginia.

Not for you, Virginia.

Well, now it’s semi-official: in spite of what it has been telling customers for years, Dominion Power is not going to build onshore wind in Virginia. Speaking at an Edison Electric Institute conference in Dallas on November 13, Dominion Resources Executive Vice President and CFO Mark Gettrick spelled it out:

“When the wind business first got started, a decade, a decade and a half ago, we built two wind projects early on [Mt. Storm, in West Virginia, and Fowler Ridge, in Indiana], and we elected not to build any more. We steered away from wind. We do not think wind would ever be a good resource on land, in Virginia anyway, and so we elected not to pursue incremental wind projects.”

Someone should probably let the rest of the company in on the secret. Dominion’s website still insists the company has three Virginia onshore wind projects in development, and it included 247 megawatts’ worth in its latest Integrated Resource Plan (IRP). But the plan reflects the company’s cooling enthusiasm for wind energy, with the projects now slated for 2022-2024.

This is disappointing news, but it certainly isn’t a surprise. Dominion proposed its Virginia wind farms back before fracking caused natural gas prices to nosedive, undercutting the economic case for wind. At that point, Virginia’s lack of a real RPS meant Dominion had no incentive to build higher-priced generation, and every reason to believe the State Corporation Commission would reject a wind project, as it did similar proposals from Appalachian Power.

But though it is abandoning wind, the company is enthusiastic about solar. Gettrick said Dominion sees “gas and solar” as the way to comply with the EPA’s Clean Power Plan, which will require states to lower their carbon emissions from electric generating plants. Gettrick said:

“We see a growing need in Virginia to install solar for native load compliance with carbon. So that’s what we’re doing . . . So watch where we go with solar. We like the technology, the cost continues to drop, and we see it as a cornerstone for future development in Virginia.”

Advocates may wonder, why solar and not wind? Wind would seem to be cheaper, after all, and a single utility-scale turbine provides more power than hundreds of home solar systems.

The IRP offers part of the answer. For a utility, not all power is equal. Dominion has plenty of power for times when demand is low; the challenge is filling in the peaks and valleys of demand above that minimum level. Dominion needs the most power on summer days when solar produces well but wind does not.

The other part of the answer is price. This will surprise people who have seen the rock-bottom prices of wind power in places like Iowa and Texas, where wind outcompetes even natural gas. But it’s cheap to build wind among cornfields or on open rangeland, where access is easy. It’s more expensive to do it in the eastern mountains, where narrow, winding roads pose logistical challenges. The result is that wind power in the Southeast will cost about double what it costs in the Plains, according to the most recent Lazard analysis.

By contrast, Lazard calculates that utility scale solar power costs only about 20% more in the Southeast than it does in the dry, sunny Southwest, where utility-scale solar has reached grid parity. So while the best wind prices are well below the best solar prices nationwide, solar may be cheaper than wind in Virginia.

Lazard’s analyses are based on actual projects, but it also makes some predictions about where prices are headed. It projects unsubsidized utility-scale solar prices of six cents per kilowatt-hour by 2017, confirming predictions of widespread grid parity made by other analysts like Citibank and Deutsche Bank.

If you’re concerned about meeting EPA carbon emissions rules, or just concerned about the environment, period–or you want a reliable and stable-priced resource to hedge gas–solar makes very good sense.

Given these price trends, Dominion’s enthusiasm is entirely understandable. But surely it has some explaining to do, after years of trashing solar to legislators and the SCC. It has gone so far as to slap standby charges on customers who generate their own solar power. And as we’ve seen, its own forays into rooftop solar can’t be counted a success.

But perhaps we could all let bygones be bygones. If Dominion would focus its efforts on utility-scale solar while allowing the removal of barriers constraining the private market for commercial and residential solar, all of us would be winners.

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Dominion Virginia Power says its 30 MW Solar Partnership Program likely to top out at “13 or 14” MW

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Photo credit Christoffer Reimer

Photo credit Christoffer Reimer

At a stakeholder meeting in Chesterfield, Virginia, on Monday, Dominion Virginia Power revealed that it expects to have installed a total of 6 megawatts (MW) of distributed solar generation by year’s end, out of the 30 MW approved by the General Assembly. But the program, which Dominion calls its Solar Partnership Program, may achieve only a total of “thirteen or fourteen megawatts” before it exhausts the $80 million that the State Corporation Commission authorized the company to spend on it.

