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. 

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.]

Bills that passed, bills that failed, and how the General Assembly failed Virginia again on clean energy

Child on father's shoulders with sign reading "We need a healthy planet"

Photo credit Sierra Club.

When the General Assembly session opened January 9, legislators were presented with dozens of bills designed to save money for consumers, lower energy consumption, provide more solar options, and set us on a pathway to an all-renewables future. Almost none of these measures passed, while bills that benefited utilities kept up their track record of success.

Before I review the individual bills, it’s worth considering for a moment how very different Virginia’s energy future would look if the best of 2019’s bills had passed. In that alternate universe, Virginians could have looked forward to:

  • A freer and more open market for renewable energy at all levels, including unrestricted use of third-party financing for renewable energy, an end to punitive standby charges and arbitrary limits on customer solar, and new opportunities for local governments to install solar cost-effectively.
  • A mandate for utilities to achieve real energy efficiency results, not just to throw their customers’ money at programs.
  • An energy efficiency revolving fund to offer no-interest loans to local governments, public schools and public institutions of higher learning.
  • The right to choose an electricity supplier for renewable energy, instead of being restricted to more expensive and less desirable utility offerings (if available at all).
  • Tax credits for solar on landfills, brownfields and economic opportunity zones.
  • Rebates for low and moderate-income Virginians who install solar.
  • A new revenue source for spending on climate adaptation efforts, energy efficiency programs, and coalfields transition, made possible bythe auctioning of carbon allowances to power plants as part of joining the Regional Greenhouse Gas Initiative; half the lowered carbon emissions would have been achieved through installing wind and solar.
  • Movement towards an eventual phase-out of fossil fuels.
  • Stronger assurance that customers won’t be overcharged for the use of the Atlantic Coast Pipeline or other fracked-gas pipelines owned by utility affiliates.

But in a legislature still ruled by Dominion Energy and Republicans (in that order), what we mostly got instead were bills letting utilities charge their electricity customers for speculative development projects (HB 1840, HB 2738 and SB 1695) and rural broadband infrastructure (HB 2691), and another that would actually prevent the state from pursuing carbon reduction regulations (HB 2611).

A year ago legislators agreed that Dominion and Appalachian Power should propose hundreds of millions of dollars in energy efficiency programs, as a way to sop up some of those companies’ excess earnings instead of the unthinkable alternative of taking the money away from them. This year subcommittees killed bills (HB 2294, HB 1809) that would have insisted those programs be effective. (HB 2294 would have also made last year’s renewable energy goals mandatory.)

The energy efficiency bills that did pass were far more modest: making it harder for the SCC to reject utility-proposed programs (HB 2292 and SB 1662) and establishing a stakeholder group to provide input on programs (HB 2293).

“Energy Freedom,” and other similar legislation aimed at opening up the rooftop solar market, died on party-line votes in committee.

In fact, the party-line vote became a theme whenever bills came up that Dominion opposed. Anyone sitting through the House Commerce and Labor subcommittee hearing, watching one customer solar bill after another be unceremoniously killed, might have wondered if the vote buttons had gotten stuck.

The only significant renewable energy legislation to make it through the committee gauntlet was a long-negotiated Rubin Group bill that gives customers of Virginia’s rural electric cooperatives more opportunities to install solar, at the cost of accepting future new demand charges (HB 2547 and SB 1769). Whether it works in favor of all coop solar customers or not remains an open question. The coops would not provide advocates with any cost modeling and referred us to the solar industry trade association MDV-SEIA, which told us they couldn’t provide it either because of a confidentiality agreement within the Rubin Group.

But the bill does raise the limit on the amount of customer solar that can be built in those parts of the state served by rural electric coops. Customers of Dominion and APCo didn’t get even that much, though one bill—from a Republican—calls for those utilities to provide a total of $50 million in assistance to low-income, elderly and disabled customers for solar and energy efficiency. HB 2789 marks one of the rare bright spots of the 2019 session.

Two other minor renewable energy bills could make incremental progress for a handful of municipalities (HB 2792 and SB 1779) and school systems (HB 2192 and SB 1331).

And that, I’m sorry to say, is pretty much it for energy legislation this year.

Below is a final rundown of the bills that passed, followed by the ones that didn’t. Links in the bill numbers will take you to their summary pages in the Legislative Information Service. The summaries there should not be relied on, because amendments may make a bill quite different by the time it gets passed (or dies). Follow the links on a page to read the legislation or see vote results. Many of the committee hearings were recorded on video.

Bills that passed: renewable energy

HB 2192 (Rush) and SB 1331 (Stanley) is a school modernization initiative that includes language encouraging energy efficient building standards and net zero design. It also encourages schools to consider lease agreements with private developers (apparently there is one particular North Carolina firm that wants this). It does not provide for the more common use of third-party power purchase agreements. It has nice (but not mandatory) language on net zero schools. It allows leases with private developers who will construct and operate buildings and facilities. It permits public schools to contract with utilities for solar energy as part of the school modernization project. An amendment added language requiring that renewable energy facilities must be on school property and cannot be used to serve any other property. PPAs are not mentioned. Ambiguous language in these provisions may cause problems for schools. Both bills passed the House and Senate almost unanimously with Senator Black the only naysayer.

HB 2547 (Hugo) and SB 1769 (Sturtevant) make changes to the net metering program for customers of electric cooperatives. The overall net metering cap is raised from the current 1 percent to a total of 5%, divided into separate buckets by customer type and with an option for coops to choose to go up to 7%. Customers will be permitted to install enough renewable energy to meet up to 125% of previous year’s demand, up from 100% today. Third-party PPAs are generally legal for tax-exempt entities, with a self-certification requirement. However, the coops will begin imposing demand charges on customers with solar, to be phased in over several years, replacing any standby charges. This bill was negotiated between the coops and the solar industry via the “Rubin Group.” An amendment to the bill establishes a stakeholder group for further discussions with Dominion and APCo on net metering, a prospect that will appeal only to eternal optimists and amnesiacs who don’t remember the past five years of time-wasting, fruitless negotiations. SB 1769 passed both the Senate and House unanimously. HB 2547 passed the House unanimously and the Senate 36-4, with Black, Chase, Stuart and Suetterlein voting no this time, with no discernible reason for the change.

