Va. to try limited energy competition after Dominion reverses opposition to embrace pilot

Virginians will see some expansion in their choice of companies to buy electricity from after two proposals killed at the urging of the state’s two largest electric monopolies, Dominion Energy and Appalachian Power Company, were unexpectedly resurrected in the waning days of the session. 

The bills, which still have to be signed by Gov. Ralph Northam to go into effect, offer a more cautious approach to opening up Virginia’s electric markets than that initially envisioned by their patrons. 

“We’re going to work hard during the reconvening session to find a happy medium on a pilot project,” said Del. Jeff Bourne, D-Richmond, of his bill, House Bill 868, which aims to let non-utility companies sell renewable energy to customers even if the incumbent utility is also doing so. 

Since 2007, when the state re-regulated its electric markets after a brief and unsuccessful flirtation with deregulation, Virginians have been almost entirely limited to buying energy from the recognized electric monopolies, electric cooperatives or municipal utilities, depending on where they live.

Only in a few situations can customers take their business elsewhere: when a non-utility is selling fully-renewable energy but the incumbent utility is not, when the customer’s demand is more than five megawatts and when the customer has multiple sites that collectively use more than five megawatts and regulators determine letting them combine those loads won’t harm other customers. 

For years the special exceptions went mostly unused. Then came advancements in technology and plunging renewables prices. Suddenly companies looking to buy cheaper electricity while also scoring corporate sustainability points were eager to take advantage of the loopholes and exit Dominion’s and Appalachian Power’s customer pools. 

Alarmed, the utilities fought the potential exodus tooth and nail, largely before the State Corporation Commission. 

The turf changed this winter when Democrats began drafting bills to open the electric markets, particularly to renewable energy providers. 

Bourne’s HB 868 sought to eliminate the provision in state law that closes the renewables market once the utility enters it. Another proposal, championed by Democrats Sen. Jeremy McPike of Prince William and Del. Mike Mullin of Newport News, would have gone one step further to allow a company that has multiple sites and uses a certain amount of renewable energy to aggregate its power loads.

Now arguing before lawmakers instead of regulators, the utilities denounced the measures as the first dangerous slide down the slippery slope of deregulation.

Allowing customers to exit the utilities’ customer pool to obtain energy from elsewhere, warned Tony Clark, a former Federal Energy Regulatory Commission member and Loudoun resident who testified “on behalf of Dominion” before a House panel Feb. 6, “creates a vicious cycle where the economics of utility regulation itself are destroyed from within.” 

John Watkins, a Dominion lobbyist and former state senator, told a Senate committee Jan. 29 that competition would produce a cost-shifting scenario where “the small guy winds up picking up most of the cost.” 

And Dominion Vice President of Public Policy and State Affairs Katharine Bond at the same meeting told senators that allowing competition from non-utilities “would move Virginia dollars and jobs to other states.”

The utilities won, with the friendly Senate Commerce and Labor Committee striking down the last surviving bills on Feb. 24.

But then, over the next week, something changed. On March 2, the committee voted to reconsider its decision on the retail competition bills. A new pilot version of Mullin’s bill negotiated with Dominion was proposed that would only apply to that utility’s territory, not that of Appalachian Power, and would set a cap of 200 megawatts on the amount of power that eligible customers could aggregate under the program. 

In testimony before lawmakers, Dominion struck a more muted tone.

“Most of these customers who have gone to choice under a different provision would prefer to go under aggregation, and we’re certainly open to doing that to accommodate our customers,” said Dominion Senior Vice President of Corporate Affairs and Communications Bill Murray. “We think this is a good resolution to the matter.”

Bourne’s renewable competition bill was also revived through the addition of a reenactment clause that would require the General Assembly to pass the legislation again in 2021 before it could go into effect — an addition intended to buy time for the details of a pilot to be negotiated. Those details are expected to be hammered out in the coming weeks before the General Assembly reconvenes for its veto session in April, said Bourne.

Dominion has said it has a policy of not speaking to the Virginia Mercury. But Greg Habeeb, a lobbyist for the Renewable Energy Buyers Association and a former delegate, said that in conversations about the aggregation pilot, the utility had said “there was already existing people in the market shopping under [the renewable energy provision], and as long as the expansion of the market wasn’t too dramatic, they were open to it.”

Lawmakers, too, proved more open to the suggestion, moving the bills out of committee and through final passage in both chambers in swift order.

“I think there were a lot of people on the committee who needed time to digest” the pilot approach, said Mullin afterward. And his pilot, he said, “is an exploration of a way of having additional choice without deregulating.”