COVID-19 throws a lemon at Virginia’s plan for an energy transition. It’s time for lemonade.

solar panels on a school roof

The solar panels on Wilson Middle School are saving money for Augusta County taxpayers. Photo courtesy of Secure Futures.

In mid-March, the Virginia General Assembly passed legislation to transition our economy from fossil fuels to clean energy over the coming years. Two weeks later, Virginia shut down in response to the COVID-19 pandemic. Among the businesses whose very existence is now in peril are the energy efficiency companies and solar installers we will be counting on to get us off fossil fuels.

Home weatherization and energy efficiency programs have come to an almost complete halt in Virginia, including programs run by Dominion Energy Virginia. Nationwide, the energy efficiency sector has lost almost 70,000 jobs. Meanwhile, companies that install solar, especially rooftop systems, report plummeting sales. The Solar Energy Industries Association reports that nationally, 55 percent of solar workers are already laid off or suffering cutbacks.

The timing seems terrible — although to be fair, there’s no good time for an economy-crushing, worldwide pandemic. Eventually, however, the virus will run its course or be defeated through vaccine or cure. At that point, we will face a choice: we can stagger blinking out into the sunlight aimlessly wondering now what?, or we can execute the well-developed plan we have spent these weeks and months formulating.

Let’s go with the second option.

First, it’s worth remembering that nothing happening now will change the trajectory of clean energy. Solar and wind had banner years in 2019, continuing their steady march to dominance. Wind has become the largest single source of electricity in two states, Iowa and Kansas. The island of Kauai in Hawaii is now 56 percent powered by renewable energy, mostly solar. Across the U.S. wind, solar and hydro produce more electricity than coal. Wind is the cheapest form of new electric generation nationally; solar takes pride of place in Virginia.

Meanwhile, fossil fuel is even more firmly on its way out. Six of the top seven U.S. coal companies have gone into bankruptcy since 2015. That was before the lockdown sent energy demand down, further hurting high-priced coal.

Fracked gas helped kill coal but is itself vulnerable to price competition from renewables. Odd as it sounds, the collapse in oil prices will make natural gas more expensive. That’s because oil producers in Texas and North Dakota are closing wells that produced natural gas along with oil. The tightening supply of gas may finally make fracking companies in Appalachia profitable, but it means higher prices for utilities. Wind and solar will just keep looking better.

The Trump administration is still trying futilely to hold back the tide, but the U.S. will get a lot farther riding the wave than struggling against it. Congressional leaders should declare the country “all in” on clean energy. Instead of bailing out the highly polluting fossil fuel industries, they should put that money to work creating more jobs and economic development — and actually doing something about climate change — with energy efficiency and renewables.

Congress should return the Investment Tax Credit for solar (and offshore wind) to the 30 percent level in effect last year and keep it there, instead of continuing the phase-out now in effect. Congress should also give solar owners the option of taking the credit as a cash grant, as it did during the last recession, and for the same reason: tax-based incentives are less useful in a recession, when companies can’t use the credits.

Virginia’s Sens. Tim Kaine and Mark Warner have a critical role to play in convincing their colleagues to support solar. So far neither is rising to the task.

On the state level, Northam did the right thing in signing this year’s energy legislation, allowing utilities and industry members to start planning for the future. But the Clean Economy Act gets wind and solar off to a very slow start; Dominion doesn’t have to build Virginia solar for five years yet. And though the new laws remove many policy constraints on customer-sited solar, they offer next to nothing in the way of financial incentives.

Governor Northam should make it clear he intends to make rooftop solar a priority for next year, along with projects on closed landfills, former coal mine areas, and other brownfields, with a special focus on areas hardest-hit economically. He can also encourage corporations that do business in Virginia to meet their sustainability goals with Virginia wind and solar, starting right now.

The governor should also prioritize building efficiency. Virginia will be adopting a new residential building code this year, and if past years are any indication, its energy efficiency provisions will fall short of the most recent model code standard. It’s up to the governor to make sure Virginia adopts the full code.

Local governments are already taking advantage of suddenly-empty buildings to accelerate maintenance and repairs. But it’s a good time to think bigger, with new financing tools available that make energy efficiency retrofits and solar facilities cash-positive right from the start.

Energy performance contracting allows the energy savings to pay for retrofits. The Department of Mines, Minerals and Energy keeps a list of pre-qualified energy service companies and offers expertise to help local government employees navigate the process.

This year’s legislation also greatly expanded local governments’ ability to finance on-site solar through third-party power purchase agreements, effective July 1. The PPAs are structured so that a school district, municipality or any commercial or non-profit customer can have a solar array installed at no cost, paying just for the energy produced.

In December, Fairfax County awarded contracts for PPAs to install solar on more than a hundred sites, including schools and other government buildings. The county’s contract is “rideable,” which allows other counties and cities to piggyback, getting the same terms without the need for new contract negotiations.

Unfortunately, local governments in southwest Virginia are prevented from pursuing PPAs — not by state legislation, which allows it starting July 1, but by a contract with Appalachian Power that governs their electricity purchases from the utility. The contract is up for renewal this year; disgracefully, APCo is refusing to agree to new terms allowing the localities to use solar PPAs. APCo should back off, and let local governments in economically depressed southwest Virginia start saving money and supporting solar jobs this year.

Arlington County has gone beyond on-site solar, contracting for a share of a large solar farm in southern Virginia that will provide more than 80 percent of the electricity for county government operations. It’s a model any locality can adopt.

Virginia residents and businesses also have good reasons to focus on clean energy. The enforced down-time many people are experiencing means more time to research options, and companies are motivated to offer low prices on energy efficiency upgrades and rooftop solar.

The federal government offers more generous tax credits this year than next. Credits for residential energy efficiency equipment and a deduction for energy efficient commercial buildings expire at the end of this year.

The investment tax credit for solar (as well as for geothermal heat pumps, fuel cells and small wind turbines) stands at 26% for projects placed in operation this year, but it will drop to 22% in 2021. It falls to 10% for commercial customers and disappears altogether for residential customers in 2022. If Congress acts to raise the credit to 30%, buyers will get an even bigger boost. If it doesn’t, there will be a rush this year to get projects done by the end of the year, so customers should secure their place in line now.

Virginia nonprofits have helped hundreds of residents and businesses save money on solar and EV chargers through bulk purchasing programs. Virginia Solar United Neighbors just announced a series of virtual information sessions to promote the Arlington Solar EV Co-op. And LEAP, which closed operations temporarily due to the virus, reports it has restarted two programs, Solarize NOVA and Solarize Piedmont.

In an ideal world, the U.S. would already be well along in executing a comprehensive plan for a clean energy transition, one that includes job retraining for workers, and that resists counterproductive efforts to save the fossil fuel industry. But we can do the next best thing, and use the tools of government, the market and consumer choice to speed us in the right direction.

COVID-19 has handed all of us a big, fat lemon. Let’s make some lemonade.

 

A version of this article appeared originally in the Virginia Mercury on April 30, 2020.

 

Yeah, I’m not perfect either. Pass the Clean Economy Act.

People gathered with signs supporting climate action

Grassroots activists gather at the steps of the Virginia Capital on January 14. Photo courtesy Sierra Club.

When it was first introduced, and before the utilities and special interests got their grubby little paws on it, the Clean Economy Act was an ambitious and far-reaching overhaul of Virginia energy policy that turned a little timid when it came to particulars.

Sausage-making ensued.

The bill that emerged from the grinder inevitably allows Dominion Energy to profit more than it should. (Welcome to Virginia, newcomers.) The energy efficiency provisions, which I thought weak, became even weaker, then became stronger, then ended up somewhere in the middle depending on whether you were looking at the House or Senate version. The renewable portfolio standard, complicated to begin with, is now convoluted to the point of farce — and to the extent I understand it, I’m not laughing.

Yet the bill still does what climate advocates set out to do: It creates a sturdy framework for a transition to 100% carbon-free electricity by 2045 (the House bill) or 2050 (the Senate bill).

It’s worth taking a moment to marvel at the very idea of a strong energy transition bill passing in a state that still subsidizes coal mining. Even a year ago, this would not have been possible. That we have come this far is a tribute not just to the Democrats who are making good on their pledge to tackle climate, but to the thousands of grassroots activists who worked to elect them and then stayed on the job to hold them to their promises.

The Clean Economy Act works by tackling the problem from multiple directions in a belt-and-suspenders approach:

• The legislation puts an immediate two-year moratorium on any new carbon-emitting plants. The concept came straight from the grassroots-led Green New Deal, and it creates space for the other provisions to kick in.

• It requires DEQ to implement regulations cutting carbon emissions through participation in the Regional Greenhouse Gas Initiative. RGGI uses market incentives to cut carbon emissions from power plants 30 percent by 2030. The Department of Environmental Quality will auction carbon allowances to power plant owners and use the auction money primarily for coastal resilience projects and energy efficiency projects for low-income residents. The Department of Housing and Community Development will be in charge of this efficiency spending, not Dominion.

• The Clean Economy Act takes RGGI out further, ensuring that Virginia reaches zero emissions by 2045 (House bill) or 2050 (Senate bill).

• It requires the closure of most coal plants in Virginia by the end of 2024. The newest of these, the Virginia City Hybrid coal plant, must close by the end of 2030 unless it achieves 83 percent emission reductions through carbon capture and storage, the technology it was allegedly designed for. Biomass plants have to close by the end of 2028.