HB 2621 (Ingram) and SB 1398 (Stanley) authorize a locality to require the owner or developer of a solar farm, as part of the approval process, to agree to a decommissioning plan. This was a negotiated Rubin Group bill. SB 1398 was incorporated into SB 1091 (Reeves), which was amended to conform to the compromise language of HB 2621.

HB 2741 (Aird) establishes a rebate program for low and moderate-income households that install solar. Amended so it retains the structure of the program but removes funding. As amended it passed both House and Senate.

HB 2792 (Tran) and SB 1779 (Ebbin) establish a 6-year pilot program for municipal net metering for localities that are retail customers of investor-owned utilities. The initial bill negotiated with the utilities was much more limited than most localities wanted; further amendments whittled it down to a point where it won’t help localities with significant projects like landfill solar. However, we are told it will be useful for a few small on-site projects that don’t need PPAs. Even with the utilities on board, 21 House Republicans and one senator (Sutterlein) voted against the House bill, though only 12 House Republicans were hardcore enough to vote against the identical Senate bill when it crossed over. 

HB 2789 (O’Quinn) requires Dominion and APCo to develop pilot programs to offer solar and energy efficiency incentives to low-income, elderly and disabled customers. The energy efficiency money, totaling $25 million, is to come out of the amount the utilities are required to propose in efficiency spending under last year’s SB 966. The renewable energy incentives, also $25 million, cannot come out of that spending; the legislation is silent on how it will be paid for. Passed the House 90-9, with only Republicans as holdouts. Passed the Senate 37-3, with only Black, Stuart and Suetterlein in opposition.

Bills that passed: energy efficiency

HB 2292 (Sullivan) and SB 1662 (Wagner), dubbed the “show your work bill,” requires the SCC to provide justification if it rejects a utility energy efficiency program. As amended, the bills passed almost unanimously.

HB 2293 (Sullivan) establishes a stakeholder process to provide input on the development of utility energy efficiency programs. Passed both houses unanimously.

HB 2332 (Keam) protects customer data collected by utilities while allowing the use of aggregated anonymous data for energy efficiency and demand-side management efforts. A substitute changed the bill to one requiring the SCC to convene a Data Access Stakeholder Group to review customer privacy and data access issues. As amended, the bill passed both Houses unanimously. 

SB 1400 (Petersen) would have removed the exclusion of residential buildings from the Property Assessed Clean Energy (PACE) program, which allows localities to provide low-interest loans for energy efficiency and renewable energy improvements on buildings. After passing the Senate unanimously, the bill was amended in the House to remove the residential PACE authorization (it does expand PACE to include stormwater improvements). As amended, it passed both houses unanimously. It’s probably cheating putting this one in the“passed” category, but I needed the win. 

Bills that passed: energy transition and climate

HB 2611 (Poindexter) would prohibit Virginia from joining or participating in RGGI without support from two-thirds of the members of the House and Senate, making it sort of an anti-Virginia Coastal Protection Act. Passed the House on a 51-48 party-line vote. Passed the Senate on a 20-19 vote. Only one Republican, Jill Vogel, voted against it. The Governor is expected to veto it.

HB 2747 (Kilgore) and SB 1707 (Chafin) create a Southwest Virginia Energy Research and Development Authority “for the purposes of promoting opportunities for energy development in Southwest Virginia, to create jobs and economic activity in Southwest Virginia consistent with the Virginia Energy Plan prepared pursuant to Chapter 2 (§ 67-200 et seq.), and to position Southwest Virginia and the Commonwealth as a leader in energy workforce and energy technology research and development.” Among the powers listed are promotingrenewable energy on brownfield sites, including abandoned mine sites, and supporting energy storage, including pumped storage hydro. Fossil fuel projects are not listed, but are also not excluded. Both bills passed unanimously.

Bills that passed: other utility regulation

HB 1840 (Danny Marshall) allows utilities to develop transmission infrastructure at megasites in anticipation of development, charging today’s customers for the expense of attracting new customers. The legislation was amended to change the language to the nicer-sounding “business park,” but it continues to allow utilities to recover costs for constructing transmission lines and substations to serve these speculative projects. It passed unanimously in the Senate and 82-18 in the House, with mainly the newer Democrats voting no.

HB 2477 (Kilgore) originally would have eliminated one of the few areas of retail choice allowed in Virginia by preventing large customers from using competitive retail suppliers of electricity, including for the purpose of procuring renewable energy, in any utility territory with less than 2% annual load growth. A substitute bill removed most of the bad provisions and confined its operation to APCo, but also left it incomprehensible, so I can’t possibly tell you what it does. As far as I was able to determine, no customers opposed the final bill, which passed the House and Senate unanimously.

HB 2691 (O’Quinn) originally would have established a pilot program for electric utilities to provide broadband services in underserved areas, and raise rates for the rest of us to pay for it. The bill was amended so utilities can only provide the capacity on their lines to private broadband suppliers. The investment is eligible for recovery as an electric grid transformation project under last year’s SB 966, presumably so it is paid for out of utility overearnings instead of a new rate increase.The amended bill passed both houses almost unanimously.   

HB 2738 (Bagby) and SB 1695 (Wagner) authorizes utilities to acquire rights of way for sites that the Virginia Economic Development Partnership Authority decides could be developed to attract new customers, and allows utilities to recover costs from existing customers. A substitute tightened the requirements somewhat, but it remains another giveaway to utilities in the name of speculative development, at the expense of landowners and consumers.The House bill passed 85-13with mostly newer Democrats in opposition, then passed the Senate 37-3, with McPike, Spruill and Suetterlein voting no. The Senate bill passed 34-6; although the bills appear to have been identical, Chase, Newman and Peake also voted no. The House vote on SB 1695 was 84-13.

And now for the also-rans.

Bills that failed: renewable energy

HB 2329 (Keam) and SB 1456 (McClellan and Edwards) is the Solar Freedom bill that would have removed 8 barriers to renewable energy installations by utility customers, including lifting the 1% net metering cap, removing PPA caps, and allowing municipal net metering. HB 2329 was defeated inCommerce and Labor 8-7 on a party-line vote. The Senate companion was killed in Commerce and Labor on a 10-3 party-line vote.

