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Author Archive: Brian Greene

VA SCC Grants Injunction, Orders Dominion to Move Customers

wind turbines and solar arraysThe Virginia Commission has entered an Order on Enrollments granting motions for injunctive relief filed by Calpine Energy Solutions, LLC and Direct Energy Business, LLC. In the Order, the Commission directed Dominion Energy Virginia to “immediately resume processing enrollment requests under Section A 5 for customers who wish to purchase from Direct Energy or Calpine.”

Under Va. Code Section 56-577 A 5 (“Section A 5”), a customer shall be permitted to purchase “electric energy provided 100 percent from renewable energy” from a competitive service provider (“CSP”) if the utility has not filed an approved 100% renewable tariff. To date, Dominion does not have an approved 100% renewable tariff, and several nonresidential customers, with multiple accounts, have signed contracts with Calpine and Direct, two CSPs, to take retail service under Section A 5.

In July, Dominion filed petitions for declaratory judgment asking the Commission to determine that Calpine and Direct had not demonstrated that they were providing “electric energy provided 100 percent from renewable energy” to their customers as required by Section A 5. Calpine and Direct are disputing Dominion’s allegations as well as Dominion’s proposed standard for providing service under Section A 5. In the interim, however, Dominion had refused to process pending and future enrollments until the case was decided.

On July 22, 2019, Calpine and Direct filed for injunctive relief, asking the Commission to require Dominion to process their respective customers’ enrollments – thereby allowing the customers to switch to Calpine and Direct – while the cases are pending.

The Commission held a hearing on the injunction on August 7 and held an expedited hearing on the merits of the cases on August 20, 2019.

In a footnote to the order, the Commission held that Calpine and Direct had satisfied the elements needed for the issuance of an injunction, including: (a) absent the instant order, Calpine and Direct Energy will suffer irreparable harm; (b) Calpine and Direct have no adequate remedy at law; and (c) the Commission is satisfied of Calpine’s and Direct Energy’s equity. The Commission also noted that “A temporary injunction allows a court to preserve the status quo between the parties while litigation is ongoing.”

Our firm is representing Calpine in the proceedings.

If you have questions about this case or electric service in general, please contact one of GreeneHurlocker’s energy and regulatory lawyers.

Maryland to Implement Supplier Consolidated Billing

Finding that supplier consolidated billing (SCB) represents the next logical step for Maryland to fully implement customer choice, the Maryland Public Service Commission on May 7, 2019 issued an order authorizing SCB for retail electric and natural gas service in Maryland. In this historic order, the Commission found that SCB could support the growth of retail competition in Maryland and is consistent with the Commission’s policies to promote competition. SCB, by augmenting the existing billing arrangements, should assist suppliers in establishing brand identity and clarifying the products available to customers. At the same time, SCB should facilitate the development of new and innovative products and services and increase the number of Maryland households that shop for electricity and natural gas. Based on these and other conclusions, the Commission found that “it is now appropriate to proceed with the development of SCB.”

The case was initiated by five retail suppliers – NRG Energy, IGS Energy, Just Energy Group, Direct Energy and ENGIE Resources – and the Commission held a hearing in February 2018. We’ve blogged about this case here and here and also posted a video blog here.

In the order, the Commission established the SCB Workgroup and immediately tasked it with developing an implementation timeline within the next 60 days. The timeline, filed in early July 2019, calls for full-on SCB implementation by September 1, 2022.

To guide the SCB Workgroup, the Commission addressed numerous substantive elements of the SCB program, the highlights of which include:

Supplier Qualifications to Provide SCB:

The Commission held: “any proposed regulations should comprehensively address the capabilities necessary to ensure that these functions are performed on par with existing utility offerings. Further, the regulations should be tailored to demonstrate that a supplier can meet the rigorous demands of increased customer service and dispute resolution functions, complex billing requirements, and the quality assurance and record keeping necessary to handle utility charges that may contribute to potential utility disconnections.”

Authority of SCB Providers to Disconnect Customers for Nonpayment:

The Commission rejected the petitioners’ request to allow SCB suppliers to initiate disconnects for non-payment. This had been a central element of the petitioners’ case because it is necessary to manage bad debt, similar to the utilities. In response to those concerns, the Commission will require that utilities purchase the outstanding distribution charges of a delinquent customer account upon the customer’s return to standard offer service (SOS), as further discussed below. For other charges, the SCB provider must resort to the traditional remedies of other non-regulated businesses, including reporting to credit agencies, seeking monetary judgments in court, and pursuing collection activities.

