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The GreeneHurlocker Blog

SCC Approves New Large Customer Renewable Energy Tariff

wind turbines and solar arraysThe Virginia State Corporation Commission (“SCC” or “Commission”) just approved a new tariff that will give customers of Dominion Energy Virginia (“Dominion”) an additional option to purchase renewable energy. On November 6, 2018, the SCC entered a Final Order approving Dominion’s application to offer a voluntary tariff designated “Rate Schedule RG.” The tariff is available to large, non-residential customers who agree to purchase the output, including all environmental attributes, from particular renewable energy facilities.

Participating customers may request to purchase the output from specific types of generation resources, such as solar and wind energy facilities. Dominion would either construct a new renewable facility or enter into a contract with a third-party generator to obtain the renewable energy necessary to serve the customer. Schedule RG, therefore, presents an opportunity for customers to choose the type of renewable energy they want to purchase. For example, a customer could request that Dominion enter into a contract with a particular generator. Or the customer could request the utility to build a new renewable facility on the customer’s premises or in a particular geographic location. The minimum facility size is 1 MW in nameplate capacity.

Participation in Schedule RG is capped at 50 customers. The tariff is also designed to ensure that non-participating customers do not subsidize any of the costs associated with Schedule RG. For example, Dominion may not place any of the Schedule RG facility costs in its rate base or the cost of service charged to non-participating customers.

The financial transactions supporting Schedule RG are complex. Participating customers would stay on their existing tariff and continue to pay all existing utility riders. At the same time, however, customers would pay a fixed price to purchase the renewable energy and would receive a “Schedule RG Credit” that is based on the wholesale price of energy and the capacity of the facility. In this way, the Schedule RG arrangement is like a financial “swap.” That is, participating customers would agree to pay a pre-determined renewable energy contract price, but would also receive the market price for the energy, which would be sold by Dominion in the PJM wholesale market. Thus, Schedule RG is designed to approximate the actual market cost of renewable energy from particular generating facilities.

Several parties intervened in the case, including Walmart and two renewable and advanced energy trade associations. While several parties offered comments on the proposal, no party to the case opposed Schedule RG.

The SCC approved the application subject to several reporting requirements. The SCC also held that Schedule RG will expire after three years if no customers participate.

Finally, it is important to note that Schedule RG was not approved under Va. Code § 56-577 A 5 and would not constitute a 100% renewable energy tariff under this statutory provision. As we explained in our Regulatory Guide, this Code section authorizes any Virginia customer to purchase electricity “provided 100% from renewable energy” from non-utility suppliers, so long as the customer’s incumbent electric utility does not offer an SCC-approved tariff for 100% renewable energy. Therefore, if Dominion received approval to offer a 100% renewable energy tariff pursuant to Va. Code § 56-577 A 5, Dominion customers would lose their existing rights to shop for such energy.

Currently, no Virginia utility offers an SCC-approved 100% renewable energy tariff. Dominion and Appalachian Power have both applied for approval to offer such tariffs, which thus far have been rejected. In the last three years, the SCC has rejected two 100% renewable tariffs proposed by Appalachian Power and one proposed by Dominion. Dominion currently has one application pending, which would be available to residential and small commercial customers.

The SCC’s Final Order in Schedule RG, Case No. PUR-2017-00163, is available here. If you have any questions about Schedule RG or other renewable energy options offered by Virginia utilities, please contact one of our energy regulatory attorneys.

SCC Approves First Renewable Energy Projects

offshore wind projectOn Friday, November 2, the Virginia State Corporation Commission (“SCC” or “Commission”) approved the first major renewable energy investments by Dominion Energy Virginia (“Dominion”) following the passage of Senate Bill 966 (“SB 966”), the sweeping utility overhaul legislation enacted in March. SB 966 provides that it is “in the public interest” for Dominion and Appalachian Power Company to purchase or construct up to 5,000 MW of new wind and solar energy resources. The legislation specifically states that a wind demonstration project located off Virginia’s coast would be “in the public interest.”

The SCC approved a 12 MW, $300 million offshore wind demonstration project proposed by Dominion, which will be constructed 27 miles off the coast of Virginia Beach. While finding the project to be prudent, the SCC’s Final Order strongly suggests that the application would have been rejected absent legislation deeming such projects to be “in the public interest” as a matter of law.

