Tag Archives: VCEA

To be or not to be a clean energy state, that is the question

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For the third year in a row, a tug-of-war is going on in the General Assembly over whether Virginia stays the course of the energy transition laid out in 2020 and 2021, or rolls it back hard.

Democrats remain committed to a renewable energy future to address pollution, high electricity costs and the causes of catastrophic climate change. Gov. Glenn Youngkin and most Republican legislators cling to the familiar (dis)comfort of fossil fuels. Republicans are still lobbing grenades at the Virginia Clean Economy Act (VCEA) and the Clean Car Standard; Democrats are holding the line on those advances.

Last year House Republicans used small subcommittees to kill Democrats’ energy bills, even those that passed the Senate on a bipartisan basis. This year the Democrats’ slim majority in both chambers will let more bills get to the governor’s desk. But with the threat of a veto tempering expectations, the party of clean energy is not running big, ambitious bills, but is instead focused on solving problems that have popped up along the march to zero carbon.

Committees have already begun work on the hundreds of energy bills filed in past days. That’s too many for even the Mercury’s dedicated readers to review without more caffeine than is good for you, so let’s focus on just some that would have the most consequence for the clean energy transition.

To be: Democrats work to further the clean economy

Many of the Democratic bills contain small fixes to existing law that add up to big gains for clean energy. One of these is HB 638, from Del. Rip Sullivan, D-Fairfax, and SB 230, from Sen. Ghazala Hashmi, D-Richmond. Most of its provisions are tweaks to the VCEA. Among them are increasing from 1% to 5% the percentage of Dominion Energy Virginia and Appalachian Power’s renewable energy purchasing that must come from small projects like rooftop solar; streamlining the State Corporation Commission’s review of energy efficiency programs by creating a single cost-effectiveness test; and supporting competition in the development of renewable energy and energy storage facilities by specifying that “at least”35% of projects must come from third-party developers, instead of the simple 35% number currently in the law. 

The bill also contains a provision that goes beyond the VCEA. It states that the SCC has an “affirmative duty” to implement the Commonwealth Energy Policy at “lowest reasonable cost.” (Two other bills, one from Sen. Jennifer Carroll Foy, D-Fairfax, and the other from Del. Phil Hernandez, D-Norfolk, contain only this provision.) The energy policy is separate from the VCEA, and it sets ambitious goals for the decarbonization of Virginia’s whole economy, including a faster timeline for achieving net zero in the electricity sector. The catch is that the policy does not have teeth, and for that reason it is routinely ignored. Requiring the SCC not just to take account of it, but also to implement it, is a step towards broader decarbonization, though it is not clear how it would actually play out at the SCC. 

Legislation from Sen. Scott Surovell, D-Fairfax and Sullivan would resolve problems with the shared solar program in Dominion territory (including putting restraints on the minimum bill that the utility can charge) and expand it to Appalachian Power territory. 

SB 79, from Sen. Barbara Favola, D-Arlington, would save taxpayers money by requiring new or substantially renovated (over 50%) public buildings to have solar-ready roofs or, if solar is deemed impractical, to meet one of two high-efficiency alternatives. New or substantially renovated schools would have to be designed and built to net-zero energy standards, unless the locality determines that to be impractical or the school is a historic building. 

Sullivan and Sen. Suhas Subramanyam, D-Loudoun, have introduced legislation to resolve the interconnection problem that has stalled commercial solar projects across Dominion territory. The House and Senate bills specify that customers are responsible for costs on their side of the meter, while the utility pays for costs on its side, including upgrades to the distribution grid. 

A few bills seek to break through the local-level gridlock that has bedeviled utility-scale solar and wind projects. The most significant of these is HB 636from Sullivan and SB 567 from Sen. Creigh Deeds, D-Charlottesville, which provides an alternative permitting process for larger utility solar (50 MW or more), wind (100 MW or more) and renewable energy storage projects (at least 50 MW nameplate and discharge capacity of 200 MWh or more) that go through the local permitting process but end up without permits. Developers get a second chance at the SCC if they meet a list of requirements. These include safeguards for farmland protection, stormwater, setbacks, wetlands, wildlife corridors, etc. Applicants are also charged $75,000 to cover the locality’s cost of participating in the SCC proceeding. (There is some irony here that small projects, which have less impact, are left at the mercy of local whims, while the most impactful projects have what amounts to a right of appeal.) 

Vehicle electrification would also get support from Democratic legislation. One bill of particular interest is Sullivan’s HB 118, which requires Dominion and Appalachian Power to take charge of upgrades to the distribution grid needed to support EV charging by non-residential customers. The utilities are also tasked with filing detailed plans to “accelerate widespread transportation electrification across the Commonwealth in a manner designed to lower total ratepayer costs.” 

Regardless of the fate of these bills, Virginia’s efforts to transition to a zero-carbon economy will be swamped by new demand from the fast-growing data center industry, unless the industry itself can be made part of the solution. A dozen or so bills seek to put conditions on the industry in one way or another, but one takes on the energy demand directly. HB116, from Sullivan, and SB192, from Subramanyam, condition data center operators’ receipt of tax credits on demonstrating compliance with minimum standards for energy efficiency and renewable energy procurement, as well as not using diesel generators for backup power. 

Not to be: Republicans try out arguments against the energy transition 

Many of the Republican anti-clean energy transition bills are blunt instruments that are more about campaigning in Trump country than low-cost energy. For example, HB 397, from freshman Del. Tim Griffin, R-Bedford, would repeal most of the important provisions of the VCEA, while declaring that development of new nuclear is “in the public interest” (a phrase that pretty much means “watch your wallet”). 

Similarly, five bills seek to repeal outright the Advanced Clean Cars law passed in 2021, which effectively put Virginia among the states that follow California’s path to vehicle electrification. The law does not kick in until 2025, but trying to repeal it has become a Republican standby. A more subtle bill from Del. Lee Ware, R-Powhatan, would condition repeal on the Virginia Automobile Dealers certifying that Virginia is not meeting its annual EV sales targets. 

Some anti-EV bills are merely performative. One non-starter, from Griffin again, would provide a tax credit for purchases of vehicles with internal combustion engines. A bill from Sen. William Stanley, R-Franklin, would require any business selling an EV or any EV component to a public body to provide a sworn declaration that there was no child labor involved not just in the manufacturing but at any point anywhere along the supply chain, starting with mining minerals abroad. 

If Stanley were truly concerned about child labor violations, of course, he would seek to apply this sworn declaration requirement to all industries. He could start with the domestic meatpacking industry, where child labor violations are rife, including in Virginia. Ah, if only that were the point. 

It’s not just state-level decarbonization that comes in for a brute-force attack. A bill from another new delegate, Eric Zehr, R-Lynchburg, makes its target any federal regulations that “may threaten the production or supply of affordable, reliable, and secure energy within the Commonwealth.” If alerted to such a threat by a utility or the SCC, the Attorney General’s office would be required to intervene. This sort of bill is not intended to survive its first committee hearing, if it even gets a hearing. Its only purpose is to show off the patron’s hard right bona-fides.

To be fair, there are Republicans who are actually trying to solve real problems in the energy sector. As one example, take SB562 from Sen. Travis Hackworth, R-Tazewell. His bill would create a ratepayer-funded pilot program for utilities to figure out a way to use coalbed methane for electricity without burning it (perhaps with fuel cells?). The problem is, he proposes to make this electricity eligible for Virginia’s renewable portfolio standard (RPS). It’s a creative, if expensive-sounding, response to the real climate problem of methane leaking from old and often abandoned coal mines, part of the true cost of coal. But calling fossil methane renewable is, shall we say, counterfactual. Some problems are more effectively tackled head-on, using tax dollars or tax credits, rather than being used to undermine the integrity of the RPS.

To be: somewhere else entirely

The reality of renewable energy is that we have to build a great many wind, solar and storage projects, each one taking months or years of design, permitting and construction work and requiring acreage we would rather use for something else. Yes, it means economic activity, investment and jobs, but it’s also something of a slog. Wouldn’t it be nice if we had a magic solution that could just provide carbon-free electricity without all that bother?

That’s the dream that continues to attract both Democrats and Republicans to nuclear energy. Opinion is divided on whether small modular reactors (SMRs) could hold the answer to all our energy woes, or are just the latest con from an industry looking to attract a new set of deep-pocketed suckers. 

 Three things are clear at this point. One, SMRs are still many years away from commercialization, coming too late to solve the climate problem that is here and now. Second, SMRs are going to cost a lot. Not only is there no free nuclear lunch, there isn’t even a low-priced breakfast. And third, Dominion is frothing at the bit to build an SMR – but only if customers have to pay for it. 

Some legislators are happy to oblige, even with all these drawbacks. The most concerning of the bills are HB 1323 from Del. Danny Marshall, R-Danville, and SB 454 from Sen. David Marsden, D-Fairfax. The legislation would allow Dominion or Appalachian Power to charge ratepayers “at any time” to recover development costs of a small modular nuclear reactor, defined as a nuclear reactor not larger than 500 MW. Not only is that not small, but by the language of the bill it need not even be modular or use advanced technology. Heck, it doesn’t even have to be in Virginia. Dominion could build any kind of nuclear plant, anywhere it chooses, and satisfy the terms of the bill. 

But it’s that “at any time” language that should be a red flag for lawmakers. Charging customers for a nuclear plant before and during construction, including cost overruns and with no guarantee of completion, is precisely how residents of South Carolina got stuck paying billions of dollars for a hole in the ground. 

That amount of money buys a lot of low-cost renewable energy and storage, right in the here and now. Virginia needs to be a clean energy state for the sake of ratepayers, the economy and the climate, and there is no time to waste.

This article was first published on January 21, 2024 in the VIrginia Mercury.

Up for a vote in this election: clean energy, data centers and utility influence

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Virginia voters will decide next month who will represent them at the State Capitol in January.

How much do Virginia’s elections matter in an off year? Measured by the turnout in past elections, you’d think the answer is “not much.” The percentage of registered voters who show up at the polls in Virginia typically drops well below 50% when no federal or statewide candidates are on the ballot. 

But measured by how much the outcome of this year’s election could affect the lives of regular people, the battle for control of the Virginia Senate and House of Delegates matters enormously. With a Republican in the governor’s mansion, a Democratic edge in either or both chambers would continue the status quo of divided government and (mostly) consensus-based lawmaking. A Republican takeover of both chambers, on the other hand, would lead to a wave of new legislation imposing the conservative social agenda on abortion, gay rights, transgender issues, education and welfare.

It would also put an end to Virginia’s leadership on climate and clean energy and lead to costly initiatives protecting fossil fuels, at the expense of consumers and the environment.

Some of the divisions between the two parties are well-known, and the consequences of one party edging out the other are clear. For some issues, however, the party positions are not as obvious, and it takes a look under the hood to understand where elections matter. 

Virginia’s clean energy transition is at risk

Let’s start with the obvious: the broad framework of Virginia’s energy transition to clean energy is a signature achievement of Democrats that Republicans have in the crosshairs. 

Three and a half years ago, Virginia made history as the first Southern state to commit to zero-carbon electricity by 2050 with detailed and specific guidance. The next year, the General Assembly followed up with legislation to begin the transition to electric vehicles. 

Clean energy investments soared after passage of the Virginia Clean Economy Act (VCEA). Solar installations in 2020 and 2021 dwarfed previous numbers, and the state solar market is now a $5.1 billion industry employing over 4,700 workers. Private investment dollars have poured into small-scale renewable energy as well, funding solar on schools, churches and government buildings. 

