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

cars on a flooded roadway

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

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

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

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

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

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

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

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

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

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

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

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

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

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

A ten-point action plan might look like this:

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

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

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

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

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

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

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

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

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

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

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

 

How Virginia localities will get to 100% renewable

Supporters of clean energy gathered in Richmond on April 25 to launch the 100% Virginia Campaign. Photo courtesy of the Sierra Club.

Last week a coalition led by the Sierra Club launched a “100% Virginia” campaign designed in part to encourage more localities to follow the lead of Blacksburg and Floyd in committing to a 100% renewable energy future. For many people this energy transition now feels inevitable, at least in the long run. In the short run, though, it still feels very difficult.

Consider the obstacles we face in Virginia. Most localities have to deal with Dominion Energy Virginia (Dominion) or Appalachian Power (APCo), which have monopolies in their service territories. With few exceptions, customers can’t just sign up with another supplier who will offer a cleaner energy mix. And most local governments themselves buy electricity collectively from Dominion under a contract that gives them an attractive price but constrains their ability to generate power for themselves.

Our utilities themselves show no interest in abandoning fossil fuels. Dominion Energy Virginia’s parent company, Dominion Energy, is heavily invested in natural gas transmission, storage and export. The parent company needs the electric utility it owns to keep burning fracked gas for electricity so it can fill pipelines like its $6 billion Atlantic Coast Pipeline. Dominion has sunk billions of dollars of its customers’ money into new gas generating plants, which it won’t want to close early. And Dominion’s 2017 Integrated Resource Plan (IRP) showed the company expected to see its CO2 emissions actually increase over the next 25 years.

For its part, APCo is a subsidiary of Ohio-based American Electric Power (AEP). AEP has reduced its use of coal in recent years and plans major investments in renewable energy, but it won’t reach its planned 80% reduction in CO2 emissions until 2050. Meanwhile it is increasing its use of fracked gas.

Both Dominion Energy Virginia and APCo make money by building new infrastructure, so they need customers to use more energy, not less. They oppose mandatory efficiency savings as well as customer-owned and third-party owned solar, both of which would reduce their own sales. One result is Virginia’s abysmal showing on energy efficiency rankings.

Virginia lacks a mandatory renewable portfolio standard (RPS), relying on a weak and voluntary standard. As a result, Dominion Energy Virginia’s energy mix is currently less than 4% renewable energy, none of it from wind or solar. (Dominion does generate a tiny amount of solar energy but sells the renewable energy certificates, so legally it no longer qualifies as energy from solar. This will be an ongoing problem as Dominion builds more solar.) APCo has more wind in its energy mix than Dominion does, but also more coal.

Customers who want to generate their own renewable energy face a long list of policy barriers, and Virginia lacks incentives like tax credits, rebates, or a REC market that would spur private investment. Under pressure from Dominion, APCo and the rural electric cooperatives, the General Assembly routinely defeats proposals that would boost investment in rooftop solar. A recent report gave Virginia an F on solar policy, ranking us among the “10 States Blocking Distributed Solar.”

If the General Assembly is unhelpful, Virginia’s State Corporation Commission (SCC) is actively hostile to renewable energy and energy efficiency. The SCC cares about low rates and not much else.

It’s also hard for local governments to fill the policy gap. Virginia is a Dillon Rule state, meaning local governments have only the power granted to them by state government. A city or county can’t adopt a building code requiring homes to be more energy efficient than called for in the statewide code, or require new buildings to have solar panels or green roofs.

With all these obstacles, the prospects for meaningful change once looked grim. But two trends have converged to change the outlook. First, the economics of electric generation have now shifted decisively in favor of renewable energy and away from fossil fuels (though a lot of people don’t know it yet). And second, customer demand for renewable energy has surged across the political spectrum, with major corporations driving much of the action.

As a result, even in Virginia a number of trends favor renewable energy:

Dominion’s 2017 IRP dropped plans for new baseload gas plants before at least 2025, a sharp change from 2016. That IRP for the first time identified solar as the least cost resource in Virginia, though it proposed a build-out of only 240 MW per year. Dominion’s 2018 IRP, due out May 1, will almost surely call for more than that, in keeping with 2018 legislation, SB 966, putting more than 5,000 MW of wind and solar by 2028 in the public interest.

