Not a great time to roll out Dominion’s pricey solar tariff

Photo by Pixabay on Pexels.com

Well, that didn’t take long.

A few weeks after I wrote about rising natural gas prices, Dominion Energy Virginia asked the SCC for permission to raise the price of electricity by about $9 per month for the average residential customers, citing higher fuel costs. Virginia law allows utilities to pass through its fuel costs to customers, without a profit margin, making it unlikely the SCC will turn down the request. Natural gas is Dominion’s largest fuel source, so its electricity rates are highly vulnerable to price swings in the market for fracked gas.

That makes this a really peculiar time for Dominion to launch a new solar energy purchase option that will add about $20 per month on average for customers who elect to meet their entire electricity demand with solar, without exempting them from the coming bill increase due to higher gas prices. If the company were trying to discourage people from signing up for its solar product, it could hardly have chosen a better time. The fact that the company delayed the launch of this program for more than three years, only to offer it now, makes it all the more suspect.

Dominion’s solar option, confusingly (and wrongly) called “Community Solar” is the product of legislation passed in 2017, three years before the General Assembly authorized private solar developers to sell to Virginia customers. The 2020 legislation dubbed the private program “shared solar,” and it remains mired in SCC rulemaking.

But Dominion Community Solar is different. As I wrote back in 2018, when the SCC approved the program (and its launch seemed imminent), this program is really a solar tariff. Dominion generates electricity from solar and puts it on the grid, and customers who want to run their homes and businesses on solar pay extra on their bill.

As part of the deal, participants also get the renewable energy certificates (RECs) associated with the solar energy. That prevents Dominion from selling the RECs to anyone else or using them to show compliance with Virginia’s new renewable portfolio standard (RPS). This is important to avoid double-counting and ensure that solar paid for by the voluntary market is in addition to the solar developed to serve customers under the RPS.

The $20 premium for the program will sound unreasonably high to people who have experience with community solar in other states, where it is typically offered at a discount to regular grid power. In many states, private developers build the solar facilities and sell the output to participants. The rate is typically fixed for many years, because solar has low O&M costs and uses no fuel. Customers still pay their utility for transmission and distribution, but the community solar fee replaces utility-delivered generation rates. Accordingly, participating customers are insulated from price increases due to higher natural gas (or coal) costs.

That is not Dominion Community Solar. Dominion’s program requires customers to pay for all the utility’s costs of running its generating plants and purchasing fuel and paying for rate adjustment clauses (RACs), including those for new renewable energy facilities that serve the entire rate base and RECs bought for the RPS. These solar-only customers will also have to pay Dominion’s costs for buying carbon allowances in the RGGI market, which the company incurs as a result of generating power from fossil fuels. (Dominion is hoping Governor Youngkin will succeed in pulling Virginia out of RGGI and has suggested shifting compliance costs from riders to base rates in the meantime, clearly as a way to mitigate the rate increase due to high gas prices.)

Dominion Community Solar customers will pay for all these costs of fossil fuel generation, and the cost of Dominion building renewable energy facilities for all its other customers. And then on top of all that, they will pay an extra $20 per month.

Let’s leave aside the question of whether $20 is even a fair premium for a solar tariff. Ultra-high gas prices, RPS riders and RGGI compliance costs are all new since the SCC authorized Dominion’s program in 2018. It’s hard to imagine the SCC agreeing today that program participants should pay all these costs in addition to the cost of developing community-sized solar arrays.

But something else has changed too: The shared solar legislation passed in 2020 promised customers the alternative of being able to buy solar from a third-party provider, unhooking participants from the roller-coaster ride of fossil fuel prices. As I noted before, though, shared solar is mired in proceedings at the SCC, where Dominion is seeking to impose such high fixed costs on participants as to make the program impossible to offer.

Right now, Dominion has an SCC hearing examiner mostly on its side.

If the SCC commissioners accept the hearing examiner’s recommendations, that could spell the end of shared solar—or at any rate, make Dominion’s $20 look good by comparison.

This article originally appeared in the Virginia Mercury on May 16, 2022.

Dear readers: Many of you know that although I write independently of any organization, I also volunteer for the Sierra Club and serve on its legislative committee. Today, the Sierra Club’s Virginia Chapter urgently needs funds to support its legislative and political work towards a clean energy transition. So for the first time I’m passing the hat and asking you to make a donation to our “Ten Wild Weekends” fundraising campaign. And if you’re free on June 12, come join the Solar Walk in Richmond that I’ll be co-leading!

Looking backward, Virginia Republicans attack climate action and coddle coal

Photo credit: Mark Dixon from Pittsburgh, PA, CC BY 2.0 , via Wikimedia Commons

Even before taking office, Governor Glenn Youngkin made two rookie mistakes: he declared his intention to pull Virginia out of the Regional Greenhouse Gas Initiative (RGGI) by executive order, not realizing it can only be done by legislation; and he nominated the much-reviled Trump-era EPA chief Andrew Wheeler to be his Secretary of Natural Resources, apparently unaware the appointment would need approval from the Democratic-led Senate he had just infuriated with the RGGI announcement. 

Evidently not a man to admit a blunder, on his first day in office Youngkin signed an  executive order directing the Department of Environmental Quality to notify RGGI of his intent to withdraw Virginia from the carbon-cutting program, and to develop an “emergency regulation” to send to the Air Pollution Control Board for the same purpose. The language in the order is a little less than he pledged, and yet still not legal.

These are unfortunate signs that Youngkin, who ran for governor as a moderate Republican, intends to govern as a burn-the-house-down extremist when it comes to the environment. 

It’s surprising to see Youngkin pursuing Trumpist energy policies, and not just because they failed so dismally when Trump tried them. As the former CEO of a multibillion-dollar private equity investment company, Youngkin is, presumably, not an idiot. He has acknowledged climate change is real and affecting Virginia, and he has access to the same polls the rest of us do that show Americans are concerned and want government action to address the crisis. Corporate America is also calling for action; CEOs of more than 70 of the world’s largest corporations wrote a letter last June calling on governments to adopt policies capable of capping the global rise in temperature at no more than 1.5 decrees Celsius. 

The legislation that put Virginia into RGGI will lead to a 30 percent cut in the Commonwealth’s electric sector CO2 emissions by 2030. Companion legislation, the Virginia Clean Economy Act (VCEA), extends the carbon cutting out to 2050, to hit zero carbon emissions from the electric sector. Youngkin complains that RGGI costs ratepayers money, but it’s not like the money raised through carbon allowance auctions disappears into the ether: it pays for coastal flood-control projects and low-income energy efficiency programs that Virginia wasn’t funding before. Maybe Youngkin intends to replace these hundreds of millions of dollars with some of the federal funding coming to Virginia through the federal infrastructure bill—you know, the legislation that Virginia’s Republican congressmen voted against

Or maybe he doesn’t really care about the human consequences of his actions, since Virginia governors can’t run for reelection. Even last fall Youngkin was being talked about as a potential presidential candidate based on his ability to say nothing of substance for an entire campaign season. It was a good trick, but it’s a hard one to pull off twice. If Youngkin runs for president, he’ll be doing it as the guy who started his governorship by torching Virginia’s climate action plan.