HB 1683 (Ware) gives electric cooperatives greater autonomy, including authority to raise their total system caps for net metering up to 5% of peak load. Amended to remove the net metering language, then withdrawn by patron.

HB 1809 (Gooditis) follows up on last year’s HB 966 by making the renewable energy and energy efficiency provisions mandatory. If utilities don’t meet annual targets, they have to return their retained overearnings to customers. Defeated inCommerce and Labor subcommittee 3 on party-line vote, with only Democrats supporting.

HB 1869 (Hurst), SB 1483 (Deeds) and SB 1714 (Edwards) creates a pilot program allowing schools that generate a surplus of solar or wind energy to have the surplus credited to other schools in the same school district. HB 1869defeated in Commerce and Labor subcommittee 3 on party-line vote. In Senate Commerce and Labor, SB 1714 was incorporated into SB 1483, then defeated unanimously.

HB 1902 (Rasoul) would provide a billion dollars in grant funding for solar projects, paid for by utilities, who are required to contribute this amount of money through voluntary contributions (sic). Killed in Appropriations subcommittee on party-line vote.

HB 1928 (Bulova) and SB 1460 (McClellan) expands utility programs allowing third-party power purchase agreements (PPAs) for renewable energy while continuing to restrict the classes of customers who are allowed to have access to this important financing tool. In committee hearings, utility lobbyists claimed there was no need for the legislation because there is “plenty of room left” under the existing caps. Industry members testified that there is a lot more in the queue than is public, and caps will likely be reached this year. HB 1928 killed in Commerce and Labor subcommittee 3 by a 6-4 vote; Republican Tim Hugo voted with Democrats in support of the bill. SB 1460 killed in Senate Commerce and Labor 10-3, with only Democrats supporting.

HB 2117 (Mullin) and SB 1584 (Sutterlein) fixes the problem that competitive service providers can no longer offer renewable energy to a utility’s customers once the utility has an approved renewable energy tariff of its own. Now that the SCC has approved a renewable energy tariff for APCo, this is a live issue. HB 2117defeated inCommerce and Labor subcommittee 3 on party-line vote. Although the patron of SB 1584, David Sutterlein, is a Republican, his bill died in Senate Commerce and Labor 11-1, with only fellow Republican Ben Chafin voting for it, and Republican Stephen Newman abstaining.

HB 2165 (Davis and Hurst) and HB 2460 (Jones and Kory), and SB 1496 (Saslaw) provide an income tax credit for nonresidential solar energy equipment installed on landfills, brownfields, in economic opportunity zones, and in certain utility cooperatives. This is a Rubin Group bill. HB 2165 and HB 2460 were left in the Committee on General Laws (i.e, they died there). SB 1496 was amended in Finance to change it from a tax credit to a grant-funded program, but with no money. Then it passed the committee and the Senate unanimously.  However, it was then killed unanimously in a House subcommittee of Commerce, Agriculture, Natural Resources & Technology.

HB 2241 (Delaney) establishes a green jobs training tax credit. Failed in House Finance subcommittee on party-line vote.

HB 2500 (Sullivan) establishes a mandatory renewable portfolio standard (RPS) for Virginia, eliminates carbon-producing sources from the list of qualifying sources, kicks things off with an extraordinarily ambitious 20% by 2020 target, and ratchets up the targets to 80% by 2027. Failed inCommerce and Labor subcommittee 3 with only Democrat Mark Keam supporting it.

HB 2641 (Gooditis) makes third-party power purchase agreements for distributed renewable energy resources legal statewide. Killed in Commerce and Labor subcommittee 3 by a 6-3 vote. Delegate Hugo, who had voted for Bulova’s narrower PPA bill, joined the other Republicans in voting against this broader one.

HB 2692 (Sullivan) allows the owner of a multifamily residential building to install a renewable energy facility and sell the output to occupants or use for the building’s common areas. Stricken from docket.

HJ 656 (Delaney) would have the Virginia Resources Authority study the process of transitioning Virginia’s workforce from fossil-fuel jobs to green energy jobs. Failed to report from Rules subcommittee on party-line vote, all Republicans voting against it.

Bills that failed: energy efficiency (some of which had RE components)

HB 2243 (Sullivan) creates an energy efficiency revolving fund to offer no-interest loans to local government, public schools, and public institutions of higher learning. Killed in Appropriations subcommittee on party-line vote.

HB 2294 (Sullivan) establishes mandatory energy efficiency goals for electric and gas utilities. Killed in Commerce and Labor subcommittee 3 on party-line vote.

HB 2295 (Sullivan) creates an energy efficiency fund and board to administer it. Killed in an Appropriations subcommittee on a party-line vote.

SB 1111 (Marsden) requires utilities to provide rate abatements to certain customers who invest at least $10,000 in energy efficiency and, by virtue of their lower consumption, end up being pushed into a tier with higher rates. Stricken at the request of the patron.

HB 2070 (Bell, John) provides a tax deduction for energy saving products, including solar panels and Energy Star products, up to $10,000. Stricken from docket in Finance subcommittee.

Bills that failed: energy transition and climate

HB 1635 (Rasoul, with 9 co-patrons) imposes a moratorium on fossil fuel projects, including export facilities, gas pipelines and related infrastructure, refineries and fossil fuel exploration; requires utilities to use clean energy sources for 80% of electricity sales by 2028, and 100% by 2036; and requires the Department of Mines, Minerals and Energy to develop a (really) comprehensive climate action plan, which residents are given legal standing to enforce by suit. This is being referred to as by the Off Act. Defeated on the floor of the House 86-12.

HB 1686 (Reid, with 14 co-patrons) and SB 1648 (Boysko) bans new or expanded fossil fuel generating plants until Virginia has those 5,500 MW of renewable energy we were promised. This is referred to as the Renewables First Act. HB 1686:Defeated inCommerce and Labor Subcommittee 3. 2 Democrats voted for it, 6 Republicans and 1 Democrat against. SB 1648 PBI’d 12-0 in Commerce and Labor.

HB 2501(Rasoul) directs the Division of Energy at DMME to include a greenhouse gas emissions inventory in the Virginia Energy Plan. Killed in Commerce and Labor subcommittee 3 on party-line vote.