The Commission’s Final Order stated that the wind proposal “would not be deemed prudent [under this Commission’s] long history of utility regulation or under any common application of the term.” The SCC noted that the offshore wind project, which will be constructed by a Danish energy developer, was not subject to competitive bidding and that the energy costs will be “26 times greater than purchasing energy from the market” and “13.8 times greater than the cost of new solar facilities.” Finally, the Commission found that the project is not needed for Dominion to ensure reliability or meet any forecasted demand. Nonetheless, the Commission concluded that, “as a matter of law,” the Commission’s “factual analysis” of the reasonableness of the project is “subordinate [to] the legislative intent and public policy clearly set forth [by the 2018 amendments.”

The Commission also approved Dominion’s request to purchase 80 MW of solar energy via a power purchase agreement (“PPA”) with a non-utility company, Cypress Creek Renewables. The Commission noted that, unlike the offshore wind project, Dominion customers would be protected from financial and performance risks of the project since the utility is purchasing the energy from private developers.

The Final Order in the offshore wind matter (Case No. PUR-2018-00121) is available here and the Final Order in the solar PPA matter (Case No. PUR-2018-00135) is available here. Please contact one of our energy regulatory attorneys if you have questions about either of these cases.

Client Alert: Dominion In the Market for Solar, Wind

On October 24, 2018, Dominion Energy Virginia (Dominion) announced and issued an RFP seeking 500 MW of solar and on-shore wind generation. Projects must be at least 5 MW. Interested bidders can propose to either sell Dominion the project development assets or sell energy to Dominion under a Power Purchase Agreement. Projects must be located in the Commonwealth of Virginia to be eligible.

The RFP schedule is as follows:

Intent to Bid forms due: This Friday, November 2, 2018
Proposals to sell development assets due: December 13, 2018
Proposals to sell energy (PPA) due: March 14, 2019
RFP concludes: Second Quarter 2019

Dominion has pledged to have 3,000 megawatts of new solar and/or wind energy under development or in operation by early 2022. Dominion also announced that it will issue formal RFPs on an annual basis until the 3,000 MW target is met.

If your company has questions or would like any additional information regarding the Dominion RFP, please contact one of our renewable energy attorneys or utility attorneys.

SCC Sets Procedural Schedule for Dominion Grid Application

On July 24, 2018, Dominion Energy Virginia (“Dominion”) filed a Grid Transformation Plan with the Virginia State Corporation Commission (“Commission” or “SCC”). The SCC has entered a procedural schedule for this case and set an evidentiary hearing for November 15, 2018.

Dominion’s grid plan proposes to invest approximately $816 million in projects designed “to enhance the reliability, resiliency and security of the electric distribution grid.” Dominion also states that the plan will “facilitate the integration of distributed energy resources, such as solar or battery storage, into the system.” Dominion proposes to make the $816 million in investments over a three-year period, between 2019 and 2021. In particular, the utility wants to install approximately 1.4 million smart meters throughout its service territory between 2019 and 2021. There is more about the request here.

The filing also outlines the utility’s longer-term grid transformation priorities. Over 10 years, Dominion proposes to invest over $3.1 billion in grid transformation investments. These investments would include additional smart meters and other “advanced metering infrastructure” as well as reliability improvements and “grid hardening” projects. Dominion’s plan includes proposals to replace certain aging distribution facilities and increase the company’s physical and cyber security capabilities.

The application is filed pursuant to recently enacted legislation, Senate Bill 966, passed by the General Assembly and signed by Governor Northam earlier this year. Dominion’s petition requests the SCC to find that the plan is “reasonable and prudent.” The legislation provides that “grid transformation projects” are “in the public interest.” However, the law does not require the Commission to approve any of the proposed investments.

Dominion does not request cost recovery in its filing or explain whether the spending plan would result in rate increases for customers. This case has been docketed as Case Number PUR-2018-00100. Interested parties have until September 11, 2018, to intervene in this case.

If you want to know more about how this filing may affect energy markets in Virginia or have a legal issue in the energy field, please contact any of our renewable energy lawyers.

What’s the Latest on Supplier Consolidated Billing?

transmission towers for electricityWe have blogged previously about a petition filed at the Maryland Public Service Commission by five electric and natural gas retail suppliers seeking implementation of supplier consolidated billing (SCB). We did a video about it when the petition was filed, and our last blog on this topic was in February 2018, just after the legislative-style hearing concluded in Baltimore.

In the blog, you’ll see that we summarized the events at the hearing and even provided a picture of the four supplier witnesses testifying before the Commission, along with Brian Greene of our firm, so that everyone could get a feel for what it’s like to appear before the Commission (from the view of the Commissioners, no less!).

So what happened in the case since then, you ask?