Whether they are fellow flame-throwers or not, General Assembly Republicans are rallying around the new governor. Two bills filed last week seek to do legally what Youngkin wanted to do by executive fiat. SB532 (Stuart) and HB1301 (Kilgore) would repeal the Clean Energy and Community Flood Preparedness Act, direct DEQ to suspend the Commonwealth’s participation in the Regional Greenhouse Gas Initiative and remove provisions for using revenues from the auctions. 

SB81 (Stanley) would prohibit the Air Pollution Control Board from considering health, environmental, scientific, or economic factors when making regulations—an attack on both RGGI and clean car regulation, as well as on the independence and very mission of the Air Board. SB657 (Stuart) also attacks the Air Board’s authority (and that of the Water Board for good measure).

HB118 (Freitas) goes bigger. It repeals key features of the VCEA, including achieving zero carbon emissions by 2050; allowing the SCC to approve new fossil fuel plants only if a utility has met energy-saving goals and can prove cost-effectiveness; allowing utilities to recover costs of compliance with Virginia’s new renewable portfolio standard; and making wind, solar and offshore wind projects “in the public interest,” magic words that assure utilities they will get paid for making these investments.

The Freitas bill might pass the House, now that Republicans hold a slim majority, but neither of these two bills should pass the Senate with Democrats in charge. Creating the framework for the energy transition was a signature success for Virginia Democrats, and it’s hard to imagine a scenario in which they will let it be taken from them. 

That isn’t stopping other Republicans from taking their own shots. Several bills seek to undermine the energy transition in various ways; all of them are bad policy.

  • HB74 (also Ware) would subsidize certain large industrial customers by allowing them to share in the benefits, yet exempting them from the costs, of the energy transition, shifting their share of the costs onto all other customers. 
  • HB5 (Morefield) raids the RGGI funds to get money for his own district. 
  • HB892 (Kilgore) and SB398 (McDougle) subsidize RGGI costs for certain fossil fuel generators, another raid on the funds. 
  • HB1204 (Kilgore) prevents the RPS from taking effect until 2025 and guts the carve-out for distributed generation permanently. It also removes the authority of the Air Pollution Control Board over air pollution permits for “minor” sources of pollution.
  • HB1257 (Kilgore, on a roll!) guarantees customers access to natural gas in the name of “energy justice,” banning local electrification efforts, and making it really hard for the city of Richmond to terminate its gas utility.
  • HB1261 (Bloxom) also strips the Air and Water Boards of their permit-granting authority. 
  • HB73 (Ware) and SB761 (Sutterlein) eliminates language putting wind, solar and offshore wind in the public interest, undercutting the market certainty that put Virginia into the top ranks for solar energy in the past year and attracted a major offshore wind turbine blade manufacturing facility to Portsmouth. (The bill also lets the SCC put costs of new facilities into a utility’s rate base instead of tacking on a rate adjustment clause. If this were the only thing the bill did, it would be worth supporting.)

Not all the bills we are likely to see this year have been filed yet, so there is a good chance we will see further attacks on climate action, all with the pretense of saving money. I will continue updating this post when I hear of other bills like these. 

“Virginia is no longer anti-coal,” — new Virginia Attorney General Jason Miyares. 

Speaking of things that cost ratepayers money, bills to subsidize coal are back this year. As we have all learned, coal is no longer a competitive fuel in Virginia. It lost out first to fracked gas, and more recently to solar. But in a compromise with coalfields Republicans, the VCEA excluded one coal plant, the Virginia City Hybrid Energy Center (VCHEC) in Wise County, from a requirement that Dominion Energy Virginia close its Virginia coal plants this decade. In theory, VCHEC could stay open until 2045, when the VCEA requires Dominion to reach zero carbon across all its generation.

In reality, though, the reprieve isn’t enough to save the coal plant. Dominion’s own analysis, from its 2020 Integrated Resource Plan case, assigned VCHEC a net present value of negative $472 million just for the ten years from 2020-2029. Dominion didn’t try to extend that analysis out to 2045, but clearly the cost to customers from running a money-losing coal plant for 25 years would top a cool billion. Not surprisingly, the SCC is considering requiring Dominion to retire VCHEC to save money for its customers.

Given concerns about RGGI’s cost to consumers, you might think Southwest Virginia Republicans would lead the charge to retire the money-losing coal plant in their midst. You would be wrong. To understand why, it will help you to know that the counties making up Southwest Virginia are not in Dominion’s service territory, but in Appalachian Power’s. The people who benefit from keeping a coal plant open in Wise County are not the same people who have to pay for the plant’s spectacular losses. 

As an excuse to keep the plant open, coalfields Republicans claim it’s to help the environment. Yes, really. Some of VCHEC’s fuel is waste coal excavated from the piles of mining waste that litter the coalfields, a toxic legacy of the era when coal was king and environmental regulations went unenforced. Burning the waste coal is one way to get rid of it, though not the only way or, for that matter, the right way. 

As a new report from the Appalachian State School of Law discusses, the federal infrastructure bill (again, the same one Virginia Republicans voted against) will provide millions of dollars to Virginia to remediate abandoned minelands, including these piles of toxic waste. (The report, titled Addressing Virginia’s Legacy GOB Piles, has been sent to General Assembly members but is not yet available online.)

In a letter to Senator John Edwards, report lead author Mark “Buzz” Belleville expressed his strong disagreement with bills aimed at encouraging the burning of waste coal. As he wrote, “Waste coal is of lower quality, requiring additives for combustion and resulting in even greater CO2 emissions and traditional air pollution than newly-mined coal. As the report notes, existing GOB piles can be disposed of or remediated in other manners that do not undermine Virginia’s commitment to a transition to clean energy.”

Rather than use the coming federal funds to remediate GOB piles, Republicans would prefer that Dominion customers be forced to pay hundreds of millions of dollars in higher energy costs and put more pollution into the air. 

So at the same time they rail against the costs of RGGI and VCEA, Republicans are using waste coal as a reason to raise costs even more. 

  • HB656 (Wampler) dangles a tax credit for using waste coal. 
  • SB120 (Hackworth) and HB657 (Wampler) declare waste coal a “renewable energy” source and exempts VCHEC from the requirement that it close by 2045. 
  • HB894 (Kilgore) outright prohibits the SCC from requiring Dominion to retire VCHEC “before the end of its useful life.” (Would that be before or after Virginia becomes so hot we all move to Canada?)
  • HB1326 (Kilgore, trying everything he can think of) makes it “in the public interest” for utilities to use waste coal, and gives utilities a way to charge ratepayers extra for doing so.