SB 966 also called for a billion dollars in new spending on energy efficiency programs, and limited the SCC’s ability to reject proposed efficiency programs. Meanwhile, localities are putting in place Commercial Property Assessed Clean Energy (C-PACE) lending programs that will allow businesses and non-profits to access low-cost financing for both energy efficiency and renewable energy.

Corporate demand has created new solar options, including some from Dominion but also some that don’t involve our utilities. For example, the 500 MW solar farm that will serve Microsoft and others appears to be structured to bypass Dominion entirely. The deal uses what is known as a wholesale power purchase agreement, an option increasingly popular with corporations, institutions, local governments, and other large purchasers of energy. The Northern Virginia Regional Commission is currently working with local governments in its area to do something similar.

Legislation passed in 2017 is also finally producing a solar option for Dominion customers that will likely be available by the end of this year. As proposed, it will offer electricity generated from solar facilities in Virginia at a cost comparable to that of Dominion’s wretched Green Power Program.

Offshore wind has not gotten much attention in Virginia recently, but Dominion’s partnership with the Danish company Orsted, the world’s leading offshore wind developer, puts Virginia’s 12-MW pilot project on track for completion in 2020, with the commercial lease area likely to see the full build-out of 2,000 MW occur during the 2020s.

Finally, the Northam Administration is finalizing new regulations designed to reduce greenhouse gas emissions from power plants by having Virginia utilities trade carbon allowances with those in states that are members of the Regional Greenhouse Gas Initiative (RGGI). It’s not clear yet how much this will incentivize utilities to build wind and solar.

Localities considering a commitment to 100% renewable energy should feel optimistic about these developments. As renewable energy costs continue to tumble, charting a path to 100% also means saving money for taxpayers.

The exact path to 100% may not be clear, but it will likely involve a combination of some or all these options:

  • Prioritizing energy efficiency in both public and private buildings;
  • Investing in large offsite solar (and wind) facilities, and encouraging corporate and institutional customers to participate in similar investments;
  • Putting solar on rooftops and parking lots of municipal buildings and schools, using third-party PPA financing to avoid upfront capital costs;
  • Offering C-PACE financing to businesses for energy efficiency and solar;
  • Sponsoring and promoting “solarize” bulk purchasing programs that make it easier and cheaper for residential and commercial customers to install solar;
  • Promoting utility-sponsored renewable energy purchase options for residents and businesses as they become available; and
  • If adequate utility options don’t emerge, using municipal aggregation to purchase renewable electricity from another supplier.

Localities also have to do a better job advocating for clean energy at the General Assembly and with the Governor, where they are currently underrepresented in the energy debate. They need to become squeaky wheels about things like the barriers to customer-owned solar, the paucity of renewable energy options and our substandard residential building code.

But most of all, localities have to begin taking advantage of the efficiency and solar options that already exist. Too many boards of supervisors and city councils waste time dithering and second-guessing and deferring to unmotivated staff and wondering if, gee, maybe it would be better to wait for someone else to go first.

Getting to 100% may not be easy, but it’s impossible if you never start.

The race to 100% renewable is on in Virginia: Floyd and Blacksburg lead in committing to energy transition (sort of)

On October 24, 2017, deep in the heart of Virginia, the mostly Republican supervisors of Floyd County (population 15, 755) issued a resolution proclaiming the county’s commitment to reduce greenhouse gas emissions by “replacing fossil fuels with renewable energy along with conservation and energy efficiency,” and “support[ing] the achievement of near zero greenhouse gas emissions through policies that shift the energy supply strategy of our County from fossil fuels to 100% clean renewable energy.” The vote in support was unanimous.

The vote made Floyd the first Virginia locality to join more than 70 cities, towns and counties across the U.S. that have committed to achieving 100% renewable electricity. At least five cities are already powered by renewable energy today, according to the Sierra Club. (And surprise! None of the five are in California.)

Floyd’s resolution does not set a date for accomplishing its goal, so some might call it more aspirational than committed. And even the residents of Floyd subsequently showed themselves more than a little conflicted. (I’ll get to that in a moment.)

But within three months, the Town of Blacksburg followed suit with its own resolution in favor of 100% renewable energy, and it upped the ante by setting a target date of 2050. The Blacksburg commitment is bolstered by the town’s previous work on a climate action plan and its own claim to fame as the location of Virginia’s first Solarize campaign.

