Virginia wind and solar policy, 2015 update

where are the renewables 1

[Note: Although this is a terrific article, it is now a bit dated.  You can find the 2017 update to the Virginia Wind and Solar Policy Guide here.]

The past year has seen a lot of activity on wind and solar in the Old Dominion, and yet Virginia lags further than ever behind neighboring states in installations to date. Why? And more importantly, what can we do about it?

I’ll try to answer these questions as briefly as possible in this third annual update of Virginia renewable energy law and policy. But yes, this is a long post. If you’re the kind of person who only reads executive summaries or prefers the elevator pitch to the full Ted Talk, let me try this:

Virginia’s utility model is built on monopoly control and large, centralized generating systems, and this model does not serve 21st century needs and technologies. The free market solution is to open Virginia’s electricity market to competition and lower the barriers to customer-sited wind and solar generation.

Virginia is further than ever behind

2015 wind and solar table copy

Virginia still has no utility scale wind or solar projects and very little in the way of customer-owned and other distributed generation. The 2015 legislative session improved prospects for solar at the utility scale, but utility interest in wind remains low. Meanwhile, barriers to the rapid adoption of customer-owned generation remain firmly in place.

Virginia utilities won’t sell wind or solar to customers (and they won’t let anyone else do it either)

With one very narrow exception for commercial customers, Virginia residents can’t pick up the phone and call their utility to buy electricity generated by wind and solar farms. Worse, they can’t even buy renewable energy elsewhere.

This wasn’t supposed to happen. Section 56-577(A)(6) of the Virginia code allows utilities to offer “green power” programs, and if they don’t, customers are supposed to be able to go elsewhere for it. (See the section on third-party-owned systems for what happened when one customer tried to go elsewhere.)

Ideally, a utility would use money from voluntary green power programs to build or buy renewable energy for these customers. However, Virginia utilities have not done this, except in very tiny amounts. Instead, utilities pay brokers to buy renewable energy certificates (RECs) on behalf of the participants. Participation by consumers is voluntary. Participants sign up and agree to be billed extra on their power bills for the service. Meanwhile, they still run their homes and businesses on regular “brown” power.

In Dominion’s case, these RECs meet a recognized national standard, and some of them originate with wind turbines, but they primarily represent power produced and consumed out of state, and thus have no effect on the power mix in Virginia. For a fuller discussion of the Dominion Green Power Program, see What’s wrong with Dominion’s Green Power Program.

In the case of Appalachian Power, the RECs come from an 80 MW hydroelectric dam in West Virginia. No wind, and no solar.

The State Corporation Commission ruled that REC-based programs like these do not qualify as selling renewable energy, so under the terms of §56-577(A)(6), customers are permitted to turn to other licensed suppliers of electric energy “to purchase electric energy provided 100 percent from renewable energy.” Unfortunately (and in this English major’s opinion, wrongly), Virginia utilities claim that the statute’s words mean that not only must another licensed supplier provide 100% renewable energy, it must also supply 100% of the customer’s demand. Obviously, the owner of a wind farm or solar facility cannot do that; the customer will need to draw from the grid part of the time. Ergo, say the utilities, a customer cannot go elsewhere. Checkmate!

The SCC may rule on this interpretation some day, but there is still another problem with the statute: under its terms, customers are allowed to turn to other electric suppliers only if their own utility doesn’t offer a qualifying program. So if the SCC sides with the English majors on this one, Dominion could (and surely would) gin up a variation of its Green Power Program consisting of true renewable energy. It would still not have to offer Virginia-based wind and solar—crappy biomass and old hydro would do, so long as it was actual energy “bundled” with the RECs. Nor would it have to offer a competitive price.

Really, the statute doesn’t ask much. It’s astonishing the utilities haven’t taken steps already to close that loophole. But surely they’re ready, and that’s enough to scare off any would-be competitors.

Earlier this year Dominion seemed poised to offer customers a program to sell electricity from solar panels, which would have qualified. Notwithstanding its name, however, the “Dominion Community Solar” program is not an offer to sell electricity generated from solar energy, and seems likely to attract customers only to the extent they are deceived into believing it is something it is not.

For customers to have real energy choice in Virginia, the GA has to change the terms of §56-577(A)(6). Let people buy wind and solar from any willing seller, whether it be their utilities or the private market. Utilities will benefit by customers taking on their job of lowering Virginia’s carbon emissions. Virginians will benefit from cleaner air, new clean energy jobs, and a stronger grid.

Virginia’s Renewable Portfolio Standard (RPS) is a miserable sham

Many advocates focus on an RPS as a vehicle for inducing demand. In Virginia, that’s a mistake. Virginia has only a voluntary RPS, which means utilities have the option of participating but don’t have to. On the other hand, it costs them nothing to do it, because any costs they incur in meeting the goals can be charged to ratepayers. Until a few years ago, utilities even got to collect bonus money as a reward for virtue, until it became clear that there was nothing very virtuous going on.

Merely making our RPS mandatory rather than voluntary would do nothing for wind and solar in Virginia without a complete overhaul. Most important, the statute takes a kitchen-sink approach to what counts as renewable energy, so meeting it requires no new investment and no wind or solar.

The targets are also modest to a fault. Although nominally promising 15% renewables by 2025, the statute sets a 2007 baseline and contains a sleight-of-hand in the definitions section by which the target is applied only to energy not produced by nuclear plants. The combined result is an effective 2025 target of about 7%.

The RPS is as impotent in practice as it is in theory. In the case of Dominion Virginia Power, the RPS has been met largely with old hydro projects built prior to World War II, trash incinerators, and wood burning, plus a small amount of landfill gas and—a Virginia peculiarity—RECs representing R&D rather than electric generation.

There appears to be no appetite in the General Assembly for making the RPS mandatory, and even efforts to improve the voluntary goals have failed in the face of utility opposition. The utilities have offered no arguments why the goals should not be limited to new, high-value, in-state renewable projects, other than that it would cost more to meet them than to buy junk RECs.

But with the GA hostile to a mandatory RPS and too many parties with vested interests in keeping the kitchen-sink approach going, it is hard to imagine our RPS becoming transformed into a useful tool to incentivize wind and solar.

That doesn’t mean there is no role for legislatively-mandated wind and solar. But it will be easier to pass a bill with a simple, straightforward mandate for buying or building a certain number of megawatts than it would be to repair a hopelessly broken RPS.

Customer-owned generation: for most, the only game in town

Given the lack of wind or solar options from utilities, people who want renewable energy generally have to build it themselves. A federal 30% tax credit makes it cost-effective for those with cash or access to low-cost financing. The credit is available until the end of 2016 (when it falls to 10% for commercial but goes away entirely for residential).