• In place of fossil fuels, utilities have to build or buy thousands of megawatts of solar, on-shore wind, offshore wind and energy storage. Yearly solicitations for wind and solar will ensure sustained job creation employing thousands of workers. Thirty-five percent of all this must be competitively procured from third-party developers, a requirement that lowers costs and makes it harder for utilities to overcharge for the projects they build themselves.

• The storage requirement in particular is notable because batteries compete directly with gas combustion turbines to serve peak demand. The more storage a utility builds, the weaker its case for building new gas peakers becomes.

• For the first time, Virginia utilities will have to achieve energy efficiency savings, not just throw money at the problem. Under the stronger House bill, Dominion must achieve 5 percent cumulative energy savings by 2025. Appalachian Power must achieve 2 percent. Starting in 2026, the SCC will set efficiency goals every three years. Achieving savings ought to be easy; a new ranking of progress on efficiency puts Dominion at 50th out of 52 utilities. Low-hanging fruit, anyone? The Clean Economy Act also calls for 15 percent of efficiency spending to be allocated for programs benefiting low-income, elderly, disabled individuals and veterans.

• Also for the first time, the legislation requires the State Corporation Commission to consider the “social cost of carbon.” That puts one more thumb on the scales weighing against fossil fuels.

• If by January of 2028 we are still not on track, the House bill empowers the secretaries of natural resources and commerce and trade to put a second moratorium on new fossil fuel facilities.

One other element of the bill is worth mentioning, given the questions about how much all these new projects and programs will cost. The legislation creates a “percentage of income payment program” for low-income ratepayers to cap electricity costs at 6 percent of household income, or 10 percent if they use electric heat. The program includes provisions for home energy audits and retrofits.

As I said at the outset, the bill is not without its flaws. The cost of offshore wind energy is “capped” in the bill at 1.6 times the cost of energy from a gas peaker plant, though I’m told negotiations continue and the adder may be reduced. Regardless of the number, this makes as much sense as capping the cost of apples at some number above the cost of Cheetos. Why are we comparing a carbon-free source of energy that is getting cheaper every year with one of the dirtiest and most expensive fossil fuel sources? On behalf of the offshore wind industry: Please, I’m insulted.

Virginia will be a leader on offshore wind, but we are not the first, and we know the price of electricity from the other U.S. projects already under contract. Prices are already well below gas peaker plant levels. The CEA ought to cap the cost of the Virginia project at 10 or 20 percent above the lowest-priced comparable offshore wind project, which would allow plenty of room for differences in wind speeds, distance from shore and other variables.

On second thought, as a point of pride, Dominion should reject any adder at all, and insist on capping its costs below those of all the northeastern projects. Have some confidence in yourselves, people!

My other complaint is that the Clean Economy Act’s nearly incomprehensible renewable portfolio standard fails to deliver. Yes, other provisions of the bill require the utilities to build a lot of wind and solar. But nothing requires them to use the renewable energy certificates (RECs) associated with those facilities for the RPS.

If I totally lost you with those acronyms, it’s okay. Just know that RECs are the bragging rights associated with renewable energy, and they can be bought and sold separately from the electricity itself. If Dominion builds a solar farm in Virginia and sells the RECs to Microsoft or the good people of New Jersey, those folks have bought the right to claim the renewable energy regardless of whether they actually get their electrons straight from the solar farm. Virginia would be left with a solar farm, but legally, no solar energy.

RECs also fetch different prices according to the kind of renewable energy they represent and how many are on the market. Everyone wants solar, so solar RECs cost more. RECs from hundred-year-old hydroelectric projects are not in demand, so they are cheap.

As written now, the Clean Economy Act sets up an RPS that doesn’t require any wind or solar RECs at all (excepting a miniscule carve-out for small wind and solar that can also be met with “anaerobic digestion resources,” possibly a reference to pig manure).

The RPS can be met with RECs from several sources less desirable than solar, and therefore cheaper. These include old hydro dams, Virginia-based waste-to-energy and landfill methane facilities and biomass burned by paper companies WestRock and International Paper. As a result, utilities will buy RECs from those sources to meet the requirements.

Only once utilities run out of cheaper RECs from eligible sources will they be forced to apply RECs from any of the wind and solar they are building. Until that time, Dominion and APCo will sell the RECs from the new solar farms to the highest bidder, while Virginia customers shell out potentially hundreds of millions of dollars for RECs no one really wants.

That’s not fair to the Virginians who are paying for the wind and solar projects to be built and who have a right to expect wind and solar will be a part of their energy supply as a result. Legislators can correct this with a very simple requirement that RECs from the new facilities mandated by the law be applied to the RPS.

And, while I am telling legislators what to do, they ought to remove the eligibility of paper company biomass. This provision seems to have been added to the bill (in obscure, coded language) simply because WestRock has talented lobbyists and the political power to demand a cut of the action. But do we ratepayers want to buy their RECs? No, we do not.

WestRock is doubtless unhappy about losing the nice stream of unearned income it’s been getting from selling thermal RECs to Dominion under Virginia’s voluntary RPS. But there is no good reason for electricity customers to subsidize a Fortune 500 corporation whose CEO earned $18 million last year and whose Covington mill, according to EPA data, spews out more toxic air emissions than any other facility in Virginia including Dominion’s Chesterfield coal plant. That’s not clean energy.

Fortunately (I guess), the RPS is not the heart and soul of the Clean Economy Act. For the next several years, its slow ramp-up makes it barely even relevant, and it is the next several years that matter most in our response to the climate crisis.

Joining RGGI, cutting emissions, implementing energy efficiency, building renewable energy and storage, closing coal and biomass plants: those are the mechanisms of the Clean Economy Act that will drive Virginia’s transition to 100% clean energy.

And so, having offered my helpful suggestions to improve the nutritional content of this sausage, I will add just one more thing:

Pass the bill.

This column originally ran in the Virginia Mercury on February 24, 2020. That afternoon, the Senate Commerce and Labor committee conformed the House version of the bill to the weaker Senate version and passed it out of committee. House Labor and Commerce meets today and is expected to conform the Senate bill to the stronger House language. Assuming both chambers pass the bills without further amendments, the bills will then go to a conference committee (three senators, three delegates) to resolve the differences, and the resulting language will go to the Governor. 

It’s halftime at the GA, and do we ever have a show!

battle scene

Tense negotiations over the Clean Economy Act. (Aniello Falcone, Metropolitan Museum of Art)

Welcome to “Crossover,” the day on which the Virginia House and Senate have to finish the work on their bills and send them over to the other chamber. This is sudden death time; if a bill didn’t get across the finish line in time, it is dead for the year.

In past years, henceforth to be known as “the bad old days,” almost nothing good even got out of committee, much less reached Crossover. Clean energy advocates could pretty much plan vacations for the second half of February.

This year the Democrats are on a tear, especially in the House. Yes, a lot of good bills have been heavily watered down. This is still the Old Dominion, with the emphasis on Dominion. And it is definitely too early to break out the champagne, because the action isn’t over for the bills still in play. But overall, 2020 is shaping up to be a watershed year for clean energy.

BILLS STILL ALIVE

Energy Transition

HB1526/SB851, the Clean Economy Act, has been the subject of intense and continuous negotiation. First there were a bunch of amendments that weakened it; then there were a bunch that strengthened it. It’s been a wild ride, and we may still see more changes during the second half of Session. But it’s alive! (HB1526 passed the House 52-47; Democrats Rasoul and Carter voted no. SB851 passed the Senate on a party-line vote of 21-19.)

SB94 (Favola) rewrites the Commonwealth Energy Policy to bring it in line with Virginia’s commitment to dealing with climate change. The bill sets a target for net-zero greenhouse gas emissions economy wide by 2045, and in the electric sector by 2040. This section of the Code is for the most part merely advisory; nonetheless, it is interesting that Dominion Energy supported the bill. (Passed the Senate 21-18, on party lines.)

Delegate Reid’s HB714 is similar to SB94 but contains added details, some of which have now been incorporated into SB94. (Passed the House 55-45 with a substitute.)

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. (Passed the House 55-44 with a substitute.)

HB547 (Delaney) establishes the Virginia Energy and Economy Transition Council to develop plans to assist the Commonwealth in transitioning from the use of fossil fuel energy to renewable energy by 2050. The Council is to include members from labor and environmental groups. (Passed the House 54-45.)

RGGI bills, good and bad

The Democratic takeover of the General Assembly means Virginia will finally join the Regional Greenhouse Gas Initiative (RGGI), either according to the regulations written by DEQ or with a system in place that raises money from auctioning carbon allowances.

HB981 (Herring) and SB1027 (Lewis) is called the Clean Energy and Community Flood Preparedness Act. It implements the DEQ carbon regulations and 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. We are told this is the Administration’s bill. A similar bill, HB20 (Lindsey), was incorporated into HB981. (HB981 passed the House 53-46. SB1027 passed the Senate 22-18.)

SB992 (Spruill) requires the Air Board to give free allowances for three years to any new power plant that was permitted before June 26, 2019, the effective date of the carbon trading regulations. Essentially it gives special treatment to two planned gas generation plants that aren’t needed and therefore have sketchy economics unless they get this giveaway. Clean energy advocates will be looking to kill this one in the House. (Passed the Senate 27-13. A number of Democrats who should know better voted for the bill.)

