How the General Assembly failed Virginia again on clean energy
A storm passes over the Capitol. (Ned Oliver/Virginia Mercury – Sept. 11, 2018)
When the General Assembly session opened Jan. 9, legislators were presented with dozens of bills designed to save money for consumers, lower energy consumption, provide more solar options and set us on a pathway to an all-renewables future.
Almost none of these measures passed, while bills that benefited utilities kept up their track record of success.
Before I review the individual bills, it’s worth considering for a moment how very different Virginia’s energy future would look if the best of 2019’s bills had passed. In that alternate universe, Virginians could have looked forward to:
- A freer and more open market for renewable energy at all levels, including unrestricted use of third-party financing for renewable energy, an end to punitive standby charges and arbitrary limits on customer solar and new opportunities for local governments to install solar cost-effectively.
- A mandate for utilities to achieve real energy efficiency results, not just to throw their customers’ money at programs.
- An energy efficiency revolving fund to offer no-interest loans to local governments, public schools and public institutions of higher learning.
- The right to choose an electricity supplier for renewable energy, instead of being restricted to more expensive and less desirable utility offerings (if available at all).
- Tax credits for solar on landfills, brownfields and economic opportunity zones.
- Rebates for low and moderate-income Virginians who install solar.
- A new revenue source for spending on climate adaptation efforts, energy efficiency programs and coalfields transition, made possible by the auctioning of carbon allowances to power plants as part of joining the Regional Greenhouse Gas Initiative; half the lowered carbon emissions would have been achieved through installing wind and solar.
- Movement towards an eventual phase-out of fossil fuels.
- Stronger assurance that customers won’t be overcharged for the use of the Atlantic Coast Pipeline or other fracked-gas pipelines owned by utility affiliates.
But in a legislature still ruled by Dominion Energy and Republicans (in that order), what we mostly got instead were bills letting utilities charge their electricity customers for speculative development projects (HB 1840, HB 2738 and SB 1695) and rural broadband infrastructure (HB 2691), and another that would actually prevent the state from pursuing carbon-reduction regulations (HB 2611). The governor is likely to veto this last one, however.
A year ago, legislators agreed that Dominion and Appalachian Power should propose hundreds of millions of dollars in energy efficiency programs, as a way to sop up some of those companies’ excess earnings instead of the unthinkable alternative of taking the money away from them.
This year, subcommittees killed bills (HB 2294, HB 2294) that would have insisted those programs be effective. (HB 2294 would have also made last year’s renewable energy goals mandatory.)
The energy efficiency bills that did pass were far more modest: making it harder for the SCC to reject utility-proposed programs (HB 2292 and SB 1662) and establishing a stakeholder group to provide input on programs (HB 2293).
“Energy Freedom,” and other similar legislation aimed at opening up the rooftop solar market, died on party-line votes in committee.
In fact, the party-line vote became a theme whenever bills came up that Dominion opposed. Anyone sitting through the House Commerce and Labor subcommittee hearing, watching one customer solar bill after another be unceremoniously killed, might have wondered if the vote buttons had gotten stuck.
The only significant renewable energy legislation to make it through the committee gauntlet was a long-negotiated compromise bill that gives customers of Virginia’s rural electric cooperatives more opportunities to install solar, at the cost of accepting future new demand charges (HB 2547 and SB 1769).
Customers of Dominion and APCo didn’t get even that much, though one bill — from a Republican — calls for those utilities to provide a total of $50 million in assistance to low-income, elderly and disabled customers for solar and energy efficiency. HB 2789 by Del. Israel O’Quinn, R-Washington, marks one of the rare bright spots of the 2019 session.
Two other minor renewable energy bills could make incremental progress for a handful of municipalities (HB 2792 and SB 1779) and school systems (HB 2192 and SB 1331).
And that, I’m sorry to say, is pretty much it for energy legislation this year.
Bills that passed: renewable energy
• HB 2192 (Del. Nick Rush, R-Montgomery) and SB 1331 (Sen. Bill Stanley, R-Franklin) is a school modernization initiative that includes language encouraging energy efficient building standards and net zero design. It also encourages schools to consider lease agreements with private developers. It does not provide for the more common use of third-party power purchase agreements. It has nice (but not mandatory) language on net zero schools. It allows leases with private developers who will construct and operate buildings and facilities. It permits public schools to contract with utilities for solar energy as part of the school modernization project. An amendment added language requiring that renewable energy facilities must be on school property and cannot be used to serve any other property. PPAs are not mentioned. Ambiguous language in these provisions may cause problems for schools. Both bills passed the House and Senate almost unanimously with Sen. Dick Black, R-Loudoun, the only naysayer.
