Advanced Energy Perspectives

Navigating Renewable Energy Options In Virginia – Guide to a Changing Landscape

Posted by Caitlin Marquis and Harry Godfrey

Jun 7, 2018 11:00:00 AM

    

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Photo by ttarasiuk, used under a Creative Commons license

In Virginia, several voluntary renewable energy tariffs have been introduced by the state’s two largest investor-owned utilities, Dominion Energy (Dominion) and Appalachian Power Co. (APCo). Customers also have the option to purchase renewable energy from competitive service providers, with certain restrictions. Are the options now available sufficient to meet the needs of Virginia’s diverse businesses that want renewable energy to power their operations?

The purpose of renewable energy tariffs, in Virginia and elsewhere, is to give customers (generally commercial and industrial, or C&I, customers) of vertically integrated utilities a way to choose renewable energy to meet their electricity needs. For some customers, the programs in Virginia have done the trick. But others are still waiting for a plan that’s right for them. AEE and Virginia AEE have teamed up to provide a guide to renewable energy in the Commonwealth – how to get it, and what needs to change to get all customers the renewable energy they want.

Here is an overview of how we got to where we are in Virginia, in terms of the options that are available today.  (For more detailed information, download the full guide to renewable energy tariffs here.) Then we will take a look at ways that renewable energy could be made more available to Virginia companies.

In 2013, Dominion introduced one of the first renewable energy tariffs in the country.  Schedule Renewable Generation (Schedule RG) was approved as a pilot program, but in those three years not a single company signed up, despite significant interest in renewable energy in Virginia, and in contrast to the success of renewable energy tariffs offered in other states at around the same time. High administrative fees and a credit structure that resulted in prohibitively high costs for customers, among other drawbacks, discouraged participation.

In the meantime, Dominion worked with certain customers to develop a new program, termed Schedule Market Based Rate (Schedule MBR), which enables customers to achieve cost certainty and provides customers with additional flexibility in sourcing renewable energy projects to meet their needs. The program has attracted praise from many customers, and has since been replicated by other utilities. But participation was restricted to customers with over 5 MW of demand and a high load factor (i.e., customers with relatively constant electricity usage, like data centers and factories), and the overall program is capped at 200 MW, so opportunities are limited. Dominion also worked with large customers to develop Schedule RF, another novel program design—but again, the program is available only to a handful of customers, in this case those bringing new load to Dominion’s service territory.

That still leaves the matter of how to meet the demand of a larger number of smaller customers who also want renewable energy. With authority for Schedule RG expiring in 2017, Dominion introduced a revision to the pilot that made several improvements. That program is still under review by the State Corporation Commission (SCC), and AEE and Virginia AEE have jointly intervened in the case, alongside the Mid-Atlantic Renewable Energy Coalition (MAREC), to argue for small but important improvements to ensure it will meet the needs of a range of customers, such as adjusting administrative fees and clarifying and expanding customer flexibility regarding project selection, term length, and taking smaller portions of output from large projects.

So these are the options available to Dominion customers through the utility. But what about options outside the utility? There are some, but without further action, they may be shrinking.

Virginia law – specifically  Virginia Code § 56-577 – allows customers to purchase electricity from a competitive service provider (CSP), but only under specific circumstances. Passed in 2007, this section of code provides three options for customers to leave their incumbent utility . The one that’s relevant here is the option to purchase 100% renewable energy – but that option is available only if the incumbent utility does not offer a plan to meet a customer’s desire for 100% renewable energy.

As demand for renewable energy has grown, both Dominion and APCo have tried to introduce 100% renewable energy programs. So far, the State Corporation Commission (SCC) has rejected the utility programs as either too costly (APCo’s Rider Renewable Energy Only, or REO), or too uncertain and with too many elements left to the utility’s discretion (Dominion’s Schedule Continuous Renewable Generation, or CRG). AEE submitted comments expressing concern at the high cost of APCo’s Rider REO; and last year intervened and submitted testimony in opposition to Dominion’s proposal not only because of uncertainty but because it would shut out CSP options without an effective utility alternative. APCo has since introduced another 100% renewable energy proposal at a lower cost; Dominion has yet to introduce a substitute for Schedule CRG.

Meanwhile, there are moves to clarify or expand customer options. A bill (SB 837) introduced this year would, among other things, eliminate the restriction on CSP offerings when a utility offers a 100% renewable energy program. The bill received significant attention from large customers, which wrote to the legislature in support of the bill, but it was kicked over to 2019, when it can be taken up again. In addition, the Virginia Supreme Court is currently considering appeal of a recent SCC decision that, if overturned, would allow CSPs to provide renewable energy for just a portion of the customer’s load.

Virginia customers have some options for renewable energy today, but they are limited, and in flux. With many moving parts, there are a couple of open questions that could impact the Virginia market moving forward:

  • Will SCC approve 100% renewable energy tariffs from Dominion and/or APCo, offering renewable energy more broadly but closing off competitive suppliers?
  • Will legislative changes or SCC orders provide renewable energy programs that meet the needs of a wider variety of customers, and offer competitive supply options?

Ultimately, the answers to these questions depend on the legislature, utilities, and courts. Here at AEE and Virginia AEE, we’ll be standing by to help make the case for options that meet the needs of all customers.

Download Virginia Renewables Policy Guide

Topics: regulation, Virginia

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