RPS

The Clean Economy Act contains a renewable portfolio standard (RPS) requiring utilities to include in their electricity mix a percentage of renewable energy that ratchets up over time. In addition, HB1451 (Sullivan) is a stand-alone RPS bill that also includes an energy storage mandate. It appears to be identical to the RPS and storage provisions of the CEA (of which Sullivan is also the patron). (Passed the House 52-47.)

Customer-sited solar/net metering

Solar Freedom SB710 (McClellan) and HB572 (Keam) lifts barriers to customer-sited renewable energy such as rooftop solar. The changes include lifting the caps on PPAs and net metering, and eliminating standby charges. Nearly identical versions were filed by Delegates Lopez (HB1184) (rolled into HB572) and Simon (HB912) (ditto). SB532 (Edwards), a stand-alone bill to make PPAs legal, was rolled into SB710. (SB710 passed the Senate 22-18 with a substitute that is much more limited than the original bill. HB572 passed the House with just a minor substitute 67-31. HB1647 (Jones) is a Solar Freedom bill that also includes community solar. (Passed the House 55-45.) Several provisions of Solar Freedom also appear in the Clean Economy Act.

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%. (HB414 passed the House 95-4. SB504 passed the Senate 40-0.)

Community solar

HB1647 (Jones) (see above) includes community solar in a bill that otherwise looks like Solar Freedom.

SB629 (Surovell) creates a program for “solar gardens.” (Substitute passed the Senate 39-0.)

HB1634 (Jones) requires utilities to establish shared-solar programs that allows customers to purchase subscriptions in a solar facility no greater than 5 MW. (Amended with a substitute; it now looks a lot like SB629. Passed the House 99-0.)

HB573 (Keam) affects the utility-controlled and operated “community solar” programs required by 2017 legislation. The bill requires that “an investor-owned utility shall not select an eligible generating facility that is located outside a low-income community for dedication to its pilot program unless the investor-owned utility contemporaneously selects for dedication to its pilot program one or more eligible generating facilities that are located within a low-income community and 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.” (Passed the House 90-8.)

Offshore wind

The CEA contains detailed provisions for the buildout and acquisition of offshore wind. HB234 (Mugler) directs the Secretary of Commerce and Trade to develop an offshore wind master plan. (Passed House unanimously with substitute.)

SB860 (Mason) and HB1664 (Hayes) puts the construction or purchase of at least 5,200 MW of offshore wind in the public interest. (SB860 passed the Senate 22-18. HB1664 amended to incorporate HB1607, but with less gold-plating than the other bill. HB1664 passed the House 65-34.)

HB1607 (Lindsey) and SB998 (Lucas) allows Dominion to recover the costs of building offshore wind farms as long as it has a plan for the facilities to be in place before January 1, 2028 and that it has used reasonable efforts to competitively source the majority of services and equipment. All utility customers in Virginia, regardless of which utility serves them, will participate in paying for this through a non-bypassable charge. Surely this bill came straight from Dominion. (HB1607 amended to incorporate HB1664; only 1664 moves forward. SB998 passed the Senate 40-0.)

Nuclear and biomass

SB828 and SB817 declare that any time the Code or the Energy Policy refers to “clean” or “carbon-free” energy, it must be read to include nuclear energy. In subcommittee, Senator Lewis suddenly announced he was amending the bills to add “sustainable biomass” as well. After an uproar and a crash course on biomass, both bills eventually went back to being only about nuclear. (Both bills passed the Senate unanimously.) Unfortunately, some biomass from paper companies did creep into the Clean Economy Act in spite of the best efforts of clean energy advocates.

Energy Efficiency

HB1526/SB851, the Clean Economy Act, contains a mandatory energy efficiency resource standard (EERS) and contains other provisions for spending on low-income EE programs. HB981 (the RGGI bill) specifies that a portion of the funds raised by auctioning carbon allowances will fund efficiency programs.

There are also a few standalone efficiency bills. HB1450 (Sullivan) and SB354 (Bell) appear to be the same as the efficiency provisions of the CEA, though the standalone applies only to Dominion and APCo. (HB1450 passed House 75-24,picking up a respectable number of Republicans. SB354 stricken at request of patron in C&L.)

HB1576 (Kilgore) doesn’t set new efficiency targets, but it 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. (Passed the House, 99-0.)

HB575 (Keam) beefs up the stakeholder process that Dominion and APCo engage in for the development of energy efficiency programs. (Passed the House 99-0 and referred to Senate C&L.)

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. (Passed the Senate 40-0.)

SB628 (Surovell) requires the residential property disclosure statement provided by the Real Estate Board to include advice that purchasers should obtain a residential building energy analysis as well as a home inspection prior to settlement. (Passed the Senate 26-14.)

Energy storage

HB1183 (Lopez) requires the SCC to establish a task force on bulk energy storage resources. (Passed the House 91-9 with a substitute.)

SB 632 (Surovell) creates a storage target of 1,000 MW and states that this is in the public interest.  Senator Surovell says this bill originated with the Governor’s office. (Passed the Senate 20-19 with a substitute.)

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. Wind developer Apex Clean Energy helped develop the bill and supports it. (Passed the House 81-12, now goes to Senate Finance.)

HB656 (Heretick) and SB875 (Marsden) allow local governments to incorporate into their zoning ordinances national best practices standards for solar PV and batteries. (Both bills passed their chambers unanimously with substitute language.)

HB1131 (Jones) and SB762 (Barker) authorize localities to assess a revenue share of up to $0.55 per megawatt-hour on solar PV projects, in exchange for which an existing tax exemption is expanded. (HB1131 Passed the House 54-42 with a substitute. SB762 passed Senate 40-0.)

HB657 (Heretick) and SB893 (Marsden) exempt solar facilities of 150 MW or less from the requirement that they be reviewed for substantial accord with local comprehensive plans. (HB657 passed the House with a substitute, 59-41. SB893 was passed by indefinitely—killed—in Local Government.)

HB1434 (Jones) and SB763 (Barker) reduces the existing 80% machinery and tools tax exemption for large solar projects. (HB1434 passed the House 57-41. SB763 passed the Senate 40-0.) 

SB870 (Marsden) authorizes local planning commissions to include certain regulations and provisions for conditional zoning for solar projects over 5 MW. (Passed Senate 40-0 with a substitute.)

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. (Passed House 89-7.)

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. (Passed House 75-23. Assigned to Senate Committee on Local Government.)

SB754 (Marsden) authorizes utilities to establish on-bill financing of energy efficiency, electrification, renewable energy, EV charging, energy storage and backup generators. (Passed Senate 40-0 with a substitute.)

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. (Passed the House 95-4.)

HB1707 (Aird) makes changes to the Clean Energy Advisory Board, which is (already) authorized to administer public grant funding. (Passed the House 65-33 with a substitute. Referred to Senate Ag.)

SB634 (Surovell) establishes the Energy Efficiency Subsidy Program to fund grants to subsidize residential “efficiency” measures, interestingly defined as solar PV, solar thermal or geothermal heat pumps. It also creates a subsidy program for electric vehicles. (Passed the Senate 32-7. Senator Surovell has requested a budget amendment of $1 million for the fund. )

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. (Passed the Senate 40-0.)

SB542 (Edwards) repeals the sunset date on crowdfunding provisions and provides fixes for certain existing obstacles to this financing approach. (Passed the Senate 40-0.)

Customer rights to shop for renewable energy

HB868 (Bourne) and SB376 (Suetterlein and Bell) allows customers to buy 100% renewable energy from any licensed supplier, regardless of whether their own utility has its own approved tariff. (HB868 passd the House 55-44. But note that its Senate companion SB376 was passed by indefinitely in C&L.)

HB 889 (Mullin) and SB 379 (McPike), the Clean Energy Choice Act, is broader than HB868. The legislation allows all customers to buy 100% renewable energy from any licensed supplier regardless of whether their utility has its own approved tariff. In addition, large customers (over 5 MW of demand) of IOUs also gain the ability to aggregate their demand from various sites in order to switch to a competitive supplier that offers a greater percentage of renewable energy than the utility is required to supply under any RPS, even if it is not 100% renewable. Large customers in IOU territory who buy from competing suppliers must give three years’ notice before returning to their utility, down from the current five years. The SCC is directed to update its consumer protection regulations. (HB889 passed the House 56-44. But its Senate companion SB379 passed by indefinitely in C&L.)

Other utility regulation

HB528 (Subramanyam) requires the SCC to decide when utilities should retire fossil fuel generation. (Passed the House 55-44.)

HB1132 (Jones, Ware) put the SCC back in control of regulating utility rates. (Passed the House 77-23.)

SB731 (McClellan) also affects rates, in this case by addressing 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. (Passed the Senate 38-1.)

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.) Last year Ware carried a similar bill that passed the House in the face of frantic opposition from Dominion Energy, before being killed in Senate Commerce and Labor. (Passed the House unanimously with a substitute. It will now go to Senate C&L, where it may still have trouble from a Dominion-friendly committee.)

DEAD FOR THE YEAR

Green New Deal HB77 (Rasoul) sets out an ambitious energy transition plan and includes a fossil fuel moratorium. (Sent from Labor and Commerce to Appropriations, where it was not brought up. This is a polite way of killing a bill without anyone having to vote on it).

Undercutting RGGI HB110 (Ware) says that if Virginia joins RGGI, DEQ must give free carbon allowances to any facility with a long-term contract predating May 17, 2017 that doesn’t allow recovery of compliance costs. Rumor has it the bill was written to benefit one particular company. (Left in Labor and Commerce.)