This year the GA passed legislation enabling Property Assessed Clean Energy (PACE) loans for commercial customers. This should help bring low-cost financing to energy efficiency and renewable energy projects at the commercial level. That would make it the year’s most helpful piece of legislation from the standpoint of customer-owned generation.

Now that some barriers to residential PACE have been removed at the federal level, we hope the legislature will extend the law to let localities offer PACE loan programs to homeowners in the near future.

Virginia offers no cash incentives or tax credits for wind or solar. The Virginia legislature passed a bill in 2014 that would offer an incentive, initially as a tax credit and then as a grant program, but it did not receive funding, and the same bill, reintroduced in 2015, died in a subcommittee. North Carolina’s tax credit for solar is widely credited with making that state a solar leader, and it could have the same effect here. With solar panel prices continuing their breathtaking descent, utility and commercial-scale solar probably won’t need that kind of help for long, so a modest program of three-to-five years duration would suffice to catalyze the market. Residential solar would benefit from longer-lasting support.

The lack of a true RPS in Virginia means Virginia utilities generally will not buy solar renewable energy certificates (SRECs) from customers. SRECs generated here can sometimes be sold to utilities in other states (as of now only Pennsylvania) or to brokers who sell to voluntary purchasers.

Limits to net metering hamper growth

Section 56-594 of the Virginia code allows utility customers with wind and solar projects to net energy meter. System owners get credit from their utility for surplus electricity that’s fed into the grid at times of high output. That offsets the grid power they draw on when their systems are producing less than they need. Their monthly bills reflect only the net energy they draw from the grid.

If a system produces more than the customer uses in a month, the credits roll over to the next month. However, at the end of the year, the customer will be paid for any excess credits only by entering a power purchase agreement with the utility. This will likely be for a price that represents the utility’s “avoided cost” of about 4.5 cents, rather than the retail rate, which for homeowners is closer to 11 cents. Given the current cost of installing solar, this effectively stops people from installing larger systems than they can use themselves.

Legislation passed in 2015 makes it less likely that new solar owners will have any surplus. At Dominion’s insistence, the definition of “eligible customer-generator” was amended to limit system sizes to no larger than needed to meet the customers demand, based on the previous 12 months of billing history. The SCC is currently writing regulations that should address issues of new construction as well as questions arising from other new language in the law.

This limitation is crazy, no? If customers want to install more clean, renewable energy than they need and sell the surplus electricity into the grid at the wholesale power price, why would you stop them from performing this service to society? And what were Dominion lobbyists thinking, since it is clearly in their company’s interest to buy peak power at a cut-rate price? We can only speculate that the primal fear of customers with solar must be stronger even than the smell of money.

Virginia law also does not allow system owners to share the electricity with other consumers through community net metering or solar gardens. Several bills that would have permitted this were introduced in the 2013 and 2014 sessions but defeated due to utility opposition. Community net metering remains one of the solar industry’s highest priorities as a way to open the market to people who can’t own solar facilities themselves. It would also spur the market for community wind.

In August of this year, Dominion received permission from the SCC to begin a program the company is calling “Dominion Community Solar.” Reading the fine print, however, makes it apparent that participants will not actually buy solar power. They will pay a significant premium on their electric bills to fund construction of a solar installation, but the electricity generated will be sold to other people rather than credited to the participants.

Under a bill introduced by Delegate Randy Minchew (R-Leesburg) and passed in 2013, owners of Virginia farms with more than one electric meter are permitted to attribute the electricity produced by a system that serves one meter (say, on a barn) to other meters on the property (the farmhouse and other outbuildings). This is referred to as “agricultural net metering.” The law took effect July 1, 2014 for investor-owned utilities (Dominion and Appalachian Power) and July 1, 2015 for the cooperatives.

Standby charges hobble the market for larger home systems and electric cars

Dominion Power and Appalachian Power are at the forefront of a national pushback against policies like net metering that facilitate customer-owned generation.

The current system capacity limit for net-metered solar installations is 1 MW for commercial, 20 kW for residential. However, for residential systems between 10 kW and 20 kW, a utility is allowed to apply to the State Corporation Commission to impose a “standby” charge on those customers.

Seizing the opportunity, Dominion won the right to impose a standby charge of up to about $60 per month on these larger systems, eviscerating the market for them just as electric cars were increasing interest in larger systems. (SCC case PUE- 2011-00088.) Legislative efforts to roll back the standby charges were unsuccessful, and more recently, Appalachian Power instituted even more extreme standby charges. (PUE-2014-00026.)

The standby charges supposedly represent the extra costs to the grid for transmission and distribution. In the summer of 2013, in a filing with the SCC (PUE-2012-00064, Virginia Electric and Power Company’s Net Metering Generation Impacts Report), Dominion claimed it could also justify standby charges for its generation costs, and indicated it expected to seek them after a year of operating its Solar Purchase Program (see discussion below). As far as I can tell, it hasn’t carried out this threat yet, and it would likely need legislation to do so.

A bit of good news for residential solar: homeowner association bans on solar are largely a thing of the past

Homeowner association (HOA) bans and restrictions on solar systems have been a problem for residential solar. In the 2014 session, the legislature nullified bans as contrary to public policy. The law contains an exception for bans that are recorded in the land deeds, but this is said to be highly unusual; most bans are simply written into HOA covenants. In April of 2015 the Virginia Attorney issued an opinion letter confirming that unrecorded HOA bans on solar are no longer legal.

Even where HOAs cannot ban solar installations, they can impose “reasonable restrictions concerning the size, place and manner of placement.” This language is undefined. The Maryland-DC-Virginia Solar Energy Industries Association has published a guide for HOAs on this topic.

Third-party ownership of renewable energy facilities could open the market, but Virginia utilities won’t step aside

One of the primary drivers of solar installations in other states has been third-party ownership of the systems, including third-party power purchase agreements (PPAs), under which the customer pays only for the power produced by the system. For customers that pay no taxes, including non-profit entities like churches and colleges, this is especially important because they can’t use the 30% federal tax credit to reduce the cost of the system if they purchase it directly. Under a PPA, the system owner can take the tax credit and pass along the savings in the form of a lower electricity price.

In 2011, when Washington & Lee University attempted to use a PPA to finance a solar array on its campus, Dominion Virginia Power issued cease and desist letters to the university and its Staunton-based solar provider, Secure Futures LLC. Dominion claimed the arrangement violated its monopoly on power sales within its territory, under that same §56-577(A)(6) we previously discussed. Secure Futures and the university thought that even if what was really just a financing arrangement somehow fell afoul of Dominion’s monopoly, surely they were covered by the exception available to customers whose own utilities do not offer 100% renewable energy.

Yet the threat of prolonged and costly litigation was too much. The parties scuttled the PPA contract, though the solar installation was able to proceed using a different financial arrangement.