Electricity customers had better get used to being used as a political football by legislators who attack the costs of the energy transition but have no qualms about making ratepayers subsidize coal. 

This post originally appeared in the Virginia Mercury on January 20, 2022. It has been updated to include bills filed since then.

You call that democracy? How Virginia’s electric co-ops fail their member-owners.

Virginia’s thirteen electric cooperatives were exempted from most provisions of the 2020 Virginia Clean Economy Act, which caps carbon pollution from power plants and requires investor-owned utilities to meet renewable-energy and energy-efficiency targets. In lobbying for the VCEA exemption, cooperatives no doubt touted their claimed status as member-owned and democratically governed. In theory that means co-op members can direct their co-ops to adopt programs friendly to consumers and the environment. But events last month showed again that some of the commonwealth’s electric co-ops are not as democratic as they claim. 

Summer is annual-meeting time for electric co-ops. Like all consumer cooperatives, electric co-ops are owned by their customers (called “member-owners”). Democratic control of the cooperative is one of seven “cooperative principles” that all electric cooperatives claim to adhere to. The key to genuine democratic control is board-of-director elections, which happen at each co-op’s annual meeting, where member-owners vote for board candidates. 

Two examples from Virginia electric co-op annual meetings last month demonstrate ways large and small in which incumbent co-op boards game the election process to help their favored board candidates. The most egregious case occurred at Rappahannock Electric Cooperative (REC), which serves rural and suburban Virginians in 22 counties. In a five-way race in REC’s August board election there was a clear winner among co-op member-owners who selected a candidate. Hanover County businessman Roddy Mitchell got more than twice as many member-owner votes as any of the four other candidates. You might call that a landslide win.

But through REC’s needlessly arcane and confusing proxy-voting process, REC’s board was able to allocate some 6,000 additional votes to the board-favored candidate, thereby swinging the election win to him. That board-favored candidate came in fourth out of five when looking at votes that member-owners cast for candidates.

When a board controls 40 to 60 percent or more of all votes, as REC’s board generally does, the board effectively controls the election outcome and “democracy” is an empty label.  

REC’s board controls huge numbers of votes each year because proxy ballots left blank are deemed by REC’s board as a delegation of the member-owner’s vote to the incumbent board to decide whom to cast them for. Moreover, REC offers those who send in a proxy, even a blank one, a chance to win cash prizes. That encourages member-owners to submit blank proxies, even if they have no interest in the election or makeup of the board. REC election tally forms going back over a decade show that every year REC’s incumbent board controls enough proxies to control election outcomes. For at least the past twelve years no candidate has won a race without getting the board-controlled votes. 

So the way to win an REC board election is to please incumbent board members, not to get the most votes from member-owners. That isn’t fair and it isn’t democratic. It leads to board groupthink, insulates boards from the concerns of member-owners, and discourages well-informed, knowledgeable co-op members from running for board.

A National Rural Electric Cooperative Association governance task force report recommended against using board-controlled proxies to swing election results. But REC’s board continues to ignore that recommendation years after it was made.  

Meanwhile, neighboring Shenandoah Valley Electric Cooperative’s (SVEC) board changed the co-op’s bylaws at a closed board meeting in June to help out an incumbent board member facing a strong challenge from another candidate in the August election. The board added a bylaw provision saying that in the case of a tie between an incumbent and non-incumbent candidate the incumbent would be deemed the winner of a one-year board term! 

As if that isn’t bad enough, REC board chair Chris Shipe said publicly a few weeks ago that SVEC’s board is considering changing its (fair) direct election process next year to a proxy system like REC’s. If SVEC follows through on that, then its board, like REC’s, will be able to determine election outcomes. That would make SVEC’s new tie-vote bylaw unnecessary. There are no ties when incumbent board members control election outcomes. 

SVEC’s board would then be fully insulated from member-owner concerns. That would greatly help incumbent board members, who recently approved major fixed-monthly-charge increases that disproportionately affect the co-op’s low-income member-owners and those who’ve invested in rooftop solar or energy efficiency.

There is currently no government oversight of Virginia electric co-op elections, and no law to ensure fair board-election procedures, prohibit abusive proxy practices, or prohibit using board-imposed bylaw changes to favor incumbents. This is important because electric cooperatives are essential service providers that operate as monopolies. Monopoly utilities seldom act in the best interest of their customers unless subjected to meaningful scrutiny, accountability, and independent oversight. Such oversight is lacking when entrenched co-op boards have ironclad control of board-election outcomes. It’s time for the General Assembly to step in and ensure basic, fair election practices to give Virginia electric cooperative member-owners a true say in the governance of the utilities they own.

Seth Heald is a retired U.S. Justice Department lawyer and has a master of science degree in energy policy and climate. He is a member-owner of Rappahannock Electric Cooperative and co-founder of Repower REC, a campaign to bring genuine democracy to Virginia’s electric co-ops. More information at RepowerREC.com

The General Assembly made progress on climate in 2021, but our work here is hardly done

Before the start of the 2021 legislative session, I highlighted three areas where Virginia needed to make significant progress to support its climate agenda: transportation electrification, improving the energy efficiency of buildings and giving consumers greater access to renewable energy. 

The General Assembly delivered on one-and-a-half out of three. If we add bonus points for smaller successes, maybe we can call it a total of two. The transportation category truly outperformed expectations, but building efficiency underperformed and renewable energy access didn’t perform at all. 

In the transportation sector, the General Assembly passed the Clean Car Standards requiring manufacturers to deliver more electric vehicles to Virginia dealers (HB1965); approved a statewide study of transit equity (HJ542); approved (but so far has not funded) an electric vehicle rebate program (HB1979); directed the SCC to report on ways to electrify transportation (HB2282); and established a school bus electrification fund (also empty for now)(HB2118). 

Together these bills address two of the most significant ways we can reduce emissions from the transportation sector: supporting the move away from the internal combustion engine to electric vehicles and improving mass transit options. 

The House rejected a second school bus electrification bill that, as originally drafted, would have allowed Dominion Energy Virginia to own, control and profit handsomely from the batteries in as many as 1,250 new electric school buses. Adding non-polluting school buses across Virginia and testing the value of vehicle-to-grid technology would have been exciting, but Dominion couldn’t help taking a good idea and trying to make it into another bloated profit center. Given the odor of Dominion boondoggle, the question isn’t why the House rejected the bill, but why the Senate was willing to swallow it.

Still, it’s clear electric school buses are an idea whose time has come, and vehicle-to-grid technology could have real benefits for ratepayers. Dominion is already testing the technology with school bus batteries in a smaller pilot program, so we can expect to see more on this topic next year. Meanwhile, advocates hope to see funding emerge to implement HB2118, possibly from the federal stimulus bill now under consideration in Congress.