As best I can tell, Floyd and Blacksburg are the only Virginia localities to take the pledge so far, but the idea is under consideration across the state. The Sierra Club launched its “Ready for 100” campaign in Virginia almost two years ago in an effort to persuade Arlington and Alexandria to set a target date of 2035 for both government and residents to be powered by 100% renewable electricity. Fairfax City and Charlottesville have also begun the conversation.

The 2035 target proposed for Arlington and Alexandria is both more and less ambitious than Blacksburg’s goal, since it covers only the electric sector. Moving to 100% renewable energy, as Blacksburg aims to do, also requires things like eliminating petroleum use in transportation and an end to heating by natural gas and fuel oil. These are harder in the near term but generally considered achievable by 2050, given the projections for electric vehicles, cost declines that make electricity from wind and solar competitive with fossil fuels, and a growing belief that combating climate change will soon push us towards a policy to “electrify everything.”

Not everyone agrees that abandoning fossil fuels is the right goal, including some of the same people who said it was. Immediately after passing the 100% resolution, supervisors in Floyd County contracted a case of buyers’ remorse when the local Tea Party found out and raised a ruckus. (The local newspaper had been covering the topic for months, but evidently it didn’t make Fox News.)

Barely six weeks later, on December 12, the board issued a hastily-prepared second resolution. It began by repeating several findings of the first resolution, including recognizing the threat of climate change and the role of humans in causing it. So far, so good. Then it took a sharp detour to praise fossil fuels and to pledge to “protect the freedom and economic interests” of residents by working for “viable, cost-effective, clean and reliable energy resources of all available types,” which the drafters seemed to think included fossil fuels. Only one supervisor voted no. They did not, however, repeal the first resolution. That leaves Floyd with its first-in-the-commonwealth status on embracing 100% renewable energy, but sadly paralyzed on putting it into action.

It is worth reading this second Floyd resolution to understand the underlying concerns of the noisy minority who pushed it through. It reveals that a belief in coal as a cheap fuel remains common, though it has been years since coal lost its competitiveness. And the reference to fossil fuels as “clean” is surely an echo of the “clean coal” propaganda that never had any truth behind it, but seemed to offer a free lunch. The very silliness of the phrase works in its favor: since no one would make up something so absurd, people figure, it has to be true.

The second resolution also reflects a genuine concern about the potential of an over-active government to infringe on individual liberties. Billy Weitzenfeld, President of Sustain Floyd, told me some local people who were opposed to the pro-renewable energy resolution expressed a fear that it would lead to the government taking away peoples’ wood stoves and forcing everyone to put solar panels on their houses. Thus the freedom from utility control that rooftop solar offers to consumers was turned on its head and made to look like a threat to individual liberty.

Weitzenfeld feels the Tea Party concerns are misplaced, but he also thinks the conflict could have been avoided by better dialog in the process. It was unfortunate, he said, that fear took over, and—at least temporarily—brought a halt to what had been an exciting momentum on clean energy initiatives.

Weitzenfeld has not thrown in the towel, though. He and other advocates in Floyd are getting back to doing “the proactive stuff that can really make a difference”: putting solar on rooftops through a second Solarize program, encouraging energy audits, engaging the public, and building what he calls “the constituency of practitioners,” people whose own experience with renewable energy will make them the ones to push back against fear and misinformation the next time around.

Looking on the bright side, even the rebelling Tea Partiers recognized the climate threat, which is also a theme common to the other Virginia resolutions. In other conservative states, more prosaic considerations have driven the decision. And by that, of course, I mean money. The Republican mayor of Georgetown, Texas, said economics pushed them to become one of the first cities in America to run entirely on wind and solar energy, when they found they could save money doing it. Bentonville, Texas, may become the second city in that state to achieve the 100% goal, on economic grounds as well as due to concerns over air quality associated with coal and gas burning.

In 2008, tiny Rock Port, Missouri, became the first locality in the U.S to be powered entirely by wind energy, taking advantage of a cheap and abundant resource in a windy farm community. Greensburg, Kansas, also went all-wind in 2013, and uses this and other green initiatives as a major branding tool.

All of these are small communities that control their own electricity supply, which gives them options most Virginia localities lack. Blacksburg residents get their electricity from Appalachian Power; most others have to deal with Dominion Energy Virginia or one of the rural electric cooperatives. So even if they achieve consensus within their communities on a goal of 100% renewables, meeting the goal will require navigating a range of barriers.