After a long and very public fight in the legislature and the press, in 2013 Dominion and the solar industry negotiated a compromise that specifically allows customers in Dominion territory to use third-party PPAs to install solar or wind projects under a pilot program capped at 50 MW. Projects must have a minimum size of 50 kW, unless the customer is a tax-exempt entity, in which case there is no minimum. Projects can be as large as 1 MW. The SCC is supposed to review the program every two years beginning in 2015 and has authority to make changes to it.

Appalachian Power and the electric cooperatives declined to participate in the PPA deal-making, so the legal uncertainty about PPAs continues in their territories. In June of this year, Appalachian Power proposed an alternative to PPAs that does not offer anything like a viable solution. The matter is before the SCC. The case is No. PUE-2015-00040. An evidentiary hearing is scheduled for September 29, 2015.

Meanwhile, Secure Futures has developed a third-party-ownership business model that it says works like a PPA for tax purposes but does not include the sale of electricity, and therefore should not trigger a challenge from Appalachian Power or other utilities. Currently Secure Futures is the only solar provider offering this option, which it calls a Customer Self-Generation Agreement.

Tax exemption for third-party owned solar may prove a market driver

In 2014 the General Assembly passed a law exempting solar generating equipment “owned or operated by a business” from state and local taxation for installations up to 20 MW. The law now classifies solar equipment as “pollution abatement equipment.” Note that this applies only to the equipment, not to the buildings or land underlying the installation, so real estate taxes aren’t affected.

The law was a response to a problem that local “machinery and tools” taxes were mostly so high as to make third-party PPAs uneconomic in Virginia. In a state where solar was already on the margin, the tax could be a deal-breaker.

The 20 MW cap was included at the request of the Virginia Municipal League and the Virginia Association of Counties, and it seemed at the time like such a high cap as to be irrelevant. However, with solar now becoming increasingly attractive economically, Virginia’s tax exemption is turning out to be a draw for solar developers. We are told Amazon’s 80 MW solar farm will proceed in four stages, indicating a desire to work around the cap—and suggesting that the tax exemption may have been a factor in the choice of Virginia as the project’s location.

Dominion “Solar Partnership” Program suggests distributed solar might be better left to the private sector

In 2011, the General Assembly passed a law allowing Dominion to build up to 30 MW of solar energy on leased property, such as roof space on a college or commercial establishment. The SCC approved $80 million of spending, to be partially offset by selling the RECs (meaning the solar energy would not be used to meet Virginia’s RPS goals). The program has resulted in several commercial-scale projects on university campuses and corporate buildings. Unfortunately, it has also been plagued by delays and over-spending.

The program was supposed to proceed in two phases, with 10 MW in place by the end of 2013, and another 20 MW by December 31, 2015. However, the program got off to a very slow start. In August of 2014 the company acknowledged it was behind schedule and would likely not achieve more than 13 or 14 MW of the 30 MW authorized before it ran out of money. On May 7, 2015 Dominion filed a notice with the SCC that it needed to extend the phase 2 end date to December 31, 2016, and confirmed that it would install less than 20 MW altogether.

Dominion’s Solar Purchase Program: bad for sellers, bad for buyers, and not popular with anyone

The same legislation that enabled the Community Solar initiative also allowed Dominion to establish “an alternative to net metering” as part of the demonstration program. The alternative turned out to be a buy-all, sell-all deal for up to 3 MW of customer-owned solar. As approved by the SCC, the program allows owners of small solar systems on homes and businesses to sell the power and the associated RECs to Dominion at 15 cents/kWh, while buying regular grid power at retail for their own use. Dominion then sells the power to the Green Power Program at an enormous markup.

I’ve ripped this program from the perspective of the Green Power Program buyers, but the program is also a bad deal for most sellers. Some installers who have looked at it say it’s not worth the hassle given the costs involved and the likelihood that the payments represent taxable income to the homeowner. There is also a possibility that selling the electricity may make homeowners ineligible for the 30% federal tax credit on the purchase of their system. Sellers beware.

And then there’s the problem that selling the solar power means you aren’t powering your home or business with solar—which is the whole point of installing it, right?

Dominion’s Renewable Generation tariff for large users of energy finds no takers; Amazon votes with its feet

Currently renewable energy projects are subject to a size limit of 1 MW. These limitations constrain universities, corporations, data centers, and other large users of energy that might want to run on wind or solar. On top of this, the utilities’ interpretation of Virginia law prohibits a developer from building a wind farm or a solar array and selling the power directly to users under a power purchase agreement.

In 2013, Dominion Power rolled out a Renewable Generation Tariff (PUE-2012-00142) to allow customers to buy larger amounts of renewable power from providers, with the utility acting as a go-between and collecting a monthly administrative fee.

From the start the program appeared flawed, cumbersome and bureaucratic, and as far as we know there have been no takers. Amazon Web Services chose to contract directly with a developer for the 80 MW solar farm it announced this year (avoiding Dominion’s monopoly restrictions by selling the electricity directly into the PJM market).

2015 marks Dominion’s foray into utility-scale solar

Late in 2014, Dominion signaled an interest in building utility-scale solar in Virginia. In 2015, at the utility’s behest, two bills promoted the construction of utility-scale solar by declaring it in the public interest for utilities to build solar energy projects of at least 1 MW, and up to an aggregate of 500 MW. At the solar industry’s urging, the bill was amended to allow utilities the alternative of entering into PPAs for solar power prior to purchasing the generation facilities at a later date, an option with significant tax advantages.

Dominion’s first solar project is expected to be a 20 MW solar farm in Remington, Virginia. The proposal is before the SCC (PUE-2015-00006). Dominion proposes to build and operate the facility itself, which will earn it a return on investment but give up tax advantages that would save money for ratepayers.

On July 17, Dominion issued a Request for Proposals for third party bidders to develop up to 20 MW of additional projects. The RFP came with an absurdly short deadline, surely limiting the number of good responses, but developers are nonetheless hopeful the results will be strong enough to convince Dominion to follow it with a larger request.

2015 will be another year without a wind farm, but there is hope

No Virginia utility is actively moving forward with a wind farm on land. For the past few years, Dominion Power’s website has listed 248 MW of land-based wind in Virginia as under development, without any noticeable progress. There has been a lot of press about the current standoff in Tazewell County, where supervisors are blocking Dominion’s proposed wind farm. Yet Dominion’s advocacy for its project feels perfunctory. The company has signaled it prefers solar, and its 2015 IRP dismisses wind as too costly. On the other hand, Appalachian Power’s IRP suggests an interest in wind as a low-cost renewable resource that could help it meet the Clean Power Plan.