Clean energy standard Instead of an RPS, SB876 (Marsden) proposed a “clean energy standard” that made room for some coal and gas with carbon capture. (Recognizing a number of problems with this approach, Senator Marsden rolled his bill into SB851; that’s GA-speak for killing a bill while still giving the patron points for trying).

Greenhouse gas inventory HB525 (Subrmanyam and Reid) require a statewide greenhouse gas inventory covering all sectors of the economy. (Laid on the table in a subcommittee, which also means it was killed.)

Brownfields HB1306 (Kory) directs the Department of Mines, Minerals and Energy to adopt regulations allowing appropriate brownfields and lands reclaimed after mining to be developed as sites for renewable energy storage projects. (Stricken from docket in House Ag.) HB1133 (Jones) makes it in the public interest for utilities to build or purchase, or buy the output of, wind or solar facilities located on previously developed sites. (Continued to 2021, yet another polite way of killing a bill, though it leaves them not technically dead. So should we call them the undead? Let’s hope the concept is resurrected next year, anyway.)

Local action HB413 (Delaney) authorizes a locality to include in its subdivision ordinance rules establishing minimum standards of energy efficiency and “maintaining access” to renewable energy. (Left in Cities, Counties and Towns.)

Retail choice SB842 (Petersen) provides for all retail customers of electricity to be able to choose their supplier, and instructs the SCC to promulgate regulations for a transition to a competitive market for electricity. Existing utilities will continue to provide the distribution service. The bill also requires suppliers of electricity to obtain at least 25% of sales from renewable energy by 2025, 50% by 2030, and 100% by 2050. Renewable energy is defined to include “sustainable biomass” but not waste incineration or landfill gas. (Continued to 2021.)

Resilience hubs HB959 (Bourne) directs DMME to establish a pilot program for resilience hubs. These are defined as a simple combination of solar panels and battery storage capable of powering a publicly-accessible building in emergency situations or severe weather events, primarily to serve vulnerable communities. (Continued to 2021.)

Net metering HB1067 (Kory) deals with a specific situation where a customer has solar on one side of property divided by a public right-of-way, with the electric meter to be served by the solar array on the other side. The legislation declares the solar array to be located on the customer’s premises. (Item 4 of Solar Freedom would also solve the problem.) (Continued to 2021.)

Utility restructuring

HB1677 (Keam) replaces Virginia’s current vertically-integrated monopoly structure with one based on competition and consumer choice. Existing monopoly utilities would be required to choose between becoming sellers of energy in competition with other retail sellers, or divesting themselves of their generation portfolios and retaining ownership and operation of just the distribution system. Other features: a nonprofit independent entity to coordinate operation of the distribution system; performance-based regulation to reward distribution companies for reliable service; consumer choices of suppliers, including renewable energy suppliers; an energy efficiency standard; a low-income bill assistance program; and consumer protections and education on energy choices. (This was politely continued to 2021 in Labor and Commerce with no debate. The patrons were complimented for “starting a conversation.”)

HB206 (Ware) was, I’m told, the beta version of Delegate Keam’s HB1677. (Incorporated into HB1677, which was continued to 2021.)

SB842 (Petersen) seeks to achieve the same end as HB1677 and HB206, but it puts the SCC in charge of writing the plan. The bill provides for all retail customers of electricity to be able to choose their supplier, and instructs the SCC to promulgate regulations for a transition to a competitive market for electricity. Existing utilities will continue to provide the distribution service. The bill also requires suppliers of electricity to obtain at least 25% of sales from renewable energy by 2025, 50% by 2030, and 100% by 2050. Renewable energy is defined to include “sustainable biomass” but not waste incineration or landfill gas. (Continued to 2021.)

Anti-renewable energy bills

HB205 (Campbell) adds unnecessary burdens to the siting of wind farms and eliminates the ability of wind and solar developers to use the DEQ permit-by-rule process for projects above 100 megawatts. (Laid on the table in subcommittee.)  HB1171 (Poindexter) is a make-work bill requiring an annual report of the acreage of utility scale solar development, as well as the acreage of public or private conservation easements. (Continued to 2021.) HB1636 (Campbell) prohibits the construction of any building or “structure” taller than 50 feet on a “vulnerable mountain ridge.” You can tell the bill is aimed at wind turbines because it exempts radio, TV, and telephone towers and equipment for transmission of communications and electricity. (Laid on the table in subcommittee. FWIW, we’re told it was aimed at hotels, not wind. Yeah, sure . . .) HB1628 (Poindexter) prohibits the state from joining RGGI or adopting any carbon dioxide cap-and-trade program without approval from the General Assembly. (Passed by indefinitely in subcommittee. Yep, another way to kill a bill.)

Financing

HB461 (Sullivan) establishes a tax credit of 35%, up to $15,000, for purchases of renewable energy property. It is available only to the end-user (e.g., a resident or business who installs solar or a geothermal heat pump). Unfortunately, loose drafting would have also made the credit available for wood-burning stoves and other non-clean energy applications. (Died in a Finance subcommittee on a 5-5 vote.)

HB633 (Willett) establishes a tax deduction up to $10,000 for the purchase of solar panels or Energy Star products. (Stricken from docket in a Finance subcommittee.)

HB947 (Webert) expands the authority of localities to grant tax incentives to businesses located in green development zones that invest in “green technologies,” even if they are not themselves “green development businesses.” Green technologies are defined as “any materials, components, equipment, or practices that are used by a business to reduce negative impacts on the environment, including enhancing the energy efficiency of a building, using harvested rainwater or recycled water, or installing solar energy systems.” (Continued to 2021.)

SB1061 (Petersen) allows residential customers to qualify for local government Property Assessed Clean Energy (PACE) financing programs for renewable energy and energy efficiency improvements; currently the availability of this financing tool is restricted to commercial customers. (Continued to 2021.)

HB754 (Kilgore) establishes the Virginia Brownfield and Coal Mine Renewable Energy Grant Fund, which will support wind, solar or geothermal projects sited on formerly mined lands or brownfields. (Left in Appropriations.)

[Updated February 12 to include late votes and fix a random meaningless line, and later to correct various other screw-ups that people have kindly brought to my attention.]

The strange case of thermal RECs

Renewable energy advocates are hoping that 2020 will be the year Virginia finally begins to make wind and solar the centerpiece of its energy planning, rather than a grudging add-on. The General Assembly will consider at least two bills that adopt a mandatory renewable portfolio standard as well as legislation to lower carbon emissions and open the private market to greater investments in renewables.

But good intentions don’t always produce effective legislation. Sloppy drafting causes unanticipated consequences. Minor amendments offered by an opponent produce major consequences only the opponent anticipated.

For a case in point, let’s consider Virginia’s existing, voluntary RPS. Worse than useless, it has enabled all kinds of mischief by defining “renewable energy” to include things that do not contribute carbon-free renewable power to the grid

As currently written, our renewable portfolio standard never has been, and never will be, responsible for a single electron of wind or solar energy. That means that any bill that takes as its starting point the definition that currently exists in the Virginia Code, or even uses the term “renewable energy” without narrowly defining it, risks failing right out of the gate.

Part of the problem is biomass. But a much greater problem is one that has been largely overlooked, mainly because no one understands it. It’s called “thermal” energy, and it is a major piece of mischief all by itself.

Added to the statute in 2015, thermal renewable energy certificates quickly became the primary means for Dominion Energy Virginia to meet its RPS targets, after counting the energy from the utility’s own hydro and biomass facilities and those from which it buys power under contract.

The thing is, no one seems to know where thermal RECs come from. The code offers three possibilities. One is “the proportion of the thermal . . . energy from a facility that results from the co-firing of biomass.” Another is “the thermal energy output from (i) a renewable-fueled combined heat and power generation facility that is (a) constructed, or renovated and improved, after January 1, 2012, (b) located in the Commonwealth, and (c) utilized in industrial processes other than the combined heat and power generation facility.” Finally, there is a tiny (and mainly unused) category for solar hot water systems and swimming pool heating.

The second definition, added to the code in 2015, is so specific that it was clearly written with a particular industrial facility or facilities in mind. From that definition, we can determine that thermal RECs don’t represent renewable electricity added to the grid.

What no one but Dominion seems to have known was that thermal RECs would instantly become the leading category for RECs, and one that would eliminate any chance for wind or solar to ever compete for RPS dollars in Virginia.

The Virginia statute is an oddity. “Thermal” is not a recognized category in the regional registry for purchase and sale of RECs among utilities and voluntary buyers (known as PJM GATS). I also haven’t found another state RPS program that includes thermal in its definition of renewable energy, aside from solar thermal.

A year ago I asked Dominion what kind of industry supplies thermal RECs; I was promised an answer, but none came. So a week ago I asked the staff of the State Corporation Commission. They don’t know either.

Every year in November, Dominion submits a report to the SCC about its renewable energy activities, including information the law requires about a utility’s RPS program. The reports are available on the SCC website.

None of the reports include any discussion of thermal RECs, including the report submitted covering 2015, the first year these RECs were allowed. The reports don’t indicate where thermal RECs come from, what kind of industrial process produces them, or whether there might be a lot more available that could supply Dominion in the future as RPS goals increase.