HB 2645 (Rasoul, with 13 co-patrons), nicknamed the REFUND Act, prohibits electric utilities from making nonessential expenditures and requires refunds if the SCC finds they have. It also bars fuel cost recovery for more pipeline capacity than appropriate to ensure a reliable supply of gas. Other reforms in the bill would undo some of the provisions of last year’s SB 966, lower the percentage of excess earnings utilities can retain, and require the SCC to determine rates of return based on cost of service rather than peer group analysis. Democrat Steve Heretick voted with Republicans to kill the bill in Commerce and Labor subcommittee 3.

HB 2735 (Toscano) and SB 1666 (Lewis and Spruill) is this year’s version of the Virginia Coastal Protection Act, which would have Virginia formally join the Regional Greenhouse Gas Initiative (RGGI). It dedicates money raised by auctioning carbon allowances to climate adaptation efforts, energy efficiency programs, and coalfields transition. HB 2735 died in Commerce and Labor subcommittee 3 on party-line vote. SB 1666 met the same fate in Agriculture, Conservation and Natural Resources, with Democrat Rosalyn Dance abstaining.

HJ 724 (Rasoul) is a resolution “Recognizing the need for a Green New Deal in Virginia which promotes a Just Transition to a clean energy economy through lifting working families.” This was referred to Commerce and Labor subcommittee 3, where it was left without a hearing.

Bills that failed: other utility regulation

HB 1718 (Ware) requires an electric utility to demonstrate that any pipeline capacity contracts it enters are the lowest-cost option available, before being given approval to charge customers in a fuel factor case. Delegate Ware testified in committee that the bill was not intended to stop the Atlantic Coast Pipeline, but would simply guide the SCC’s review of a rate request after the pipeline is operational. Dominion’s lobbyist argued the legislation was unnecessary because the SCC already has all the authority it needs, and it shouldn’t be allowed to look back to second-guess the contents of the ACP contract. The bill passed the House 57-40. Do look at the votes; this is the most interesting energy vote of the year, as it neatly separates the Dominion faction from the pro-consumer faction. Unfortunately, the bill was then killed in Senate Commerce & Labor, where the Dominion faction runs the show, so most senators didn’t have the opportunity to demonstrate whose side they’re on.

HB 2503 (Rasoul) requires the State Corporation Commission to conduct a formal hearing before approving any changes to fuel procurement arrangements between affiliates of an electric utility or its parent company that will impact rate payers. This addresses the conflict of interest issue in Dominion Energy’s arrangement to commit its utility subsidiary to purchase capacity in the Atlantic Coast Pipeline.  Stricken from docket.   

HB 2697 (Toscano) and SB 1583 (Sutterlein) supports competition by shortening the time period that a utility’s customer that switches to a competing supplier is barred from returning as a customer of its utility from 5 years to 90 days. HB 2697 died in House Commerce and Labor subcommittee 3 on a party-line vote, with all the Republicans voting against it. SB 1583 died in Senate Commerce and Labor 11-2, with only Republicans Newman and Chafin voting for it. Democrats Saslaw, Dance and Lucas joined the rest of the Republicans in demonstrating their Dominion-friendly bonafides.

SB 1780 (Petersen) requires, among other things, that utilities must refund to customers the costs of anything the SCC deems is a nonessential expenditure, including spending on lobbying, political contributions, and compensation for employees in excess of $5 million. It directs the SCC to disallow recovery of fuel costs if a company pays more for pipeline capacity from an affiliated company than needed to ensure a reliable supply of natural gas. It requires rate reviews of Dominion and APCo in 2019 and makes those biennial instead of triennial, and provides for the SCC to conduct an audit going back to 2015. It tightens provisions governing utilities’ keeping of overearnings and provides for the allowed rate of return to be based on the cost of providing service instead of letting our utilities make what all the other monopolists make (“peer group analysis”).  Killed in Commerce and Labor 12-1, with only Republican Richard Stuart supporting the bill.

Appalachian Power gets approval to sell 100 percent renewable energy to customers. Hold the champagne.

Photo credit Andy Beecroft via Wikimedia.

Last week the State Corporation Commission (SCC) approved a request from Appalachian Power Company (APCo) to offer its customers the option of buying electricity entirely from renewable sources. The sources will be primarily wind and hydro, with some solar to be added as it gets built. Participants will pay a premium of less than 4% over ordinary “brown” power, resulting in bill increases of $4.25 per month for a customer who uses 1,000 kW per month.

The approval gives APCo more than a new way to meet customers’ desire for renewable energy. It also triggers a provision in Virginia law that blocks competitive service providers from selling renewable energy to all but the largest of a utility’s customers once the utility itself has an approved offering. Both APCo and Dominion Energy Virginia have long sought to close off competition, but this marks the first time either has succeeded.

The SCC order goes against the recommendation of hearing examiner D. Matthias Roussy, Jr., who had advised against approval of APCo’s tariff.

The SCC had previously rejected a similar program APCo proposed in 2016, primarily due to its high cost. That program, too, would have repackaged the utility’s existing wind and hydro projects that all ratepayers currently pay for, and passed on the cost of those contracts to participants in the renewable energy program. The result was a price premium for the program of about 18%, which the SCC deemed unreasonable.

But APCo didn’t go back to the drawing board and redesign its program; it just changed the pricing. The cost to participants will now be based on the market value of renewable energy certificates (RECs) generated by facilities like the ones APCo owns.

REC prices are set by supply and demand, and an oversupply of wind RECs in the market has pushed prices way down over the past few years. Using REC prices allowed APCo to slash the cost of its renewable energy program by more than 75%.

On the one hand, this is a false calculation, since the value of RECs has little to do with the actual cost of developing and operating a project. On the other hand, the SCC liked the result: a lower cost to participants.

Some customers agreed. A number of APCo’s customers offered support for the program at the SCC. For them, this marks the first opportunity they will have to buy energy from specific wind and solar projects (okay, and a lot of decades-old hydro, too). Currently their only option is buying RECs to offset the dirty power they use, so they are willing to accept a price premium based on REC values.

Other customers were less impressed. Wal-Mart Stores opposed the program because the company prefers to save money by buying renewable energy, not spend more on it. As summarized by the Hearing Examiner, Wal-Mart felt the APCo tariff would be okay as a REC offering, but a real renewable energy tariff ought to “permit the customer to realize the benefits and risks of taking service from renewable energy sources”—i.e., offer at least the potential of saving money for the customer.