With no utility buyers, Virginia has not been a friendly place for independent wind developers. In previous years a few wind farm proposals made it to the permitting stage before being abandoned, including in Highland County and on Poor Mountain near Roanoke.

As of 2015, however, Apex Clean Energy is in the development stages for a wind farm of up to 80 MW in Botetourt County. No customer has been announced, but the company believes the project can produce electricity at a competitive price.

As for Virginia’s great offshore wind resource, the perception that offshore wind energy will be costly continues to hold back progress. In 2013 Dominion won the federal auction for the right to develop about 2000 MW of offshore wind power, and the lease terms call for the company to file construction plans within five years. The federal government’s timeline leads to wind turbines being built off Virginia Beach around 2020. As I’ve discussed elsewhere, Dominion is something less than committed to seeing the process through. This puts advocates in the legislature and in the business and environmental communities in the odd position of being keener on a development than the developer is.

Meanwhile, however, Dominion is part of a Department of Energy-funded team designing a pilot project of two 6-MW offshore wind test turbines, originally scheduled for installation in 2017. This year Dominion declared it was taking a “step back” when the sole bid for the contract came in way too high. Stakeholders have been meeting this summer to help chart a path forward.

Will a Solar Development Authority help?

One of the MacAuliffe Administration’s initiatives this year was a bill to establish the Virginia Solar Development Authority. The Authority is explicitly tasked with helping utilities find financing for solar projects; there is no similar language about supporting customer-owned solar. The Authority is supposed to identify barriers to solar, but isn’t given any tools to remove them. The Authority has not been given funding. And members have not been named yet. Meanwhile, the clock is ticking on that December 31, 2016 expiration of the 30% federal tax credit.

The Clean Power Plan: better to switch than fight

On August 3, 2015, EPA issued the final rule known as the Clean Power Plan. Under the rule, states with existing fossil-fuel generating plants must develop plans to reduce total carbon pollution from power plants. In Virginia, the task will fall to the Department of Environmental Quality.

While Virginia’s goals under the plan are modest, the rule means the state, utilities and the SCC must for the first time take carbon emissions into account in their planning. The EPA has signaled a strong interest in seeing wind and solar deployed as solutions.

Some legislators have succumbed to partisan pressure to attack the Clean Power Plan, using talking points provided by fossil fuel front groups. Not only does this do a disservice to Virginians already suffering the effects of climate change, it’s bad economic policy. EPA’s analysis shows Virginia is already on track to meet or come close to our Clean Power Plan goals. Wasting time fighting the plan, or mandating that utilities keep outdated coal plants open, makes far less sense than using the plan as a catalyst to begin an efficient and cost-effective energy transition.

The transition need not even happen fast, as EPA’s numbers suggest that all we need to do is keep our total carbon emissions from increasing over time. Energy efficiency has a huge role to play in achieving this, but so would a requirement that utilities meet any increases in electrical demand with wind and solar. Freeing up the private market will go a long way towards achieving that goal. And of course, when customers install solar “behind the meter,” it keeps electric demand from growing.

The Department of Environmental Quality will be holding “listening sessions” this fall to take public comment prior to developing a state implementation plan under the rule.

 

Surprise endings to a week of bad news on energy and climate bills

The fourth annual Clean Energy Lobby Day on February 3d brought representatives from businesses across the state to Richmond. Photo courtesy of MDV-SEIA.

The fourth annual Clean Energy Lobby Day on February 3d brought representatives from businesses across the state to Richmond. Photo courtesy of MDV-SEIA.

More than a hundred representatives of energy efficiency and renewable energy businesses descended on Richmond Tuesday for Clean Energy Lobby Day. After meetings with legislators, many of them stayed to attend a critical subcommittee meeting where most of this year’s clean energy bills came up for votes. And they came away with one overpowering impression: the only bills that can make it out of committee are the ones supported by the state’s utilities, especially Dominion Power.

But that wasn’t quite the end of the story. Because by the end of the week, they also found that the groundwork they had laid with their lobbing, and their tenaciousness before the subcommittee, created an opening they would not otherwise have had.

First, the bad news, and plenty of it

Things started bleakly. The House Commerce and Labor Subcommittee on Energy turned back multiple proposals that would have benefited Virginia’s small renewable energy and energy efficiency businesses, as well as their customers. Going down to defeat were bills to improve the renewable portfolio standard (HB 1913), create an energy efficiency resource standard (HB 1730), require a more rigorous study before utilities can impose standby charges (HB 1911), make third-party PPAs legal across the state (HB 1925), and enable an innovative vehicle-to-grid (V2G) project (HB 2073).

Left in limbo for the day was Delegate Minchew’s community solar bill, HB 1636. Minchew wasn’t ready to give up on it, but he had not found a way to get the utilities to back off their opposition. It went without saying that, without Dominion’s buy-in, the subcommittee members wanted nothing to do with it. Out of respect for a fellow Republican, however, they were willing to give him a couple of days’ grace. (On Thursday they killed the bill off.)

One small success was the raising of the cap for individual commercial renewable energy projects from the current 500 kilowatts to 1 megawatt (MW) (HB 1950). Bills to increase it to 2 MW were discarded. The bill was also passed out of the full committee on Thursday.

Also reported out was HB 2267, creating the Virginia Solar Development Authority. It passed in the full committee on Thursday but was then referred to the Committee on Appropriations.

With a few exceptions, the good bills lost on party-line voice votes following testimony from utilities in opposition to the measures. Republican committee members repeatedly expressed their concern about the potential impact on other ratepayers of bills that would make it easier for utility customers to generate their own power, or that would require utilities to buy a smidgeon more renewable energy.

Indeed, anyone who thinks Republicans don’t care about poor people should have been in that room. The outpouring of concern for struggling families was tremendously affecting. These brave souls made it abundantly clear that nothing that could be construed as a subsidy would sneak by on their watch.

Those of us who had seen some of the same delegates vote just last week to continue giving tens of millions of dollars annually in subsidies to coal companies, could not help noting the inconsistency.

Then a funny thing happened on the way to rubber-stamping Dominion’s solar bill

The anti-subsidy rhetoric was further undercut when, a few minutes later, the subcommittee unanimously approved Delegate Yancey’s bill (HB 2237) declaring it in the public interest for the state’s largest utility to install up to 500 MW of solar and offshore wind projects. Chairman Terry Kilgore did ask Dominion Power’s lobbyist if it would raise rates, but he was easily satisfied with the assurance that it would not—even though solar was “marginally more expensive.”

This was all the committee wanted to hear, and a motion had already been made to report the bill when the members were suddenly treated to an earful from the solar industry—not in support of the bill, but in opposition. Francis Hodsoll of Virginia Advances Energy Industries and Jon Hillis of MDV-SIEA, the solar industry trade association, praised the goal but urged that the bill be amended to open up competition for building the solar projects. Utilities might prefer to build the projects themselves to earn their guaranteed return on investment, said Hodsoll, but ratepayers would benefit from lower costs and in-state jobs if independent companies were eligible to bid.