We are not alone there. A fair number of the cities on the Ready for 100 list are also located in the Southeast, and suffer from the same outdated monopoly utility structure that we do. Virginia localities can look for guidance to Atlanta, Georgia (100% renewable energy by 2035), and Columbia, South Carolina (100% renewable electricity by 2036).

Next week Sierra Club will launch its “100% Virginia Campaign” to encourage residents across the state to advocate for clean energy in their communities, with the hope that more localities will take up resolutions for 100% renewable electricity by 2035.

More generally, Sierra Club organizer Alice Redhead says the goal is to “build a movement for clean energy across the state and set the conditions for Virginia to transition to 100% renewable energy statewide by 2050. We are pushing for localities around Virginia to commit to 100% clean energy, but we are also making sure that the campaign is flexible rather than one size fits all and allows for locally-tailored initiatives that are strategic for the conditions in different areas of the state. Local campaign teams that are a part of the 100% Virginia network will develop unique plans to advocate for clean energy progress specific to their area.”

In an upcoming blogpost I’ll take a harder look at the obstacles facing Virginia localities, as well as the opportunities that make getting to 100 a viable option.

Virginia buys Dominion’s pig in a poke

How Dominion sees the bill.

A pig in a poke is defined as “an object offered in a manner that conceals its true value, especially its lack of value.” The expression is said to go back about five hundred years to English marketplaces. A poke was a sort of sack, but why 16th century people bought pigs in sacks, and why they would have bought a sack without looking inside, is not at all clear. I’m guessing the seller was the local pig monopoly, and the buyers were timid leaders who meekly paid their farthings and hoped for the best. After all, that is how we do it in the marketplace of Virginia’s General Assembly when Dominion Energy Virginia comes peddling legislation.

And indeed, the true value (or lack of value) of this year’s boondoggle bill (HB 1558/SB 966) will probably not be understood for months or even years to come. The General Assembly passed this legislation that will govern billions of dollars of new spending paid for by Virginia customers after just a handful of hearings over a few weeks, and with no study or input from outside experts. If you will excuse the expression, this is a lousy way to make sausage.

Arguably, the only thing worse than this bill is the law it seeks to fix, the infamous “rate freeze” legislation of 2015 that simply let Dominion keep a billion dollars of customer money to line its own pockets. You’d think legislators would have learned something about legislating in haste and repenting at leisure.

But the legislation could have been worse. We know this because it was worse; the bills Dominion originally put forward returned even less money to consumers, gave the utilities even more leeway on spending, and included the infamous “double dip” that the SCC said would let Dominion charge customers twice for the same projects. The bills improved over the next few weeks under pressure from progressive Democrats, conservative Republicans, the SCC, the Attorney General’s office, the Governor, and consumer and environmental groups.

Whether it is good enough now remains a matter of debate. Conservatives for Clean Energy and the League of Conservation Voters support the bill, especially the provisions relating to investments in energy efficiency and renewable energy. The Sierra Club, an early opponent, used what leverage it had to get the worst provisions changed before removing its opposition late in the game (while still not supporting the bill). The AG’s Office of Consumer Counsel and Appalachian Voices never dropped their opposition.

Nevertheless, the poke has been bought, so you should definitely take a look at the pig. The Virginia Poverty Law Center and the Southern Environmental Law Center produced a handy summary of the bill’s final provisions compared to both the original bill and the status quo under the 2015 law (and sometimes also to the pre-2015 law).

The summary describes the categories of new spending authorized by the law, but a lot is left to interpretation—Dominion’s interpretation, mostly. Customers don’t seem to have any say in how their money gets spent. They are just supposed to feel happy with the provisions granting them some initial refunds reflecting a portion of the overearnings from past years, plus the utility’s savings from the federal tax cut. Going forward, though, the likelihood of further refunds or rate cuts seems remote. The whole point of the bill is to allow utilities to spend overearnings and avoid refunds. And as always, rates can continue to go up through “rate adjustment clauses” (RACs) like the ones that tacked new charges onto electricity bills even when base rates were frozen.

Moreover, what VPLC’s summary (understandably) lacks is a comparison to what ought to be in there: full refunds based on a review of past earnings rather than legislative guesstimates; mandatory—and much higher—levels of energy efficiency, wind and solar; proper regulatory oversight of rates and spending; and an independent assessment of grid modernization needs rather than blanket permission for a utility to indulge in projects that benefit itself most.