Purchase of Receivables (POR) and Supplier Bad Debt:

The Commission held that SCB suppliers must provide POR to the utili8ty on substantially the same terms as provide in utility consolidated billing (UCB). The Commission directed the workgroups, including the SCB Workgroup, to identify and propose an equitable payment posting priority system and other protections that may be necessary to ensure that any charges contributing to a disconnection are properly handled. Additionally, the Commission agreed with the petitioners that suppliers need some ability to protect themselves from the risk of non-payment. The Commission held that, after reasonable efforts to collect, the supplier should not be required to hold any debt attributable to the customer’s distribution charges paid under POR. Where a supplier can demonstrate the amount of unpaid distribution charges, the utility should repurchase those charges at a zero discount rate unless the SCB Workgroup can provide alternative calculations which are supported by a compelling analysis.

Customer Protection and Customer Education:

The Commission held that a supplier that offers SCB is required to provide all the same consumer protections, disclosures (including the utility’s price to compare), notices,
and billing information required of a regulated utility. This includes providing all surcharge line items and compliance with all current COMARs related to consumer protections. The Commission directed the SCB Workgroup to identify and justify any deviations from or additions to existing consumer protection standards. The SCB Workgroup should consider new disclosure and notice requirements for how utilities and SCB suppliers communicate the varying relationships to the customer, the content of past due notices by SCB suppliers, and the utility notices for customers selecting SCB.

Cost Recovery:

The Commission made no findings regarding cost recovery. The Commission directed the SCB Workgroup to identify and estimate, with as much detail as possible, these and any other costs and benefits related to SCB. The Commission directed the SCB Workgroup to consider varying cost recovery mechanisms and present either a consensus approach or options for Commission consideration. The Commission recognized that the SCB Workgroup might not reach a consensus on cost recovery but said, “this should not delay progress towards proposing regulations in other areas.”

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.

Delaware Implementing Purchase of Receivables Program for Electricity Suppliers

At long last, the Delaware Public Service Commission entered an order adopting Delmarva Power’s proposed purchase of receivables (“POR”) program effective July 1, 2019. We previously blogged on this issue when Delmarva initially filed its proposal. The effective date was delayed by one month, but Delmarva will purchase suppliers’ receivables effective the end of May so that suppliers are not harmed by the delay.

The going-in rates for the first year of the program are in the table below. These are important because they represent the “haircut” that suppliers must accept when Delmarva purchases their receivables.

Residential Small commercial Large commercial Hourly Priced (LGS, GSP, GST)
Payment factor 99.3833% 99.6591% 99.8818% 100.00%
Discount factor 0.6167% 0.3409% 0.1182% 0.0000%

For more information, please contact one of our energy lawyers.

Delmarva Power Files Proposed DE Purchase of Receivables

transmission towers for electricityAfter years of proceedings at the Delaware Public Service Commission, the end – or the beginning – is in sight. In late March, Delmarva Power filed its proposed Purchase of Receivables (POR) program, including the going-in discount rates, with the Delaware Commission. With a POR program, the utility purchases the receivables of the retail electric supplier operating on the system, which helps to level the playing field between suppliers and the utility which has the right to disconnect service for non-payment.

Delmarva recommends that the program take effect for service rendered on June 1, 2019, as the Commission has previously directed. The discount rates are important because those are the “discounts” that retail suppliers must accept in allowing the utility to purchase the receivable. Delmarva proposes the following discount rates for the first year of the program:

Class Discount Rate
Residential 0.6167%
Small C&I 0.3409%
Large C&I 0.1182%
Hourly Priced Service 0.0%

 

It is expected that the Commission will consider the POR proposal at one of its May administrative meetings, in time for the program to being June 1, 2019. For more information, please contact one of our energy lawyers.

Maryland PSC Requests Comments on New RFP for Retail Suppliers

The Maryland Public Service Commission issued a Notice of Opportunity to Comment seeking comments on a new “Retail Supplier Load Shaping RFP.” The Commission want to consider “programs designed to demonstrate the ability to shape residential load profiles using innovative business models.” Comments on the RFP, a copy of which is attached to the Notice, are due April 9, 2019.