Improving the energy efficiency of new homes should have been an equally popular idea with legislators. Virginia will be spending hundreds of millions of dollars retrofitting existing homes in the years to come, so it makes sense to ensure that new houses don’t immediately join the queue of homes needing upgrades to be climate-ready. Unfortunately, beefing up the energy efficiency provisions of Virginia’s residential building code (HB2227) proved a hard sell in the face of entrenched opposition from the homebuilders’ lobby and surprising resistance from even some Democratic legislators. 

The legislation originally would have mandated adoption of the latest national energy efficiency code provisions, but it was amended to leave it up to the discretion of the code-writing board whether to require new homes to achieve this higher level of efficiency. They already had that authority; however, the board will now have to consider factors that favor stricter standards, like the long-term cost of ownership. For that reason I’m counting this bill as half a win. Whether or not the board decides to take the hint, improving efficiency in new homes is a topic we will see a lot more of in the future — and next time it is likely to come with more urgency and added features.

Energy efficiency bills did better when they addressed only government bodies. Legislation that passed now favors energy-efficient and water-efficient products in public procurement, and requires EV charging and energy/carbon tracking capability for new public buildings.

Unfortunately, 2021 was another bad year for my third priority, giving consumers the right to buy renewable energy from competitive suppliers. The House supported the “right to shop” bill (HB2048), but Senate Commerce and Labor once again proved itself a bulwark of defense for the monopoly utility model against the interests of residents and corporate customers alike. Killing the bill does nothing to lessen the demand from consumers. If Dominion does not move soon to offer better renewable energy options itself, we can expect to see this legislation return.

Senate Commerce and Labor further cemented its reputation as Dominion’s best friend by dispatching the full suite of utility reform bills that had won bipartisan support in the House. Only three senators on the 15-member committee consistently voted in favor of the reforms, ensuring that none of them got to the Senate floor. 

https://www.virginiamercury.com/2021/02/15/electric-utility-rate-reform-efforts-quashed-by-senate-committee/embed/#?secret=PtRlKZ6GtJ

Various other bills advanced the energy transition in smaller, focused bites. But perhaps the best news is that nothing this year marked a retreat from the commitment the General Assembly and the governor made last year to move Virginia toward a cleaner and more equitable energy supply. 

Below is a brief round-up of the climate and energy bills that passed this year, including the ones mentioned above. The governor will still have to sign the bills before they become law, but we are not expecting any surprises. 

Renewable energy and storage

 HB1925 (Kilgore) establishes, but does not fund, the Virginia Brownfield and Coal Mine Renewable Energy Grant Fund and Program. 

• HB1994 (Murphy) expands the definition of small agriculture generators to include certain small manufacturing businesses such as breweries, distilleries and wineries for the purposes of the law allowing these businesses to aggregate meters and sell renewable energy to a utility. 

• HB2006 (Heretick) and SB1201 (Petersen) change the definition of an “electric supplier” to include the operator of a storage facility of at least 25 MW, exempting them from state and local taxation but allowing a revenue share assessment. 

 HB2034 (Hurst) clarifies that the program allowing third-party power purchase agreements (PPAs) applies to nonjurisdictional customers (i.e., local government and schools) as well as jurisdictional customers (most other customers) of Appalachian Power and Kentucky Utilities. 

 HB2148 (Willett) provides for energy storage facilities below 150 MW to be subject to the DEQ permit by rule process as “small renewable energy projects.” This is a priority bill for renewable energy industry associations. 

 HB2201 (Jones) and SB1207 (Barker) expands provisions related to siting agreements for solar projects located in an opportunity zone to include energy storage projects; however, according to existing language, the provision only takes effect if the GA also passes legislation authorizing localities to adopt an ordinance providing for the tax treatment of energy storage projects. This is another renewable energy industry bill. 

 HB2269 (Heretick) provides for increases in the revenue share localities can require for solar projects based on changes in the Consumer Price Index. 

• SB1258 (Marsden) requires the State Water Control Board to administer a Virginia Erosion and Sediment Control Program (VESCP) on behalf of any locality that notifies the Department of Environmental Quality that it has chosen not to administer a VESCP for any solar photovoltaic (electric energy) project with a rated electrical generation capacity exceeding five megawatts. The provisions become effective only if the program is funded.. 

• SB1295 (DeSteph) requires utilities to use Virginia-made or U.S.-made products in constructing renewable energy and storage facilities “if available.” As amended, the products must be “reasonably available and competitively priced.” 

Energy efficiency and buildings

 HB1811 (Helmer) adds a preference for energy efficient and water-efficient products in public procurement. 

 HB1859 (Guy) amends last year’s legislation on Commercial Property Assessed Clean Energy (C-PACE) loans to allow these loans to be extended to projects completed in the previous 2 years; it also expressly excludes residential buildings of less than 5 units and residential condominiums. 

 HB2001 (Helmer) requires state and local government buildings to be constructed or renovated to include electric vehicle charging infrastructure and the capability of tracking energy efficiency and carbon emissions. Local governments are authorized to adopt even more stringent requirements. It now has an amendment delaying its effectiveness to 2023 for localities with populations under 100,000. 

 HB2227 (Kory) originally required the Board of Housing and Community Development to adopt amendments to the Uniform Statewide Building Code within one year of publication of a new version of the International Code Council’s International Energy Conservation Code (IECC) to address changes related to energy efficiency and conservation. The bill would have required the Board to adopt building code standards that are at least as stringent as those contained in the new version of the IECC. 

Financing

• HB1919 (Kory) authorizes a locality to establish a green bank to finance clean energy investments. 

Fossil fuels 

• HB1834 (Subramanyam) and SB1247 (Deeds) originally required owners of carbon-emitting power plants to conduct a study at least every 18 months to determine whether the facility should be retired; and to give notice of any decision to retire a facility to state and local leaders within 14 days. Both bills were amended so that the retirement analysis is now just a part of the integrated resource planning process of investor-owned utilities, currently every three years, leaving out other plant owners like cooperatives. 

• HB1899 (Hudson) and SB1252 (McPike) sunset the coal tax credits as ofJan. 1, 2022

• SB1265 (Deeds) makes it easier for DEQ to inspect and issue stop-work orders during gas pipeline construction. 

• SB1311 (McClellan) requires pipeline applicants to submit detailed erosion and sediment control plans and stormwater management plans to DEQ. 

Climate bills 

• HB2330 (Kory) is the legislation the SCC asked for to provide guidance on the Percentage of Income Payment Program under the Virginia Clean Economy Act. 

• SB1282 (Morrissey) directs DEQ to conduct a statewide greenhouse gas inventory, to be updated and published every four years. 