The VCEA’s support for offshore wind gave that industry the certainty it needed to move beyond the pilot project stage. Foundations for the first of 176 turbines of the Coastal Virginia Offshore Wind project are currently on their way to the Portsmouth Marine Terminal. By the end of 2026, the turbines are expected to provide enough electricity to power more than 600,000 homes. 

Communities benefited from Virginia’s entry into the carbon-cutting Regional Greenhouse Gas Initiative (RGGI), as $730 million in new revenue flowed to the Commonwealth for flood mitigation and low-income home weatherization. 

And after passage of the Clean Cars law, sales of electric vehicles in Virginia are set to double by the end of next year, and to double again by 2026.

In 2021, however, the election of Gov. Glenn Youngkin and a narrow Republican majority in the House of Delegates put these gains at risk. Early on, Youngkin declared his intent to repeal the VCEA and the Clean Cars law and pull Virginia out of RGGI. Only a Democratic majority in the Senate stopped legislative rollbacks passed by House Republicans in 2022 and 2023. Loss of that majority would ensure repeal of Clean Cars and the evisceration of VCEA.

As for RGGI, the failure to repeal the law led Youngkin to attempt to pull Virginia out through an administrative rulemaking that will be contested in court. He could sidestep a court battle and do it legally through legislation if his party takes control of the General Assembly. 

“No-brainer” bills killed in small committees

While a clear divide separates the two parties on signature Democratic initiatives like VCEA and RGGI, party membership is the determining factor on other energy and climate bills in less obvious ways. House rules allow a subcommittee consisting of as few as 5 members to vote down a bill by majority vote, keeping it from being heard by the full committee. With Republicans in control of the House, every subcommittee has a Republican majority, and Democratic bills routinely die on 3-2 votes. This can be true even if a bill has already passed the Senate, and even if the Senate vote was bipartisan – or for that matter, unanimous.

The Senate operates very differently. There, a subcommittee can only make recommendations. It takes a vote of the full committee to kill a bill in the Senate. 

You might wonder: if a bill is such a no-brainer that it passes the Senate unanimously or by a wide bipartisan majority, why would it get voted down in the House at all? Wouldn’t the bipartisan endorsement suggest this is actually a good bill that even the party in charge of the House would want to support, or at least have heard in full committee?

Indeed, when a no-brainer bill is killed in a tiny House subcommittee along party lines, it is rarely because the bill’s patron just happened to find the only few people in the General Assembly who don’t like the bill. More typically, it’s because the governor or the caucus itself has taken a position against the bill, but doesn’t want to draw attention to that fact. The subcommittee members tasked with doing the killing let everyone else in the party keep their hands clean. 

This explains the fate of Fairfax Democrat Sen. Chap Petersen’s bill to study the effect of data centers on Virginia’s environment, economy, energy resources and ability to meet carbon-reduction goals. The bill passed unanimously by voice vote in the Senate before dying at the hands of three Republicans in a five-person subcommittee of the House Rules committee. 

The data center study was the very definition of a no-brainer bill. The unbridled growth of data centers has ignited protests in communities across Virginia, and the industry’s voracious appetite for energy is blowing up Virginia’s climate goals, according to Dominion Energy. How can it be that House Republicans don’t even want to study the issue?

The answer lies in the fact that the Youngkin administration testified against the three data center bills that were heard in the Senate. One of Youngkin’s proudest achievements in office was the deal with Amazon to bring another $35 billion worth of data centers to Virginia. He does not want a study that would bring negative realities to light, so the bill had to die. The Republican members of the subcommittee were merely the executioners.

Another no-brainer bill that never made it to a full committee vote is one that gets introduced year after year: a prohibition on using campaign funds for personal purposes. This year’s legislation passed the Senate unanimously before just five Republicans voted to scuttle the bill in a House Privileges and Elections subcommittee.

My guess is you could not find a voter anywhere in Virginia who thinks legislators should be able to take money donated to their election campaigns and spend it on themselves. Justifying it requires legislators to turn themselves into logical pretzels. 

The combination of unlimited campaign giving by donors and unrestricted spending by the recipients makes it easy for powerful corporations like Dominion Energy to buy influence. Dominion has long been the largest corporate donor to legislators of both parties. The company’s influence has cost consumers billions of dollars and kept its fossil fuel plants burning.

Dominion’s influence was clearly at work this year when a House subcommittee killed a bill from Fairfax Senator Scott Surovell that would have made shared solar available to more Virginians, over Dominion’s opposition. The bill passed the Senate with bipartisan support before losing 4-2 on a party-line vote in a House Commerce and Energy subcommittee. 

It is less clear whether Dominion had a hand in the death of a bill that would help localities put solar on schools. The legislation passed the Senate unanimously before being killed in House Appropriations, again on a straight party-line vote. 

Certainly, there have been plenty of Democrats over the years who have voted for Dominion’s interest time and again. Conversely, not all the no-brainer bills killed by House Republicans reflect a hostility to the energy transition; sometimes the problem seems to be a hostility to environmental protections in general. Thus a bill to require customer notification when water tests show contamination from PFAS – known commonly as “forever chemicals” – passed the Senate unanimously and then was killed in a House subcommittee on, yet again, a party-line vote. 

It would be hard to identify a consistent line of reasoning behind all the anti-environment votes across all the various subcommittees, but the pattern is clear enough. It reflects not just the positions of individual legislators, but a firm party line. 

Whether voters care about these votes now is not clear, mainly because the news media rarely look at the role of the environment, climate and energy in elections. Regardless, these issues will be very much at stake at the polls next month. 

This article originally appeared in the Virginia Mercury on October 4, 2023.

If Dominion’s plan is so bad, is there a better one? (Spoiler alert: yes, there is.)

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Courtesy of Lowell Feld, Blue Virginia

In my last column I took Dominion’s Integrated Resource Plan (semi-) seriously, giving the utility the benefit of the doubt in its projections for data center growth and the alleged need for more fossil fuels to keep up with the power demands of that ravenous industry. But as I also noted, Dominion doesn’t deserve to be taken seriously with this document.

Under Virginia law, an Integrated Resource Plan (IRP) is supposed to explain how the utility expects to meet demand reliably and at low cost within the constraints of the law. In this IRP, however, Dominion asked a different question: how to make Gov. Glenn Youngkin happy by keeping fossil fuels dominant regardless of both law and cost. 

Coming up with a favorable answer required Dominion to ignore the Virginia Clean Economy Act (VCEA), create arbitrary limits on solar deployment, use wishful thinking instead of facts and, for good measure, do basic math wrong. They also assume the Youngkin administration will succeed in pulling Virginia out of the carbon-cutting Regional Greenhouse Gas Initiative (RGGI), a move that is being challenged in court. This makes Dominion’s IRP, with its plan to double carbon emissions, a sort of evil twin to a plan from any RGGI state. 

Sure enough, the governor loves it. Elsewhere, however, this evil twin found a cold reception. Experts retained by environmental, consumer and industry groups all agree that this IRP should be chucked in the trash bin and Dominion told to start over.

It’s worth taking a look at the testimony from these groups to understand where Dominion went so badly wrong, and what a better plan might look like. 

It’s all about the data centers

Northern Virginia data centers are the driving force behind Dominion’s plans to burn more coal and gas, but there is some disagreement whether their growth will be absolutely off-the-charts crazy, or merely eye-poppingly huge. Dominion’s IRP projects the data center industry’s power use in its territory will quadruple over the next 15 years, rising from 2,767 megawatts (MW) in 2022 to more than 11,000 MW in 2038. At that point it would represent close to 40% of Dominion’s load. 

Experts testifying in the IRP case believe data center demand won’t reach the dizzying heights Dominion projects. They question whether Virginia communities will accept so much new data center development, given the pushback already evident in localities like Prince William and Fauquier Counties. Their thinking is essentially that if things can’t go on this way, they probably won’t.

They also suggest that some of the demand Dominion expects may also be reflected in the plans of other utilities serving Northern Virginia’s Data Center Alley, leading to double-counting. A load forecast published by grid operator PJM shows that Northern Virginia Electric Cooperative (NOVEC) projects its data center demand to rise from about 400 MW in 2022 to 4,000 by 2028 and 8,000 by 2034. Two other cooperatives project a combined 3,000 MW of data center development in the same time period. 

Aside from data centers, demand for electricity in Dominion territory is flat or declining over the next fifteen years; presumably this is due to the increased efficiency of homes and businesses offsetting the increased demand from electric vehicles and building electrification. 

If you were already experiencing vertigo over Dominion’s data center numbers, and you are now hearing for the first time that Dominion’s numbers represent only half of the total projected data center load coming to Virginia, maybe you won’t find it all that cheering that some of that added demand could be illusory. Still, it is a reasonable point. If you reduce demand by a few thousand megawatts here and there, pretty soon you might not “need” a new gas plant.

As an aside, one Virginia utility stands out for apparently not expecting much in the way of new data centers in its territory. Appalachian Power, which serves customers in Southwest Virginia, West Virginia and Tennessee, has experienced declining demand for years, and rural Virginia leaders would dearly love to see data centers come there. Yet the PJM forecast shows Appalachian Power’s parent company, American Electric Power (AEP), told grid operators it expected only about another 200 MW on top of the 500 MW of data center load it serves across its entire 11-state territory. AEP seems to regard this as quite a lot, which, when compared with what is happening in Northern Virginia, seems rather sweet.

I can’t help but wonder how Gov. Youngkin managed to make a deal with Amazon to bring $35 billion worth of new data centers to Virginia without securing a guarantee that many of the facilities would be located in a part of the state that actually has surplus energy capacity and desperately needs new economic development. Southwest Virginia voters may have put Youngkin in office; you’d think he’d be looking out for them.

Instead of real investment today, Youngkin promises the area a little nuclear plant a decade from now, when and if small modular reactors (SMRs) prove viable. Local leaders must be muttering, “Gee, thanks.”

And this leads to another point raised by several of the experts in the IRP case: All of the load growth Dominion projects is due to a single industry in Northern Virginia; elsewhere, demand is decreasing. Yet, instead of crafting a solution specific to the industry and region experiencing runaway growth, Dominion proposes to build a fossil fuel plant 140 miles away in Chesterfield and a nuclear plant 300 miles away in another utility’s territory.

Gregory Abbott, a former SCC Deputy Director, offers a particularly withering assessment of the IRP in his testimony on behalf of environmental advocacy group Appalachian Voices. Dominion’s computer model, he says, “is proposing supply-side solutions that are not focused on solving the actual problem, are likely unnecessary, and driving costs higher than they should be.”

Although Dominion insists this IRP represents just a “snapshot in time,” Abbott says that’s misleading: The IRP “sets the stage for multi-billion-dollar investments that Dominion’s customers will pay for decades to come. If a future snapshot in time changes, based on new public policy goals or market dynamics, ratepayers are stuck with paying for these sunk costs.” 

Garbage in, garbage out

Abbott and others also note that unlike factories or other high consumers of energy, data center operators can shift some functions to other data centers elsewhere for short periods of time. Dominion could save money and reduce the need for new investments by capitalizing on this capability to develop demand-response programs tailored specifically to this industry. 

Instead, Dominion treated the surge in demand as if it were statewide and spread across all its customers; then it used a computer model to figure out how to meet the soaring demand. 