We’ll have to wait until next year for any new legislation, but it is not too early to start laying the groundwork. Governor Northam should direct his administration to begin working with national experts on a comprehensive grid modernization study. The goal should not be to tinker around the edges of current law and policy, but to draft a new and better approach from the ground up. (For a great discussion of why we need this study and what it should look like, see Tom Hadwin’s blogpost from last week.)

Meanwhile, legislators should promise their constituents that they will never again allow a public utility to write our energy laws and force through massive and complex changes over the course of a few weeks of the legislative session. Next time Dominion offers a pig in a poke, the answer should be no.

Sierra Club takes State Corporation Commission to court over failure to review Atlantic Coast Pipeline deal

Photo credit Chesapeake Climate Action Network

Sierra Club is asking the Supreme Court of Virginia to require the State Corporation Commission (SCC) to review a key deal for shipping capacity on the Atlantic Coast Pipeline. The SCC has thus far declined to exercise its oversight authority over this arrangement, despite a Sierra Club petition filed last May urging that Virginia’s Affiliates Act requires the Commission’s review in this case. In Sierra Club’s appeal filed yesterday by attorneys with Appalachian Mountain Advocates, the law firm representing it in court, the Club argues that the SCC was wrong to reject its petition and seeks an order reversing the SCC’s decision.

The Atlantic Coast Pipeline (ACP) is being developed by a partnership called Atlantic Coast Pipeline LLC, whose largest shareholder – Dominion Energy – is parent company of the public utility Virginia Electric and Power Company, now operating as Dominion Energy Virginia (having changed its name earlier this year from Dominion Virginia Power). Under the arrangement noted above, Dominion Energy Virginia must, through one of its subsidiaries, purchase pipeline capacity on the ACP for a period of 20 years, with Atlantic Coast Pipeline LLC— the utility’s own corporate affiliate—bringing in tens or even hundreds millions of dollars per year in revenue. What’s more, Dominion is nearly certain to request that Virginia’s ratepayers ultimately foot the bill for this arrangement.

The utility’s deal with Atlantic Coast Pipeline LLC underpins Dominion Energy’s claim that the ACP has enough customers to justify its construction. Without that arrangement, Dominion and its partners would likely have had trouble getting approval from the Federal Energy Regulatory Commission (FERC) to build the pipeline.

Under the Virginia Affiliates Act, public utilities like Dominion Energy Virginia are required to submit their “contracts or arrangements” with affiliated companies to the SCC for approval before they can take effect, something the utility failed to do. But on September 19, the SCC rejected Sierra Club’s petition for an order holding that Dominion must comply with the Act and requiring a formal proceeding to determine whether the ACP deal is in the public interest.

Sierra Club and other critics contend that this arrangement is a loser for ratepayers because Dominion Energy Virginia already has all the pipeline capacity it needs: several years ago, it purchased 20 years’ worth of capacity from Transcontinental to service the same power plants that it now claims must receive gas—at a much higher shipping rate—from the ACP. As a result, the utility’s arrangement with Atlantic Coast Pipeline LLC will very likely increase, not decrease, electricity prices in Virginia. It is hard to imagine that if the SCC were to examine the facts of the deal, as the Affiliates Act requires it do, it would find that this expensive and redundant arrangement is actually in the public interest.

“We have grave concerns that Dominion’s deal for shipping capacity on the ACP will only serve to benefit the company’s bottom line, not the needs of the public,” says Andres Restrepo, a Sierra Club lawyer involved in the matter. “Luckily, the Affiliates Act is crystal clear: arrangements like Dominion’s must be reviewed and approved by the SCC before they can take effect. That’s why we’re confident that the Supreme Court will rule in our favor and require Dominion and its subsidiaries to comply with this critical review requirement.”

According to Restrepo, the Supreme Court will likely solicit briefing on the appeal and hold oral arguments during the first half of 2018. If Sierra Club is successful, Dominion would then have to file its agreement under the Affiliates Act, and the SCC would have to open a case docket and hold a hearing to consider whether the deal is in the public interest.