However, by law Dominion has to provide other information that, read together, allows us to deduce a few bits of information about thermal RECs, and about their role in the RPS:

  • They are generated by one or more Virginia facilities.
  • The facility or facilities were placed in service this decade, confirming that we are talking about that second meaning of thermal.
  • The facilities are not owned by Dominion.

All or almost all the RECs Dominion purchases are thermal RECs. Thermal RECs make up all or nearly all the energy and RECs Dominion has banked to use in future years. (Virginia law allows a utility to hang on to a REC for up to five years after it was generated.) If these were wind and solar RECs instead of thermal RECs, the value of the banked RECs would exceed $40 million, even at the low REC prices currently prevailing in the PJM marketplace.

I compiled the information from these reports into the table below. The 2019 filing, containing information for 2018, also gives us a view into the current year. It states: “The company began 2019 with banked renewable energy and RECs of 4,252,354 MWh and expects to have a bank of approximately 4,113,477 MWh of renewable energy and RECs toward future RPS targets at year-end 2019.”

Source: Virginia State Corporation Commission. (Ivy Main)

As you can see, Dominion has enough RECs banked that, when added to generation from Dominion’s own or contracted renewable energy facilities, Dominion has no need to purchase any RECs from any source until 2022 (when it still won’t need much).

Dominion doesn’t report what it paid for thermal RECs, but they are undoubtedly cheaper than any other qualifying source. One reason: with no competitive market for thermal RECs, Dominion is almost certainly the only buyer. In antitrust parlance, the term for this is “monopsony,” a word I hope you will now want to work into your dinner table conversation.

Monopsony power includes the power to set the price of a product, because the seller has no one else to sell to. In the case of thermal RECs, we don’t know who the seller is, but clearly its primary business is not the production of thermal RECs for sale. In fact, the money it gets for these RECs likely represents a windfall, and it is happy to get anything that covers its administrative cost in documenting its use of thermal energy.

On the other hand, Dominion doesn’t have to be overly stingy, since Virginia law allows the utility to pass on to ratepayers the cost of purchasing RECs for the RPS. One can imagine Dominion CEO Thomas Farrell having a nice dinner with the CEO of the corporation owning the industrial facility that uses the thermal energy, and together deciding what Virginia consumers will pay for these RECs. As long as it is less than the cost of other RECs available to Dominion, who will complain?

Whatever the price is, a monopsony price of thermal RECs will be less than the price of wind and solar RECs in Virginia, because wind and solar have a competitive market and buyers who are willing to pay more.

For years, critics have complained that the voluntary RPS is a failure for every purpose except greenwashing. But with no appetite for reform in the General Assembly, it’s been easy to ignore how the definition of renewable energy was expanding like a slime mold escaping its petri dish.

This year, though, the reformers are on the move. One or more bills requiring utility investments in renewable energy seem likely to gain traction. Advocates will be keeping their fingers crossed—and reading the definitions.

 

This article was originally published in the Virginia Mercury on January 7, 2020.

[Update: Several astute readers pointed me to information indicating that the source of the thermal RECs is WestRock, a Georgia-based multinational paper company that burns wood and black liquor (a toxic byproduct of the pulping process) as a power source. WestRock is the single biggest emitter of air toxics in Virginia, with its facility in Covington topping the ranks as the Commonwealth’s number one air polluter, ahead of even Dominion’s biggest and dirtiest coal plant. So when you are sorting through junk mail or have a cardboard box delivered, take time to savor the moment. Maybe you didn’t actually help make that paper, but you probably contributed your small mite to WestRock CEO Steven Voorhees’ $18 million compensation package.]

Green Power for Suckers program wins regulatory approval

Trees clearcut.

Don’t think of biomass as destroying forests, think of it as a way to feel good about subsidizing pollution. Photo by Calibas, Creative Commons.

Virginia’s State Corporation Commission (SCC) has approved Dominion Energy Virginia’s request to offer a new product to electric utility customers who want to buy renewable energy at a discount but lack the knowledge to understand when they are being taken for chumps.

“Rider REC” is an ultra-cheap version of the company’s Green Power Program (itself of questionable value). For less than a buck a month on their electric bills, customers will be able to buy renewable energy certificates that cost Dominion next to nothing because no one else wants them. And for good reason: these are the dregs of the renewable energy category.

You won’t find any wind or solar in Rider REC, but you might find paper mill waste, trees burned after clear-cutting, or century-old hydro dams—all officially “renewable” under the generous provisions of Virginia law. Dominion will scrounge up these old and dirty leftovers, package them up, and put a green bow on them.

“Caveat emptor,” says the SCC with a shrug. The SCC seems to think anyone dumb enough to pay extra voluntarily deserves whatever they get.

This is not the first time the SCC has shown disregard for eco-conscious consumers. Four years ago it gave Dominion the nod for a program the company was calling “community solar,” which wasn’t actually selling any solar and had nothing to do with communities. Dominion never did roll out that program, perhaps because there was no way to market it without courting accusations of consumer fraud. But it had the SCC’s blessing for it!

(In case you are confused: this was before the company’s most recent iteration of community solar, also approved, also not actually community solar, and which we are still waiting for. Dominion executives could probably do with a thesaurus.)

In response to concerns that customers wouldn’t know what they are getting, the SCC order did impose one labeling requirement. Dominion’s marketing materials must “clearly identify the source of the RECs available for purchase under Rider REC (i.e., the less expensive of PJM Tier II RECs or national Green-e eligible RECs).”

Perhaps Dominion will even tell buyers what those things mean, though the SCC doesn’t seem to be saying it has to. In the interests of clarity, Dominion could explain that “PJM Tier II RECs” translates to “some stuff we found behind the refrigerator and think might still be edible.” But it probably won’t.

That’s because, just as with the old community solar thing, the problem is that if buyers understand what’s in it, they won’t be buyers.

 

This article was originally published in the Virginia Mercury on November 8, 2019. 

First solar crowdfunding campaign launches in Virginia

workers complete a rooftop solar array on a warehouse

A Secure Futures project on an InterChange warehouse. Photo courtesy of Secure Futures.

Unless you have a sunny roof or back yard, you probably haven’t found a way to put your money into building local solar facilities. This month, that changed.

Secure Futures, LLC has created a crowdfunding platform to sell solar bonds in support of five projects across Virginia, all for tax-exempt institutions. The financial details, including interest rates and terms, can be found on the crowdfunding website.

The five projects, totaling 1.3 megawatts of solar capacity, involve these customers:

  • The Caritas Center in Richmond, a non-profit that works to break the cycles of homelessness and addiction in the Metro Richmond area, will have a 426.6 kW system to serve a building under construction
  • Eastern Mennonite School, a private K-12 school in Harrisonburg; the 131 kW solar facility will meet 33% of the school’s total electric demand
  • Insurance Institute for Highway Safety, a nonprofit scientific and educational organization with a research center in Ruckersville, where the 200 kW facility will go
  • Shenandoah University, a private university in Winchester; the 467 kW project will provide 10% of the university’s electricity
  • Temple Rodef Shalom, the largest Jewish congregation in the Commonwealth, located in Falls Church; the 115 kW facility will provide 29% of the temple’s electricity

All of the projects will be installed using power purchase agreements or solar services agreements, and all are scheduled for completion in 2019 and 2020.

Although selling bonds to finance solar projects doesn’t sound revolutionary, I’ve found few precedents for the general public to buy into specific projects. Solar City sold corporate bonds directly to the public until the company was bought by Tesla; the bonds financed Solar City’s nationwide portfolio of projects. (Disclosure—I own stock in several renewable energy companies including Tesla, not always to my profit.)

Several years ago another company, Solar Mosaic, raised money from individual investors who could choose to link their investments to specific projects, but the company has since closed the investment side of its business. Other companies have offered investment opportunities only to accredited investors—i.e, people with high incomes or net worth.

Opportunities for regular folks to invest have been slow to emerge since Congress changed the law to allow people to invest through internet crowdfunding back in 2012. But it took the Securities and Exchange Commission until 2016 to implement rules, so it’s early yet. If Secure Futures finds success raising funds for these Virginia projects, perhaps solar bonds will turn out to be the next new thing in project financing.

Dominion Energy’s new choices are really about limiting choices

Trees clearcut.

Dominion’s renewable energy products contain copious amounts of biomass, also known as burning trees. Photo by Calibas, Creative Commons.

An annual survey conducted by Yale and George Mason universities shows concern about climate change is surging. Seventy-three percent of Americans think climate change is happening, and 69% are at least somewhat worried about it, the highest percentages since the surveys began in 2011.

Another Yale survey found that “a large majority of registered voters (85%) – including 95% of Democrats and 71% of Republicans – support requiring utilities in their state to produce 100% of their electricity from clean, renewable sources by 2050. Nearly two in three conservative Republicans (64%) support this policy.”

Yet here in Virginia, Dominion Energy expects to reduce carbon emissions less in the future than in the past, and it has no plan to produce 100% of its electricity from clean, renewable sources by 2050. For all the talk here of solar, Virginia still had one-seventh the amount of solar installed as North Carolina at the end of 2018 and no wind energy.

Dominion has developed a few solar projects and new tariffs to serve tech companies and other large customers, but ordinary residents still lack meaningful choices. So this spring, Dominion decided to do something about that.

The wrong thing, of course.

Dominion has asked the State Corporation Commission for permission to market two quasi-environmentally-responsible products. One is for people who are willing to pay a premium for renewable energy, and don’t read labels, and the other is for people who want a bargain on renewable energy, and don’t read labels.