An expert for the Sierra Club, Devi Glick of Synapse Energy Economics, noted several problems with Dominion’s approach. Among them: the company told its computer model that it couldn’t select energy efficiency as a resource; it had to include gas combustion turbines in 2028; it had to adhere to artificial limits on solar, wind and battery storage; and it had to assume prices for solar that were “substantially higher than industry projections.” Dominion also did not instruct the model to account for proposed (and since finalized) new federal pollution limits that will raise the cost of burning fossil fuels, and miscalculated — by a billion dollars — the penalties associated with failure to meet the VCEA’s renewable energy requirements. 

As they say, garbage in, garbage out. The model did what it was told, and produced plans that limited solar and battery storage, called for new gas combustion turbines and/or SMRs, and kept uneconomic coal plants running past their previously-planned retirement dates. Accordingly, none of the modeled scenarios complied with Virginia law and all would be unnecessarily expensive for customers.

Synapse ran its own computer model that kept most of Dominion’s load and cost assumptions but corrected for the company’s errors and artificial constraints. The results, not surprisingly, show that building more solar and storage and retiring coal plants earlier than Dominion wants to will lower carbon emissions and “reduce costs for Dominion’s ratepayers by between $4.1 and $9.0 billion over the 25-year study period.”  

When Synapse then tweaked the model to reflect the new federal pollution rules and prices for solar and battery storage in line with industry projections, the results saw solar and battery investments soaring, while the “need” for firm capacity such as a new gas plant disappeared altogether during the planning period.  

Clean energy, vindicated

So finally, we begin to see a path forward founded on real data and not constrained by political expediency. With none of its plans meeting the basic requirements of Virginia law, Dominion should be ordered to go back to the drawing board. The company should reexamine its data center load projections and design a demand-response program tailored to that industry. Then it should re-run its computer model with energy efficiency allowed as a resource, with no artificial constraints on battery storage and renewable energy,with federal and state compliance costs associated with fossil fuels fully included and with cost estimates for solar and storage consistent with industry norms.   

The General Assembly has a role to play, too, in ensuring the data center industry does not shift costs onto other customers and cause Virginia to fall short of its carbon reduction goals. Data centers should be required to meet energy efficiency targets and to secure an increasing percentage of renewable energy on their own as a condition of obtaining generous state tax subsidies. Likewise, the State Corporation Commission should be required to ensure that data centers pay for the transmission upgrades they need. Finally, the General Assembly should pass the data center study bill adopted by the Senate this year before being killed in the House.

Finally, it’s clear that the computer models will select as much low-cost solar as they are allowed to, so the General Assembly should make it easier to build solar projects at competitive rates. They can do this by further opening the market to third-party developers, who are currently constrained by an interpretation of the VCEA that caps their share of the solar Dominion procures at 35%.

The SCC will hold a hearing on the IRP beginning September 18.

An earlier version of this article appeared in the Virginia Mercury on September 5, 2023.

Why are Dominion Energy’s customers footing the bill for Virginia’s data center buildout?

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Dominion Energy headquarters, Richmond, VA


Virginia’s embrace of the data center industry produced new fallout this spring when Dominion Energy Virginia released its latest Integrated Resource Plan (IRP). With data center growth the “key driver,” Dominion projects a massive increase in the demand for electricity. As a result, the utility claims the state-mandated transition to clean energy is now impossible to achieve. 

Jettisoning its commitment to the Virginia Clean Economy Act (VCEA), Dominion proposes to keep running uneconomic coal and biomass plants that were previously slated for closure, build a new fossil gas plant and pay penalties instead of meeting state renewable energy targets, all of which mean higher costs for customers.

As I said at the time, this IRP is primarily a political document aimed at currying favor with a gas-loving governor. It is not a serious plan. For example, a Sierra Club filing with the State Corporation Commission describes how Dominion put artificial constraints into its computer modeling (including limits on new solar) to ensure the plan came out fossil-friendly. Moreover, Dominion’s demand projections are inflated, according to the clean energy industry group Advanced Energy United.

But for the sake of discussion, let’s take the IRP at face value. And in that case, I have some questions. How did Dominion let itself get blindsided by the data center growth spurt? Why are the rest of us expected to pay for infrastructure that’s only needed for data centers? Does the Governor understand that his deal to bring another $35 billion worth of new Amazon data centers to Virginia  is driving up energy rates for everyone else? 

Oh, and while I’m at it, are tech company commitments to sourcing renewable energy just a pack of lies?

Virginia’s data center problem is well known. Northern Virginia has the largest concentration of data centers in the world, by far. Data centers are Dominion’s single largest category of commercial power users, already consuming more than 21% of total electricity supply and slated to hit 50% by 2038. In addition to the new generation that will be required, data centers need grid upgrades including new transmission lines, transformers and breakers, with the costs spread to all ratepayers. 

Residents are not happy. Controversy around data centers’ diesel generators, their water use, noise and visual impacts have spread outward from Loudoun County into Prince William, Fauquier, and even other parts of Virginia as massive new developments are proposed. 

Data center developers don’t build without assurance they will have access to the huge amount of electricity they need for their operations, so they have to start discussions with their utility early. Yet in July of 2022, Dominion stunned the data center industry by warning it would not be able to meet new demand in Loudoun County until 2025 or 2026. The utility said, however, that the problem was not generating capacity, but transmission. So, what gives?

Not that it would be better if Dominion anticipated the oncoming tsunami but kept it secret until this spring. You have to wonder whether the General Assembly would have approved hundreds of millions of dollars in grants and tax subsidies for new Amazon data centers in February if legislators understood the effect would be to upend the VCEA and drive up energy costs for residents. 

Some Republicans are no doubt pleased that Dominion’s IRP undermines the VCEA, but they shouldn’t be. Dominion proposes keeping coal plants open not for economic reasons, but in spite of them. These plants were slated for closure in previous IRPs because they were costing ratepayers too much money. Now Dominion says it needs more generating capacity and can’t (or rather, won’t) build enough low-cost solar to keep up with new data center demand.

Dominion also proposes to build a new methane gas combustion “peaker” plant that wasn’t in its last IRP, and again the company points to data center growth as the reason. Peaker plants are an expensive way to generate power; on average, the cost of energy from gas combustion is about double that of a solar/storage combination, or even triple once you factor in federal clean energy incentives.

Keeping the fossil fuel party going instead of embracing more solar isn’t the only way this IRP drives rates higher for customers. Limiting its solar investments means Dominion expects to miss the VCEA’s renewable energy percentage targets by a mile. The shortfall would subject Dominion to significant penalties. The kicker is, Dominion can pass the cost of those penalties  on to ratepayers, too. 

Regardless of your political persuasion, then, this IRP is bad news for Virginia consumers. 

It’s also concerning that the driver of all these higher costs and carbon emissions is the high-tech industry that is so eager to be seen as a leader in sustainability. If these tech companies were meeting their power needs with renewable energy, Dominion wouldn’t be able to claim a “need” to keep its old coal plants belching away.  

Amazon, the number one beneficiary of state data center largesse, says it is the leading corporate purchaser of renewable energy globally. Its website claims the company is “on a path to powering our operations with 100% renewable energy by 2025.” A map shows it has developed around 16 solar projects in Virginia, adding up to over 1,100 megawatts. That’s great, but the company’s Virginia data centers are such energy hogs that they would need many times as much solar, plus a huge amount of battery storage to meet their 24/7 demand. And of course, Amazon’s demand will skyrocket with that next $35 billion in new data centers.

That same map, by the way, shows that Amazon has on-site solar at warehouses and Whole Foods stores all over the Northeast, but none in Virginia. Northeastern states have higher commercial power rates than Virginia does, so on-site solar means bigger bill savings in those states. One cannot help but suspect that Amazon’s commitment to renewable energy is really just a commitment to cheap energy.  

The Data Center Coalition’s filing in the IRP case does nothing to reassure us otherwise. Instead of chiding Dominion for reneging on its clean energy commitments, the Coalition’s Josh Levi essentially argues data centers are so important it doesn’t matter. 

I have no beef with data centers as a general proposition. They are an integral component of today’s economy, and the developments that now drive their explosive growth — machine learning and artificial intelligence — will also help us achieve a zero-carbon future.  

I just think data centers should try a little harder to be part of the solution instead of part of the problem.  

This article was first published in the Virginia Mercury on August 16, 2023.

A dog, a food fight and other highlights from the 2023 General Assembly session

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Cartoon describes Amazon replacing Dominion as the major political power in Virginia

For followers of Virginia energy policy, 2023 will be remembered as the year Dominion Energy lost its stranglehold on the General Assembly. The utility’s all-out campaign to boost its return on equity earned it little more than crumbs. By contrast, a bill to return authority over rates to the State Corporation Commission garnered overwhelming support. 

Another surprise loser was the nuclear industry. Gov. Youngkin and boosters of small modular reactors (SMRs) expected a lot more love, and incentives, than legislators proved willing to dole out this early in the technology’s development. 

Less noticed was the rise to political power of one of Dominion’s largest customers, Amazon Web Services. Many legislators may still not have caught on, but the corps of lobbyists who haunt the hallways of the General Assembly building know a 500-pound gorilla when they see one. As one lobbyist put it: “Amazon is the new Dominion.”

These are the standout takeaways from a legislative session in which, otherwise, few significant energy bills emerged from the scrum. Senate Democrats ably protected the energy transition framework established in 2020 and 2021, but modest efforts to accelerate the transition mostly failed. Of the roughly 60 bills I followed this session, only a handful made it to the governor’s desk. 

Republican attacks on the energy transition failed

The three foundational bills of Virginia’s energy transition — the Regional Greenhouse Gas Initiative (RGGI), the Virginia Clean Economy Act (VCEA) and Clean Cars — all came under attack this year, as they did last year. And again, repeal efforts failed every time.

Senate Democrats blocked the one bill that would have pulled Virginia out of RGGI. Gov. Youngkin remains bent on achieving the pullout by regulation through  Department of Environmental Quality rulemaking. 

In the transportation sector, every bill to repeal the Air Pollution Control Board’s authority to implement the Advanced Clean Car Standard failed in the Senate as Democrats held the line. 

Efforts to undermine key parts of the VCEA failed, including House and Senate bills that would have given the State Corporation Commission more authority over closures of fossil fuel plants and require it to conduct annual reviews designed to second-guess the VCEA’s framework for lowering emissions and building renewable energy. 

A House bill that would have exempted certain industrial customers categorized as “energy-intensive trade-exposed industries” from paying their share of the VCEA’s costs passed the House on a party-line basis. However, with the bill facing certain death in Senate Commerce and Labor, patron Lee Ware, R-Powhatan, requested it be stricken. At the time, he had reason to expect that a compromise approach proposed by Sen. Jeremy McPike, D-Prince William, would pass. McPike’s bill would have had the SCC put together a group of experts to study the issue and make recommendations. After passing the Senate, however, McPike’s study bill went to House Energy and Commerce, which insisted on amending it to mirror Del. Ware’s bill. That did not go over well in the Senate, where the House substitute was  unanimously rejected. McPike then asked the Senate to kill his own bill, and the energy-intensive trade-exposed industries got nothing. 

Raids on the VCEA produced mixed results

One of the VCEA’s strengths is in creating incentives for clean energy. That’s also a vulnerability, because everybody and their brother wants in on the incentives — and this year, once again, the brothers came peddling some pretty sketchy stuff.