• HB 2547 (Del. Tim Hugo, R-Fairfax) and SB 1769 (Sen. Glen Sturtevant, R-Richmond) make changes to the net metering program for customers of electric cooperatives. The overall net metering cap is raised from the current one percent to a total of five percent, divided into separate buckets by customer type and with an option for coops to choose to go up to seven percent. Customers will be permitted to install enough renewable energy to meet up to 125 percent of previous year’s demand, up from 100 percent today. Third-party PPAs are generally legal for tax-exempt entities, with a self-certification requirement. However, the co-ops will begin imposing demand charges on customers with solar, to be phased in over several years, replacing any standby charges. This bill was negotiated between the co-ops and the solar industry via the “Rubin Group.” An amendment to the bill establishes a stakeholder group for further discussions with Dominion and Appalachian on net metering, a prospect that will appeal only to eternal optimists and amnesiacs who don’t remember the past five years of time-wasting, fruitless negotiations. SB 1769 passed both the Senate and House unanimously. HB 2547 passed the House unanimously and the Senate 36-4, with Black and Sens. Amanda Chase, R-Chesterfield, Richard Stuart, R-Stafford, and David Suetterlein, R-Roanoke County, voting no this time.
• HB 2621 (Del. Riley Ingram, R-Hopewell) and SB 1398 (Stanley) authorize a locality to require the owner or developer of a solar farm, as part of the approval process, to agree to a decommissioning plan. This was a negotiated Rubin Group bill. SB 1398 was incorporated into SB 1091 (Sen. Bryce Reeves, R-Spotsylvania), which was amended to conform to the compromise language of HB 2621.
• HB 2741 (Del. Lashrecse Aird, D-Petersburg) establishes a rebate program for low and moderate-income households that install solar. Amended so it retains the structure of the program but removes funding. As amended it passed both House and Senate.
• HB 2792 (Del. Kathy Tran, D-Prince William) and SB 1779 (Sen. Adam Ebbin, D-Alexandria) establish a six-year pilot program for municipal net metering for localities that are retail customers of investor-owned utilities. The initial bill negotiated with the utilities was much more limited than most localities wanted; further amendments whittled it down to a point where it won’t help localities with significant projects like landfill solar. However, we are told it will be useful for a few small on-site projects that don’t need PPAs. Even with the utilities on board, 21 House Republicans and one senator (Sutterlein) voted against the House bill, though only 12 House Republicans were hardcore enough to vote against the identical Senate bill when it crossed over.
• HB 2789 (O’Quinn) requires Dominion and Appalachian to develop pilot programs to offer solar and energy efficiency incentives to low-income, elderly and disabled customers. The energy efficiency money, totaling $25 million, is to come out of the amount the utilities are required to propose in efficiency spending under last year’s SB 966. The renewable energy incentives, also $25 million, cannot come out of that spending; the legislation is silent on how it will be paid for. Passed the House 90-9, with only Republicans as holdouts. Passed the Senate 37-3, with only Black, Stuart and Suetterlein in opposition.
Bills that passed: energy efficiency
• HB 2292 (Del. Rip Sullivan, D-Fairfax) and SB 1662 (Sen. Frank Wagner, R-Virginia Beach), dubbed the “show your work bill,” requires the State Corporation Commission to provide justification if it rejects a utility energy efficiency program. As amended, the bills passed almost unanimously.
• HB 2293 (Sullivan) establishes a stakeholder process to provide input on the development of utility energy efficiency programs. Passed both houses unanimously.
• HB 2332 (Del. Mark Keam, D-Fairfax) protects customer data collected by utilities while allowing the use of aggregated anonymous data for energy efficiency and demand-side management efforts. A substitute changed the bill to one requiring the SCC to convene a Data Access Stakeholder Group to review customer privacy and data access issues. As amended, the bill passed both Houses unanimously.
• SB 1400 (Sen. Chap Petersen, D-Fairfax City) would have removed the exclusion of residential buildings from the Property Assessed Clean Energy (PACE) program, which allows localities to provide low-interest loans for energy efficiency and renewable energy improvements on buildings. After passing the Senate unanimously, the bill was amended in the House to remove the residential PACE authorization (it does expand PACE to include stormwater improvements). As amended, it passed both houses unanimously. It’s probably cheating putting this one in the “passed” category, but I needed the win.
Bills that passed: energy transition and climate
• HB 2611 (Del. Charles Poindexter, R-Franklin) would prohibit Virginia from joining or participating in RGGI without support from two-thirds of the members of the House and Senate, making it sort of an anti-Virginia Coastal Protection Act. Passed the House on a 51-48 party-line vote. Passed the Senate on a 20-19 vote. Only one Republican, Jill Vogel, voted against it. The governor is expected to veto it.
• HB 2747 (Del. Terry Kilgore, R-Scott) and SB 1707 (Sen. Ben Chafin, R-Russell) create a Southwest Virginia Energy Research and Development Authority “for the purposes of promoting opportunities for energy development in Southwest Virginia, to create jobs and economic activity in Southwest Virginia consistent with the Virginia Energy Plan prepared pursuant to Chapter 2 (§ 67-200 et seq.), and to position Southwest Virginia and the commonwealth as a leader in energy workforce and energy technology research and development.” Among the powers listed are promoting renewable energy on brownfield sites, including abandoned mine sites, and supporting energy storage, including pumped storage hydro. Fossil fuel projects are not listed, but are also not excluded. Both bills passed unanimously.