There may be plenty of both kinds of customers out there, but that doesn’t mean the SCC should approve either product. Indeed, while the purpose of the bargain product is to offer a choice nobody wants, the purpose of the premium product is to close off better choices.

Let’s look first at the product for bargain-hunters, a super-cheap version of the utility’s Green Power Program. Dominion is calling it “Rider REC.” A better name for it would be the “You Call This Green? Power Program.”

Rider REC consists of the dregs of the renewable energy category, the stuff that isn’t good enough for the Green Power Program. That’s a low bar already, because the Green Power Program doesn’t sell green power. It sells renewable energy certificates (RECs), the “renewable attributes” of electrons from facilities labeled renewable.

Customers who pay extra for RECs still use whatever mix of energy their utility provides. For Dominion customers, that’s fracked gas, nuclear and coal, plus a tiny percentage of oil, biomass, hydro and solar.

Buying RECs lets good-hearted people feel better about using dirty power by donating money to owners of renewable energy facilities somewhere else. The facilities might be in Virginia, or they might be clear across the country.

For example, say a utility out west builds a wind farm because wind is the cheapest way to generate power. If the state doesn’t have a renewable portfolio standard that requires the utility to use the RECs for compliance (most windy states don’t), the RECs can be sold to buyers in liberal East Coast states, lowering energy prices for the utility’s own customers.

RECs don’t even have to represent clean sources like wind. Some RECs subsidize industries that burn trees (aka biomass), black liquor (a particularly dirty waste product of paper mills) and trash.

Dominion’s Green Power Program uses RECs that meet the standards of a national certification program called Green-e. Green-e requires that facilities be no more than 15 years old and meet minimum environmental standards, such as requirements that woody biomass be sustainably grown and that generators don’t violate state and federal pollution limits.

But Virginia’s definition of renewable energy is, shall we say, more forgiving than Green-e’s. Our law does not discriminate against decades-old facilities like hydroelectric dams, or energy from trees that have been clear-cut. (Nor does it recognize that burning trees produces even more lung-damaging, asthma-inducing pollution than coal, and more climate-warming CO2 as well.) Virginia’s definition of renewable energy even includes a vague category of “thermal” energy that may be another way paper mills profit from the REC racket.

This loose definition of “renewable” creates a business opportunity for anyone unscrupulous enough to seize it. Dominion proposes to package up these otherwise unmarketable RECs from sketchy sources across the continental United States and pawn them off on unsuspecting consumers here in Virginia.

There is always money to be made by suckering well-meaning folks, but that’s not a good enough reason for the SCC to let Dominion do it. The case is PUR-2019-00081. Public comments are due by Aug. 15.

So what about the more expensive quasi-environmentally responsible product? “Rider TRG” consists of real, straight-from-the-facility electricity on the power grid serving Virginia, not RECs from out west. And while it is not dirt-cheap like Rider REC, Rider TRG would cost residential customers a premium of only about $50 per year.

Unfortunately, Virginia’s kitchen-sink definition of renewable energy means the sources still don’t have to be new or carbon-free or sustainable. It appears most of them won’t be.

Dominion’s filing indicates the program will use the energy from the Gaston hydroelectric dam built in 1963; the Roanoke Rapids hydro station built in 1955; the Altavista, Southampton and Hopewell power stations that were converted from coal to wood-burning in 2013; and several solar farms the company has already built or contracted for.

In addition, Dominion proposes to allocate to the program the portion of electricity from its Virginia City coal plant representing the percentage of wood that is burned along with the coal.

That’s right, Dominion intends for renewable energy buyers to subsidize its coal plant. The idea is cynical enough to have come from the Trump administration.

Dominion knows full well that customers who want renewable energy want new wind and solar, so why is its first product for residential customers so loaded with dirty biomass and old hydro?

The answer is that Dominion doesn’t care if no one signs up for Rider TRG. The point isn’t to give customers what they want, it’s to prevent them from shopping elsewhere for better options. Like Appalachian Power before it, Dominion wants to close off the narrow opening provided by Virginia law that allows customers to shop for 100% renewable energy from other providers only if their own utility doesn’t offer it. The SCC approved APCo’s renewable energy tariff some months ago. Dominion is following APCo’s successful strategy.

Yet APCo’s product consists of hydro, wind and solar, so it is nefarious, but not actually bad. Dominion’s is nefarious and bad.

An SCC decision in 2017 confirmed customers’ right to shop for renewable energy as long as the incumbent utility doesn’t offer it. Currently at least two other providers, Direct Energy and Calpine Energy Solutions, offer renewable energy to commercial customers in Dominion territory. Yet according to documents provided by Direct Energy, Dominion is refusing to let its customers transfer to Direct Energy and Calpine, triggering competing petitions to the SCC.

Dominion no doubt hopes to resolve the dispute permanently by terminating its customers’ right to switch providers at all.

The case is PUR-2019-00094. Comments may be submitted until Nov. 14, and a public hearing will be held on Nov. 21.

 

This article first appeared in the Virginia Mercury on July 22, 2019.

 

UPDATE November 5: The SCC approved Dominion’s Rider REC, the Green Power For Suckers program, on October 31, disregarding the recommendation of SCC staff to deny it. It hasn’t yet ruled on Rider TRG. However, the SCC staff has pointed out that if Dominion left the controversial biomass elements out of the program, it would cost less than half as much.

Dominion’s plans to tackle global warming are mostly hot air

Graph compares CO2 reductions by Dominion Energy and Xcel

Dominion (blue line) starts out with lower total CO2 emissions than the larger Xcel (red line), but after switching out old coal for new fracked gas, Dominion’s carbon-cutting slows to a crawl, while Xcel’s keeps going.

My readers will be shocked, shocked to learn that contrary to Dominion Energy’s propaganda, the company plans to cut carbon emissions by only about 1% per year between now and 2030, a slower pace than it has achieved in the past.

According to an analysis of Dominion’s own data by the Energy and Policy Institute, “the company reduced its carbon emissions at an average rate of 4% per year from 2005 to 2017, mostly by retiring coal plants in the later years of that period. That reduction rate plummets to 1% per year between now and 2030 under Dominion’s new goal.”

“The company’s reduction pace would increase again between 2030 and 2050 in order to meet its later goal [of 80% carbon reduction from 2005 to 2050], though only to about 2.8%, still lower than its pace from 2005 to 2017.”

Fracked gas investments are both the reason Dominion has brought carbon emissions down as much as it has, and the reason it can’t keep up the pace. Closing expensive, old coal plants is an easy way to cut carbon and save money at the same time. Replace the output of a coal plant with the same output from a gas plant, and you’ve slashed carbon emissions almost in half overnight.

But it’s not such a great trick if it requires you to build a new gas plant with a useful life of 30 years. That makes it much harder to decarbonize further by replacing gas with carbon-free renewables.

This is exactly Dominion Energy Virginia’s problem. A comparison of the utility’s 2013 and 2018 integrated resource plans shows coal fell from 22% of the total energy mix to 18%, while natural gas jumped from 17% to 32%, displacing purchased energy as well as coal.

The company achieved this feat with three new, huge combined-cycle gas plants it brought online just in the past five years: Warren (1,370 MW) in 2014, Brunswick (1,358 MW) in 2016, and Greensville (1,588 MW) in 2018. Together these plants increased Dominion’s natural gas generating capacity by more than 50%.

Not only did Dominion stick utility ratepayers with these big new gas plants, its parent company promised investors the utility will burn enough gas to justify spending $7 billion-plus on the Atlantic Coast Pipeline. Decarbonizing violates the business plan.

Dominion is in good company — by which I mean bad company — in making bold claims about carbon cuts that prove inadequate on closer inspection. According to the Energy and Policy Institute, the other southeastern monopoly utilities, Duke, Southern, and NextEra, are all using the same playbook.

Other utilities have avoided the gas trap. National leaders like Minneapolis-based Xcel, Consumers Energy in Michigan, and NIPSCO in Indiana are replacing coal with renewables and leapfrogging over new gas. That puts them in a position to deliver on their promises of rapid emissions cuts.

The Energy and Policy Institute analysis pointedly contrasts Xcel with Dominion:

Xcel Energy is one of the country’s largest electric utilities, with operations in eight states, primarily Colorado and Minnesota. Xcel pledged in December 2018 to reduce its carbon emissions 80 percent by 2030 from 2005 levels, and to fully decarbonize by 2050. Xcel’s new goal is an upgrade of a previous one to cut carbon emissions 60 percent by 2030. It says it plans to lean heavily on renewable energy and batteries will save its customers money. In a detailed report released in March, Xcel says its goals fall within the range compatible with Intergovernmental Panel on Climate Change scenarios that achieve either a 2°C or 1.5°C target.

Graphing Xcel’s trajectory vs. Dominion’s is telling: the companies’ decarbonization pathways tracked one another closely from 2005 until 2017. At that point, Xcel’s trajectory starts turning sharply downward, while Dominion’s flattens out.

Another contrast you’ll notice between Xcel and Dominion: Dominion has no plans to get to zero emissions, ever. It’s hard not to conclude that the company’s leaders are simply putting the best climate face on a gas strategy that hasn’t changed.

Eventually, though, the falling costs of wind and solar and the public’s demand for climate action will force Dominion to follow Xcel and others into deep decarbonization.

It may not be the business plan, but it is the future.