In the end, however, the VCEA sustained little damage. An effort to open up the renewable energy category to coal mine methane was modified to become simply a policy to encourage the beneficial capture and use of methane that would otherwise escape from old coal mines into the air. However, methane extraction jobs in four Southwest Virginia counties will now qualify for a “green jobs” tax credit.

More successful was an effort by the forestry industry to allow more woody biomass to qualify for the renewable portfolio standard (RPS); this was in spite of drawbacks including high levels of pollution, expense and large climate impact. As passed, the House and Senate bills will allow Dominion-owned biomass plants to remain open and have their output qualify for the RPS, so long as they burn only waste wood from forestry operations. Climate advocates opposed the change, but remain hopeful that Dominion and the SCC will want to close these uneconomic biomass plants to protect ratepayers. 

Two different House bills that tried to shoehorn nuclear and hydrogen into the RPS failed in the Senate. A third bill promoting small modular nuclear reactors (SMRs) got more traction initially; it would have had the SCC develop a pilot program for SMRs with a goal of having the first one operational by 2032. After it passed the House, the Senate Commerce and Labor committee adopted amendments to require the SCC to examine the cost of any SMRss  relative to alternatives, and to prevent ratepayers from being charged for the costs if an SMR never became operational. The Senate voted unanimously for the bill with these protections included, but the House rejected them. Ultimately, the bill died, a remarkable setback for the governor’s nuclear ambitions.

Utility reform consumed most of the session (again)

Dominion’s money grabs have turned into near-annual food fights. This one almost wrecked the cafeteria. 

The action proceeded along two fronts. One consisted of bipartisan, pro-consumer House and Senate legislation promoted as the Affordable Energy Act, intended to return ratemaking authority to the SCC. As passed, it merely authorizes the SCC to modify Dominion’s or Appalachian Power’s base rates going forward, if it determines that current rates will produce revenues outside the utility’s authorized rate of return. If that strikes you as hard to argue with, you’re not alone; no one in either chamber voted against it. 

Far more divisive was Dominion’s own effort to secure an increased rate of return on equity (ROE). This legislation earned its own bipartisan support from Dominion loyalists, led by Senate Majority Leader Dick Saslaw, D-Fairfax, for the Senate bill and House Majority Leader Terry Kilgore, R-Scott, for the House bill. 

As initially drafted, it probably should have been called the Unaffordable Energy Act instead of the reassuringly bureaucratic-sounding Virginia Electric Utility Regulation Act. The bill described a formula for determining Dominion’s allowed ROE that SCC staff calculated could result in an ROE as high as 11.57%, up from the currently-allowed 9.35%. SCC staff told legislators this could cost ratepayers $4 billion through 2040. In return, the bill offered some near-term savings for customers but also would have removed the last vestige of retail competition and opened VCEA coal plant retirement commitments to second-guessing by the SCC.

Dominion pulled out all the stops. The company supplemented its own in-house lobbying corps of 13 with another 17 top lobbyists from around Richmond. Former senator John Watkins signed on, as did former FERC commissioner Bernard McNamee. CEO Bob Blue showed up personally  to push the bill. Dominion ran full-page ads in the Washington Post and Virginia newspapers touting a provision of the bill that would save ratepayers $300 million (neglecting to mention that it was the ratepayers’ own money). The ad featured a dog so people could be sure Dominion was being friendly.

It didn’t work. The consumer advocates hung tough, and Gov. Youngkin, possibly a cat person, added his weight to the resistance. As the Mercury reported, the “compromise” that all parties now swear they are delighted with gives Dominion very little kibble. The coal plants will be retired on schedule, ratepayers will see savings and a larger percentage of over earnings will be returned to customers in the future. In exchange, Dominion’s future return on equity will be bumped up to 9.7%, but only for two years, after which the SCC will have discretion to set the ROE as it deems fair. (That is, if Dominion doesn’t start the next food fight first.)

Appalachian Power had its own troubles this session. APCo-only legislationthat would have replaced the requirement for an integrated resource plan with an “annual true-up review” was radically amended to become an entirely different bill. It now allows both utilities to finance the high fuel costs they’ve incurred due to soaring natural gas and coal prices. The amendments were welcomed both as a way to handle the fuel debt and so that no one had to figure out what a true-up review is. The bills passed handily.

One other successful piece of legislation may help avoid future food fights. Sen. Scott Surovell, D-Fairfax, and Del. Kilgore worked together to resuscitate the Commission on Electric Utility Regulation (CEUR) and create more transparency around utility planning. The original bill also created a structure for state energy planning, but that proved too much for House Republicans, who amended it down to the lean bill that passed. 

Over the years CEUR earned a bad reputation as an entity that rarely met but that served as an excuse for legislators to defer action on pro-consumer bills. That makes advocates somewhat wary of this bill. On the other hand, provisions welcoming stakeholders into the utility integrated resource planning process seems likely to benefit the public, if not the utilities.  

Elsewhere, consumers did poorly

Dominion may have taken a drubbing on its money grab, but it did pretty well in guarding its monopoly. The Dominion-friendly Senate Commerce and Labor committee killed a bill to allow customers to buy renewable energy at a competitive rate from a provider other than their own utility. Bills to expand shared solar passed the Senate but died in the House. 

Indeed, the House turned into a killing field for any bill with the word “solar” in it, no matter how innocuous or popular. A House Rules subcommittee killed a bill that would have helped schools take advantage of onsite solar, though it had passed the Senate unanimously. A resolution to study barriers to local government investments in clean energy was left in House Rules. A bill to create a solar and economic development fund passed the Senate but was tabled in House Appropriations. A resolution directing the Department of Transportation to study the idea of putting solar panels in highway medians never got a hearing in House Rules. A consumer-protection effort for buyers of rooftop solar was tabled in House Commerce and Energy. A bill clarifying the legality of solar leases passed the Senate unanimously, only to be left in House Commerce and Energy. 

Do we detect a little frustration on the part of House Republicans at the complete failure of their anti-clean energy agenda? Why, yes. Yes, we do.

The only pro-consumer legislation to pass was a very modest bill requiring the SCC to establish annual energy efficiency savings targets for Dominion customers who are low-income, elderly, disabled or veterans of military service. But legislation that would have made homeowners eligible for low-cost loans through property-assessed clean energy (PACE) programs failed.

Offshore wind remains on track

Dominion beat back an effort to make it hold ratepayers harmless if its Coastal Virginia Offshore Wind project fails to produce as much energy as expected. A bill to allow the company to create an affiliate to secure financing for the project passed. 

Legislation to move up the VCEA’s deadline for offshore wind farm construction from 2034 to 2032 passed; the law now also requires that the SCC consider economic and job creation benefits to Virginia in overseeing cost recovery. However, a bill that would have required the SCC to issue annual reports on the progress of CVOW failed. That bill would also have required the SCC to analyze alternative ownership structures that might save ratepayers money. 

The gas ban ban fails again

This year’s attempt to bar local governments from prohibiting new gas connections passed the House on a party-line vote but was killed in Senate Commerce and Labor. A Senate companion bill from Democrat Joe Morrissey, which had caused something of a tizzy initially, was stricken at Morrissey’s request. 

And this year’s big winner is … Amazon!

With data centers now making up over 21% of Dominion’s load and since they have already sucked up over a billion dollars in tax subsidies, this should have been the year Virginia government woke up to the need for state oversight of the industry. Alas, no. Bills that would limit where data centers could be sited failed. Senate legislation that would have simply tasked the Department of Energy with studying the impact of data centers passed the Senate on a voice vote but was killed in a subcommittee of House Rules on a 3-2 vote, the same fate suffered by a similar House bill. 

Who could be against studying the impact of an industry this big? Aside from the data center industry that is enjoying the handouts, the answer is the Youngkin administration. The governor is so pleased with Amazon’s plan to spend $35 billion on more data centers across Virginia that he promised the company even greater handouts. 

Those handouts take the form of a bill creating the Cloud Computing Cluster Infrastructure Grant Fund, with parameters that ensure only Amazon gets $165 million. In addition, the far more impactful sales and use tax exemption, currently set to expire in 2035, will be continued out to 2040 with an option to go to 2050; again, this is all just for Amazon, unless some other company manages to pony up $35 billion in data center investments. In return, Amazon must create a total of just  1,000 new jobs across the entire commonwealth, and only 100 of them must pay “at least one and a half times the prevailing wage.” A jobs bill, this is not.

With the sales and use tax exemption already costing Virginia $130 million per year and growing rapidly, this legislation will be very costly. You would not know it, though, from the budget analysis performed for legislators. Through the magic of accounting rules, that analysis managed to conclude that the budget impact of this legislation would be zero. 

As preposterous as that is, it may explain why only a few legislators voted against the bill. They have no idea what the governor is getting us into.

Attacks on Virginia’s climate laws are front and center at the General Assembly

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People gathered in a square listening to speakers.
Climate advocates gathered at the Virginia Capitol on Friday to defend Virginia’s clean energy laws. Speakers included Senators Creigh Deeds, Ghazala Hashmi, David Marsden and Scott Surovell, and Delegates Rip Sullivan, Nadarius Clark, Rodney Willett and Alfonso Lopez. Photo courtesy of Mary-Stuart Torbeck, Virginia Sierra Club.

Every year I do a round-up of climate and energy bills at the start of the General Assembly session. This year, as expected, Republicans continue their assault on the hallmark legislation passed in 2020 and 2021 committing Virginia to a zero-carbon economy by 2050. In addition, this year features the usual assortment of bills doing favors for special interests, efforts to help residents and local governments go solar and a brand-new money and power grab by Dominion Energy.

Republicans are not down with the energy transition

Dominion Energy may have baked the transition to renewables into its planning, but unsurprisingly, the Virginia Republican Party thinks the fight to preserve fossil fuel dependence is a winning issue. The three foundational bills of Virginia’s energy transition — the Regional Greenhouse Gas Initiative (RGGI), the Virginia Clean Economy Act (VCEA) and Clean Cars — all come in for attack, either by outright repeal or death-by-a-thousand-cuts.

Senate Bill 1001 (Richard Stuart, R-Westmoreland) would repeal the Clean Energy and Community Flood Preparedness Act, the statute that propelled Virginia into the Regional Greenhouse Gas Initiative. Participation in RGGI is the vehicle by which utilities buy allowances to emit carbon pollution. Under RGGI, the number of allowances available declines every year, and Virginia’s power sector would reduce CO2 emissions 30% by 2030. The allowance auctions have already raised hundreds of millions of dollars that by law must be used for low-income energy efficiency programs and flood resilience projects. A similar bill failed last year, and Senate Democrats have pledged to block the effort again. Meanwhile, Gov. Glenn Youngkin is trying to withdraw Virginia from RGGI administratively, a move that former Attorney General Mark Herring ruled wasn’t legal. 

Carbon allowance auctions are a foundational piece of the VCEA as well, but it is a much bigger law that touches on too many aspects of energy regulation for repeal of the whole thing. This isn’t stopping Republicans from trying to undermine key provisions. House Bill 2130 (Tony Wilt, R-Rockingham) and Senate Bill 1125 (Travis Hackworth, R-Tazewell) would give the State Corporation Commission more authority over closures of fossil fuel plants and require it to conduct annual reviews aimed at second-guessing the VCEA’s framework for lowering emissions and building renewable energy. Achieving the VCEA’s climate goals is decidedly not the purpose; meanwhile, the legislation would remove business certainty and undercut utility planning.