• SB1284 (Favola) changes the name of the Commonwealth Energy Policy to the Commonwealth Clean Energy Policy, and streamlines the language without making major changes to the policies set out last year in Favola’s successful SB94. That bill overhauled the CEP, which until then had been a jumble of competing priorities, and established new targets for Virginia to achieve 100 percent carbon-free electricity by 2040 and net-zero carbon economy-wide by 2045. 

• SB1374 (Lewis) sets up a Carbon Sequestration Task Force to consider methods of increasing carbon sequestration in the natural environment, establish benchmarks and identify carbon markets. 

EVs and Transportation energy

 HB1850 (Reid) increases the roadway weight limit for electric and natural gas-fueled trucks to accommodate the extra weight of batteries or natural gas fuel systems. 

 HB1965 (Bagby) is the Clean Car Standards bill, which would require manufacturers to deliver more electric vehicles to Virginia dealers beginning in 2025. 

• HB1979 (Reid) creates a rebate program for new and used electric vehicles; however, the GA provided no funding. 

 HB2118 (Keam) establishes an Electric Vehicle Grant Fund and Program to assist school boards in replacing diesel buses with electric, installing charging infrastructure, and developing workforce education to support the electric buses. It currently has no funding.

 HB2282 (Sullivan) directs the SCC to develop and report on policy proposals to accelerate transportation electrification in the Commonwealth. The bill also limits how utilities get reimbursed for investments in transportation electrification: they must recover costs through normal rates for generation and distribution, and not through rate adjustment clauses or customer credit reinvestment offsets. 

 HJ542 (McQuinn) requests a statewide study of transit equity and modernization. 

 SB1223 (Boysko) adds a requirement to the Virginia Energy Plan to include an analysis of electric vehicle charging infrastructure and other infrastructure needed to support the 2045 net-zero carbon target in the transportation sector.

This article originally appeared in the Virginia Mercury on March 5, 2021.

The bill list gets longer. How do you choose what to focus on?

[This post was updated January 22 to include two bills filed just ahead of the deadline. See SB1463 under Renewable Energy, and HB2330 under Climate.]

The 2021 General Session is in full swing, with bills being heard at all hours of the day, every day of the week. We’re now told the session will be extended to 45 days as it normally is in odd years, buying a little time for committees to act before the new “crossover” date of February 6.  

Meanwhile, the list of bills I’ve corralled over the past week has grown to nearly 50. I’ve included the updated list here—scroll down. 

Unless you’re paid to lobby, you may have only a few minutes at a time to contact legislators about the bills you want to see passed (or in some cases, defeated). So how do you set priorities? 

Let me propose three criteria for you to lobby for a bill: 

  1. If enacted, the legislation would achieve progress on the issue you care about, in a way you approve of;
  2. The legislation has a shot at passage; and
  3. Your lobbying could make a difference

Do you like the bill? You might think this one is easy, but I recommend reading the whole bill before you decide to support one, and not just the summary. In my experience, the summaries are often misleading or incomplete. And even if you agree with the apparent goal of a bill, you might conclude the specifics are unwise or could lead to unintended consequences. But don’t dismiss a bill because it doesn’t go far enough or have everything you want. They seldom do.

Can it pass? This largely depends on who is against it, and how much influence they have. It used to be that if the utilities opposed a bill, it would die. Last year we saw a rebellion against that norm, but utilities are still formidable foes—and there are plenty of other powerful interests who can sink a bill.

There is a second reason some bills don’t have a chance: they cost money. If legislation requires public spending and the patron hasn’t got that figured out, the committee that hears the bill is likely to send it to the Appropriations Committee to die.  

Can you make a difference? It’s a waste of your time to lobby for a bill that can’t pass, unless your game plan is to build momentum for future years. On the other end of the scale, sometimes a bill has been negotiated before it is even introduced, or it makes technical amendments that no one opposes; those bills don’t need your help. Focus on the bills where you believe public support matters. (And then get your friends involved, too.) 

Three bills to consider for your priority list. These bills pass all three tests. They would make a difference on climate and they all have a shot, but they need public pressure to win votes.

If you have time to adopt additional bills, you might consider adding one or more of the utility reform measures. I’m also partial to HB1925 to bring renewable energy to the Coalfields, which would pair nicely with HB1899/SB1252, sunsetting the coal tax credits. I could go on, but you’ve heard enough. 

Here is the whole list, updated this morning, and hopefully now comprehensive:

Renewable energy and storage

HB1925 (Kilgore) Establishes, but does not fund, the Virginia Brownfield and Coal Mine Renewable Energy Grant Fund and Program. Kilgore put in a similar bill last year, which unfortunately did not pass. With no budget impact, this ought to pass easily. But I said that last year, too. 

HB1937 (Rasoul) is this year’s version of the Green New Deal Act. It contains policy initiatives to prioritize jobs and benefits for EJ populations and displaced fossil fuel workers and requires a transition to renewable energy by 2035, though these latter provisions are poorly integrated into the VCEA.

HB1994 (Murphy) and HB2215 (Runion) expands the definition of small agriculture generators to include certain small manufacturing businesses such as breweries, distilleries and wineries for the purposes of the law allowing these businesses to aggregate meters and sell renewable energy to a utility. 

HB2006 (Heretick) exempts energy storage systems from state and local taxation but allows a revenue share assessment. This is a priority bill for renewable energy industry associations.

HB2034 (Hurst) clarifies that the program allowing third-party power purchase agreements (PPAs) applies to nonjurisdictional customers (i.e., local government and schools) as well as jurisdictional customers (most other customers). Currently, PPA projects with local governments in APCo territory have been held up due to a contract provision between the localities and APCo, and it is hoped this legislation will break the logjam. [Passed House, now in Senate Commerce & Labor.]

HB2048 (Bourne) restores the right of customers to buy renewable energy from any supplier even once their own utility offers a renewable energy purchase option.  In addition, third party suppliers of renewable energy are required to offer a discounted renewable energy product to low-income customers, saving them at least 10% off the cost of regular utility service.  

HB2067 (Webert) lowers from 150 MW to 50 MW the maximum size of a solar facility that can use the Permit by Rule process. [Killed in committee.]

HB2148 (Willett) provides for energy storage facilities below 150 MW to be subject to the DEQ permit by rule process as “small renewable energy projects.” Although 150 MW is not “small,” the permit by rule process has worked pretty well, so this should be acceptable. This is a priority bill for renewable energy industry associations.

HB2201 (Jones) expands provisions related to siting agreements for solar projects located in an opportunity zone to include energy storage projects; however, according to existing language, the provision only takes effect if the GA also passes legislation authorizing localities to adopt an ordinance providing for the tax treatment of energy storage projects. (Why doesn’t the bill just go ahead and include that authorization? Don’t ask me.) This is another renewable energy industry bill.