Tony Smith of Secure Futures, LLC, further explained that federal tax incentives strongly favor independent companies developing projects instead of the utilities doing it themselves. He said an independent firm that develops a 20 MW project can sell solar for 5 cents per kilowatt-hour, a far better price than a utility can achieve building the same project itself.

Andy Bidea of Sigora Solar put the case most simply. “This is America. Let’s give capitalism a chance, right?”

Catchy idea. The committee proceeded to report the bill without changes, but Kilgore encouraged the patron to work with the solar industry on possible amendments prior to the full committee meeting on Thursday.

The industry’s stand had an effect. When the bill was taken up on Thursday, it included an amendment allowing utilities to buy power from a third-party developer before purchasing the project itself. This should be significant because the SCC would presumably insist on the lowest-cost approach. In an email, Francis Hodsoll told me the industry now supports the bill, which passed the full committee.

With Dominion’s recent announcements of its plans to move forward with as much as 400 MW of large-scale solar projects in Virginia, this is a hopeful sign for utility solar in the state. Only one project has actually been announced, a 20 MW project in Remington, Virginia. It should also make it easier for Dominion to move forward on offshore wind, a major plus.

Admittedly, the struggle for distributed solar continues. The happy ending on the Yancey bill means little to members of the industry struggling to make a living doing residential and small commercial projects. They had pinned a lot of hope on the grant program that passed with such fanfare a year ago, only to sink like a stone in a House subcommittee this session.

On the other hand, those who take the long view believe that once Virginians get familiar with the benefits of solar, it will become an unstoppable force. The indicators point to success in coming years whether utilities like it or not.

Climate? What climate?

In addition to the clean energy bills, the subcommittee also took action on two climate bills Tuesday. It rejected Delegate Villanueva’s HB 2205, which would have had Virginia join the Regional Greenhouse Gas Initiative as a vehicle to reduce carbon emissions. (The Senate companion bill died on a party-line vote last week.) It was the only legislation this year that would have taken positive action to address climate change and raise some of the enormous sums of money that will be needed to address the consequences of sea level rise.

Instead, it passed HB 2291 (O’Quinn), a bill that would require the Department of Environmental Quality (DEQ) to get approval from the General Assembly before submitting to the U.S. EPA a plan to implement the Clean Power Plan. Since the Republican majority has made its hostility to the Clean Power Plan clear, this is widely seen as a way to keep the state from acting at all. The bill also passed the full committee Thursday on a straight party-line vote, a clear indication that it is about party politics and anti-Obama Administration sentiment, not climate change.

Over in the Senate, however, saner heads prevailed. Senator Watkins amended his companion bill, SB 1365, simply to give DEQ direction on what to consider in developing the plan, and to require it to consult with the SCC and to meet with General Assembly members. The substitute bill passed Senate Agriculture unanimously.

Dominion’s Ratepayer Rip-off Act hits a bump in the road

Meanwhile, Senator Wagner’s bill to protect utility profits and shield Dominion (and now APCo too) from SCC scrutiny through the end of the decade sailed through Senate Commerce and Labor in spite of sparking the kind of outrage and condemnation in the press usually reserved for bills on guns and abortion. Editorial boards excoriated the legislation; Wagner was forced to sell his Dominion stock. Environmental groups, which had first sounded the alarm, staged a protest outside the General Assembly on Thursday morning and spurred thousands of constituents to write letters opposing the ratepayer rip-off.

As a consequence, SB 1349 ran into trouble on the Senate floor Thursday afternoon, and a substitute was introduced consisting of two pages of such dense regulatory detail that I cannot possibly tell you what it means. Anyone with the gumption to try to understand it may be wasting their time anyway, because I hear it remains in flux, with negotiations underway right now. Senator Donald McEachin reportedly is working to make it less objectionable. One thing seems certain: the senators who will be asked to vote on this will have no chance to review the language and reach their own conclusions.

It’s a lousy way to make sausage, but it’s ours.

 

 

 

 

 

 

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

photo credit: Amadeus

photo credit: Amadeus

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

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

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

Net metering bills

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

This year’s initiatives include:

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

Third-party power purchase agreements (PPAs)

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

Utility-scale solar

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

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

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

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

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

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

Grants and tax credits

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

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

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

Bills specific to energy efficiency

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

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

PACE bills

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

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

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

Virginia Solar Energy Development Authority

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

Virginia SREC registry

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

Cross-cutting approaches to clean energy

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

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

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

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

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

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

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

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

Huge Virginia solar farm scuttled because Virginia utilities aren’t interested

This could have been us.  Photo credit U.S. Department of Agriculture

This could have been us.
Photo credit U.S. Department of Agriculture

A solar array that would have more than doubled Virginia’s solar power will not be built after all, with the developer blaming Dominion Virginia Power and other utilities for their lack of interest in buying the output.

The Winchester Star reports that the 20-megawatt array—100,000 solar panels, capable of powering 20,000 homes—had been planned for 145 acres of agricultural land in Clarke County. A spokesman for the developer, OCI Solar Power, said the company allowed its land option to lapse “due to the lack of long-term solar procurement efforts by Dominion and other VA utilities.”

This shouldn’t surprise anyone. Virginia has done little to encourage our utilities to buy solar power, and so for the most part they haven’t. The state’s voluntary renewable energy goal is a sorry dishrag of a law. It can be—and is—met with old, out-of-state hydro plants, trash burning, and wood. And because our utilities have a state-sanctioned monopoly on power sales, customers who want solar power can’t go buy it from someone else.

But if it isn’t surprising for Virginia to lose a big solar opportunity due to utility intransigence, it is stupid. Virginia consumers would love to buy solar energy, local governments would love to have solar farms generating tax revenue, and local businesses would love to create solar jobs. A win-win-win opportunity is being wasted, at a time when lawmakers complain about how hard it is to reduce our carbon emissions.

Even Dominion says it wants utility-scale solar (eventually), but it wants to build its own so it can earn the fat return on equity guaranteed to it by Virginia law. (If the utility buys power from someone else, it can pass along the cost to customers, but it doesn’t earn a profit.)

Last year the General Assembly overwhelmingly passed a bill to support solar development, and then failed to fund it. Governor McAuliffe’s energy plan talks a good game on solar, but it’s toothless. We will continue to miss out on opportunities like this one until we have a law that requires Virginia utilities to buy solar, or lets consumers contract for it directly from any willing seller.

Or better yet, both.

