Advanced Energy Perspectives

In Virginia, Better Options for Corporate Buyers Begin with This: Redoing Dominion’s Renewable Energy Tariff

Posted by Caitlin Marquis and Dylan Reed

Mar 30, 2017 10:28:15 AM

    

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Solar array atop the Weinstein Center for Recreation and Wellness at the University of Richmond. 

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As we’ve reported before, companies across the country are increasingly looking to advanced energy to meet their electricity needs, and in Virginia, the story is no different. A new AEE state market brief shows that unleashing this demand would bring huge benefits to the Commonwealth, including significant investment and development activity. With the renewable energy tariff of Dominion Virginia Power, the Commonwealth’s largest investor-owned utility, expiring at the beginning of April, Virginia has a chance to do just that. The question legislators and regulators need to ask themselves now is this: How can Virginia expand and improve options for renewable energy procurement to attract and retain top corporate citizens and reap the jobs and economic benefits that come with a dynamic renewable energy market?

Just how big is the opportunity?  AEE’s market brief finds that, if large companies in Virginia today sourced just 15% of their energy needs from renewable energy, it would drive development of nearly 2,000 MW of renewable energy capacity—and over $3.6 billion in new energy investment. In addition to the direct job and tax benefits of new renewable energy development, expanding options for corporate renewable energy procurement would make Virginia more attractive for companies looking to move or expand their operations – and wanting renewable energy as part of the deal.

Don’t take our word for it. In November, 18 companies, including AEE members Microsoft, Salesforce, and Walmart, submitted a letter to the Virginia State Corporation Commission asking for more choices when it comes to purchasing renewable energy in the Commonwealth. “Our ability to access power from renewable resources is essential to our corporate energy strategies,” the companies wrote.

Unfortunately, in Virginia, these companies’ options are limited, and the options they have aren’t very good. Take Dominion’s offering, which suffers from five major flaws:

  1. The structure of the program results in a high premium price for participants;
  2. A restrictive cap prevents the program from meeting the needs of large companies (exactly the customers it is intended to serve);
  3. Participants are offered limited transparency and given little control over the renewable energy contracts intended to serve their needs under the program;
  4. High administrative costs make the program unattractive to customers even without considering the premium price for service; and
  5. The inability to aggregate meters prevents participation by customers with multiple mid-sized metered locations within the Company’s service territory, such as retailers.

At the time when Dominion’s tariff was proposed and approved, it was one of the first renewable energy tariffs in the country. Even so, given its design, it should come as no surprise that not a single company has opted to participate.

The renewable energy tariff proposal from Appalachian Power Company (APCo) is no better. APCo’s program would charge customers an 18% premium for renewable energy from projects that were built years ago, and they aren’t even in Virginia. In comments submitted to the SCC in November, AEE made clear that these elements would have to change for the program to meet the needs of Virginia companies. The tariff is still pending.

Expiration of Dominion’s tariff presents a perfect opportunity for much-needed make-over, and for Virginia to make itself a magnet for corporations that care about the type of energy that powers their operations.

That begs the question: what would a good renewable energy tariff look like?

Quite simply, a good renewable energy tariff should be designed to give customers access to renewable energy purchased through their utility provider. A successful offering would provide customers with choice and flexibility at a competitive yet fair price, and would provide customers with assurance that the renewable energy that they are purchasing is both new and additional to existing requirements on the utility. It should also be administratively simple, avoid high participation fees, and work equally well for customers across different industry segments, from information technology to manufacturing to retail.

Utility ratemaking is never simple, and hitting those objectives can be complicated. But several states have managed to succeed at garnering corporate interest in renewable energy tariffs that result in new development. In Nevada, NV Energy’s Green Energy Rider has helped to build five different projects, including two with AEE member Apple; in New Mexico, a project for AEE member Facebook has already been approved under a new Green Energy Rider (in Utah, an alternate project for Facebook was approved under Rocky Mountain Power’s Schedule 34 before the tech giant decided on New Mexico); and in North Carolina, Duke Energy’s Green Source Rider has been used for six projects. That’s not to say these programs are perfect— but they show it can be done.

As we said at the top, the choice for Virginia is clear: Maintain the status quo, and risk losing ground with the growing number of companies that want to purchase renewable energy, or make some changes, and declare Virginia open for business. A better renewable energy tariff for Dominion customers won’t do it all, but it would be a good place to start.

Download the brief at the link below.

Download the Brief 

Topics: State Policy Update

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