Wal-Mart has a point. Given the plunging costs of building and operating new renewable energy projects in recent years, a utility could, in theory, offer a renewable energy tariff at below the cost of brown power. Wind and solar increasingly outcompete even existing coal plants, and APCo is still heavily reliant on coal.

But APCo isn’t going to do any such thing. If its customers can buy renewable energy at a discount, who would want to buy power from fossil fuels?

So APCo had to make sure its program costs more. Tying it to REC prices means it always will, because RECs are always an additional cost.

Just as importantly, APCo has to make sure no other seller of electricity can be allowed to compete with a better or cheaper product. That’s where section § 56-577 A 5 of the Virginia Code comes to the aid of our monopoly utilities. Now that APCo has an approved tariff for a 100% renewable energy tariff, no competitive supplier can come on to its turf with a product that’s better, or simply different. (The Code contains an exception for very large customers.)

Concern about this squelching of competition drove most of the opposition to APCo’s tariff at the SCC, from both competitive suppliers like Collegiate Clean Energy and environmental advocates like the Southern Environmental Law Center, as well as a number of customers. For them, the SCC Order approving APCo’s program represents a loss for consumer choice that will inevitably lead to less renewable energy development.

Separately, Dominion Energy Virginia filed for approval of its own renewable energy tariff, following the Commission’s rejection of the company’s initial proposal last year (correctly in my view). Last month a hearing examiner recommended Dominion’s new tariff be approved, though with changes that would make it significantly cheaper than what Dominion wants. Dominion’s proposal as filed would have cost the average customer an extra $20 per month.

But on January 9, two days after the SCC approved APCo’s tariff, Dominion filed a request to withdraw its application. The request states that the company intends to file a new application “consistent with the principles outlined” in the APCo order.

Although Dominion’s request doesn’t specify which principles it has in mind, they likely include the SCC’s determination that a renewable energy tariff need only match demand on a monthly basis, not the hourly basis Dominion used. According to the hearing examiner’s report, Dominion’s insistence on hourly matching was a significant factor in the program’s high cost.

Dominion’s withdrawal of its renewable energy tariff grants a temporary reprieve to competitive service providers like Direct Energy, which wants to offer renewable energy to Dominion customers. But if Dominion re-files with a program that meets SCC approval, the window of opportunity for competition in the electric sector in Virginia will close permanently in both major utility territories, absent a change in the law.

Anticipating this, Direct Energy sought legislation in the 2018 session that would have ensured the ability of competitors to offer renewable energy even after the SCC approved a utility’s own tariff. Neither the House bill (from Delegate Michael Mullin, D-Newport News) nor the Senate bill (from Senator David Sutterlein, R-Roanoke) made it out of the Commerce and Labor committee. Delegate Mullin is trying again this year; his bill is HB 2117.

Cliona Robb, a lawyer with the law firm of Christian & Barton who represents Direct Energy, says her client hopes for a better outcome in the General Assembly this year.

With the SCC’s order approving APCo’s program, harm to competition is no longer hypothetical. If legislators are serious about renewable energy development in Virginia, keeping the door open to competition has to be a key priority.


This article first appeared in the Virginia Mercury on January 10, 2019.

Update: Senator Sutterlein has also filed a bill this year that would continue to allow competition even once a utility has an approved green tariff. The Senate bill is SB 1584.

All I want for Christmas is a 500 MW offshore wind farm

Ivy Main with wind turbine

Yes, you will say I have expensive taste. But it’s not for me, it’s for the children! Picture their shining faces on Christmas morning when they find Santa has delivered 62 SiemensGamesa 8.0-megawatt, pitch-regulated, variable speed offshore wind turbines sporting a rotor diameter of 167 meters each, to a patch of ocean 27 miles east of Virginia Beach. 

Or the turbines could be GE’s sleek Haliade 150-6 MW like my friends up in Rhode Island got two years ago, or the MHI Vestas 10 MW beast that the cool kids are talking about. It sports a hub height of 105 meters and has blades 80 meters long. A single one of those bad boys can power over 5,000 homes.

But really I am not particular; these are just suggestions. 

I know we’re getting two turbines in 2020 as a demonstration project, and I’m grateful, I really am. But all the clued-in states are serious about offshore wind, and they’re building projects of 200 MW and up. We’ll be left behind if we don’t get in the game.

The states north of us are making port upgrades, attracting new businesses, and doing workforce training. They look at offshore wind as not just a jobs generator, but as a way to save money on energy costs, meet sustainability goals, improve the environment and reduce their reliance on fracked gas and imported energy. 

They’re positioning themselves to be serious players in a huge industry that a decade from now will employ tens of thousands of Americans. In the decade after that, offshore wind turbines will start delivering power to the West Coast, Hawaii and the Great Lakes region.  The effect will be transformative, as offshore wind energy feeds East Coast cities, pushes out the last of the Midwestern coal plants and leaves the fracking industry without a market.

Think that’s just the eggnog talking? Consider these indicators of an industry that’s taking off: 

1. Offshore wind is now a global industry.Offshore wind got its start in Europe more than 20 years ago as a way to get more wind energy without sacrificing valuable land space. But just in the last few years, it has spread to China, South Korea, Taiwan, Japan, and Vietnam in addition to the U.S. Analysts estimate China alone will have 28,000 megawatts installed by 2027. 

Offshore wind has been slow to advance in the U.S. because building 600-foot tall machines and planting them twenty-five miles out to sea is not cheap or easy, and the federal government had to devise a regulatory scheme from scratch. As the kinks get worked out and a manufacturing and supply chain emerges, the U.S. will move to the forefront of the industry. We always do.

2. Offshore wind competes on price in many markets. Offshore wind is cheaper than fossil fuels and nuclear in Europe already. That hasn’t been so true in the U.S. thanks to abundant coal and fracked gas, but even here, tumbling offshore wind prices have states looking at offshore wind as a way to help customers save money on energy. Bloomberg reported that Massachusetts’ first commercial-scale offshore wind farm will save electricity users $1.4 billion over 20 years. 