HB2269 (Heretick) provides for increases in the revenue share localities can require for solar projects based on changes in the Consumer Price Index.  

SB1201 (Petersen) changes the definition of an “electric supplier” to include the operator of a storage facility of at least 25 MW, and subjects them to the same reporting obligations as other suppliers. 

SB1207  (Barker) is a companion to HB2201.

SB1258 (Marsden) requires the State Water Control Board to administer a Virginia Erosion and Sediment Control Program (VESCP) on behalf of any locality that notifies the Department of Environmental Quality that it has chosen not to administer a VESCP for any solar photovoltaic (electric energy) project with a rated electrical generation capacity exceeding five megawatts. The provisions become effective only if the program is funded; Marsden has submitted a budget amendment. This is also a priority bill for renewable energy industry associations.

SB1295 (DeSteph) requires utilities to use Virginia-made or US-made products in constructing renewable energy and storage facilities “if available,” but it does not require any added cost to be reasonable. [Amended to resolve the reasonable cost issue.]

SB1420 (Edwards) is a companion bill to HB2034, clarifying PPA language for Appalachian Power territory.

SB1463 (Cosgrove) would reverse the progress made last year in preventing homeowner associations from unreasonably restricting rooftop solar. It would create a loophole to let HOAs ban solar once again. [Withdrawn by patron.]

Energy efficiency and buildings

HB1811 (Helmer) adds a preference for energy efficient products in public procurement.

HB1859 (Guy) amends last year’s legislation on Commercial Property Assessed Clean Energy (C-PACE) loans to allow these loans to be extended to projects completed in the previous 2 years; it also expressly excludes residential buildings of less than 5 units and residential condominiums. [Passed House with a substitute, now in Senate.]

HB2001 (Helmer) requires state and local government buildings to be constructed or renovated to include electric vehicle charging infrastructure and the capability of tracking energy efficiency and carbon emissions.

HB2227 (Kory) is the same as SB1224, below. 

SB1224 (Boysko) requires the Board of Housing and Community Development to adopt amendments to the Uniform Statewide Building Code within one year of publication of a new version of the International Code Council’s International Energy Conservation Code (IECC) to address changes related to energy efficiency and conservation. The bill requires the Board to adopt Building Code standards that are at least as stringent as those contained in the new version of the IECC. This is one of the important bills I wrote about last week. 

Financing

HB1919 (Kory) authorizes a locality to establish a green bank to finance clean energy investments. Fairfax County has requested this authority. 

Fossil fuels 

HB1834 (Subramanyam) requires owner of carbon-emitting power plants to conduct a study at least every 18 months to determine whether the facility should be retired. It also requires notice of any decision to retire a facility to be submitted to state and local leaders within 14 days, a step that allows transition planning.

HB1899 (Hudson) sunsets coal tax credits, because it is absolutely crazy that Virginia continues to subsidize coal mining while we’ve committed to close coal plants.

HB1934 (Simon) requires local approval for construction of any gas pipeline over 12 inches in diameter in a residential subdivision. The genesis of this bill is a particular project in Simon’s district, but I was surprised this isn’t a requirement already. 

HB2292 (Cole) is similar to the Green New Deal bill but without the speeded-up RPS timeline. It contains a moratorium on permits for new fossil fuel infrastructure and requires programs for transitioning fossil fuel workers that guarantees them jobs at the same income they had before and provides early retirement benefits and pension guarantees. It also requires development of new job training programs; requires that 40% of energy efficiency and clean energy funding go to EJ communities; and mandates that 50 percent of the clean energy workforce come from EJ communities. 

SB1247 (Deeds) is a companion to HB1834.

SB1252 (McPike) sunsets the coal tax credits. 

SB1265 (Deeds) makes it easier for DEQ to inspect and issue stop-work orders during gas pipeline construction. 

SB1311 (McClellan) requires DEQ to revise erosion and sediment control plans or stormwater management plans when a stop work order has been issued for violations related to pipeline construction.

Climate bills 

HB2281 (Ware) would exempt certain companies that use a lot of energy from paying for their share of the costs of Virginia’s energy transition under the VCEA, driving up costs for all other ratepayers. And thus the slow chipping away at the VCEA begins. Everybody’s got a reason they’re special. [Killed in subcommittee.]

HB2330 (Kory) is the legislation the SCC asked for to provide guidance on the Percentage of Income Payment Program under the Virginia Clean Economy Act. 

SB1282 (Morrissey) directs DEQ to conduct a statewide greenhouse gas inventory, to be updated and published every four years.

SB1284 (Favola) changes the name of the Commonwealth Energy Policy to the Commonwealth Clean Energy Policy, and streamlines the language without making major changes to the policies set out last year in Favola’s successful SB94. That bill overhauled the CEP, which until then had been a jumble of competing priorities, and established new targets for Virginia to achieve 100% carbon-free electricity by 2040 and net-zero carbon economy-wide by 2045. This year’s bill shows the Northam Administration is now fully on board, and the result is a policy statement that is more concise and coherent. 

SB1374 (Lewis) would set up a Carbon Sequestration Task Force to consider methods of increasing carbon sequestration in the natural environment, establish benchmarks, and identify carbon markets. 

And because this category would not be complete without a bill from a legislator who thinks climate action is a bunch of hooey, we have HB2265 (Freitas), which would repeal provisions of the VCEA phasing out carbon emissions from power plants, repeal the restrictions on SCC approval of new carbon-emitting facilities, and nix the provisions declaring wind, solar, offshore wind and energy storage to be in the public interest. Oh, but in case you thought Freitas was just a free market believer, or cared about cost, the bill provides that planning and development of new nuclear generation is in the public interest. 

Utility reform

Clean Virginia developed a full slate of bills, each a little different, that all restore SCC oversight over utilities and/or benefit customers with refunds. 

HB1835 (Subramanyam) eliminates provisions that limit rate reductions to $50 million in the next SCC review of Dominion’s rates.

HB1914 (Helmer) changes “shall” to “may” in a number of places, giving the SCC discretion over when to count utility costs against revenues.

HB1984 (Hudson) gives the SCC added discretion to determine a utility’s fair rate of return and to order rate increases or decreases accordingly.

HB2049 (Bourne) would prevent utilities from using overearnings for new projects instead of issuing refunds.

HB2057 (Ware) changes how the SCC determines a fair rate of return for utilities and gives the SCC discretion in the treatment of certain utility generation and distribution costs, as well as in determining when a rate increase is appropriate. It also provides that when a utility has earnings above the authorized level, 100% of the overearnings must be returned to customers, up from 70% today. The SCC is also given authority to determine when a utility’s capital investments should offset overearnings. 

