The remaining energy bills: energy choice, carbon trading, the SCC, and coal. Plus, will Dominion be forced to give up its ill-gotten gains?

This is the last of my three-part review of energy legislation introduced in Virginia’s 2018 session. The first post covered solar bills; the second focused on energy efficiency, storage, and electric vehicles. I’m concluding with bills from the miscellaneous file–some of which, however, will likely be among the most significant energy bills addressed this year.

Energy Choice

Readers will recall the ruckus at the SCC that ensued when third-party electricity provider Direct Energy proposed to offer renewable energy to current Dominion customers. The SCC confirmed last spring that this is allowed under the Virginia Code, but only until Dominion wins approval for its own renewable energy tariff. Dominion immediately filed a tariff, though eight months later, the SCC has yet to rule on it. Irked by the delay, Dominion has gotten two of its best friends to introduce bills forcing the SCC to act faster when Dominion wants something. The bills are SB 285 (Saslaw) and HB 1228 (Hugo).

Meanwhile, Senator Sutterlein has introduced SB 837, allowing customers of Dominion and APCo to purchase electricity generated 100% from renewable energy from any supplier licensed to do business in the state, and eliminating the condition that permits such purchases only if the utility itself does not offer a tariff for 100 percent renewable energy. This would resolve Direct Energy’s conundrum, since the approval of a similar Dominion tariff would not nullify an existing—or future—renewable energy offering from Direct Energy or anyone else. HB 1528 (Mullin) is the companion bill in the House.

Carbon trading

Last May, Governor McAuliffe announced Executive Directive 11, which started the process for drafting regulations that would have Virginia participate in a carbon emissions trading program known as the Regional Greenhouse Gas Initiative (RGGI). Electric utilities would be allotted, or would buy, carbon emission allowances. This makes non-carbon-emitting sources and energy efficiency more attractive to utilities than fossil fuel generation. Draft regulations were released in late December, and a comment period runs until April 9, 2018. Governor Northam has pledged to follow through on the program.

As part of this effort, the Administration’s bills include SB 696 (Lewis) and HB 1273 (Bulova), which provide for the state to join RGGI. The legislation is not necessary for Virginia to trade with RGGI, but there is an advantage to the state in doing so: RGGI member states auction off carbon allowances to polluters, rather than giving them away. That provides a significant source of income to the state that can be used to support clean energy, climate adaptation, or other priorities. Accordingly, HB 1273 spells out how the auction revenues would be spent. Energy efficiency and renewable energy would both get pieces of the pie.

Republican critics have counter-attacked. HB 1270 (Poindexter) would prohibit Virginia from joining RGGI or implementing carbon rules. Delegate Yancey, whose lucky win following a tied election barely returned him to office, is affirming his Tea Party credentials with HB 1082, prohibiting state agencies from adopting any rules more stringent than what is required by federal law. And then there is HB 549 (Freitas), which tries to hobble the General Assembly itself, prohibiting any future laws that would direct state agencies to adopt regulations that “are likely to have a significant economic impact” (defined as anything over $500!) unless they pass the bill twice to prove they really, truly mean it.

None of these bills pose a real threat to the Administration’s carbon initiative; the Governor will veto any that pass. A more serious challenge takes the form of a constitutional amendment, because it would not be subject to the Governor’s veto. Last year, Republicans pushed through a bill approving a constitutional amendment that would allow the General Assembly (read: the Republican majority) to nullify any existing regulations enacted by any Virginia state agency on any topic at any time. Since constitutional amendments have to be passed two years in a row before going to the voters for ratification, the same language (which Senator Vogel has reintroduced via SB 826 and SJ69) has to pass again this year.

Bills aimed at the SCC

Our investor-owned utilities are not the only barrier to cleaner energy in Virginia; often the SCC does us no favors either. Some of the energy efficiency bills discussed in my last post would force the SCC to evaluate utility efficiency programs differently. Two other bills are also worth noting:

HB 33 (Kory) repeals a provision prohibiting the SCC from imposing environmental conditions that go beyond what is in a permit, and expressly permits (though it does not require) the SCC to consider environmental effects, including carbon impacts, when evaluating new generating sources.

HB 975 (Guzman) would prohibit the SCC from approving new fossil fuel generating plants unless at least 20% of the generating capacity approved that year uses renewable energy. Too bad we didn’t have a rule like this a few years ago, when Dominion sought (and got) approval for the last of its giant combined-cycle gas plants. Today, however, this could be moot. No utility has proposed a new fossil fuel plant other than relatively small gas combustion turbines (peaker plants), which could meet the 20% rule when paired with even the modest levels of solar generation Dominion contemplates.

Coal subsidies

You think you killed the zombie, but it pops right back up. HB 665 (Kilgore) and SB 378 (Chafin) would reinstate the expired tax subsidies for the mining companies who despoil Virginia mountains. There is little risk of this corporate welfare becoming law again, because the governor would surely veto the legislation if it passes. The more interesting question is whether it gets through this year’s more closely divided General Assembly.

Undoing the Dominion handouts

The boondoggle Dominion won in 2015—the now infamous SB 1349, which allowed the utility to keep overearnings and avoid SCC rate reviews until into the next decade—has been in the news a lot lately. Under pressure from legislators and the media, Dominion has agreed to revisit the so-called “rate freeze.” That doesn’t mean it wants to give the money back. We hear the company is working on a deal with House and Senate leaders that lets it spend its ill-gotten gains on things it wants to do anyway: some for renewables, some for grid upgrades, anything but refunds.

So far, Dominion’s friends in the Senate have its back. Under the guidance of Frank Wagner, the original SB 1349 patron, and Dick Saslaw, Dominion’s top ally among the Democrats, the Commerce and Labor Committee today killed Chap Petersen’s SB 9, which would have restored the SCC’s ability to review utility spending and order refunds. The House companion bill, HB 96 (Rasoul) has not yet been taken up. Currently, no other bills are on file addressing the overearnings, but both Saslaw and Republican Tommy Norment have promised they have excellent bills in the works.

UPDATE January 23: On the last day to file legislation, Terry Kilgore presented us with the first of the new utility boondoggle bills. HB 1558 calls for a small portion of the overcharges to be rebated to customers, after which overcharging would go back to being the normal course of business. Wagner, Saslaw and Newman filed their own bills, supposedly on January 19, though these evaded posting on the website until today. I hear they are similar but haven’t ha time to read them. Petersen, meanwhile, played a new card, introducing SB 955, which would empower the SCC to review the overearnings and order refunds as appropriate.