3. Early movers in the U.S. are already doubling down. Massachusetts and New York, which committed to a limited number of offshore wind projects early in order to capture a piece of the jobs pie, now want more projects. New York has set a goal of 2,400 MW by 2030; this fall Governor Andrew Cuomo announced a solicitation for 800 MW. This fall New Jersey announced a solicitation for 1,100 MW of capacity, a down payment on the state’s goal of 3,500 MW by 2030. 

3. Large multinational companies are buying the entrepreneurial start-ups.This year Ørsted, the energy giant formerly known as DONG Energy (for Danish Oil and Natural Gas) acquired Deepwater Wind, the scrappy developer of the Block Island project as well as projects in other states. French company EDF Renewables bought Fishermen’s Energy, another homegrown company that sought to give fishing interests a stake in wind projects. 

Along with big developers have come big law firms. You know there’s going to be serious money involved when $800 an hour lawyers trawl for clients at industry conferences. 

4. Oil and gas companies have moved in. Shell Oil and its partner EDP Renewables just spent $135 million for the right to develop a lease area off Massachusetts large enough to accommodate 1,600 MW of wind turbines. Norway’s Equinor (formerly Statoil) also put in $135 million for another section of the lease area, with the third piece going to a European partnership. 

American oil companies haven’t shown the same level of interest yet, but their suppliers in the Gulf of Mexico are handing out cards at offshore wind conferences, advertising their offshore expertise in everything from cables to shipbuilding.

5.  Offshore wind turbines have evolved away from their land-based kin. Unfettered by space limitations, offshore turbines now average close to 6 MW, more than twice the size of the typical land-based turbine. Wind farms slated for completion over the next several years will use even larger turbines, ranging in size up to a General Electric 12 MW turbine expected to deploy in 2021, and even larger ones still on the drawing boards. 

Foundations are diversifying, too, away from the original “monopile” design that mimics its land-based counterparts. Floating turbines will become mainstream in the next decade, enormously increasing design options as well as potential locations for wind farms. 

This will prove a special boon to the U.S., because while most of the East Coast is blessed with a shallow outer continental shelf that allows for fixed foundations even 30 miles from shore, the deep waters of the West Coast require floating technology to feed energy-hungry California. And the open ocean offers a lot of space.

So what’s holding Virginia back?

Dominion Energy holds the lease on the commercial-scale Wind Energy Area off Virginia. The company won it for a mere $1.6 million back in 2013, and not a whole lot seems to have happened with it since then. Dominion needs a customer, or perhaps just competition.

But Governor Northam is determined to see Virginia become a supply chain hub for at least the Mid-Atlantic states, and he has adopted a goal of achieving 2,000-MW of wind energy off our coast by 2030. 

That means I am not the only person in Virginia who wants a wind farm in my Christmas stocking, although I am likely the only one trying to get you to picture that image.

Admittedly, even Santa could find this a tall order (ho ho ho!), but Virginia is now rife with data centers that consume huge amounts of energy, owned by corporations that have promised the energy will be clean. So far the actions of these corporate players have lagged behind their promises. 

So if Santa can’t bring the governor and me a 500 MW wind farm off the coast of Virginia, maybe Amazon will deliver.

This column originally appeared in the Virginia Mercury on December 24, 2018. As this is now December 26, perhaps you think people are asking me if I got my wind farm yesterday. But no one has. Because of course they know it is out there, only waiting for us to do the hard work to make it a reality.

There’s a lot to like in Northam’s energy plan, but missed opportunities abound

electric vehicle plugged in

Vehicle electrification gets a boost under the energy plan.

There is a lot to like in the Northam Administration’s new Virginia Energy Plan, starting with what is not in it. The plan doesn’t throw so much as a bone to the coal industry, and the only plug for fracked gas comes in the discussion of alternatives to petroleum in transportation.

The 2018 Energy Plan is all about energy efficiency, solar, onshore wind, offshore wind, clean transportation, and reducing carbon emissions. That’s a refreshing break from the “all of the above” trope that got us into the climate pickle we’re in today. Welcome to the 21stcentury, Virginia.

But speaking of climate, the Intergovernmental Panel on Climate Change (IPCC) just released a special report that makes it clear we need “rapid, far-reaching and unprecedented changes in all aspects of society” to keep warming below 1.5 degrees Celsius. That’s only half again the amount of warming that has already brought us melting glaciers, a navigable Arctic Ocean, larger and more destructive hurricanes, and here in Virginia, the swampiest summer in memory. The fact that things are guaranteed to get worse before they get better (if they get better) is not a happy thought.

Perhaps no Virginia politician today has the courage to rise to the challenge the IPCC describes. Certainly, Governor Northam shows no signs of transforming into a rapid-change kind of leader. But as we celebrate the proposals in his Energy Plan that would begin moving us away from our fossil fuel past, we also have to recognize that none of them go nearly far enough, and missed opportunities abound.

Let’s start with the high points, though. One of the plan’s strongest sections champions offshore wind energy. It calls for 2,000 megawatts (MW) of offshore wind by 2028, fulfilling the potential of the area of ocean 27 miles off Virginia Beach that the federal government leased to Dominion Energy. In the short term, the Plan pledges support for Dominion’s 12-MW pilot project slated for completion in 2020.

Other East Coast states like Massachusetts and New York have adopted more ambitious timelines for commercial-scale projects, but the economics of offshore wind favor the Northeast over the Southeast, and they aren’t saddled with a powerful gas-bloated monopoly utility.  For Virginia, a full build-out by 2028 would be a strong showing, and better by far than Dominion has actually committed to.

Another strong point is the Administration’s commitment to electric vehicles. The transportation sector is responsible for more carbon emissions even than the electric sector, and vehicle electrification is one key response.

Even better would have been a commitment to smart growth strategies to help Virginians get out of their cars. Overlooking this opportunity is a costly mistake, and not just from a climate standpoint. Today’s popular neighborhoods are the ones that are walkable and bikeable, not the ones centered on automobiles. If we want to create thriving communities that attract young workers, we need to put smart growth front and center in urban planning—and stop making suburban sprawl the cheap option for developers.