HB2160 (Tran) gives the SCC greater authority to determine when a utility has overearned and gives the Commission greater discretion in determining whether to raise or lower rates and order refunds. It also requires 100% of overearnings to be credited to customers’ bills, instead of 70%, as is the case today.

HB2200 (Jones) makes a number of changes to SCC rate review proceedings, including setting a fair rate of return, requiring 100% of overearnings to be credited to customers’ bills, and eliminating the $50 million limit on refunds to Dominion customers in the next rate review proceeding.

SB1292 (McClellan) requires 100% of overearnings to be credited to customers’ bills, instead of 70%, as is the case today.

EVs and Transportation energy

The Virginia Mercury ran a good article this week that covered most of these bills.  

HB1850 (Reid) increases the roadway weight limit for electric and natural gas-fueled trucks to accommodate the extra weight of batteries or natural gas fuel systems. 

HB1965 (Bagby) is the Clean Car Standard bill, which would require manufacturers to deliver more electric vehicles to Virginia dealers beginning in 2025.

HB1979 (Reid) creates a rebate program for new and used electric vehicles. 

HB2118 (Keam) establishes an Electric Vehicle Grant Fund and Program to assist school boards in replacing diesel buses with electric, installing charging infrastructure, and developing workforce education to support the electric buses. 

HB2282 (Sullivan) directs the SCC to develop and report on policy proposals to accelerate transportation electrification in the Commonwealth. The bill also limits how utilities get reimbursed for investments in transportation electrification: they must recover costs through normal rates for generation and distribution, and not through rate adjustment clauses or customer credit reinvestment offsets. 

HJ542 (McQuinn) requests a statewide study of transit equity and modernization. 

SB1223 (Boysko) adds a requirement to the Virginia Energy Plan to include an analysis of electric vehicle charging infrastructure and other infrastructure needed to support the 2045 net-zero carbon target in the transportation sector. 

SB1380 (Lucas) authorizes electric utilities to partner with school districts on electric school buses. The utility can own the batteries and the charging infrastructure and use the batteries for grid services and peak shaving.  

Code update

SB1453 (Edwards) revises Titles 45.1 and 67 of the Virginia Code. “The bill organizes the laws in a more logical manner, removes obsolete and duplicative provisions, and improves the structure and clarity of statutes pertaining to” mining and energy. The bill is a recommendation of the Virginia Code Commission. 

An early look at climate and energy bills in the 2021 session

Last year Virginia’s General Assembly passed more than 30 separate clean energy bills, which together put Virginia on a path to zero-carbon electricity by 2050, enabled massive investments in renewable energy, storage and energy efficiency and eased restrictions on distributed solar. 

But many of the bills that passed were not perfect, and most of the new mandates affect only the electric sector. Only about a quarter of Virginia’s greenhouse gas emissions comes from power plants, so getting serious about a zero carbon economy means finding ways to reduce emissions from transportation, buildings, industry and agriculture. 

Unfortunately, building on last year’s progress will be hard this winter, not because there aren’t plenty of opportunities, but because the legislative session that starts Jan. 13 is likely to be exceptionally short and tightly-controlled. If, as expected, Republicans force a 30-day session limit(including weekends and holidays), that means each chamber must dispose of its own bills even faster than that to meet the crossover deadline (around Jan. 28, I’m told), when bills that have passed one chamber “cross over” to be considered in the other. Leadership has responded by strictly limiting the number of bills a legislator can carry, hoping not to overwhelm the committees that have to vet the bills. 

One result is that complex bills haven’t got a prayer. Climate advocates and their legislative champions will be focused on bills that are narrowly-crafted (or at least short) and easy to explain. 

Adding to the challenge, for those who want to weigh in with their legislators, is the fact that very few bills appear in the Legislative Information System yet, in another departure from prior years. 

And then of course, there’s COVID-19, disrupting normal procedures and making it harder than ever for citizens to make their voices heard. 

So yeah, ain’t we got fun?

What follows is a list of bills that are far along in the drafting process, have a patron, and are likely to be filed this year. I’m omitting other initiatives that don’t seem likely to make it into legislation this year or that I don’t have enough information to go on. I have not seen the language for any of these bills, so descriptions are based on previous years’ legislation, information from legislators and advocates, or both.

Building codes

One of the most cost-effective ways to lower carbon emissions from buildings is by constructing them with an eye to saving energy right from the start. If the builder puts more insulation in the walls and attic, reduces draftiness and installs better windows, buyers will save money and future residents will have lower heating and cooling costs for decades. Any small increases in a buyer’s mortgage costs are recouped many times over in utility bill savings.  

A national standard for energy efficiency in residential buildings even takes the guesswork out. The standard, known as the International Energy Efficiency Code (IECC), is updated every three years by a national organization referenced in the law setting out procedures for adopting Virginia’s residential building code. Unfortunately, the Board of Housing and Community Development (BHCD) has long ignored its statutory obligation to keep Virginia’s building code at least consistent with these nationally recognized standards. 

As a result of that, and BHCD’s slow review process, Virginia’s building code is still behind the 2012-2018 IECC’s consumer protections.  Unless BHCD is compelled to protect residents consistent with national standards, sub-standard housing will continue to be built for years into the future.    

Ideally, the attorney general or the governor would direct BHCD to correct its latest decision to extend substandard code protections. Regardless, this long history of our building code underperforming national standards calls for legislative action. Sen. Jennifer Boysko, D-Fairfax, is expected to introduce legislation that would require the BHCD to adopt the latest IECC within 12 months.  

[Update: Boysko’s bill is SB1224. Delegate Kory has also introduced HB2227.]

Right to buy

It’s a strange paradox. The Virginia Clean Economy Act is one of the most ambitious clean energy laws in the U.S., calling on our utilities to add thousands of megawatts of solar and wind energy in the coming years. And yet most Virginia customers still can’t buy solar energy unless they install it on their own property. 

This is an absurd position for Virginia to be in today, insisting on an energy transition but not allowing customers to actually go buy electricity from solar. Indeed, this restriction threatens Virginia’s ability to meet its carbon reduction goals, for one reason in particular: data centers. 

Data centers are energy hogs, and this sector has grown so fast in Virginia it now makes up 12 percent of Dominion Energy’s total electric demand in the state. Most data center operators say they want to run on renewable energy, and we need them to make good on that. Otherwise, cutting carbon will be harder and more expensive for the rest of us. 

But we have to make it possible for them to do so. Right now, only the really big companies, like Microsoft or Facebook, can get Dominion to come to the table on solar deals. The rest don’t have that kind of market power. Neither, of course, do residential customers and small businesses. 

The irony is that customers actually had the right to go outside their utility to buy 100% renewable energy until just recently. The Virginia Code gives customers that right so long as their own utility wasn’t offering a 100% renewable energy product. But first Appalachian Power, and then Dominion Energy Virginia, triggered a “kill switch” by offering their own products. The trouble is, these products cost more, use existing facilities instead of adding new renewable energy to the grid, and in Dominion’s case, include the poison pill of dirty biomass energy.