Other attacks on the VCEA take the form of favors for specific industries, but would effectively make the VCEA’s goal of reaching 100% carbon-free electricity by 2050 at the least cost to consumers impossible. I’ve dealt separately with small modular reactors, hydrogen and coal mine methane below. 

In addition, House Bill 1430 and House Bill 1480 (Lee Ware, R-Powhatan) exempt certain industrial customers categorized as “energy-intensive trade-exposed industries” from paying costs that the VCEA makes all customers pay. The exemption would last four years. The result would be nice for those industries but would shift costs onto everyone else. The bill seems likely to pass the House, but the same bill last year died in the Senate. However, Senate Bill 1454 (Jeremy McPike, D-Prince William) proposes the SCC put together a group of experts to study the issue and make recommendations.

In the transportation sector, no fewer than seven bills sought to repeal the Air Pollution Control Board’s authority to implement the Advanced Clean Car Standard: House Bill 1372 (Buddy Fowler, R-Hanover), House Bill 1378 (Wilt), Senate Bill 778 (Stuart), Senate Bill 779 (Stephen Newman, R-Bedford), Senate Bill 781 (Bill DeSteph, R-Virginia Beach), Senate Bill 782 (Bryce Reeves, R-Fredericksburg) and Senate Bill 785 (Ryan McDougle, R-Hanover). The Senate bills were killed in committee on Tuesday. The House bills are likely to pass that Republican-led chamber, but it appears clear that Senate Democrats intend to hang fast to Clean Cars.

Although so many identical bills might look like a failure of legislators to coordinate efforts, in fact the senators all signed on as co-patrons to each other’s bills, along with a dozen House Republicans. Republicans think they have a winning issue for the November election, and lots of them want to claim they filed “the” legislation attempting to repeal Clean Cars.

Raiding the store for polluter interests

If the VCEA is here to stay, there are some decidedly non-green industries that want to claim the green mantle to get in on the action. It’s not about making themselves feel better about their high greenhouse gas emissions. It’s about getting a piece of the market for renewable energy certificates and undermining the integrity of the renewable energy label. 

House Bill 1643 (Terry Kilgore, R-Scott) and Senate Bill 1121 (Hackworth) proclaim coal mine methane a renewable energy. House Bill 2178 (James Morefield, R-Tazewell) makes coal mine methane a qualifying industry for Virginia’s green job creation tax credit. 

Burning wood for electricity produces as much CO2 as coal, at a cost much higher than solar energy today. Yet House Bill 2026 (Israel O’Quinn, R-Bristol) and Senate Bill 1231  (Lynwood Lewis, D-Accomack) remove the requirement in the VCEA for the retirement of Dominion’s generating facilities that burn wood for electricity and allow these generating plants to qualify as renewable energy sources.

SMRs and hydrogen

Speaking of raiding the store, House Bill 2197 (Kathy Byron, R-Bedford) allows “advanced nuclear technology” to qualify for Virginia’s renewable portfolio standard (RPS). The bill defines the term as “a small modular reactor or other technology for generating nuclear energy,” which looks like an opening for existing nuclear plants as well. Even if it isn’t, treating any kind of nuclear technology as a renewable resource upsets the VCEA’s calibrated approach to nuclear as a zero-carbon technology alongside renewable energy, not in place of it. 

House Bill 2311 (Kilgore) goes a step further, declaring both nuclear and hydrogen to be renewable energy sources and making them eligible for the RPS. Hydrogen, of course, is a fuel made from other sources of energy, which can be renewable but are more typically fossil fuels currently. Given Youngkin’s interest in seeing hydrogen made from coal mine methane, you can see where this is headed.  

House Bill 2333 (Danny Marshall, R-Danville) calls on the SCC to develop a pilot program to support building small modular nuclear reactors, with a goal of having the first one operational by 2032. In spite of the word “pilot,” the bill is ambitious. It contemplates four sites, each of which can have multiple reactors of up to 400  megawatts each.  

Utility reform 

Some of these bills are reform bills; some are “reform” bills. To recognize the difference, it helps to know whether the proponent is a public interest organization or the utility itself. When Dominion tells you it has a bill you’re going to love, you can be pretty sure the result will be bad for ratepayers. 

Senate Bill 1321 (Jennifer McClellan, D-Richmond, and Creigh Deeds, D-Charlottesville) and House Bill 1604 (Ware), billed as the Affordable Energy Act, is real reform legislation that gives the SCC authority to lower a utility’s base rates if it determines that existing rates produce “unreasonable revenues in excess of the utility’s authorized rate of return.” 

Other straightforward measures include House Bill 2267 (Wilt) and Senate Bill 1417 (David Suetterlein, R-Roanoke), which allow the SCC to decide to add the cost of a new utility generation project into base rates instead of granting a rate adjustment clause (RAC), and House Bill 1670 (Marshall), which returns rate reviews to every two years instead of the current three years. 

Dominion, however, has its own “reform” bill, introduced by its favorite Democratic Senate and Republican House leaders. As is typical for Dominion, Senate Bill 1265 (Dick Saslaw, D-Fairfax) and House Bill 1770 (Kilgore) is long, dense and deadly effective in crushing competition and protecting profits. The bitter pill is sugarcoated with short-term rebates and concessions to minor reform proposals, such as biennial rate reviews in place of triennial reviews and consolidating many RACs into base rates. A somewhat less objectionable substitute moved forward in Senate subcommittee this week, but further negotiations are expected to produce yet more changes.

The warring factions may be able to find common ground in House Bill 2275 (Kilgore) and Senate Bill 1166 (Scott Surovell, D-Fairfax), legislation creating a structure for state energy planning.

House Bill 1777 (O’Quinn) and Senate Bill 1075 (Frank Ruff, R-Mecklenburg) change how the SCC regulates rates of Appalachian Power – but not Dominion. They require the SCC to conduct “annual rate true-up reviews (ART reviews) of the rates, terms and conditions for generation and distribution services” by March 31, 2025 and annually after. They also remove the requirement for an integrated resource plan. 

Retail choice

Past years have seen efforts to restore the ability of customers to buy renewable energy from providers other than their own utilities, an important option for a resident or business that wants to buy renewable energy at a competitive rate. Senate Bill 1419 (Suetterlein) marks at least the fourth year in a row for this effort. A Senate subcommittee voted against it this week.

Dominion’s “reform” bill, on the other hand, clamps down further on retail choice. In light of Youngkin’s support for retail choice in his energy plan, it is interesting to see Republicans like Kilgore instead enabling Dominion’s anticompetitive efforts. 

solar panels on a school roof
Wilson Middle School, Augusta County. Photo courtesy of Secure Futures.

Goosing investments in solar and efficiency

With the passage of the federal Inflation Reduction Act last summer, renewable energy and energy efficiency tax credits are more generous and easier to access than ever before. Senate Bill 848 (Barbara Favola, D-Arlington) and House Bill 1852 (Suhas Subramanyam, D-Loudoun) direct the Commission on School Construction and Modernization to figure out how to help schools take full advantage of onsite solar. 

House Joint Resolution 545 (Briana Sewell, D-Prince William) directs the Department of Energy to study barriers to clean energy investments by localities and their residents and issue recommendations to help. 

Senate Bill 1333 (Ghazala Hashmi, D-Richmond) creates a program within the Department of Energy to be known as the Commonwealth Solar and Economic Development Program. The program will implement solar, energy efficiency and other economic development projects in specified census tracts. 

Senate Bill 1323 (McClellan) requires the SCC to establish for Dominion Energy Virginia annual energy efficiency savings targets for customers who are low-income, elderly, disabled or veterans of military service. 

Senate Bill 984 (Monty Mason, D-Williamsburg) clarifies that lease arrangements for onsite solar are legal, whether or not they’re net metered, including when battery storage is part of the project. (For context: Leasing has always been an option for onsite solar, but the IRA has increased interest in this approach. It is considered especially attractive for residential projects that, except when the customer is low-income, are barred by Virginia law from using third-party power purchase agreements.) The bill also ensures owners can be paid for grid services using the facilities. Another welcome provision of the bill is removing standby charges for residential customers who have batteries along with their solar panels. Currently, residents with systems over 15 kW must pay hefty standby charges.

House Joint Resolution 487 (Marshall) directs the Department of Transportation to study the idea of putting solar panels in highway medians.

Meanwhile, House Bill 2355 (Jackie Glass, D-Norfolk) is a consumer-protection effort for buyers of rooftop solar and other small arrays, who have sometimes been the victims of unscrupulous companies that overcharge and under-deliver.

Shared solar

Virginia has been wading into community solar like a child at the seashore, dipping a toe in and then running away again and again, without ever truly entering the water. A 2020 law establishing a “shared solar” program in Dominion territory was supposed to get us swimming. At the SCC, however, Dominion won the right to impose such a high minimum bill as to make the program unworkable for any but low-income customers, who are exempt from the minimum bill.   

Senate Bill 1266 (Surovell) attempts to address the problems with the shared solar program in Dominion territory. Surovell was the author of the 2020 law and criticized the SCC’s action for making shared solar unavailable to anyone other than low-income residents. His approach would limit the minimum bill to more than twice the basic customer charge, while also increasing the size of the program to at least 10% of the utility’s peak load and allowing non-jurisdictional customers like local governments to participate. 

Senate Bill 1083 (Edwards and Surovell) creates a shared solar program in Appalachian Power territory. It builds on the framework of the existing program in Dominion territory, but the minimum bill is limited to $20. It also seeks to prevent the interconnection problems that industry members have complained about by limiting costs and requirements to those “consistent with generally accepted industry practices in markets with significant penetration levels of distributed generation.”

On the House side, House Bill 1853 (Suhas Subramanyam, D-Loudoun) combines both Senate bills into one bill that addresses both Dominion and Appalachian Power. For both, it limits the minimum bill to two times the basic customer charge, and it includes the interconnection language. 

offshore wind turbines

Offshore wind

Senate Bill 1441 (Mamie Locke, D-Hampton) moves up the VCEA’s deadline for offshore wind farm construction from 2034 to 2024, a change I don’t understand at all, given that the current timeline calls for completion of the Coastal Virginia Offshore Wind Project (CVOW) in 2026. The bill also requires that when Dominion seeks cost recovery, the SCC must give preference “for generating facilities utilizing energy derived from offshore wind that maximize economic benefits to the Commonwealth, such as benefits arising from the construction and operation of such facilities and the manufacture of wind turbine generator components.” I look forward to learning what’s behind that, too. 

Senate Bill 1854 (Subramanyam) seeks annual reports from the SCC on the progress of CVOW, including “the status and the anticipated environmental impacts and benefits of such projects” that  “analyze the current and projected capital costs and consumer rate impacts associated with such projects.” It also wants “an analysis of the ownership structure chosen by an electric utility for previously approved wind energy projects and the costs, benefits, and risks for consumers associated with utility-owned and third-party-owned projects.” This analysis would compare the Virginia project with other U.S. projects, potentially a useful analytical tool for the next offshore wind project that comes along. 

