McAuliffe vetoes coal subsidy bills, but Republicans vow to keep the corporate welfare flowing

Your taxpayer dollars at work!

Your taxpayer dollars at work!

Governor Terry McAuliffe has vetoed the two bills that would have extended Virginia’s coal subsidies through 2019. It’s a laudable act of fiscal responsibility, and surely no more than Virginia taxpayers had a right to expect in a time of tight state budgets. And yet it was also an act of courage in a coal state where mining companies have had far too much political power for far too long.

You’d like to think legislators would now focus on working with the Administration to help southwest Virginia communities shift away from their unhealthy dependence on coal mining and instead develop new, cleaner industries. The tens of millions of dollars that have been spent annually on coal subsidies could be much better directed to job diversification efforts. Unfortunately, legislators representing coal companies—I mean, coal countieshave already vowed to reintroduce bills next year to keep the taxpayer largesse flowing. They have time; the subsidies won’t actually expire until January 1, 2017.

It’s been 20 years since Virginia began subsidizing coal mining via these two tax credits, bleeding the state treasury of more than $500 million in all. And it’s been three years since the Joint Legislative Audit and Review Committee (JLARC) issued a critique of the various Virginia tax credits that included an especially harsh assessment of the handouts to coal companies. Yet instead of canceling the credits in light of the report, the General Assembly promptly extended them. Even Governor McAuliffe didn’t actually try to end them completely this year. Legislators rejected his efforts simply to scale them back, leading to this veto.

So if we didn’t get jobs for our $500 million, what did we get? Most of the money has gone to enrich coal companies, but a portion went to fund the Virginia Coalfields Economic Development Authority (VACEDA). VACEDA’s board includes coal executives, a fact which has served to intensify rather than lessen coal’s hold on the area.

Perhaps VACEDA’s economic diversification mission would prove more successful if the state were to fund it directly, with money not tied to coal, and were to insist on reforms to VACEDA to ensure board members don’t have a conflict of interest.

In addition to propping up the coal industry, the tax credits also serve to lower the price of Virginia coal purchased by our utilities. This shifts energy costs from ratepayers to taxpayers, but it also makes it easier for coal to compete against other forms of energy, including renewable energy like wind and solar. And since making taxpayers subsidize electricity rates artificially cheapens electricity, it also lessens the incentive to conserve energy. In an age of climate change, this is simply bad energy policy.

Most economists agree that energy policy should seek to make electricity rates reflect the true cost of producing energy. This should include costs imposed on the public in the form of higher health care costs for asthma and heart disease as a result of power plant pollution—costs known as “externalities.” The coal subsidies do the exact opposite; instead of making utilities and coal companies internalize pollution costs, they actually shift more costs onto the public.

All this was done in the name of supporting employment in the Coalfields areas. However, the coal subsidies aren’t linked to jobs; they are based on coal tonnage, so mining companies that increase mechanization while cutting jobs don’t lose anything. And cutting jobs is exactly what has happened in Virginia. As the Governor’s veto statement noted, coal mining jobs declined steadily from their highs in the early 1990s to about 3,600 today, notwithstanding the subsidies.

A reading of the JLARC report also shows that most of the drop occurred before President Obama took office and the EPA imposed tighter pollution standards. The fact is, coal is in decline, and Virginians will be better off not throwing good money after bad.

Indeed, the coal jobs number is barely twice the number of people working in Virginia’s tiny solar industry, which gets no state subsidies. Just this year a House subcommittee killed a bill that would have provided $10 million a year in support for renewable energy projects.

Solar is growing by leaps and bounds across the country, while coal fades. Governor McAuliffe has taken the right lesson from that. It’s too bad so many Virginia legislators have not.

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

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

With apologies to the Rolling Stones

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

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

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

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

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

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

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

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

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

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

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

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

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

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

And the coal gravy train rolls on

Your taxpayer dollars at work!

Your taxpayer dollars at work!

This should have been the year to end more than two decades of corporate welfare for companies whose business model involves the destruction of Virginia’s mountains. All the facts line up against the coal subsidies: the unremitting decline of coal employment since the 1990s, the waste of half a billion dollars that could have gone towards diversifying the southwest Virginia economy, the unfair advantage it gives coal over 21st century clean energy technologies that promise real job growth, and even all that anti-subsidy rhetoric from Republicans that ought to make them uncomfortable with crony capitalism and a blatant giveaway to a mature industry.