This post was originally published in the Virginia Mercury on July 15, 2019. 

 

So many bills filed, so few remain: almost-halftime status report on climate and energy legislation

Virginia statehouse, where the General Assembly meetsTuesday, January 5 marks “crossover” at the Virginia General Assembly, the date when House bills go over to the Senate, and Senate bills to the House. Any legislation that hasn’t made it through the gantlet to a successful vote in its starting chamber evaporates in a puff of smoke, if it has not already died due to causes natural or unnatural.

I’ve hot-linked the bill numbers to their pages in the Legislative Information Service; follow the links on the page to read the legislation or see vote results. The information below is based on what was available as of yesterday, February 3.

Many of the committee hearings were recorded on video.

Renewable energy bills

Solar Freedom, the bill to remove barriers to customer-owned solar statewide, met implacable resistance from Republicans in control of the Commerce and Labor committees, as did narrower bills focused just on power purchase agreements (PPAs). That meant the only significant renewable energy legislation moving forward is a bill negotiated between the rural electric cooperatives and solar advocates that will ease restrictions on customer solar in coop territory. See HB 2547 (Hugo) and SB 1769 (Sturtevant), below.

Two bills that would have provided financial support for solar have passed their committees, but only after the money part got taken out.

A watered-down municipal renewable energy bill survives, but in a disappointingly limited form. An interesting solar-on-schools bill now looks less interesting.

Legislation enabling localities to impose new decommissioning requirements on large solar farms will likely move forward.

Here is the status of the renewable energy bills I’ve been tracking, with a little color commentary sprinkled in:

 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.  Advocates gave this everything they had, with hundreds of citizens lobbying for the bill and showing up at the subcommittee hearings.But Republicans held firm for their utility friends. HB 2329 was defeated in Commerce and Labor 8-7 on a party-line vote with two Democrats absent and one (Lindsay) present but strangely not voting. The Senate companion was killed in Commerce and Labor on a 10-3 party-line vote. Some of the reforms in Solar Freedom also appear in weakened form in one bill (HB 2547 and SB 1769) that moves forward—but only for the electric cooperatives.   

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 in Commerce 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 1869 defeated 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 2117 defeated in Commerce 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.

STILL ALIVE: 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 remain stuck in the Committee on General Laws (not a good sign). 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 unanimously. 

STILL ALIVE:  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 contemplate the more common use of third-party power purchase agreements. HB 2192 was amended in General Laws, where it passed unanimously. It still 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. New language requires that renewable energy facilities must be on school property and cannot be used to serve any other property. PPAs are still not mentioned. Ambiguous language in these provisions may cause problems for schools. SB 1331 was amended with what appears to be the same language as its House counterpart. It reported unanimously from Finance.

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 in Commerce and Labor subcommittee 3 with only Democrat Mark Keam supporting it.

STILL ALIVE:  HB 2547 (Hugo) and SB 1769 (Sturtevant) makes 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, 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.” You have to hand it to the coops, this is huge movement on their part, if not perfect, and it is too bad that Dominion and APCo held fast to their obstructionist position rather than allow their customers more freedom to install solar. 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. Delegate Hugo told me he tried to get Dominion and APCo to sign on to the coop deal but couldn’t persuade them—and I understand from others that he did make a real effort. But he scoffed at my suggestion that maybe Dominion shouldn’t have the final say. HB 2547 reported unanimously from Commerce and Labor. SB 1769 was amended to include the same stakeholder language requiring the mice to continue negotiations with the cat. It has now passed the Senate unanimously.

STILL ALIVE: 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 is a Rubin Group bill. An amended version of HB 2621 reported from Counties, Cities and Towns unanimously. SB 1398 was incorporated into SB 1091.

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.

STILL ALIVE: 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; otherwise it was going to be sent to Appropriations to die. As amended it was reported Commerce and Labor unanimously.

STILL ALIVE: HB 2789 (O’Quinn) requires Dominion and APCo to apply for approval of three-year programs to incentivize low-income energy efficiency and solar totaling $25 million each. The efficiency spending comes out of the money utilities are required to spend under last year’s grid mod legislation. The solar spending is new money. Somehow I missed this bill in my earlier round-up. It passed the House 88-11. The nay votes are  all Republicans: Adams, L.R., Byron, Cole, Fariss, Freitas, Gilbert, Landes, Poindexter, Wright, Brewer and LaRock.

STILL ALIVE: HB 2792 (Tran) and SB 1779 (Ebbin) establishes 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 predictably much more limited than most localities wanted; further amendments have left it useful for only a few small on-site projects that don’t need PPAs. Fairfax County supervisor Jeff McKay testified in committee it would do nothing to help the county’s projects.Tran presented the amended bill in committee just a day or two after coming under fire from conservative Republicans for a bill that would ease one restriction on late-term abortions. In an obviously orchestrated attempt to demonstrate that conservative middle-aged white men still wield the power in Richmond, Delegate Hugo said he needed time to read the amendment. Committee chairman Terry Kilgore obliged, saying they would come back to it. Kilgore then kept Tran waiting through several hours of other bills, many of which also had new amendments, before letting her bill come back up. (Proving once again that middle school has nothing on the General Assembly.) As amended, HB 2792 reported from Commerce and Labor 19-2, with only Republicans Hugo and Head voting no.

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.

STILL ALIVE: SB 1091 (Reeves) imposes expensive bonding requirements on utility-scale solar farms, taking a more drastic approach than HB 2621 (Ingram) and SB 1398 (Stanley) to resolving the concerns of localities about what happens to solar farms at the end of their useful life. SB 1091 was amended to conform to the compromise language of HB 2621 and has passed the Senate unanimously.

Energy Efficiency (some of which have RE components)

We’re seeing modest progress in efficiency bills this year, mostly of the greasing-the-wheels variety. One of particular interest is Chap Petersen’s bill enabling Property Assessed Clean Energy (PACE) financing programs for residential buildings.

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.

STILL ALIVE: 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. HB 2292 reported from Commerce and Labor with a substitute. SB 1662 passed the Senate with only 6 Republicans in opposition.

STILL ALIVE: HB 2293 (Sullivan) establishes a stakeholder process to provide input on the development of utility energy efficiency programs. Reported unanimously from Commerce and Labor with a substitute.

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.

STILL ALIVE: 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. Reported unanimously from Commerce and Labor with a substitute.

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.

STILL ALIVE: SB 1400 (Petersen) removes 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. Passed the Senate unanimously.

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.

Energy transition and climate

Bills designed to push Virginia towards a clean energy future died in the face of unanimous Republican opposition. House Republicans also united to pass a bill prohibiting Virginia from implementing its carbon reduction plan. But in a faint nod to reality, most Republicans and Democrats support legislation to help southwest Virginia develop renewable energy and energy storage (as long as it doesn’t cost anything).

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 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 in Commerce 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.

STILL ALIVE: 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 party-line vote.

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.

STILL ALIVE: HB 2747 (Kilgore) and SB 1707 (Chafin) create a Southwest Virginia Energy Research and Development Authority which will, among other things, promote renewable energy on brownfield sites, including abandoned mine sites, and support energy storage, including pumped storage hydro. HB 2747 reported unanimously from Commerce and Labor and was referred to Appropriations, where it passed with a substitute (presumably removing its fiscal impact, though I haven’t looked closely enough to confirm that). SB 1707 reported from Local Government and then from Finance, also with a substitute, presumably the same one.

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, but there is no further information about it in the LIS.

Other utility regulation

 Bills that preserve, protect, and extend the monopoly power of our utilities are doing well. On the other hand, Dominion has so far failed to kill a bill strengthening the standards of review the SCC will use in considering whether to allow rate recovery for pipeline capacity. 

STILL ALIVE: 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. The discussion in the committee was lively. Delegate Ware assured the committee 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 committee 11-8, with Democrats Keam, Kory, Bagby, Toscano, Heretick, Mullin and Bourne joining Republicans Ware, Byron, Webert and Wilt in support.  Republicans voting against were Kilgore, Hugo, Marshall, Robert Bell, O’Quinn, Yancey, Ransone, and Head. Democrat Eileen Filler-Corn abstained. [UPDATE 2/5/19: HB 1718 passed the House on a bipartisan vote of 57-40, with Filler-Corn abstaining again. Here is the tally of who voted on which side.]

STILL ALIVE: 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. Reported from Commerce and Labor with a substitute. Democrats Bagby, Heretick, Mullin and Bourne joined the Republicans in support.

STILL ALIVE: HB 2477 (Kilgore) would eliminate 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 in Commerce and Labor removes this language but replaces it with other requirements designed to make it difficult for large customers to leave the embrace of their incumbent monopoly. The substitute passed 15-2, with only Delegates Filler-Corn and Keam opposed.

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.

STILL ALIVE: HB 2691 (O’Quinn) establishes 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, proclaiming this to be in the public interest. A substitute bill has utilities only providing the capacity on their lines to private broadband suppliers, and makes the investment eligible for recovery as an electric grid transformation project (seriously!), but prevents utilities from going into broadband services themselves. The amended bill passed Commerce and Labor unanimously.

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.