House Bill 1797 (Nick Freitas, R-Culpeper) declares that ratepayers will be held harmless if CVOW’s annual net capacity factor falls below 42% as measured on a three-year rolling average. The capacity factor is the average output of the wind turbines as a percentage of their full potential. In its filing with the SCC, Dominion projected CVOW would hit that 42% mark. If wind speeds turn out to be stronger than projected, the turbines will produce more energy at a lower cost. If the wind (or the machinery) doesn’t meet expectations, the capacity factor will be lower and costs will be higher. The bill would make Dominion absorb the loss in that event. However, the SCC did just resolve this issue in a way that takes account of both ratepayer interests and the newness of the technology, making it unlikely that many legislators will want to revisit this topic.  

Senate Bill 1477 (Lewis) allows Dominion, subject to SCC approval, to create an affiliated company to build some or all of its offshore wind project, with the purpose of having the affiliate secure equity financing.

House Bill 2444 (Bloxom) moves up the timeline for Virginia offshore wind projects under the VCEA from 2034 to 2032 (I wonder if this is what Senator Locke’s bill was supposed to say). It also requires the SCC to give preference to requests for cost recovery by Dominion for “generating facilities utilizing energy derived from offshore wind that maximize economic benefits to the Commonwealth.” I don’t understand if this is intended to discourage Dominion from pursuing projects off the shores of other states, or if it is a poorly-worded way to support in-state manufacturing of components.

Residential PACE

Senate Bill 949 (Petersen) makes homeowners eligible for property-assessed clean energy (PACE) programs, which provide low-cost financing for energy efficiency and renewable energy upgrades. Currently PACE loans are only available to commercial customers. 

Data centers

Virginia has a data center problem. Northern Virginia hosts the largest concentration of data centers in the world, and the energy they consume now amounts to 21% of Dominion’s load. This growth has happened with no state oversight; indeed, it’s been goosed by a billion dollars’ worth of state tax incentives over the past decade. Meeting the energy demand of data centers requires more generation and more transmission lines, usually paid for by all utility customers. 

Senate Joint Resolution 240 (Chap Petersen, D-Fairfax), and House Joint Resolution 522 (Danica Roem, D-Manassas) task the Department of Energy with studying data centers’ impact on Virginia’s environment, energy supply, electricity rates and ability to meet climate targets. The bills also ask for recommendations on whether tax incentives should be conditioned on use of renewable energy or on meeting siting criteria. 

Both Roem and Petersen also have bills that deal with specific siting issues, mostly unrelated to energy. Senate Bill 1078 (Petersen) limits areas where data centers can be sited (e.g., not near parks and battlefields, a barb likely aimed at the Prince William Gateway project). However, it also requires localities to conduct site assessments for impacts on carbon emissions as well as water resources and agriculture. 

Meanwhile, though, legislators seem determined to increase taxpayer handouts to data centers. Following Governor Youngkin’s announcement about Amazon’s plans to invest billions of dollars in new data centers in Virginia, Delegate Barry Knight (R-Virginia Beach) filed House Bill 2479, creating the Cloud Computing Cluster Infrastructure Grant Fund to throw more money at a corporation that seems likely to have more money already than Virginia does.

Return of the gas ban ban 

Last year the natural gas industry tried to get a law passed to ban localities from prohibiting gas connections in new buildings. Some cities in other states have done that to protect the health and safety of residents and protect the climate; meanwhile, about 20 red states have passed laws to prevent their local governments from doing it. But no Virginia locality has attempted to ban gas connections, in part because as a Dillon Rule state, our local governments don’t appear to have that authority. That isn’t stopping the gas industry from seeking to ban bans here; House Bill 1783 (O’Quinn) and Senate Bill 1485 (Morrissey) would do just that. Obnoxiously, it calls the right to use gas “energy justice,” which is surely the best reason to oppose it.  

A version of this article appeared in the Virginia Mercury on January 18, 2023.

Update January 19: Two new bills have been added since yesterday. Senator Morrissey filed SB1485 (gas ban ban), and Senator Lewis filed SB1477 (Dominion offshore wind affiliate).

Update January 23: Delegate Bloxom filed HB2444, added to the offshore wind section above. Delegate Knight filed HB2479, a bill to enrich Amazon; see data centers.

You call that an energy plan?

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Protesters outside the Virginia Clean Energy Summit on October 21.

Governor Glenn Youngkin issued a press release on October 3 presenting what he says is his energy plan. Accompanying the press release was 26 pages labeled “2022 Virginia Energy Plan,” but that can’t be what he’s referring to. I mean, the Virginia Code is pretty specific about what makes up an energy plan, and this isn’t it.

Under Virginia law, the energy plan must identify steps the state will take over the next 10 years consistent with the Commonwealth Clean Energy Policy’s goal of a net-zero carbon economy by 2045 “in all sectors, including the electric power, transportation, industrial, agricultural, building, and infrastructure sectors.”  Not only does Youngkin’s document not do that, it doesn’t even mention the policy it’s supposed to implement.

It’s also missing critical pieces. The plan is supposed to include a statewide inventory of greenhouse gas emissions, but it’s nowhere to be found. The inventory is the responsibility of the Department of Environmental Quality, which reports previous inventories on its website from 2005, 2010 and 2018. The one specifically required to be completed by October 1, 2022 isn’t there, nor is there any indication it’s in the works and just unfortunately delayed. Did I miss some fine print about how the requirement doesn’t apply if the governor is a Republican?

In fact, there is no discussion about climate change in Youngkin’s energy plan.  The word “climate” appears nowhere. He simply ignores the problem: a modern Nero, fiddling while the planet burns.

Instead, Youngkin’s document mostly attacks the laws Virginia has passed in recent years to implement its decarbonization goals, including the Virginia Clean Economy Act, legislation allowing the state to participate in the Regional Greenhouse Gas Initiative and the Clean Cars law. In their place he offers a bunch of random ideas — some with merit, some without, some spinning off on tangents.

I did not really expect a conservative Republican with presidential aspirations to embrace all the recommendations for the energy plan that I laid out last month, or those from the many environmental, faith and consumer groups that support Virginia’s clean energy transition. Going further and faster down the road to decarbonization is a tall order for politicians beholden to fossil fuel interests, no matter how much it would benefit the public.

Yet Youngkin doesn’t have a lot of ammunition to use against the switch to renewable energy. With soaring coal and natural gas prices, it’s hard to keep pretending that fossil fuels are low-cost. The insistence that we need them for reliability is the only straw left to grasp at.

https://www.virginiamercury.com/blog-va/regulators-approve-dominion-bill-increase-for-rising-fuel-costs-appalachian-power-also-seeking-hike/embed/#?secret=Vd8muOhz01

And indeed, underlying Younkin’s attack on the VCEA is a misunderstanding of how grid operators manage electricity. The critique boils down to “baseload good, intermittent bad.” But baseload is not the point; meeting demand is the point. Demand fluctuates hugely by day and hour. If grid operators had nothing to work with but slow-ramping coal plants or on/off nuclear reactors and no storage, they’d have as much trouble matching demand as if they had nothing but renewable energy and no storage. Pairing low-cost wind and solar with batteries makes them dispatchable — that is, better than baseload.

That’s not to say there aren’t good reasons to invest in higher-cost resources, but “baseload” is a red herring that stinks up Youngkin’s entire argument.

To his credit — and notwithstanding his “baseload” fixation — Youngkin supports Virginia’s move into offshore wind energy even with the high cost of the Coastal Virginia Offshore Wind project and other early U.S. developments. (The plan notes that Virginia’s project will be the largest “in the Free World,” a weirdly retro way to tell us China has leapt far ahead in installing offshore wind.)

The plan also supports removing barriers to customer purchases of solar energy, including shared solar and a greater ability for renewable energy suppliers to compete with utilities for retail sales. This is all phrased as a consumer choice issue rather than an endorsement of greater utility investments in solar; regardless, these would be welcome moves.

It’s also good to see the governor’s endorsement of rate reform. Republicans have been at least as much to blame as Democrats for Dominion Energy’s success in getting laws passed that let it bilk ratepayers. It will be interesting to see if Youngkin actually pursues the reforms he touts.

Less encouraging are Youngkin’s desires to jump into hydrogen (I’m guessing not the green kind, since we hardly have an excess of renewable energy) and, worse, to deploy “the nation’s first” commercial small modular nuclear reactor (SMR) in Southwest Virginia within 10 years.

You know what will happen there, right? Ratepayers will foot the bill, and it will be very expensive.

But unlike offshore wind, SMRs aren’t proven technology; they remain firmly in the research phase. The U.S. Department of Energy is hoping for a demonstration project “this decade.” If successful, the industry believes SMRs will eventually be able to produce electricity at a price that’s only two or three times that of solar and wind energy. Which begs an obvious question: Is there a reason to build SMRs?

Nor has anyone figured out the nagging problem of what to do with the radioactive waste, including the waste piling up at today’s nuclear plants because it’s too dangerous to move and there’s no place to put it. So Youngkin’s plan also “calls for developing spent nuclear fuel recycling technologies that offer the promise of a zero-carbon emission energy system with minimal waste and a closed-loop supply chain.” Great idea! But how about focusing on that first, Governor?

That’s not where Younkin is putting his focus, though. Last week, he proposed spending $10 million on a Virginia Power Innovation Fund, with half of that earmarked for SMR research and development.  The announcement said nothing about waste.

Look, I happen to know some earnest climate advocates who believe SMRs are the silver bullet we’ve been waiting for. I follow the research with an open mind while also noting the astonishing advances in renewable energy technology announced almost daily. But the climate crisis is here and now. We can’t afford to press pause on known carbon-free technologies for 10 years in the hope that something even better will pan out.

Investing in research and development of new technologies is an important role for government, but kicking the climate can down the road isn’t an option. Rather than attacking our energy transition, Youngkin would have done more for Virginia by using his plan to build on it.

This article appeared first in the Virginia Mercury on October 18, 2022.

Buckle up, folks: this federal climate bill is going to supercharge Virginia’s energy transition

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Young woman holding sign that says Climate Action Now
Photo by Alex Kambis.

On Sunday the U.S. Senate passed the historic climate legislation package hammered out between Senate Majority Leader Chuck Schumer and West Virginia Senator Joe Manchin. The House is expected to follow suit this week, giving President Joe Biden a huge win on one of his administration’s priorities and finally making good on his pledge to tackle climate change.

The bill is titled the Inflation Reduction Act (IRA), apparently because the senators think inflation is the only thing most Americans care about right now. But whether it reduces inflation is beside the point. The IRA marks the federal government’s most significant investment in clean energy and transportation ever. Its $370 billion of climate spending will cut U.S. emissions roughly 42% below 2005 levels by 2030, only slightly less than the reductions that would have been achieved through Biden’s signature Build Back Better bill.

This is a huge piece of legislation, though, and some of the compromises Schumer was forced to make are not climate-friendly. Manchin, after all, is a coal baron representing a state so dominated by the extraction industries that it has lost sight of any other future. Climate hawks have to hold their noses (beaks?) to accept some noxious provisions, such as the bill’s requirement for new offshore drilling lease sales. No doubt that one will cheer motorists who wrongly assume the government could lower gasoline prices just by turning on a spigot, if only it wanted to.

The bill also comes with a side deal meant to ensure completion of the Mountain Valley Pipeline, which starts in Manchin’s home state. That news promptly soured many activists in Virginia on the whole package.

Hang in there, people. The pipeline deal isn’t actually part of the IRA, and Manchin knows better than anyone that a promise of some second bill to be voted on in the future is a castle in the air. Maybe he’ll get it, maybe he won’t. Meanwhile, the IRA’s incentives for renewable energy, energy storage, energy efficiency, building electrification and electric vehicles are overwhelmingly more impactful than provisions designed to increase oil and gas production. The business case for new pipelines will only get worse.