Speaking of developers, how about beefing up our substandard residential building code? Lowering energy costs and preparing for hotter summers requires better construction standards. Houses can be built today that produce as much energy as they consume, saving money over the life of a mortgage and making homes more comfortable. The only reason Virginia and other states don’t require all new homes to be built this way is that the powerful home builders’ lobby sees higher standards as a threat to profits.

The Energy Plan mentions that updated building codes were among the recommendations in the Virginia Energy Efficiency Roadmap that was developed with funding from the U.S. Department of Energy and published last spring. I hope the only reason the Energy Plan doesn’t include them among its recommendations is that the Administration is already quietly taking action.

Meanwhile, it is not reassuring to see that the section of the plan devoted to attaining Virginia’s ten percent energy efficiency goal simply describes how our utilities will be proposing more efficiency programs as a result of this year’s SB 966 (the “grid mod” bill).

States that are serious about energy efficiency don’t leave it up to companies whose profits depend on a lack of efficiency. They take the job away from the sellers of electricity and give it to people more motivated. So if the Governor’s plan is merely to leave it up to Dominion and APCo without changing their incentives, we should abandon all hope right now.

Indeed, it is strange how often the Energy Plan finishes an in-depth discussion of an issue with a shallow recommendation, and frequently one that has the distinct odor of having been vetted by Dominion.

That observation leads us straight to grid modernization. The plan opens with a very fine discussion of grid modernization, one that shows the Administration understands both the problem and the solution. It opens by declaring, “Virginia needs a coordinated distribution system planning process.” And it notes, “One important rationale for a focus on grid modernization is that the transitions in our electricity system include a shift away from large, centralized power stations to more distributed energy resources.”

Well, exactly! Moreover: “The grid transformation improvements that the Commonwealth is contemplating include a significant focus on the distribution system, but our current resource planning process (Integrated Resource Plan or IRP) does not fully evaluate the integration of these resources. One overarching focus of this Energy Plan is the development of a comprehensive analysis of distributed energy resources.”

But just when you feel sure that the plan is about to announce the administration is setting up an independent process for comprehensive grid modernization, the discussion comes to a screeching halt. The plan offers just one recommendation, which starts out well but then takes a sudden turn down a dead-end road:

To ensure that utility investments align with long-term policy objectives and market shifts, Virginia should reform its regulatory process to include distribution system level planning in Virginia’s ongoing Integrated Resource Planning requirement.

Seriously? We need regulatory reform, but we will let the utilities handle it through their IRPs? Sorry, who let Dominion write that into the plan?

It’s possible the Administration is punting here because it doesn’t want to antagonize the State Corporation Commission (SCC). The SCC pretty much hated the grid mod bill and resented the legislation’s attack on the Commission’s oversight authority. And rightly so, but let’s face it, the SCC hasn’t shown any interest in “reforming the regulatory process.”

The Energy Plan’s failure to take up this challenge is all the more discouraging in light of a just-released report from the non-profit Grid Lab that evaluates Dominion’s spending proposal under SB 966 and finds it sorely lacking. The report clearly lays out how to do grid modernization right. It’s disheartening to see the Administration on board with doing it wrong.

Dominion’s influence also hobbles the recommendations on rooftop solar and net metering. This section begins by recognizing that “Net metering is one of the primary policy drivers for the installation of distributed solar resources from residential, small business, and agricultural stakeholders.” Then it describes some of the barriers that currently restrain the market: standby charges, system size caps, the rule that prevents customers from installing more solar than necessary to meet past (but not future) demand.

But its recommendations are limited to raising the 1% aggregate cap on net metering to 5% and making third-party power purchase agreements legal statewide. These are necessary reforms, and if the Administration can achieve them, Virginia will see a lot more solar development. But why not recommend doing away with all the unnecessary policy barriers and really open up the market? The answer, surely, is that Dominion wouldn’t stand for it.

Refusing to challenge these barriers (and others—the list is a long one) is especially regrettable given that the plan goes on to recommend Dominion develop distributed generation on customer property. Dominion has tried this before through its Solar Partnership Program, and mostly proved it can’t compete with private developers. If it wants to try again, that’s great. We love competition! But you have to suspect that competition is not what this particular monopoly has in mind.

The need to expand opportunities for private investment in solar is all the more pressing in light of the slow pace of utility investment. Legislators have been congratulating themselves on declaring 5,000 megawatts (MW) of solar and wind in the public interest, and the Energy Plan calls for Dominion to develop 500 MW of solar annually. I suspect our leaders don’t realize how little that is. After ten years, 5,000 MW of solar, at a projected capacity factor of 25%, would produce less electricity than the 1,588-MW gas plant Dominion is currently building in Greensville, operating at a projected 80% capacity.

Offshore wind capacities are in the range of 40-45%, so 2,000 MW of offshore wind will produce the amount of electricity equivalent to one of Dominion’s other gas plants. It won’t quite match the 1,358-MW Brunswick Power Station, or even the 1,329-MW Warren County Power Station, but Dominion also has several smaller gas plants.

But at this point you get the picture. If all the solar and wind Virginia plans to build over ten years adds up to two gas plants, Virginia is not building enough solar and wind.

That gets us back to climate. The Administration can claim credit for following through on developing regulations to reduce carbon emissions from power plants by 30% by 2030, using the cap-and-trade program of the Regional Greenhouse Gas Initiative (RGGI) of the northeastern states. If successful, that still leaves us with 70% of the carbon emissions in 2030, when we need to be well on our way to zero. And for that, we don’t have a plan.

Of course, Ralph Northam has been Governor for only nine months. He has some solid people in place, but right now he has to work with a legislature controlled by Republicans and dominated by Dominion allies in both parties, not to mention an SCC that’s still way too fond of fossil fuels. Another blue wave in the 2019 election could sweep in enough new people to change the calculus on what is possible. In that case, we may yet see the kind of leadership we need.

 

This article first appeared in the Virginia Mercury on October 15, 2018.

What will it take for Virginia’s largest jurisdiction to raise the bar on energy policy?

cars on a flooded roadway

Cars caught in a flash flood during Northern Virginia’s intense rainstorm on July 17. Photo courtesy of Hayfield Varsity Gymnastics, https://twitter.com/hayfieldgvgym?lang=en.