STILL ALIVE: HB 2738 (Bagby) and SB 1695 (Wagner) authorizes utilities to acquire rights of way on land that the Virginia Economic Development Partnership Authority decides could attract new customers to the site, and allows utilities to recover costs from existing customers. Because, you know, having utilities seize Virginians’ land for speculative development is already going so well for folks in the path of the pipelines. Who could complain about paying higher rates to help it happen more places?  A substitute tightens the requirements somewhat without changing the basics. HB 2738 reported from Commerce and Labor 19-1 (Kory opposing, Keam abstaining). SB 1695 now has a similar amendment; it passed the Senate 34-6 and has been referred to House Commerce and Labor. The dissenting senators are an interesting mix of Rs and Ds: Chase, McPike, Newman, Peake, Spruill, and Suetterlein.

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.

Your guide to 2019 climate and energy bills

Virginia statehouse, where the General Assembly meetsUpdated (again!) January 23.

Clean energy and climate action are mainstream concepts with the public these days, but at Virginia’s General Assembly they have yet to gain much traction. Last year saw one renewable energy bill after another die in committee, along with legislation mandating lower energy use through energy efficiency and climate measures like having Virginia join the Regional Greenhouse Gas Initiative (RGGI).

The only major energy legislation to pass the GA in 2018 was the infamous SB 966, the so-called “grid mod” bill that included spending on energy efficiency and a stipulation that 5,500 megawatts (MW) of utility-owned or controlled solar and wind is “in the public interest.” But the bill didn’t actually mandate any efficiency savings or renewable energy investments, and it contained no support for customer-owned solar.

So clean energy advocates and climate activists are trying again, though the odds against them look as tough as ever. Republicans hold a bare majority of seats overall, but they dominate the powerful Commerce and Labor Committees that hear most energy bills. And Republicans overall (though with some exceptions) are more hostile to clean energy legislation than Democrats, and more willing to side with utilities against customers and competitors.

In particular, the House energy subcommittee has been a regular killing field for renewable energy bills. It consists of 7 Republicans and 4 Democrats, and last year every clean energy bill but one lost on party-line votes. Bills don’t advance to the full committee, much less to the House floor, unless they garner a majority in the subcommittee.

Over at Senate Commerce and Labor, Republicans hold an 11-4 majority on the full committee, and none of the Democrats are what you would call environmental champions. The electric utility subcommittee does not appear to be active this year.

A scattering of other clean energy and climate bills have been assigned to House Rules (which Republicans dominate 11-6) and Appropriations (12-10), where a subcommittee will several energy-related bills with fiscal impacts (at least three have been assigned to date). Some Senate bills will go to Finance.

Of course, this is an election year in Virginia, with every House and Senate seat up this fall. Legislators have reason to worry that the 2017 “blue wave” could turn into a 2019 flood tide that sweeps out not just vulnerable Republicans, but Democrats facing primary challenges from the left.

Will that persuade some of them to finally support clean energy, or at least some of the pragmatic initiatives that have broad popular support?

That’s the hope driving a number of bills framed around supporting market competition and customer choice, enabling private investments in renewable energy, and saving money for consumers and taxpayers. These are themes that appeal as much to conservatives as to liberals.

But a lot of these bills have the same problem they’ve always had. Dominion Energy opposes them, and Dominion controls the legislature.

Both Dominion and elected leaders maintain the fiction that it’s the other way around. That fiction allowed Senator Wagner and Delegate Kilgore, the chairmen of the Commerce and Labor Committees, to “refer” solar bills for secret negotiation between utilities and the solar industry via the private, closed-door Rubin Group.

About that Rubin Group

Frankly, I’ve never understood the notion that the solar industry ought to be able to work things out with the utilities so legislators don’t have to make decisions themselves. Solar installers negotiating with Dominion is like mice negotiating with the cat. The cat is not actually interested in peaceful coexistence, so it’s hard to imagine an outcome that makes life better for the mice.

And however much they insist they support solar, Kilgore, Wagner and company act like they’re secretly pleased that Kitty is such a good mouser. I don’t know how else to explain the way they lecture the mice on the virtues of compromise.

The Rubin Group has managed to produce legislation where the interests of the utilities and the solar industry align, primarily in ways that help utility-scale solar farms. When it comes to net metering and customer solar generally, however, Dominion hasn’t been willing to give up anything unless it gets something in return—and as it already has everything but the crumbs, progress seems to have stalled. I hear negotiations remain ongoing, however, so this isn’t the last word.

On the other hand, the solar industry did reach an accommodation with the electric cooperatives this year over customer solar. As member-owned non-profits, the coops are sometimes more responsive to the desires of their customer-owners, and this seems to be evidence of that. (Though see this blogpost from Seth Heald about the failures of democracy and transparency at Virginia’s larges coop, an issue now in litigation before the SCC.)

With the solar industry stalled in its talks with Dominion and a sense of urgency mounting, customer groups and other solar industry alliances have stepped into the void. Several bills seek to preserve and expand the market for customer solar with bills removing policy barriers. The most comprehensive of these is the Solar Freedom legislation put forward by Delegate Keam (HB 2329) and Senators McClellan and Edwards (SB 1456), removing 8 non-technical barriers to renewable energy deployment buy customers. Other net metering bills have similar provisions that tackle just one barrier at a time.

Another group of bills don’t seem intended to win Republican support, much less Dominion’s. Bills that will dramatically alter our energy supply, put Virginia at the forefront of climate action and rein in utility power have no chance of passage this year, but may become part of a platform for strong climate action next year if a pro-environment majority wins control of the GA.

The list below may look overwhelming, so let me just note that this is not even comprehensive, and additional bills may yet be filed.

I’ve separated the bills into categories for easier reference, but watch for overlap among them. I’ve put Solar Freedom up first (because I can!); after that, bills are ordered by number, with House bills first.

Solar Freedom 

HB 2329 (Keam) and SB 1456 (McClellan and Edwards) is the Solar Freedom bill that removes barriers to renewable energy installations by utility customers, mostly in the net metering provisions, and adds language to the Commonwealth Energy Policy supporting customer solar. The 8 provisions are:

  • Lifting the 1% cap on the total amount of solar that can be net metered in a utility territory
  • Making third-party financing using power purchase agreements (PPAs) legal statewide for all customer classes
  • Allowing local government entities to install solar facilities of up to 5 MW on government-owned property and use the electricity for other government-owned buildings
  • Allowing all customers to attribute output from a single solar array to multiple meters on the same or adjacent property of the same customer
  • Allowing the owner of a multi-family residential building or condominium to install a solar facility on the building or surrounding property and sell the electricity to tenants
  • Removing the restriction on customers installing a net-metered solar facility larger than required to meet their previous 12 months’ demand
  • Raising the size cap for net metered non-residential solar facilities from 1 MW to 2 MW
  • Removing standby charges for residential and agricultural net metering customers

Other renewable energy bills

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.

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.

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 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).

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.

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 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 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, but does not seem to contemplate the more common use of third-party power purchase agreements.

HB 2241 (Delaney) establishes a green jobs training tax credit.

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.

HB 2547 (Hugo) and SB 1769 (Sturtevant) makes 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, 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. In the House version only, one additional provision allows investor-owned utilities (Dominion and APCo) to ask the SCC to raise the net metering cap if they feel like it, but I’m told it is not expected to be in the final legislation. This bill was negotiated between the coops and the solar industry via the “Rubin Group.”

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 is a Rubin Group bill.

HB 2641 (Gooditis) makes third-party power purchase agreements for distributed renewable energy resources legal statewide.

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.

HB 2741 (Aird) establishes a rebate program for low and moderate-income households that install solar.

HB 2792 (Tran) and SB 1779 (Ebbin) establishes a 6-year pilot program for municipal net metering for localities that are retail customers of investor-owned utilities.

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.

SB 1091 (Reeves) imposes expensive bonding requirements on utility-scale solar farms, taking a more drastic approach than HB 2621 (Ingram) and SB 1398 (Stanley) to resolving the concerns of localities about what happens to solar farms at the end of their useful life.

Energy Efficiency (some of which have 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.

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.

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

HB 2294 (Sullivan) establishes mandatory energy efficiency goals for electric and gas utilities.

HB 2295 (Sullivan) creates an energy efficiency fund and board to administer it.

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.

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.

SB 1400 (Petersen) removes 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.

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

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. (Update: HB 1635 passed Commerce and Labor on January 23 and heads to the floor of the House. Read this blogpost to understand what’s going on.)

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. The Governor has made this bill a priority.

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 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.

HB 2501 (Rasoul) directs the Division of Energy at DMME to include a greenhouse gas emissions inventory in the Virginia Energy Plan.

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.

HB 2747 (Kilgore) and SB 1707 (Chafin) create a Southwest Virginia Energy Research and Development Authority which will, among other things, promote renewable energy on brownfield sites, including abandoned mine sites, and support energy storage, including pumped storage hydro.

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.”

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.

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.

HB 2477 (Kilgore) would eliminate 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. (I haven’t confirmed this, but that might be Dominion as well as APCo.)

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.

HB 2691 (O’Quinn) establishes 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, proclaiming this to be in the public interest.

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 2738 (Bagby) and SB 1695 (Wagner) authorizes utilities to acquire rights of way on land that the Virginia Economic Development Partnership Authority decides could attract new customers to the site, and allows utilities to recover costs from existing customers. Because, you know, having utilities seize Virginians’ land for speculative development is already going so well for folks in the path of the pipelines. Who could complain about paying higher rates to help it happen more places?

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”).


This article originally appeared in the Virginia Mercury on January 17, 2019. I’ve updated it to include later-filed bills and one or two that I missed originally.