Bills that passed: other utility regulation
• HB 1840 (Del. Danny Marshall, R-Danville) allows utilities to develop transmission infrastructure at megasites in anticipation of development, charging today’s customers for the expense of attracting new customers. The legislation was amended to change the language to the nicer-sounding “business park,” but it continues to allow utilities to recover costs for constructing transmission lines and substations to serve these speculative projects. It passed unanimously in the Senate and 82-18 in the House, with mainly the newer Democrats voting no.
• HB 2477 (Kilgore) originally would have eliminated one of the few areas of retail choice allowed in Virginia by preventing large customers from using competitive retail suppliers of electricity, including for the purpose of procuring renewable energy, in any utility territory with less than two percent annual load growth. A substitute bill removed most of the bad provisions and confined its operation to Appalachian, but also left it incomprehensible, so I can’t possibly tell you what it does. As far as I was able to determine, no customers opposed the final bill, which passed the House and Senate unanimously.
• HB 2691 (O’Quinn) originally would have established a pilot program for electric utilities to provide broadband services in underserved areas, and raise rates for the rest of us to pay for it. The bill was amended so utilities can only provide the capacity on their lines to private broadband suppliers. The investment is eligible for recovery as an electric grid transformation project under last year’s SB 966, presumably so it is paid for out of utility overearnings instead of a new rate increase. The amended bill passed both houses almost unanimously.
• HB 2738 (Del. Lamont Bagby, D-Henrico) and SB 1695 (Wagner) authorizes utilities to acquire rights of way for sites that the Virginia Economic Development Partnership Authority decides could be developed to attract new customers and allows utilities to recover costs from existing customers. A substitute tightened the requirements somewhat, but it remains another giveaway to utilities in the name of speculative development, at the expense of landowners and consumers. The House bill passed 85-13 with mostly newer Democrats in opposition, then passed the Senate 37-3, with McPike, Spruill and Suetterlein voting no. The Senate bill passed 34-6; although the bills appear to have been identical, Sens. Amanda Chase, R-Chesterfield, Stephen Newman, R-Lynchburg and Mark Peake, R-Lynchburg, also voted no. The House vote on SB 1695 was 84-13.
A sampling of what failed:
• HB 1718 (Del. Lee Ware, R-Powhatan) would have required an electric utility to demonstrate that any pipeline capacity contracts it enters are the lowest-cost option available, before being given approval to charge customers in a fuel factor case. Ware testified in committee that the bill was not intended to stop the Atlantic Coast Pipeline, but would simply guide the SCC’s review of cost recovery after the pipeline is operational. Dominion’s lobbyist argued the legislation was unnecessary because the SCC already has all the authority it needs, and it shouldn’t be allowed to look back to second-guess the contents of the ACP contract. The bill passed the House 57-40. Do look at the votes; this is the most interesting energy vote of the year, as it neatly separates the Dominion faction from the pro-consumer faction. Unfortunately, the bill was then killed in Senate Commerce & Labor, where the Dominion faction runs the show, so most senators didn’t have the opportunity to demonstrate whose side they’re on. In an interesting side note, however, Sen. Dick Saslaw, D-Fairfax, the minority leader and long one of Dominion’s most reliable allies in the General Assembly, voted against killing the bill. Maybe it has something to do with the line of attack his primary challenger has taken.
• HB 2329 (Keam) and SB 1456 (Sens. Jennifer McClellan, D-Richmond and John Edwards, D-Roanoke) is the Solar Freedom bill that would have removed eight barriers to renewable energy installations by utility customers, including lifting the one percent net metering cap, removing PPA caps, and allowing municipal net metering. HB 2329 was defeated in Commerce and Labor 8-7 on a party-line vote. The Senate companion was killed in Commerce and Labor on a 10-3 party-line vote.
• HB 1928 (Del. David Bulova, D-Fairfax) and SB 1460 (McClellan) would have expanded utility programs allowing third-party power purchase agreements for renewable energy while continuing to restrict the classes of customers who are allowed to have access to this important financing tool. In committee hearings, utility lobbyists claimed there was no need for the legislation because there is “plenty of room left” under the existing caps. Industry members testified that there is a lot more in the queue than is public, and caps will likely be reached this year. HB 1928 killed in Commerce and Labor subcommittee 3 by a 6-4 vote; Republican Tim Hugo voted with Democrats in support of the bill. SB 1460 killed in Senate Commerce and Labor 10-3, with only Democrats supporting.
• HB 2645 (Del. Sam Rasoul, D-Roanoke, with 13 co-patrons), nicknamed the REFUND Act, would have prohibited electric utilities from making nonessential expenditures and requires refunds if the SCC finds they have. It also would have barred fuel cost recovery for more pipeline capacity than appropriate to ensure a reliable supply of gas. Other reforms in the bill would undo some of the provisions of last year’s SB 966, lower the percentage of excess earnings utilities can retain, and require the SCC to determine rates of return based on cost of service rather than peer group analysis. Democrat Steve Heretick voted with Republicans to kill the bill in Commerce and Labor subcommittee 3.
For a complete list of the several dozen pieces of legislation that might have been, go to powerforthepeopleva.com
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