Last year saw the passage of a bill patroned by Del. Jeffrey Bourne, D-Richmond, that would return to customers their right to go outside their utility to buy renewable energy from sellers who qualify as competitive service providers. But there was a catch: an amendment tacked on at the last moment made the bill effective only if passed again in 2021.

Delegate Bourne is bringing the bill back this year, with added language that would require competitive service providers who sell renewable energy in Virginia to offer a discount to low and moderate income consumers. The providers would have to offer 100% renewable energy at a 10% discount off the cost of the utility’s standard residential rate. [Update: the bill is HB2048.]

Workers install solar panels at Huguenot High School in Richmond. (Sun Tribe Solar)

Solar for public schools and other government buildings

Last year the VCEA and Solar Freedom legislation expanded the ability of customers to finance onsite solar projects by raising the cap on third-party power purchase agreements (PPAs) and making the program available to a wider range of customers in Appalachian Power territory, where it had previously been restricted. The new limits in Dominion territory are 500 MW for “non-jurisdictional” customers like local governments and schools and 500 MW for “jurisdictional” customers like residents and businesses; in Appalachian Power territory the new limit is 40 MW for all customers. This year a bill from Sen. John Edwards, D-Roanoke, clarifies that the program in Appalachian Power territory applies to non-jurisdictional customers as well as jurisdictional customers. 

The bill also expands a pilot program for municipal net metering established in 2019 that allowed a local government to use surplus electricity generated by solar panels on one building for another building also owned by the locality. As originally enacted, however, the pilot program did not allow the locality to use PPA financing for its solar panels, a restriction that prevents budget-conscious local governments from using the program. Senator Edwards’ bill will let local governments of both Dominion and APCo use PPAs for solar projects installed under the pilot program. In addition, the previous caps on the municipal net metering pilot program are removed in favor of the general PPA program caps. 

[Update: Delegate Hurst introduced HB2049, which just addresses PPAs in APCo territory.]

Transportation

What RGGI does for the electric sector, the Transportation Climate Initiative (TCI) is supposed to do for transportation. As Sarah Vogelsong reported last week, Virginia is participating in the development of the multistate compact designed to lower carbon emissions from the transportation sector 30 percent by 2032, but it hasn’t yet pledged to join the compact. There may be some details to work out before that happens, including resolving concerns from environmental justice leaders who believe more of the revenues should go to historically underserved communities. So whether we will see a TCI bill this year is anyone’s guess, but I’ve included it here because of the impact it would have if it does show up.

Three other transportation bills are more certain. One, called the Clean Car Standard, simply requires manufacturers of electric vehicles to send some of their vehicles to Virginia dealers, so consumers can actually buy them. (Weirdly, many dealers are opposed.) Del. Lamont Bagby, D-Henrico, is expected to carry the bill; its passage is a priority for a long list of environmental and grassroots groups. [The bill is HB1965.]

A bill from Del. David Reid, D-Loudoun, would have Virginia offer incentives for the purchase of electric vehicles, following recommendations from a 2019 study. I’m told we should also expect at least one bill from Del. Mark Keam, D-Fairfax, and one from Sen. Louise Lucas, D-Portsmouth, to get more electric school buses on the road. [Reid’s bill is HB1979. Keam’s is HB2118.]

Another bill would require a Transit Modernization Study, which would gather information about how the public is currently being served by the existing transit system, including details as specific as which bus stops in which communities have benches and covered facilities. The study will determine which transit systems have infrastructure needs related to safety, reliability and environmental impact, such that when funding is available, the results of the study can ensure that funding is allocated equitably and to be used to make non-car options more appealing. A patron will be announced soon. [The patron is McQuinn, and the bill is HJ542.]

Environmental Justice

Del. Shelly Simonds, D-Newport News, and Keam are expected to introduce a bill that will expand last year’s Environmental Justice Act to change how the state forms and carries out environmental justice policies within agencies, and to ensure greater public involvement in the permitting process at DEQ. Among other issues, residents often learn too late that Virginia’s Department of Environmental Quality has finalized a permit for a facility that will add to the pollution in their community. The legislation would also require DEQ to consider the cumulative impact of polluting facilities — that is, to take into account whether the community is already overburdened.

Low-income ratepayer protections

The State Corporation Commission has been busy writing implementing regulations for many of the programs established by 2020 legislation. Some of the rules that have come out of the SCC are disappointing enough that I wouldn’t be surprised to see corrective legislation, but probably not until next year. One exception, where legislation is needed right away, concerns the Percentage of Income Payment Program. 

The PIPP is an important feature of the Virginia Clean Economy Act  that caps utility bills for qualifying low-income customers. The SCC convened a stakeholder group to hammer out the details, but concluded the statute did not provide enough information to go on. An SCC order issued Dec. 23 left open critical elements of the program, and urged the General Assembly to provide additional legislative guidance. It is very late in the year to craft a response and secure a patron, but the administration and advocates are trying. 

Pipelines

A bill from Sen. Jennifer McClellan, D-Richmond, adds specificity to the currently vague process that governs small to medium changes in pipeline routes and may impact permit conditions like erosion control measures. Currently it is unclear under what conditions DEQ must re-examine plans it has previously approved. The legislation will bring clarity and explicit direction to all parties involved. [The bill is SB1311.]

At least one and possibly two other bills that would affect pipeline construction are also said to be in the works, but I have no details. [See SB1265, from Senator Deeds.]

Fossil fuel moratorium

Last year’s Virginia Clean Economy Act contains a two-year moratorium on new fossil fuel electric generating plants. Del. Joshua Cole, D-Fredericksburg, is expected to introduce legislation expanding this into a permanent moratorium on all new fossil fuel infrastructure, to take effect in 2022. The bill would exempt retail projects like local gas hook-ups but would otherwise affect not just electric generation, but pipelines, fracking infrastructure, refineries and processing facilities. 

Utility reform

Last year saw a number of bills that would affect how our utilities do business. These issues have not gone away, so we should expect to see legislation to strengthen SCC oversight and pare back the ability of utilities to pocket overearnings. [Clean Virginia produced a whole slew of bills. These include HB1835, HB1914, HB1984, HB2049, HB2160, and HB2200.]

Will there be bad bills?

Yes, we should expect to see a few bills from Republicans attempting to roll back parts (or all) of the Virginia Clean Economy Act, or trying to block Virginia’s participation in the Regional Greenhouse Gas Initiative. These aren’t expected to get far in the Democratically-controlled General Assembly. [So far the worst of the bunch is HB2265.]

This post originally appeared in the Virginia Mercury on January 4, 2021. It has been updated to reflect additional bill information.

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.