A ruling by the SCC rejecting Dominion’s plan could have significant ramifications. Namely, it would undermine the basis on which FERC approved construction of the ACP this fall. FERC approval for new pipeline rests on a showing that the pipeline is “needed,” and the Commission has recently found that such need exists where the project proponent has customer contracts for most or all of the pipeline’s capacity. Without valid contracts, this basis for a need determination vanishes.

Sierra Club and other pipeline opponents have asked FERC to reconsider its approval of the ACP, based in part on the question of whether Dominion and its partners have properly shown need. A decision by the SCC rejecting Dominion Energy Virginia’s deal with Atlantic Coast Pipeline LLC could prompt FERC to reconsider its prior approval.

An SCC ruling could also impact the ACP’s construction timetable and even its economic rationale. How will investors feel about spending $5 billion to build a pipeline through Virginia when most of its Virginia customer base has disappeared?

But first, the SCC must actually review the deal. In its September order rejecting Sierra Club’s petition, the SCC essentially said that it didn’t need to make a determination now; it could wait until Dominion comes to it asking to charge ratepayers for the ACP deal in future proceedings. But the Affiliates Act requires review and approval of inter-affiliate agreements before they take effect. Furthermore, any later proceedings to determine rate impacts would happen only after the pipeline had been built and become operational.

Yes, that’s nuts. Dominion seems to be willing to construct the pipeline now and gamble on SCC’s approval of cost reimbursement further down the road, but the rest of us—Virginia’s ratepayers—shouldn’t be forced into such a gamble. Virginians, who have to suffer the environmental destruction the ACP will cause in addition to likely impacts to their electric rates, deserve to have their needs considered now, just as the law requires, and not later, as Dominion would prefer.

The fact is simple: contrary to its ruling in September, the SCC must review Dominion Energy Virginia’s deal for ACP shipping capacity now to determine whether it is in the public interest. The Affiliates Act requires no less. Here’s hoping Virginia’s Supreme Court holds the SCC to its obligations and mandates a formal review process. After all, better late than never.

Show up and be counted

Just in case you own neither a television nor a mailbox, don’t read a newspaper, only use your computer to watch videos of a Japanese cat with a thing for boxes, and never answer a telephone call from an unfamiliar number because it might be Rachel from Cardholder Services . . .

Tomorrow is Election Day in Virginia. Judging from the ads, politicians think you are most interested in which candidate has a hidden agenda of coddling violent gang members, or which one will dramatically lower our taxes simply by cutting the waste that every one of his predecessors somehow missed.

But I’d like to put in a plug for choosing candidates who support people over corporations, the public good over special interests, the environment over polluters, and the free market over monopoly. And if the candidates you’re choosing between don’t do any of those things as well as they should, vote anyway, because only by voting do you have the right to hold elected officials accountable.

The Virginia Chapter of the Sierra Club has endorsed candidates at the state and local level whose background and responses to questionnaires and interviews show they are most likely to support the environment in office. The endorsements are made by the chapter’s Political Committee and the volunteer Executive Committee, in consultation with members most knowledgeable about the issues and the candidates. As a non-partisan organization, the Sierra Club can and does endorse Republicans as well as Democrats, but the Republican vow of ignorance on climate change tends to make it hard to find ones the Club can endorse. (The standout exception is Republican Delegate Randy Minchew of Leesburg.)

A group called Activate Virginia has also compiled a handy list of candidates who have pledged not to take contributions from the likes of Dominion Energy, which has used its remarkable influence to enrich itself at the expense of consumers and lull even otherwise savvy leaders into supporting the expansion of fossil fuel infrastructure.

Personally, I find it pretty easy to know who to vote for. No serious candidate still denies that the planet is warming or that humans are causing it. (Regrettably, we have a lot of un-serious candidates.) Governor McAuliffe finally put in motion a proposed rulemaking that would lower carbon emissions from power plants. Ralph Northam has pledged to see it through if he is elected Governor. Ed Gillespie has pledged to kill it. Northam gets my vote.

New fracked gas pipelines will raise energy prices and commit Virginia to decades more of rising greenhouse gas emissions, while crowding out cleaner and cheaper renewable energies like wind and solar. Candidate for Lieutenant Governor Justin Fairfax opposes the pipelines, while Jill Vogel repeats the mindless “all of the above” pablum so popular with politicians who aren’t troubled by the difference between a mountaintop dotted with wind turbines and one blown up for its coal. Fairfax gets my vote.