Dominion had originally requested $110 million for the program, under which it develops large solar facilities on rooftops it leases from commercial, industrial or institutional customers in selected areas. But many solar industry members and advocates, including yours truly, argued that it should be possible to install 30 MW of solar for much less. It turns out that we were right that the private sector could do it for less, but wrong in thinking Dominion could.

The $80 million price tag works out to a cost of between $5.70 and $6.15 per watt, a number that is at least two and a half times what a commercial customer would expect to pay if it purchased a system directly. It’s vastly higher even than what residential customers are paying under the popular “solarize” programs that have sprung up around the state this year, which are producing contracts for home systems at $2.90-3.55 per watt.

Dominion analyst Nate Frost told me at the meeting that the SCC required the company to include all the related costs of the program, including financing and O&M as well as the cost of leasing rooftops from participants. But this still puts the price far above what similar projects would cost if built and owned by a private sector firm, according to an industry insider I consulted.

I followed up with Mr. Frost by email to ask for a cost breakdown, and to find out whether unique factors might have driven up the cost. Mr. Frost referred me to the company’s August 29 filing with the SCC (which, due to the SCC’s impossibly user-unfriendly website, I cannot link you to, although you can look it up yourself on the website by searching under case PUE-2011-0017).

That filing does not, unfortunately, answer any of the questions I put to Mr. Frost. But reading it does give a strong impression that the company had expected to be able to install the full 30 MW under the cost cap, and was as surprised and dismayed as the rest of us to find they were proceeding with projects way too slowly while blowing through their budget way too fast.

Of course, the point of the Solar Partnership Program is not to show whether Dominion is capable of competing with private companies, but to give the utility a chance to examine how solar integrates with the existing grid. This is important because solar is such a new and untried technology that the utility could not possibly know what might happen if it just scattered twenty or thirty megawatts’ worth of it into a system with tens of thousands of megawatts of fossil fuel generation. Sure, critics might suggest Dominion could get that information from New Jersey, which has over 1,300 MW of solar in a state half the size of Virginia. But what the critics fail to understand is that unlike Virginia, New Jersey actually encourages solar, making its electrons highly suspect. This is why we need our own study.

Monday’s stakeholder meeting revealed more bad news about Dominion’s progress on solar. Also behind schedule is the Solar Purchase Program, under which solar owners who would otherwise be eligible to net meter (using their solar power themselves) are offered 15 cents per kilowatt-hour to sell their green electricity to Dominion for resale to the Green Power Program, while purchasing “brown” power for their own use at the standard rate. Although the program has been open for more than a year and has a capacity of 3 MW, to date it has signed up only 703 kilowatts.

Solar industry members and analysts had criticized the design of the program from the outset. But again, the company’s SCC filing (included with the Solar Partnership Program filing) reveals Dominion’s surprise and chagrin that the great majority of customers who initially signed up for the program changed their minds.

Nor are customers jumping to take advantage of Dominion’s “Schedule RG,” which makes the utility a middleman for sales of renewable energy from producers to large customers, like the consumer-conscious corporations that have driven big solar installations in many other states. Thus far there have been no takers. That’s not a huge surprise to observers; Schedule RG was criticized at the time of its proposal for its cumbersome design. (Yes, we are seeing a pattern here.)

By contrast, reported Mr. Frost, the net metering option that allows customers to install solar on their own property and for their own use has attracted 1,080 customers, who have installed a total of 8 MW to date, with 86% of these customers residential.

These aren’t huge numbers either, but they probably don’t include more than a few of the home systems currently under development through the solarize programs, which will add significantly to our residential total this year. Two projects using third-party power purchase agreements (PPAs) will also add as much as a megawatt.

The lesson seems to be that customers are doing a better job installing solar than Dominion is. If Virginia is serious about increasing renewable energy in the state, it should free the private market to build distributed generation like rooftop solar: serving every kind of customer of every size, everywhere in the state. If the utilities want to compete on a level playing field, let them. Otherwise, they should be encouraged to focus on developing multi-megawatt, utility-scale projects for the grid. There is plenty of room for both, and we need it all.