2014 legislative session ends with modest progress on solar, not much else to brag about

photo credit: Amadeus

photo credit: Amadeus

The 2014 Virginia legislative session wrapped up this weekend, sort of. Legislators still have to return to work out a budget deal, and in six weeks they will be back again to consider any bills vetoed or amended by the governor. But it’s still a good time to survey the battlefield.

Advocates of enlightened energy policy march into session every January bright-eyed and optimistic, only to become mired in the slough of despond. We watch the best bills die, while bills we thought too backward to survive the light of day flourish like an invasive species. Yet even in Virginia, the past few years have produced glimmers of hope that suggest a slowly shifting mindset among legislators.

There is, for example, a growing movement in favor of solar energy that is as strong on the Republican right as it is on the Democratic left. They haven’t quite formed a Solar Caucus yet, but you might say we are beginning to see a Solar Consensus.

Last year, after a long battle, this consensus produced a law specifically allowing some third-party-owned solar and wind projects, a critical step for nonprofits to install solar economically. This year, the legislature removed the second major hurdle to these projects, local “machinery and tools” taxes on solar equipment that would have made third-party-owned projects impossible in most Virginia jurisdictions.  Assuming the Governor signs, SB 418 and HB 1239 take effect January 1, 2015.

In a near-rerun of two years ago, Senator Chap Petersen’s SB 222, nullifying homeowner bans on solar, passed the House and Senate. Back then Governor McDonnell surprised us all by vetoing similar legislation, an action not expected from Governor McAuliffe.

This year, too, the legislature voted to establish a grant program to help fund renewable energy projects. Originally conceived as an ambitious, $100 million tax credit, the legislation was quickly scaled back to $10 million and turned into a grant, causing it to run into trouble when money couldn’t be found in the budget to fund it. (Sorry, we spent it all on coal.) So SB 653 won’t take effect until fiscal year 2015-2016, and even for that to happen the bill must be reenacted in 2015. Too many contingencies, you say? Well, yes. But passing the bill at all is a remarkable milestone for this legislature. Let’s appreciate this moment.

Solar advocates also tried for a second year to pass a bill that would require the State Corporation Commission to set up a registration system for Virginia renewable energy certificates. While the bill did not pass, the SCC has agreed to examine whether it can do the job administratively, and if legislation is required, to suggest the necessary language for the 2015 session. Again, it’s a small victory, but it reflects an increasing acceptance of solar energy as an inevitable part of our energy mix.

Okay, sure, the defeats were far more numerous. Reforms to our farcical Renewable Portfolio Standard were whittled down to why-bother status before passage (SB 498 and HB 822). Efforts to ensure that both utilities and regulators take account of the long-term costs of fossil fuels (HB 808) and their climate change impacts (HB 363) never made it out of House subcommittee. Every effort to expand residents’ access to solar energy by opening up net-metering failed (SB 350, HB 879HB 1158HB 906 and SB 350).

One of the net-metering champions, Senator John Edwards, put in a resolution in the final days of the session to organize a study of the value that distributed solar generation provides to utilities and the grid. The bill was introduced on March 3d and scuttled on the 6th (surely some kind of record), but advocates expect the study to go forward administratively. The study will make use of the Small Solar Working Group that formed last year, facilitated by the Department of Environmental Quality and consisting of solar advocates, utilities, local governments and others.

This value-of-solar issue is at the heart of the national battle over the expansion of distributed solar and the effort by utilities to nip it in the bud to preserve their monopolies. We expect Virginia utilities to continue their push for a very low valuation, one that would justify the barriers currently in place and add new ones like standby charges.

There were other disappointments, too, like the failure of HB 766, a bill that would have allowed localities to form service districts for energy projects, just as they do for things like trash collection, and HB 1001, which would have required electric utilities to offer on-bill financing of energy efficiency improvements.

But as I wrote in my last post, the worst news for consumers this year was the passage of SB 459, a bill allowing Dominion to write off hundreds of millions of dollars it has spent developing plans for a third nuclear reactor at Lake Anna. Last week we spoke with lawyers at the Attorney General’s office about this boondoggle, which they also oppose, and received confirmation that our reading of the bill is correct. In spite of the propaganda coming from Dominion about “no ratepayer impact,” customers of the utility will indeed pay these costs.

Worse, while we know Dominion has spent $570 million so far, the company has not disclosed how much more it intends to spend—and charge us for—in the future. The AG’s office told us Dominion has this estimate but won’t disclose it publicly, insisting the figure is confidential. Apparently it is not for the likes of us customers to know such things.

Legislators not only signed us up for this open-ended boondoggle, they specifically rejected an amendment offered by Delegate Ware that would have ensured we got our money back if Dominion doesn’t build the nuclear plant.

Given the lopsided vote tally, the Governor is not likely to veto the bill. Knowing this, the AG’s office is recommending amendments that would allow the State Corporation Commission to review the money spent (the bill as written jettisons even that minor consumer protection), but isn’t suggesting a wholesale rewrite.

Looking for a silver lining? There are two. First, Dominion may have pursued this legislation not because it wants to build North Anna 3, but because it intends to abandon the project and figures it might as well get ratepayers to cover the sunk costs while it’s still possible to pretend everything is full-speed-ahead. That would actually come as a relief; not building a financially uncompetitive nuclear plant on an earthquake fault line is way better than building it.

Second, the bitter pill of this legislation comes with a little chaser of sugar in the form of a second bill, SB 643, that provides the same treatment for the costs of developing an offshore wind farm. So far these costs have been tiny in comparison to what’s been spent on North Anna 3, but putting them into the rate base will lower the cost of building turbines offshore.

Some people have suggested it’s inconsistent to like the wind bill while hating the nuclear bill, but surely it’s only reasonable to fish a pearl out of a dung heap. There are good reasons to distinguish the bills, beyond the dangers of nuclear and the planet-friendly qualities of wind power. Most obvious is that there is real doubt whether the federal government will approve a nuclear plant with the serious siting issues confronting Lake Anna, while it has already approved the site of the offshore wind farm and given Dominion a lease.

Since my last update, a few other bills have seen action. Senator Stuart’s bill to control fracking in the Tidewater area, SB 48, died in the killing fields of House Commerce and Labor.  SJ3 and HJ16, Virginia’s first bills to deal with the effects of climate change, had to go to conference on the question of who would be part of the subcommittee studying “recurrent flooding” and how much power they would have. The compromise calls for three senators and five delegates to be part of the 11-member subcommittee. Absurdly, it gives the majority of either the senators or the delegates veto power over any recommendation. Senators Locke, McWaters and Watkins, and Delegates Stolle, Knight and Hester have already been appointed.