Last week, 40 drivers traveling on the George Washington Parkway had to be rescued near National Airport when a flash flood brought water up to their car doors. This week, Northern Virginia experienced a tornado, more flash flooding and road closures, more rescues and more power outages.

Extreme weather events like these are among the effects climate scientists were warning about in 2007, when Fairfax County adopted the Cool Counties Climate Stabilization Declaration. The County committed to reduce greenhouse gas (GHG) emissions by 20% below its 2005 baseline by 2020 and by 80% by 2050.

So how is the County doing with that? Not so good.

Last week, more than 10 years after its Cool Counties Declaration, the Fairfax County Board of Supervisors finally adopted what it called an Operational Energy Strategy for its own facilities, vehicles, and other operations with specific—but astonishingly weak—targets and deadlines for action. Supervisors who voted for the plan called it  “a step forward” or “a baseline.” (Watch the video here; discussion begins at 1:29:22.)

Local activists were less kind. “It may not be fiddling while Rome burns, but it comes close,” wrote the co-founder of Faith Alliance for Climate Solutions (FACS) Scott Peterson in a Washington Post op-ed.

To their credit, Supervisors John Foust (Dranesville District) and Dan Storck (Mt. Vernon District) urged their colleagues to adopt stronger measures. “We are out of the mainstream on renewable energy,” Foust told his colleagues.

“Do we really believe this effort is proportional to the challenges or the opportunities?” asked Storck. “The waters are rising, and they are rising in the Mt. Vernon District.”

The Board’s action is yet another disappointment for Fairfax residents interested in aggressive action to combat climate change and to reduce the county’s long-term energy costs. The Sierra Club, FACS and others have tried for years to get Fairfax County to live up to the commitment it made in 2007. (In those days I was part of a citizen’s group that offered advice to the County on ways to implement energy savings. Our suggestions were ignored, and in 2009 the County disbanded our group.)

The County Board is dominated by Democrats who say they care about climate change, but even meeting the County’s obligations as a member of the Metropolitan Washington Council of Governments (MWCOG) seems to lie beyond their ambitions. A chart prepared by the Sierra Club comparing Fairfax County’s climate and energy goals for its local operations to those of MWCOG and other local jurisdictions makes the County’s shortcomings clear. The most striking example: MWCOG says its members should meet 20% of their electricity needs with renewable energy by 2020. Fairfax County’s plan for renewable energy begins and ends with a single solar facility on one warehouse in Springfield.

Moreover, in sharp contrast to D.C., Arlington, and Montgomery County, Fairfax County has not implemented a community energy and climate action plan to address the 97% of GHG emissions contributed by the private sector.  In fact, the county has not even begun to develop such an action plan. The recommendations of a 2012 Private Sector Energy Task Force, initiated by the Board Chair, have languished.

Fairfax County’s inaction is as puzzling as it is disappointing. With a population of over 1.1 million, Fairfax is Virginia’s largest county as well as the second-richest county in the nation, after neighboring Loudoun. One in seven Virginians lives in Fairfax. We’ve got 414,000 homes and 116,000 businesses, including a strong tech sector that increasingly demands renewable energy—not least of all because it can save them money.

Nor is Fairfax held back by politics. The county has steadily grown more Democratic in elections. In 2017, Democrat Ralph Northam beat his Republican challenger by a whopping 36 points.

So what would it take to move Fairfax County from left-behind to leader? Advocates agree the County needs to make three big changes: commit to serious targets for renewable energy and energy efficiency in county operations; actively assist residents and businesses to save energy and go solar; and become an advocate for stronger state policies, including removing barriers to customer-sited solar.

A ten-point action plan might look like this:

1).  Ensure that County staff provides a thorough one-year review of the approach, cost savings, and GHG reductions under the County Operations Energy Strategy, including the consideration of options necessary to meet the goals of the MWCOG Climate and Energy Action Plan for 2017 to 2020.

2). Expedite the proposed Request for Proposals for Solar Purchase Power Agreements (PPA) announced on July 11th(but curiously not included in the Energy Strategy).  By late 2018, the County should finalize a PPA contract to facilitate the installation of on-site solar on county buildings.  By drafting the RFP and contract to allow the Fairfax County Public Schools and other localities to ride the contract, Fairfax County government could jumpstart solar development and jobs in Northern Virginia.

3).  Participate in a September 7 workshop at the County Government Center on budget-neutral clean energy funding alternatives (e.g., Energy Savings Performance Contracts, Solar Power Purchase Agreements, public-private partnerships).  This workshop will provide an improved understanding of the opportunities provided by these funding alternatives to support more aggressive energy and climate goals while limiting impacts on county real estate taxes. FCPS has achieved several million dollars in energy savings using ESPCs to obtain GHG reductions and can serve as a model of success.

4).  Complete its ongoing Commercial Property Assessed Clean Energy (C-PACE) initiative by enacting an ordinance necessary to support a C-PACE Program and by implementing the program by late 2019.  This action will provide critical financing to supercharge the inclusion of energy efficiency and renewable energy measures in eligible buildings, thereby supporting the County’s goals to repurpose and revitalize underutilized buildings.

5).  Develop and implement a County-wide Energy and Climate Action Plan to address GHG emissions from residents and businesses.

6).  Develop and implement an action plan to increase county resiliency in order to prepare for the impacts of climate change and help reduce the impact and costs of extreme weather events.

7).  Meet all obligations under Cool Counties and the Metropolitan Washington Council of Governments Climate Plan.

8). Support county staff by increasing staffing levels for energy and climate functions and by establishing a dedicated Energy Office reporting directly to the County Executive. Without an effective organizational structure and adequate resources, implementation of key recommendations is highly uncertain and the county is unlikely to maximize energy cost savings or meet its own climate goals.

9).  Engage in strong advocacy with the General Assembly and the Governor to promote the enactment of legislation removing barriers to customer-sited solar.  This legislation has already been endorsed by the county’s Environmental Quality Advisory Committee.  Removing these barriers would allow the County to pursue the installation of a major solar array on the Lorton Landfill.

10).  Work with the Virginia Association of Counties to enlist its support for legislation to remove barriers to on-site solar.

Given its size and resources, Fairfax County can’t continue to sit back and wait for others to do the hard work. Climate change has reached us. To paraphrase Supervisor Storck, the waters are rising, and they are rising here.