Three recurring themes stand out in the IRA. One is the attention paid to ensuring benefits flow to low- and moderate-income residents and communities impacted by fossil fuel extraction. A second is the effort to incentivize manufacturing and supply chain companies to bring operations back to the U.S., using tax credits for manufacturing and requirements for U.S.-made components. The third is job creation and training for career jobs that pay well. The combined effect is that the law will benefit former coal workers in Southwest Virginia looking for employment at least as much as Northern Virginia suburbanites jonesing for Teslas.

Every state will see clean energy investments soar if the bill becomes law, but Virginia is especially well positioned. Though we have embarrassingly little wind and solar in our energy mix today, we have huge potential for both, a strong tech sector and a well-educated workforce.

Just as important, laws passed by the General Assembly in the past few years already provide the framework for our energy transition. Among them, the Virginia Clean Economy Act and participation in the Regional Greenhouse Gas Initiative are pushing our utilities to decarbonize, including through investments in energy efficiency, solar and offshore wind. Solar Freedom removed barriers to private investments in distributed solar, while the Grid Modernization Act authorized upgrades to the distribution grid, and the Clean Cars Act started us down the road to vehicle electrification. For all of these, the IRA’s incentives make compliance easier and less expensive for both utilities and customers.

Renewable energy tax credits with an emphasis on equity and jobs

Photo courtesy of NREL

The IRA is a big bill with a lot of fine print detailing incentives for a wide range of technologies, mostly clean but with a few clunkers. (Hydrogen made from fracked gas, anyone?) Still, the largest share of the renewable energy tax credits will go to companies involved in the wind and solar industries. The credits will remain fixed for 10 years before ramping down, finally providing the business certainty and long planning window that clean tech companies have been begging for.

The more utilities take advantage of the law to install renewable energy, the greater the benefit to electricity customers. Renewable energy helps stabilize electricity costs, dampening the impact of high fossil fuel prices. The IRA’s tax credits will lower the cost of building wind and solar, saving money for Virginia customers as our utilities meet and exceed the VCEA’s targets for solar, storage and wind. (So, yes, the Inflation Reduction Act will live up to its name when it comes to electricity prices.)

For utility-scale projects like solar farms and offshore wind, obtaining the maximum tax credit requires that a steadily increasing percentage of the equipment used be American made. Credits available to manufacturers are intended to draw the supply chain back to the U.S. and will help those parts be cost-competitive. New prevailing wage and apprenticeship program requirements favor union labor and middle-class incomes for careers in green energy.

While large renewable energy facilities will contribute most to decarbonizing the grid, the most generous incentives in the IRA are reserved for distributed generation facilities under 1,000 kilowatts AC (1,300 kW DC), a category that includes most rooftop solar. For these projects, the investment tax credit will return to 30% for the next 10 years, with adders available if the facility is located on a brownfield or in an “energy community” (10%), uses domestic content (10%) or serves low-income residents (10-20%). The credits can be combined, making it entirely possible for a solar project on low-income housing in Virginia’s coalfields, built using American-made equipment, to qualify for tax credits of up to 70% of the cost.

Not only that, but taxpayers will be allowed to sell the credits, so people with no tax liability can still take advantage of the discounts. This feature will make solar affordable for homeowners who don’t owe enough in federal taxes to use the tax credits themselves. It will also make it possible for installers to discount the upfront cost of a solar array by the amount of the tax credit so customers don’t have to wait months for a tax refund.

A final feature is that the tax credits will now also be available as direct payments to tax-exempt entities like local governments, schools and churches. Direct pay will have the biggest impact in states that don’t allow third-party power purchase agreements (PPAs), but it’s a great option anywhere.

The “adder” for brownfields will be of interest to many Virginia localities that want to find ways to safely use closed landfills and old industrial sites, while Virginia’s government has already identified brownfields as a great opportunity for solar.

But the biggest market opportunities would seem to be for solar on low-income housing and in areas impacted by fossil fuel extraction. Carrie Hearne, associate director for renewable energy and energy efficiency at Virginia’s Department of Energy, said the many federal funding programs laid out in the IRA “would provide great opportunities for energy infrastructure investments in communities that are most in need, and in turn, help to lower energy bills. These federal funds could also contribute to the commonwealth’s goal of competitive rates, reliable and responsible delivery of energy alongside rural economic development.”

To understand how the solar industry sees these opportunities, I called the leaders of three solar companies that develop onsite solar in low-income areas and in the coalfields: Dan Conant of West Virginia-based Solar Holler, Tony Smith of Staunton-based Secure Futures and Ruth Amundsen of Norfolk Solar. Not surprisingly, they all predicted stunning growth in both distributed solar and jobs as a result of the IRA.

Solar has made fewer inroads in Southwest Virginia than in other parts of the state, which Conant sees as an opportunity. One of the few unionized solar companies in the area, and the only one I know of focused exclusively on Appalachia, Solar Holler has been expanding into Southwest Virginia and hiring workers at a steady clip. (Disclosure: I own a tiny stake in Solar Holler.)

The company already uses American-made components, so Conant said coalfields residents will be able to take advantage of two of the adders to install solar on their homes and businesses at half price, with low-income residents paying even less. The IRA’s manufacturing tax credits for American solar companies will further reduce the cost of the projects.

Conant was especially excited about the IRA’s impact on jobs in Appalachia. He expects to ramp up hiring significantly once the IRA becomes law. It took no prodding from me for him to add, “I truly believe this bill will let us get to 100% clean energy in 15 years.”

Secure Futures also has projects underway in Southwest Virginia as well as elsewhere across the state. The company uses third-party PPAs to allow tax-exempt customers like schools and nonprofits to go solar with no money down, paying just for the electricity produced by the panels. Although the IRA allows these customers to get the tax benefits without a PPA, Secure Futures president Tony Smith said tax-exempt entities will still do better using PPAs to take advantage of accelerated depreciation.

Smith said the IRA will make an already strong solar market in Virginia even stronger, as the higher tax credits will push down prices and the transferability of the credits will make it easier to attract more investors to solar. At the same time, a provision of the VCEA requiring Dominion Energy Virginia to acquire renewable energy certificates (RECs) from distributed generation facilities has created a strong market for these certificates, helping to finance projects and making solar even more affordable for institutional customers that sell their solar RECs.

On the other side of the commonwealth, Norfolk Solar also installs solar in low-income communities, offering PPAs to both commercial customers and low-income residents in economically distressed areas that qualify for special tax treatment as Qualified Opportunity Zones. (Under Virginia law, residential PPAs are available only to low-income customers.) Amundsen pointed out that the 10-year time horizon of the tax credits is an added benefit of the IRA to both her customers and potential investors because it allows for long-range planning and multi-year projects.

Energy storage will stand on its own

The VCEA established one of the most ambitious goals for energy storage development in the nation. But current federal law offers tax credits for energy storage only when it is part of a renewable energy project. The limitation has led to the proliferation of solar-plus-batteries projects around the country. It’s an ideal combination because it allows solar energy to be used when it is needed, unshackled from the time of day that it’s produced.

But uncoupling storage from renewable energy projects is a more efficient way to manage the grid, said Steve Donches, a Loudoun County attorney who represents battery storage companies and recently served on the Virginia Energy Storage Task Force.

“In many instances, the best location for storage supporting the grid is not where the renewables are located but rather near grid chokepoints or inside load pockets,” he said. “Moreover, site selection flexibility can often be important from a zoning permitting perspective. The new approach allows developers to be more nimble and locate where it is most useful and cost efficient.”

Recognizing this, the IRA provides a tax credit of up to 30% for energy storage whether or not it is part of a renewable energy facility.

This will make grid storage less expensive and easier for our utilities to install, and it will also benefit customers who want to put batteries in their buildings for back-up power. Amundsen noted that her customers sometimes can’t afford to include a battery at the time they install solar; the IRA will let them take the tax credit for storage even if they buy the battery later. This is especially important, she said, for resilience in low-income neighborhoods, where adding a battery to a solar-powered church or community center allows it to “island” during a power outage and provide a refuge for neighbors.

Homeowners will see huge benefits from building electrification

A cleaner electricity grid makes it possible to decarbonize other sectors of the economy by substituting electricity for fossil fuels in transportation and buildings; hence the climate advocates’ mantra “Electrify everything.” Yet while new electric appliances have become more energy efficient and attractive to consumers than the ones they replace, the switch comes with a price tag.

Under the new law, price will no longer be a barrier. The IRA offers rebates to residents to upgrade their homes with new electric technology such as heat pumps for heating and cooling (up to $8,000), electric induction stoves ($840), heat pump water heaters ($1,750) and upgrades to home electrical systems to support all the new load ($4,000). The rebates phase out for higher-income earners. Lower-income families replacing old and inefficient appliances will see the greatest energy savings as well as the highest rebates.

The federal rebates are a fantastic complement to existing Virginia programs for low-income energy efficiency upgrades. A major attraction of Virginia’s participation in the Regional Greenhouse Gas Initiative is the hundreds of millions of dollars it raises for low-income efficiency programs such as those devoted to upgrading multifamily housing like apartment buildings. Coordinating the state programs with the new federal rebates should be an urgent priority to ensure the broadest possible benefits to low-income Virginians.

Meanwhile, gas utilities had better start planning for the end of their business. There is no longer any reason to expand and upgrade gas distribution pipelines, because from here on in their customer base will be shrinking, not growing, resulting in stranded assets.

Electric vehicles aren’t just for the rich any more

Santeri Viinamäki, CC BY-SA 4.0 , via Wikimedia Commons

The IRA provides a $7,500 EV tax credit for new vehicles, including those made by manufacturers like Tesla and Toyota that had reached volume caps in previous law. Restrictions apply, including income limits, vehicle price caps and supply chain sourcing rules. The act also now adds a credit of up to $4,000 for used vehicles, making ownership possible for more people at all income levels.

Virginia is committed to vehicle electrification through its adoption of clean cars legislation in 2021 and a 2022 law requiring state agencies to buy electric light-duty vehicles whenever the total cost of ownership is less than it would be for a vehicle with an internal combustion engines. But further speeding up the transition to EVs will create ripple effects requiring careful planning. Electricity demand will increase and do so unevenly, requiring load management programs and upgrades to parts of the distribution grid.

https://www.virginiamercury.com/2021/05/05/data-centers-and-electric-vehicles-will-drive-up-virginia-electricity-demand-uva-forecaster-predicts/embed/#?secret=EvWicAM2Bx

Charging all these vehicles will also be an issue. Many would-be EV customers lack the ability to charge at home, either because they don’t own the space where they park or because their homes aren’t wired for easy installation of a charger. The problem is especially acute for people who rent apartments in buildings that lack charging stations.

No matter how generous the credits, people won’t buy EVs if they can’t charge them. Virginia must require multifamily buildings to include enough charging stations for all the residents who want them, ensure public charging stations are plentiful and convenient in low-income neighborhoods and improve its residential housing code to ensure new homes are wired to facilitate installation of chargers.

For best results, lean in

Photo credit iid.com

Virginia law requires each new governor to produce an energy plan in October of the first year in office, so Virginia’s Department of Energy is currently in the process of writing a plan that will have Gov. Glenn Youngkin’s stamp on it. The plan must be one that “identifies actions over a 10-year period consistent with the goal of the Commonwealth Clean Energy Policy set forth in § 45.2-1706.1 to achieve, no later than 2045, a net-zero carbon energy economy for all sectors, including the electricity, transportation, building, agricultural, and industrial sectors.”