Delegate Toscano led a spirited charge against them that included a hard-hitting op-ed in the Richmond Times-Dispatch. But the coal companies whined in committee hearings, and Dominion’s Bill Murray explained that the utility supports making coal cheaper, saying ratepayers would benefit. (Since the money comes out of taxpayers’ pockets, and taxpayers are also presumably ratepayers, it’s a little hard to follow this logic. If you want to get your money’s worth, use more energy?)

No one but a few lonely environmentalists spoke up against the subsidies. Where are the clean energy businesses? Where is the Tea Party? Where are the people who actually care about the dire need for new industries and new jobs in southwest Virginia?

They certainly weren’t being heard in the General Assembly. By mid-week it was clear the giveaway will continue, though perhaps with one welcome change. Under HB 1879, reported from House Finance on Wednesday, the credit for the companies that mine the coal would have a limit on how much any given coal company can claim. However, the credit for those who burn coal is not limited and will actually be extended out to 2019, keeping coal’s unfair advantage over other fuels. (Like, say, renewable energy.)

SB 741, which passed the Senate 32-6 on Thursday, merely contains the extension of the subsidy for coal use out to 2019. So few Senators seem to have their heads on straight on this issue that it’s worth thanking them by name here: Adam Ebbin, Barbara Favola, Janet Howell, Mamie Locke, Donald McEachin, and Jennifer Wexton.

SB 1161 (Colgan), which also passed the Senate, contains the same limitation found in HB 1879. In this case, passing the bill was better than the status quo.


Update: On February 19, the Richmond Times-Dispatch reported, “The House of Delegates and state Senate have agreed to leave untouched a tax credit for electric utilities that burn Virginia coal, even though the policy reversal will create a $5.2 million hole in each chamber’s proposed budget. The House amended and passed Senate Bill 1161, introduced by Sen. Charles J. Colgan, D-Prince William, to include a substitute drafted by Dominion Virginia Power, the state’s largest power company.”

 

 

 

 

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

Photo credit: Corrina Beall

Photo credit: Corrina Beall

Anti-Clean Power Plan bills

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

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

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

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

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

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

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

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

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

Coastal Protection Plan

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

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

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

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

The Dominion Power Ratepayer Rip-Off Act of 2015

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

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

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

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

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

Your 2015 Virginia legislative session cheat sheet, part 2: Fossil Fuels

Photo credit: Corrina Beall

Photo credit: Corrina Beall

My last post covered clean energy bills introduced into the 2015 legislative session, which began last week and ends at the end of February. Time to hustle on to the oil, gas, and coal bills.

Coal subsidies

Coal companies claim to be victims of a “war on coal,” but for nearly two decades they’ve been conducting a war on Virginia taxpayers. Virginia’s tax code offers so many preferences that a 2012 study concluded the coal industry costs Virginia more than it gives back. Among other preferences, two different subsidies in the Code have allowed coal companies to siphon off tens of millions of dollars annually from the General Fund since 1996.

The subsidies come with nominal sunset dates, currently January 1, 2017. Over nearly twenty years, no matter how fat or lean the state’s financial condition, the legislature has repeatedly passed extensions, and they are being asked to do so again this year. HB 1879 (Kilgore) and SB 741 (Carrico) would extend the giveaway out to 2022.

(According to VPAP.org, Delegate Kilgore, chairman of the Commerce and Labor Committee, gets a check for $10,000 every year from coal giant Alpha Natural Resources. Alpha also gives ten grand a year to Senator Carrico, who just happens to sit on Senate Finance, which will hear the bill. I mention these facts only in passing. It would be cynical to suggest a connection.)

Supporters of the subsidies seem to believe coal companies need the inducement to blow up our mountains and dump waste into stream valleys. And they maintain this is a good thing for the people of Southwest Virginia, who can enjoy gainful employment by participating in the destruction of their communities.

The coal companies certainly do benefit from this arrangement, but coal jobs have declined to less than 5,000 total in Virginia today, and it’s clear to everyone that Southwest Virginia needs to diversify its economy or face a future of poverty and high unemployment. The coal subsidies suck up money that could be spent on new jobs and a better-educated workforce.