Attorney General Mark Herring has been a champion for the environment and consumers in court and before the State Corporation Commission. His challenger John Adams has a cool name. Herring gets my vote.

New pipelines report shows the ACP is part of a widespread, systemic market failure

Photo courtesy of Chris Tandy.

Anyone who examines the corporate deals that underlie the Atlantic Coast Pipeline comes away with a strong sense of looking at a broken regulatory system. The Federal Energy Regulatory Commission (FERC) is supposed to approve only those pipelines that can demonstrate they are actually needed. Pipeline companies demonstrate need by showing that customers have contracted for most or all of the pipeline’s capacity. In the case of the ACP, Dominion Energy and its partners manufactured the need by making their own affiliates the customers of the pipeline.

What’s weird is that FERC seems to be okay with this. It recently approved another pipeline with a similar setup—the Nexus pipeline that will carry fracked gas from Ohio through Michigan to Canada. FERC ignored blatant self-dealing between the pipeline company and its regulated utility affiliate, including clear evidence the regulated utility affiliate increased its share of the pipeline’s capacity only to create a “need” for its parent company’s project.

A new report from Oil Change International concludes the U.S. is currently building unneeded fracked-gas pipelines as a result of FERC’s regulatory failures, including its failure to police self-dealing. The result will be excess pipeline capacity, paid for by regulated utility customers.

The primary cause of the overbuilding, and the reason companies like Dominion engage in self-dealing to create the impression of “need,” is that FERC sets an absurdly high rate of return on pipelines—14%, compared to a typical utility rate of return of 10%. FERC set the high rate back in 1997 when interest rates were double what they are now, so it was more expensive to build large infrastructure. FERC hasn’t changed the rate since then even though it is causing obvious market distortions—and creating an incentive for utilities to jump into the pipeline business.

What is even weirder is that Virginia’s State Corporation Commission seems to be okay with self-dealing, too. The ACP is also using affiliate contracts that commit the customers of state-regulated electric utilities (including Dominion Energy Virginia) to pay for the use of the pipelines.

The SCC’s job is to protect electric utility customers from precisely this kind of exploitation. These customers don’t have the option to walk away from the likes of Dominion Energy Virginia; they are required by law to get their electricity from that utility and no other. If the SCC looks at self-dealing and shrugs, where are the customers supposed to go for protection?

That’s why Virginia has a law called the Affiliates Act that requires SCC approval before a regulated utility can commit its customers to any contract or arrangement with an affiliated company. Dominion had to commit electricity customers to the ACP in order to show FERC the pipeline was needed. Yet Dominion never even asked the SCC for approval.

Recognizing the risk to ratepayers, the Sierra Club petitioned the SCC to require Dominion to comply with the Affiliates Act by disclosing the affiliate relationship and seeking approval of the arrangement that affects captive customers. Without SCC approval, Dominion would seem to be on thin ice telling FERC it has the contracts in place that demonstrate the “need” for the ACP.

One would have thought the SCC would jump at the chance to weigh in. The FERC filings show it will cost ratepayers three to four times more to use the ACP than to stick with the competing pipeline that Dominion already has long-tem contracts with.

But on September 19, the SCC denied the Sierra Club’s petition. One of the reasons cited was that Dominion will have to get SCC approval before it actually charges ratepayers for any gas carried by the pipeline.

Meaning, the SCC says it will consider the merits of the problem only after Dominion has secured FERC approval, and after the ACP has already ripped a 600-mile gash across the countryside, dispossessing landowners, tearing up forests, and endangering streams and water supplies.

Well, that poses a bit of a problem, doesn’t it? If the SCC turns down Dominion’s rate recovery request at that point, its decision will cancel out the very argument of “need” that Dominion and its partners used to get the ACP approved by FERC. Meaning, the ACP should never have been built.

But the pipeline will be there in all its razed-earth, $5 billion glory. What then? Perhaps Dominion will instead use the pipeline to serve its LNG export terminal at Cove Point or go hawking its expensive gas to new industrial customers, as some politicians hope. But more likely, this being Virginia, we would expect our General Assembly to order the SCC to grant rate recovery anyway, citing energy security or whatever fig leaf Dominion comes up with.

And a systemic market failure will leave Virginians, along with residents of other states, paying more to burn fracked gas for decades, unwillingly and unfairly doing our part to exacerbate the climate crisis.