Amid the carnage, some energy bills make progress

This week marks “Crossover” at the General Assembly. Both chambers have to finish up action on their own bills by midnight Tuesday; starting on Wednesday, they can consider only bills passed by the other chamber. If you’re a legislator and your bill doesn’t get acted on by COB Tuesday, you are out of luck for the year.

photo credit: Amadeus

photo credit: Amadeus

Most of the energy and climate bills we’ve been following now lie dead on committee floors, but some have made it through to passage by the whole House or Senate. Now they need to get through the other chamber’s committees and floor votes by March 8, the end of Session. This date is known as Sine Die, Latin for “thank God that’s over with.”

Here’s where we stand at press time:

Investment tax credit-now-grant passes Senate but not House; advocates looking for help to get it through this year. HB 910 (Villanueva) was “continued to 2015” by voice vote in House Finance, essentially killing it for the year due to a failure to find funds in the budget to cover the cost. However, SB 653 (Norment) has passed the Senate, giving proponents a second shot in House Finance and more time to identify funds. Supporters are running a campaign to generate emails to members of the House Finance committee. Follow the link to send an email.

Just for the record, I don’t recall any similar difficulty approving the tens of millions of dollars we throw at coal every year.

Redefining solar panels as pollution control equipment looks to be a done deal. SB 418 (Hanger) and HB 1239 (Hugo) have passed their respective houses. The amendment to the House bill limiting projects to 20 megawatts will likely be added to the Senate bill. The legislation is primarily designed to help third-party owners of solar systems who currently face prohibitive local taxes on “machinery and tools.”

No more HOA bans on solar. SB 222 (Petersen) is expected to pass easily in the House, where it has been referred to Commerce and Labor. The legislation nullifies homeowner bans on solar systems, while retaining associations’ ability to enact “reasonable” restrictions on their placement. Next year perhaps someone will take on the task of explaining to HOAs that restricting solar panels to north-facing roofs is not what we mean by “reasonable.”

5-year banking limits on REC purchases for the RPS expected to become law. SB 498 (McEachin) and HB 822 (Lopez) both passed their houses, so voting in the other house is just a formality before they go to the governor for his signature.

Municipal and multi-family net metering dead for the year. Last week I reported that the House energy subcommittee had killed all the House bills that would expand net metering opportunities for municipalities and multifamily housing communities. Now we have to add the Senate bill, SB 350 (Edwards), to the death toll. Condolences go out to those intrepid industry members and advocates who keep fighting to give Virginians more access to solar, knowing they have about as much chance against Dominion Power as democracy advocates have in North Korea.

Hampton Roads set to get a study of “recurrent flooding”; just don’t call it climate change. SJ3 and HJ16 have passed the Senate and House.

Fracking restrictions for Tidewater Virginia pass Senate. SB 48 (Stuart) will now go to House Commerce and Labor.

HB 207 “science education” bill may die of (press) exposure. Delegate Bell’s bill has been tossed from one House committee to the next like a hot potato, with no one wanting to go on the record voting either for it or against it. The news media have been all over this one, quoting science educators who say it promotes creationism and climate denial. Truth be told, many delegates support it for precisely that reason, but they don’t want to be exposed as troglodytes in the press. The bill is now back in Courts of Justice with pretty much no chance of getting to the floor tomorrow.

Dominion’s rate increase for nuclear clears both House and Senate. You can call it what you want, but in the absence of SB 459 (Stosch) and HB 1059 (Kilgore), we’re told regulators would require Dominion to refund to ratepayers the money it has reportedly been overcharging them, and to decrease rates going forward. These bills let Dominion keep the overage as a way of paying for a nuclear plant that will probably never get built. SB 459 sailed through the Senate. HB 1059 passed through committee and awaits action tomorrow by the full House. Stay tuned to find out if Dominion succeeds in sticking us with half a billion dollars to support Tom Farrell’s nuclear fantasy.

Energy and climate bills get hearings in Richmond

photo credit: Amadeus

photo credit: Amadeus

This week Virginia’s General Assembly took action on a good many of the bills we are following. For a fuller description of the bills and information on how to access the bill language, refer to my previous posts. At the end I’ve also added comments on a few additional bills you may have read about.

Solar panels on their way to being redefined as pollution control equipment. SB 418 (Hanger) passed the Senate. HB 1239 (Hugo) passed a House Finance Subcommittee Thursday and is expected to pass the full committee next week. Following the subcommittee hearing, proponents agreed to add a 20-megawatt limitation on the size of projects that can qualify for the tax-free treatment. Obviously, this project size won’t stop any projects in Virginia, but the amendment satisfied the only opposition the bill had encountered, from the Virginia Municipal League.

HOA bans on solar may soon be a thing of the past. SB 222 (Petersen) passed the Senate unanimously and now moves the House. Petersen added an amendment sought by HOA interests that would preserve solar bans if they were included in the underlying deeds, as opposed to in HOA contracts. As no one knows of any deeds prohibiting solar, this seems to have removed the only opposition to the bill without actually limiting its effectiveness.

Investment tax credit/grant facing headwinds. HB 910 (Villanueva) was heard Friday morning in a 5-member subcommittee of House Finance, which voted to table the bill.  Usually this is fatal to a bill, but advocates who were there say in this case they do expect the bill to come before the full committee on Wednesday, and the tabling is a temporary measure while $10 million is found in the budget to cover the cost. The Senate companion bill, SB 653 (Norment) remains in Senate Finance and has not been heard yet. It has been converted to a $10 million grant in accordance with the committee’s policy to reject most new tax credits but consider grants instead.

Two RPS bills rendered almost meaningless (but they pass!), one killed unceremoniously. Both SB 498 (McEachin) and HB 822 (Lopez) originally would have made modest improvements to Virginia’s sad, toothless, voluntary, RPS. Facing utility opposition, the bills were made even more modest, amended down to consist of nothing more than 5-year “banking” limits on the length of time utilities can hold onto RECs. States with real RPS laws generally have 2-year limits. Virginia currently has no limit at all, which not-just-theoretically allows utilities to stock up on enough pre-world-war II, out-of-state hydro RECs to last through 2025. So any limit at all is an improvement. And the bills seem set to pass both chambers, so you should thank Dominion for its generosity in allowing this to happen.

Meanwhile, HB 1061, Delegate Surovell’s “Made in Virginia” bill, was killed in Thursday’s House energy subcommittee.

Efforts to expand net metering fail in the House, will be heard in Senate Monday. Solar advocates and industry members successfully beat back Dominion Power’s bid to hijack the multi-family net metering provisions of HB 879 (Yost) and HB 906 (Krupicka). Alas, Dominion got its revenge Thursday in the House Commerce & Labor energy subcommittee, where the Republican majority had clearly come prepared to kill the bills. The two bills, plus Delegate Surovell’s solar gardens bill, HB 1158, were tabled with little debate, though with dissenting votes from the subcommittee’s three Democrats.