The McAuliffe administration, facing a budget shortfall, has suggested cutting the subsidies way back, and has no plans to extend them. HB 2181 (Toscano) reduces the amount of the subsidies for 2015 and 2016 but does not eliminate them. It also limits the amount that can be claimed on any one tax return to $500,000 under each Code provision.

HB 1877 (Krupicka) would end the subsidies altogether a year early. His bill goes further: it would redirect the savings into a fund to provide grants to students enrolled in Virginia public colleges and universities. Half the money would be required to go to students from the Coalfields region.

Natural gas

SB 1338 (Hanger) repeals a provision of the Code known as the Wagner Act (after Senator Frank Wagner, who introduced the legislation ten years ago). That provision allows interstate natural gas companies to enter private property without the consent of the owner in order to make “examinations, tests, hand auger borings, appraisals, and surveys.”

The Wagner Act gained notoriety last year when Dominion Power sued landowners who resisted efforts to survey their land. We think of Dominion as an electric utility, but Dominion Resources also owns a gas transmission company, and it plans to build a huge new pipeline to bring fracked gas from Ohio and West Virginia and deliver it to industrial customers and export facilities on the coast. Turns out, a lot of people don’t like strangers coming on their land without permission, especially when the point is to let the strangers decide whether they might want to seize the land for a pipeline. Well, who could have expected that?

But in case the GA doesn’t have an appetite for repealing the Wagner Act, how about making it harder to use? SB 1169 (Hanger again) amends it to add a pre-condition. Before any natural gas company can enter someone’s property without permission, the governing board of the locality must have adopted a resolution in support of the pipeline or gas works. Moreover, the resolution “shall not be adopted unless the governing body has found that locating the line or works within the city or county is consistent with its comprehensive plan, master plan, or any general development plan and that there exists a demonstrated public need for the line or works.”

HB 1475 (Ware) and SB 1163 (Saslaw) allow natural gas utilities to expand their systems to reach more retail customers. This legislation is not related to the interstate gas pipelines sought by Dominion and others. It deals with pipelines within the state that would connect customers who currently don’t have access to natural gas for heating and cooking (a more efficient use of energy than burning gas for electricity to perform the same functions).

But the gas utilities have taken a page from the Dominion playbook and overreached with their legislative language, including by declaring its plans and business goals to be “in the public interest” (the magic words that limit SCC review). We hear the bill is likely to be amended to take out the offending language.

Really a bill about energy efficiency, SB 1331 (Petersen) changes how the SCC evaluates natural gas conservation programs proposed by utilities. It instructs the SCC to determine the cost-effectiveness of a program by looking at the utility’s whole portfolio of conservation programs and not each judged separately. This should make it easier to get conservation programs approved, and it’s to the credit of the retail gas companies that they want it passed. Senator Petersen’s office informed me the bill originated with the governor’s office, which supports it.

Offshore oil drilling

Virginia doesn’t control the deep waters off our coast where oil may be lurking, and drilling is still years away, if it happens at all. But that has never stopped state lawmakers from making plans to spend the money we might earn from oil drilling, if Congress were to share some of the revenue with us. Most of us will recognize this game as, “Imagine if you won the lottery.”

Back in 2010, Governor McDonnell pushed through a bill to fund transportation projects with the imaginary money. In 2014, the law was amended to put $50 million into an emergency response fund to combat what would have to be a pretty small imaginary oil spill, with all the extra imaginary money going to the General Fund.

HB 1702 (Davis) proposes to amend the law again to take half of the imaginary General Fund money and put it into public schools. Well, who could object to that? Except for the imaginary part, of course.

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

photo credit: Amadeus

photo credit: Amadeus

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

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

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

Net metering bills

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

This year’s initiatives include:

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

Third-party power purchase agreements (PPAs)

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

Utility-scale solar

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

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

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

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

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

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

Grants and tax credits

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

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

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

Bills specific to energy efficiency

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

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

PACE bills

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

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

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

Virginia Solar Energy Development Authority

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

Virginia SREC registry

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

Cross-cutting approaches to clean energy

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

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

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

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

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

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

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

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