In May 2018, the Commission issued this Notice of Briefing Schedule, requesting comments primarily on the legal issue of whether Maryland statutes allow a supplier utilizing SCB to initiate the disconnect process if the customer does not pay. Parties, including the petitioners, submitted comments on June 14 and June 28. We are now awaiting a Commission order or further guidance.

There’s also an SCB proceeding pending at the Pennsylvania Commission. On June 14, 2018, the Commission held a legislative-style hearing that will continue on July 12, 2018. You can get more info on the Pennsylvania proceeding here.  Delaware is also moving towards an SCB proceeding, with a recent Hearing Examiner’s report in Docket No. 15-1693 recommending approval of a Stipulated Order that calls for a new docket to be opened now to address whether SCB is permitted in and should be adopted in Delaware.

If you have questions about SCB or electric or natural gas retail service in general, please contact one of GreeneHurlocker’s energy and regulatory lawyers.

Solar and Wind Take Center Stage at the 2018 Virginia Energy Conference

wind turbines and solar arraysRenewable energy development, driven by rising corporate demand, was a central theme of Wednesday’s 2018 Virginia Energy Conference, hosted by the Virginia Chamber of Commerce. Garret Bean, Vice President of Development for sPower and one of the keynote speakers at the conference, discussed his company’s proposed 500-megawatt facility in Spotsylvania County, which will serve corporate customers in Virginia. Microsoft announced that it will purchase 315 MW of energy from sPower’s 500 MW project as part of its sustainability goal of 60 percent renewable energy by early 2020. In addition to Microsoft, major global companies including Google, Apple, Facebook, and Walmart have joined together to commit to 100% renewable power as a part of the RE100 initiative.

In his keynote, Bean explained that rapid data center development in Virginia, sustaining 70 percent of the world’s internet traffic, coupled with customer demand for cloud services powered by clean energy sources, presents a significant opportunity for growth in Virginia’s renewable energy sector. However, with the growth of renewable energy, developers are facing siting, permitting, and interconnection challenges that will have to be overcome.

Delegate Terry Kilgore, Senator Frank Wagner, and Secretary of Natural Resources Matt Strickler also discussed the opportunities and challenges of Virginia’s renewable energy industry. Senator Wagner voiced concerns about Virginia’s proposed regulations to link to the Regional Greenhouse Gas Initiative (RGGI) and participate in its regional greenhouse gas emissions cap-and-trade program. However, with the passage of SB 966 this session, paving the way for 5,000 megawatts of solar and wind energy in Virginia, and Governor Northam’s announcement that the Virginia Department of Mines, Minerals and Energy has posted a Request for Proposals for contracts to help strengthen Virginia’s offshore wind supply chain and service industry, the future for Virginia’s renewable energy industry is looking bright.

If you have questions about Virginia’s renewable energy industry, legislation, or regulatory structure, please contact one of GreeneHurlocker’s energy and regulatory lawyers.

U.S. Supreme Court Upholds Class Action Waivers in Arbitration Agreements

U.S. Supreme Court building.

U.S. Supreme Court building. (Photo credit: Wikipedia)

In a decision that could bode well for competitive retail energy suppliers, the U.S. Supreme Court on May 21, 2018 upheld employers’ arbitration agreements containing class action waivers. In a 5-4 opinion by Justice Gorsuch in Epic Systems Corp. v. Lewis, the Court deemed the arbitration provisions enforceable under the Federal Arbitration Act, 9 U.S.C. § 2 et seq., which requires courts to enforce an arbitration agreement unless there are grounds to refuse to enforce it under the Act’s savings clause (e.g. fraud, duress, or unconscionability).

In Epic Systems Corp., the employees challenging the arbitration agreements argued that mandated individualized proceedings (i.e. class action waivers) conflicted with language in the National Labor Relations Act, rendering the agreements unenforceable. The Court rejected the employees’ arguments, holding: “Congress has instructed in the Arbitration Act that arbitration agreements providing for individualized proceedings must be enforced, and neither the Arbitration Act’s saving clause nor the NLRA suggests otherwise.”

While this case involved employment contracts rather than retail energy supply contracts, the Court’s precedent upholding arbitration agreements with class action waivers is a good sign for retail energy suppliers concerned about potential class action claims.

If you have questions or would like to learn more issues to consider when preparing retail energy supply contracts, please contact one of GreeneHurlocker’s energy and regulatory lawyers.