(We interrupt this blogpost for an observation about the workings of the General Assembly, which you can skip if your interest extends only to the sausage and not the sausage-making. Sitting in the audience of the House energy subcommittee on Thursday, I couldn’t help noticing the three Democrats appeared to be entirely irrelevant. They were seated way off to one side by themselves, and took no part in any of the discussions during the three hours that I was there. Even their dissenting votes were cast by silent little waves of their hands. It is tough to be a Democrat in the House.)

Meanwhile over in the Senate, SB 350 (Edwards) is scheduled to be heard in Commerce & Labor on Monday afternoon. Like the House bills, the Senate bill as drafted addresses both multi-family and municipal net metering.

House energy subcommittee kills effort to add price stability to factors to be considered in new generation. HB 808 (Lopez) was tabled Thursday in the House energy subcommittee.

And don’t go considering the environment, either. HB 363 (Kory) was also killed in the House energy subcommittee Thursday.

On-bill financing effort fails for the year. HB 1001 (Yancey) was continued to 2015 at the request of the patron, a face-saving way to withdraw your bill when you find it really isn’t ready for prime time. The bill faced utility opposition, but also had flaws that the delegate wants to work on. “Continuing” it rather than withdrawing it signals that we can expect another effort next year.

Adding energy and water conservation projects to the powers of local service districts fails. HB 766 (Bulova) was tabled in a subcommittee of the House Counties, Cities and Towns committee.

Crowdfunding bills fail. Both HB 880 and SB 351 failed in committee.

All right, time for some good news.

Bill to impose a new gas plant on AEP fails. My understanding of HB 1224 turned out to be mistaken; AEP did not seek this legislation. Instead the proponent of a new gas plant in AEP territory is the would-be developer, which resorted to legislation when its efforts to sell the utility on its proposal failed. Following a far more spirited and extensive debate than was afforded to far better bills, HB 1224 failed to get a vote to move it out of the House energy subcommittee.

Hampton Roads “recurrent flooding” study passes Senate, moving through House. SJ3 passed the Senate, while HJ16 was reported from House Rules subcommittee with an amendment shrinking the size of the commission doing the study. Still no mention of why recurrent flooding is happening.

Some protections from fracking pass Senate Ag. SB 48 (Stuart) passed the Senate Agriculture committee unanimously. The bill provides some protections for drinking water from impacts related to oil or gas operations proposed in Tidewater Virginia. I haven’t analyzed this bill; for more information, contact the Southern Environmental Law Center, which supports the bill.

Attempts to nullify federal law (said to) fail. I’m told Bob Marshall’s HB 140 and HB 155 both died in a subcommittee of House Privileges and Elections, although the website still shows them in committee. Possibly they simply failed to gain a vote, which is one way bills die.

Saner heads prevail (mostly) on anti-EPA bills. SB 615 (Carrico), the “Carbon Dioxide Emission Control Plan” designed to ensure the continuation of carbon dioxide emissions, was in trouble even before Democrats took control of the Senate. The senator changed the bill to conform it to HB 1261 (Chafin), which called for a study with the same purpose. Under pressure from the governor’s office, the bill was amended to study not just the costs to industry and ratepayers of complying with EPA regulations, but also the benefits. In Senate Ag Thursday, still facing heavy opposition to the bill from the environmental community, Carrico accepted an amendment from Chap Petersen that took out the worst remaining provision, one that would have restricted the state from proposing any standards more stringent than the EPA required. The bill then passed unanimously. Later in the afternoon, HB 1261 was conformed to the amended language of SB 615 and passed handily. The bill remains weighted towards findings favorable to the fossil fuel industry, but it is hugely better than it was.

But lest we feel progress is being made in Virginia . . .

Dominion’s rate boondoggle shows excellent prospects. Really, you have to admire the way Dominion Power pushes through bills it wants and kills the ones it doesn’t. Dominion is the single biggest contributor to Virginia’s politicians, after the Republican and Democratic parties, and the company gets its money’s worth. But it’s not just the way it kills smart energy policies that impresses.

Take HB 1059 (Kilgore), which would allow—nay, require!—Dominion to begin charging customers for $570 million it has spent towards a new nuclear plant, plus a couple million towards offshore wind, money it would ordinarily recover only when the projects are built.

Stephen Haner, a lobbyist for Newport News Shipbuilding, delivered a valiant and spirited defense of ratepayers in opposing the bill during the meeting of Thursday’s House subcommittee on energy. The real reason for the bill, he explained, is to prevent Dominion from having to give its customers hundreds of millions of dollars in rebates as a result of having earned too much money these past two years. Two years of over-earning would also lead to a reduction in rates for consumers going forward, threatening the bottom line still further. Dominion has figured out it can avoid that result by adding the money spent on nuclear to the balance sheet, thereby canceling out that pesky excess revenue and avoiding a rate decrease. For more on this, see the article in the Richmond Times-Dispatch.

Separate bills in the Senate–one for nuclear, one for wind—also empower the boondoggle. SB 643, the offshore wind bill, remains in Senate Commerce and Labor and is not on the docket yet. But the nuclear bill, SB 459, has already passed the Senate unanimously, a testament to Dominion’s charm if there ever was one. In addition to requiring our utility monopoly to charge us for its costs in planning and developing a new nuclear facility, it states as a matter of law that this development is in the public interest. Really, guys? How do you think the public would vote?

Science “education.” Last, I bring you a dispatch from guest blogger Seth Heald, who has been following Delegate Dickie Bell’s anti-science bill. Seth attended the House education subcommittee on Thursday. He reports:

HB 207 science education bill referred to Courts Committee. The bill purports to encourage open discussion and “critical thinking” as to purported “scientific controversies.” Last week the Hampton Daily Press and Washington Post nicely described the anti-science creationist and climate-denial history of the bill’s statutory language here and here. More detail is on the National Center for Science Education website. The bill came before the House Subcommittee on Elementary and Secondary Education on January 30, where Rita Dunaway of the Virginia Christian Alliance was the sole member of the public speaking in favor of it. Ten or so people spoke in opposition to the bill, including representatives of teacher and education groups, the Sierra Club, and the Jewish Community Relations Council. At week’s end WRIC TV in Richmond reported that the bill’s sponsor, Delegate Dickie Bell, said he introduced HB 207 after being “approached by” the Virginia Christian Alliance. The subcommittee approved Delegate Peter Farrell’s motion to refer the bill to the Courts of Justice Committee to consider its constitutionality.  Delegate Bell’s hometown newspaper, The Staunton News Leader, opined in a Feb 1 editorial titled “Bell introduces an unnecessary bill” that HB 207 is “unworthy of legislative attention.” The paper noted that Bell “has been down this road before, sponsoring other controversial bills drafted by ultraconservatives.”