Governor Youngkin hasn’t shown much enthusiasm for Virginia’s energy transition to date, having tried to gut the VCEA and repeal RGGI. Yet with the IRA making so many incentives available for clean energy and electric vehicles, leaning in to the energy transition now will allow the commonwealth to reap huge rewards in the form of economic development, job growth, cleaner air and lower energy bills.

The opportunities for Virginia are enormous; the governor should make the most of them.

This article originally ran in the Virginia Mercury on August 9, 2022.

Dear readers: Many of you know that although I write independently of any organization, I also volunteer for the Sierra Club and serve on its legislative committee. The Sierra Club’s Virginia Chapter urgently needs funds to support its legislative and political work towards a clean energy transition. So this summer I’m passing the hat and asking you to make a donation to our “Ten Wild Weekends” fundraising campaign. Thanks!

Your electric bills are skyrocketing. Blame our failure to invest in renewable energy.

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Photo by Pixabay on Pexels.com

Fossil fuel prices are higher everywhere, and the effect is hitting electric bills as well as prices at the gas pump. 

Utilities that generate power from natural gas and coal face fuel costs two or three times as high as they were just a couple of years ago —and those costs are passed on to customers. Some utilities employ hedging strategies and long-term contracts to reduce the impact of price spikes. But as a general matter, how painful your bill increase will be is a function of how much electricity your utility generates from fossil fuels. 

Gee, don’t you wish we had more renewable energy in Virginia? 

Let’s review the problem. Dominion Energy Virginia, our largest utility, generates most of its electricity from gas and coal, with 29 percent from nuclear and a tiny percentage from solar and biomass. Our second-largest utility, Appalachian Power, derives 85 percent of its power from coal and gas and only 15 percent from renewable energy, primarily wind and hydro. 

Both utilities are investing more in renewables now, but for years they lagged other states even as wind and solar became the lowest-cost sources of energy nationwide. Because the “fuel” for wind turbines and solar panels is free, those sources generate electricity at a stable price that looks even better when coal and gas prices go up. (Nuclear reactors are fueled by uranium, so they aren’t affected by the fossil fuel crunch either; even so, most of them need subsidies to compete in the wholesale market.) 

As previously reported in the Mercury, Dominion filed a request with the State Corporation Commission in May to increase the “fuel factor” portion of its customer bills, citing the higher prices. In the past year, according to Dominion, the price of the natural gas it bought has gone up 100 percent. High gas prices cause utilities to switch to coal generation when it’s cheaper, so the price of coal also rose by 92 percent. In all, the company said it incurred more than a billion dollars more in fuel costs over the past year than it budgeted for a year ago. 

Under Virginia law, Dominion and APCo “pass through” the costs of fuel directly to customers. They don’t collect a profit, but they don’t have to swallow unexpected increases themselves. Customers will have to pay higher rates for as long as it takes Dominion to recoup the extra spending. The only question for the SCC is how quickly Dominion should collect the money.

Consumers in other states are also being hit by higher electricity bills, but the effect is uneven across the country. States that built more renewable energy protected their residents from fuel price increases. 

Data collected by the U.S. Energy Information Agency shows that with few exceptions, states with lower electricity rates than Virginia’s have more renewable energy than we do. Since the EIA data doesn’t reflect all the planned increases due to rising coal and gas prices, the disparity will become even more pronounced over the coming year. 

States in the Pacific Northwest with a lot of inexpensive hydroelectric power have especially low rates, but wind and solar are the cheapest forms of new energy. The higher fossil fuel prices go, the better wind and solar look by comparison. 

States in the Great Plains have been building wind for years because it outcompetes everything else, so their rates are low and increasingly insulated from fossil fuel volatility. South Dakota residents pay less per kilowatt-hour than Virginians do, and the state gets a whopping 83 percent of its electricity from renewable energy, primarily wind. Even North Dakota, a deep red state wedded to fossil fuels, gets more than 35 percent of its electricity from wind and another 5 percent from hydro. Its rates are already much lower than Virginia’s, and its renewable energy will cushion fuel cost increases. 

Investments in solar are also paying off. Take Utah for example, where residential rates are also far lower than Virginia’s. Utah has a coal problem, with 61 percent of its electricity from that one dirty source, and another 24 percent from natural gas. But, as EIA reports, “almost all the rest of in-state generation came from renewable energy, primarily solar power.” Moreover, “solar energy powers about 93 percent of Utah’s electric generating capacity added since 2015.” Evidently, Utah spent the past seven years working to future-proof its energy supply, while Dominion kept building more gas plants. 

Virginia’s slow start on the transition to renewable energy is the direct result of poor investment decisions by our utilities and a disgraceful myopia on the part of the State Corporation Commission. Environmental advocates pointed out for years that our over-commitment to fracked gas meant we’ve been gambling on fuel costs and undervaluing price stability. But the SCC kept approving new fossil fuel projects, and actually urged Dominion to build more gas plants.

Indeed, our situation would be even worse if the General Assembly had not passed the Virginia Clean Economy Act in 2020. The VCEA requires our utilities to transition to carbon-free electricity by 2050 and establishes wind and solar targets for Dominion and APCo to achieve by 2035. The targets are still too low to meet the climate emergency — but until the VCEA became law, Dominion was planning to build even more gas plants. 

Now customers have to pay for Dominion’s folly. Dominion’s filing states that if it recovers the entire $1 billion shortfall over the coming year, residential bills would have to go up by 19.8 percent. Dominion instead proposes to spread the higher charges over three years to ease the shock, making the bill increase 12.2 percent.  The effect would be further moderated this year by other adjustments the company proposes, like moving the costs of participating in the Regional Greenhouse Gas Initiative into base rates, where they can be absorbed because those rates are so inflated. (On the other hand, the SCC just granted Dominion a separate rate increase for spending to extend the life of its aging nuclear plants—an undertaking projected to cost nearly $4 billion.) 

An SCC hearing examiner heard testimony in Dominion’s rate case on July 6 and 7. A ruling is expected later this summer, and the SCC seems likely to approve the three-year plan. 

Spreading the cost of higher fuel prices out over a longer time may reduce the rate shock, but there are drawbacks to this approach. First, Dominion will charge customers the financing costs of deferring collection on the full amount, adding to the total cost burden. (What, did you think the company was offering to absorb that cost itself?) The way it works is that ratepayers will borrow money to pay off our debt to Dominion, then repay the loan with interest over the next three years. 

The second problem is that if the high cost of fossil fuel isn’t temporary, extending the recovery period will lead to even greater shocks in coming years. If prices stay high and we keep kicking the can down the road, we will pay more financing costs and pile up more debt. Where does this end?

This is not mere speculation. Dominion’s filing already projects that “fuel costs will remain elevated over the next year,” and expert witness testimony in the case notes that Dominion revised its natural gas price projections upwards after it filed its request, without updating the amount it is seeking to collect to reflect the higher projections. 

Over at Appalachian Power the situation may not be any better. APCo typically seeks its fuel factor rate increases in September of each year. Last year the utility sought a $3 average increase in residential bills to cover higher fuel costs, at a time when coal and gas prices were still well below this year’s prices. When the company files for its next fuel factor increase two months from now, the rate increase it seeks is likely to pack a much bigger punch. 

What of other Virginia utilities? Our smallest publicly-owned utility, Kentucky Utilities (Old Dominion Power, which serves five counties in southwest Virginia), is also heavily dependent on fossil fuels although now planning to build more renewables. ODP filed for a modest rate increase in February of this year, just before Russia invaded Ukraine and sent world natural gas prices to heights not seen since the start of the fracking revolution. 

Chris Whelan, vice president for communications and corporate responsibility, told me ODP is able to dampen the effect of fuel price volatility through a “flexible fuel procurement strategy that includes long-term contracts to help hedge against price swings as well as the ability to purchase fuel on the spot market when prices drop.” Still, ODP will have to seek another increase next February unless prices suddenly plummet. The utility recovers excess fuel costs (or lowers rates if fuel costs fall) on an annual basis, so customers would pay off the full amount over 12 months. 

Electric cooperatives that buy electricity from Old Dominion Electric Cooperative also face price increases due to high fossil fuel prices and a paucity of renewables. ODEC’s 2021 energy profile shows it generates 38 percent of its electricity from gas, 14 percent from nuclear, and 4 percent from coal. It purchases the rest from the wholesale market (38 percent) and from renewable energy projects (6 percent). Electricity sold on the PJM wholesale market is generated mainly by natural gas, nuclear and coal, so wholesale market prices are also higher now.

According to Kirk Johnson, ODEC’s senior vice president for member engagement, ODEC has had to raise energy prices twice since the beginning of the year, effective May 1 and July 1. Assuming individual distribution cooperatives passed those costs through immediately, residential co-op customers will have seen a 16 percent increase in their electricity rates since Jan. 1. That’s a really steep increase, but Johnson notes ODEC will collect the full amount of the excess cost by Jan. 1, 2023. 

ODEC’s increase for six months is almost four percentage points lower than the increase Dominion would impose for 12 months if it were to collect its full $1 billion in the shortest time possible. Johnson said ODEC engages in a hedging strategy that acts like an insurance policy to limit the effect of fuel price volatility, and that this strategy has saved their ratepayers hundreds of millions of dollars.

So hedging and long-term contracts can smooth out fossil fuel volatility, but rates are going up everywhere in Virginia. The lesson is clear enough: “cheap” fracked gas was a bad bargain. Our utilities should have been building wind and solar over the last several years to protect us from fossil fuel price volatility, rather than waiting for the General Assembly to force them to act. 

Going forward, the more we invest in wind and solar, the more price stability we will have in our electricity rates, and the less we will have to worry about high fossil fuel prices in the future.  

This article originally appeared in the Virginia Mercury on July 18, 2022. I’ve corrected information for Utah.

*EIA’s webpage lists each state’s average residential price of electricity per kilowatt-hour, but finding the fuel mix for each state requires looking up each one separately. For those of you who like to dive into these details, I’ve assembled the information for you. Note that most of EIA’s data is for 2021, but some state data is for 2020. Unfortunately this includes Virginia.

StatePrice cents/kWh% REsource of RE
Virginia12.837biomass, hydro, solar
Idaho9.8674mostly hydro
Washington10.1275mostly hydro
North Dakota10.4840mostly wind
Utah10.6615mostly solar
Montana11.0052mostly hydro
Wyoming11.0619mostly wind
Nebraska11.1128mostly wind
Oregon11.2268mostly hydro, some wind
Missouri11.5412mostly wind
Arkansas11.7510mostly hydro
Louisiana11.984biomass
South Dakota12.0382wind, hydro
Iowa12.0960almost all wind
North Carolina12.2616mostly solar and hydro
Oklahoma12.3845mostly wind
Kentucky12.637hydro

Dear readers: Many of you know that although I write independently of any organization, I also volunteer for the Sierra Club and serve on its legislative committee. The Sierra Club’s Virginia Chapter urgently needs funds to support its legislative and political work towards a clean energy transition. So this summer I’m passing the hat and asking you to make a donation to our “Ten Wild Weekends” fundraising campaign. Thanks!

Looking backward, Virginia Republicans attack climate action and coddle coal

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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