Dominion Proposes Significant New Solar and Gas-Fired Generation

On May 1, Dominion Energy Virginia (“Dominion”) filed its 2018 Integrated Resource Plan (“IRP”) at the State Corporation Commission (“SCC”). In Virginia, an IRP is a utility’s proposal for meeting customer demand over the next 15 years. An IRP is a planning document and does not represent a commitment to pursue any particular course of action. Instead, it is the utility’s best assessment, at a particular point in time, regarding which resources it will deploy over the planning horizon.

The SCC must review Dominion’s IRP and decide whether the plan is “reasonable and in the public interest.” Generally, interested parties are able to present arguments and testimony regarding the reasonableness of the plan.

Dominion’s 2018 filing includes five alternative scenarios. The key variable in the alternative plans is carbon regulation. For example, the IRP includes different modeling based on whether a carbon tax is imposed at the federal or state level, or whether the Commonwealth joins the Regional Greenhouse Gas Initiative.

In each alternative plan, Dominion proposes to add at least 4,700 MW of new solar capacity in the next 15 years. Dominion also proposes to add between 3,700 and 5,200 MW of new gas-fired generation. Dominion suggests that these new gas facilities will be used as “peaking resources,” which run when necessary during periods of increased demand, such as on hot summer days when there is greater need for air conditioning. The also IRP assumes that Dominion’s peak demand will increase 1.4% each year.

The IRP indicates that the proposed Atlantic Coast Pipeline (“ACP”) will be a supply source for the new gas facilities. Dominion states that it has already signed an agreement to “secure firm transportation services on the Atlantic Coast Pipeline.” Dominion’s parent company, Dominion Energy, is one of the developers of the ACP.

Finally, the IRP assumes that Dominion’s four nuclear reactors will receive federal approval to remain operational throughout the planning period. However, Dominion says that it will “pause material development activities for North Anna 3,” a third nuclear reactor that the company was planning to construct at its nuclear facility in central Virginia.

The IRP notes that Senate Bill 966, which was enacted by General Assembly earlier this year, will become effective on July 1 of this year. This legislation is intended to encourage investments in renewable energy and “grid transformation” projects. The legislation requires Dominion to propose at least $870 million in energy efficiency programs over the next 10 years.

Dominion states that it “has begun the initial planning associated with a transformational grid modernization effort.” These “grid transformation” efforts will include investments in smart meter technology, distribution substation automation, “replacing aging infrastructure,” and an “enhanced customer information platform” to allow customers to manage their energy consumption. Although the IRP notes that Senate Bill 966 requires the company to propose $870 million in efficiency programs over the next 10 years, the IRP does not identify what type investments might be made.

We expect the SCC will enter an order for notice and hearing in the coming weeks. The SCC’s order will include deadlines for intervention, expert witness testimony submissions, and a date for the evidentiary hearing.

If you have any questions about Dominion’s IRP, or other electric energy matters, please contact one of GreenHurlockler’s renewable energy or regulatory lawyers.

Pending cases will have major impact on energy choice in Virginia

Our clients and colleagues have a lot of questions about the status of retail energy choice in Virginia. In this Energy Update special report, Will Reisinger breaks down the major legal issues and several pending court cases. These cases could determine whether Virginia expands – or restricts – customers’ access to new renewable energy and market-based rate options.

Dominion, Appalachian Power Dispute SCC Decision

SCC CASE UPDATE:

Last week we told you about an important State Corporation Commission (“SCC” or “Commission”) decision that could expand access to competitive electric supply in Virginia. The SCC approved a request filed by a group of manufacturing customers to combine their demands for purposes of shopping for competitive electric supply. The SCC found that their request was “in the public interest.” The SCC approved the customers’ application over the objections of both Dominion Energy Virginia (“Dominion”) and Appalachian Power Company (“APCo”). Dominion argued that allowing the companies to shop for competitive electric supply would “erode a significant portion of the utility’s jurisdictional customer base.”

Both utilities are now appealing the decision to the Virginia Supreme Court. Dominion filed a notice of appeal with the SCC on March 21, while APCo filed its notice on March 15. The utilities have not yet filed their assignments of error (i.e., their grounds for appealing the decision).

Appeals from the SCC are “of right,” meaning the Supreme Court is required to hear any case that’s properly appealed.  While the Court can overturn any of the Commission’s findings, the Court usually gives deference to the SCC. The Court has frequently said that SCC decisions are “entitled to the respect due judgments of a tribunal informed by experience” and that Commission orders won’t be disturbed if “based upon the application of the correct principles of law.”

We’ll keep you updated on the status of this important case. If you want to talk about this case, the SCC’s role, or energy law and regulation, just call any of our energy lawyers.