The RFP states that:

“The primary goal of this RFP is to identify pilots that demonstrate an ability to shape customer load profiles through load shifting, peak shaving, and energy efficiency. Applicants can propose any mechanism for load shaping such as sending appropriate price signals (real time rates), using technology to control usage (controllable thermostats), payment of rebates or behavioral modification treatments. A secondary goal is to test whether load shaping can lower customer bills or reduce the customers’ overall effective rate for electricity by avoiding energy usage during high cost periods. Customer satisfaction will be surveyed at the pilot’s conclusion.”

There’s some background here. In early 2017, the Commission established Public Conference 44 with various working groups. Three working groups involved areas where the retail supply market could be improved or could expand to provide additional services to Maryland customers. One of those working groups involved rate design issues and sought to develop TOU pilot programs. The Commission approved TOU programs for the utilities, which are now being marketed to customers. The Commission also approved an RFP to establish retail supplier programs. However, and the Commission in November 2018 issued a letter order holding that the bids received were not compliant and directed the utilities to reject them.

The Commission has now proposed changes to the prior RFP and has issued the current Notice to elicit more involvement from retail suppliers in a rate design program. The Commission seems determined to engage the retail supplier community in this effort, stating that, “[a]s Maryland moves forward with grid modernization, the retail supply community can play an important role in supporting policy goals, including more active efforts to shape load profiles.”

If you have questions or would like more information about community solar projects or other regulatory issues, contact Brian Greene or any of our mid-Atlantic energy lawyers.

Virginia Commission Denies Walmart’s Request to Shop for Electricity

On February 25, 2019, the Virginia State Corporation Commission entered a Final Order denying Walmart’s petitions seeking permission under Va. Code § 56-577(A)(4) (“Section A 4”) to aggregate or combine the demands of certain electricity accounts. Walmart had filed a petition to aggregate 120 accounts in the Dominion service territory and 44 accounts in the Appalachian Power service territories. Had the petitions been approved, Walmart intended to enter into a contract to purchase electricity from its affiliate, Texas Retail Energy, but would remain as a distribution customers of the utilities. But, the Commission denied both petitions.

Under § 56-577(A)(4), nonresidential customers can aggregate their load to hit the 5 MW floor needed to switch electricity supply from the customer’s utility to a competitive service provider (“CSP”). Section A 4 requires the customers to seek Commission approval to aggregate. A company like Walmart must seek permission because the Code treats non-contiguous sites that are under 5 MW as separate customers. The Commission may approve the petition if it finds that: (1) “neither such customers’ incumbent electric utility nor retail customers of such utility that do not choose to obtain electric energy from alternate suppliers will be adversely affected in a manner contrary to the public interest by granting such petition,” and (2) “approval of such petition is consistent with the public interest.”

In the Final Order, the Commission found that remaining customers would be adversely affected in a manner contrary to the public interest. The Commission cited to alleged costs that would be shifted to remaining customers attributable to the loss of Walmart’s load. The Commission also cited to the alleged bill impacts that the utilities presented in the cases which purported to show the increases to an average residential customer’s monthly bills in the event Walmart was allowed to shop. The Commission also cited to the potential for lower earned returns for the utilities and found that the potential for load growth in a utility service territory did not matter.

The Commission determined that “the harm to customers who do not, or cannot, switch to a CSP is contrary to the public interest.” The Commission noted that the vast majority of Dominion and APCo customers have no ability to shop for solely lower prices. The Commission discussed that since 2007, the average Dominion and APCo residential customer has seen monthly bills increase by $48 (73%) and $26 (29%), respectively, and that with the mandates in Senate Bill 966, passed in 2018, more increases are likely to come.

Of course, there were numerous arguments presented by Walmart and other parties in the proceedings that addressed and countered the Commission’s findings summarized above.

The Commission concluded that if Walmart believes the current statutory structure results in rates that are too high, or that the public policy of Virginia should be to institute retail choice on a far more extensive scale than required under current law, “its potential for recourse may be found through the legislative process.” That process would begin with the 2020 legislative session because the 2019 sessions ended on Sunday, February 24 — the day before the Commission entered the Final Order.

The case numbers are PUR-2017-00173 (Dominion) and PUR-2017-00174 (APCo). Follow those links to see all the documents, including the Final Order, filed in each case. If you have questions about these cases, electricity purchases or rates, or need legal counsel regarding electricity regulation, please contact one of our Virginia regulatory lawyers.

SCC Order OKs new, but limited, APCo customer renewable tariff

On January 7, the State Corporation Commission (“SCC” or “Commission”) approved a request by Appalachian Power Company (“APCo”) to offer a 100% renewable energy tariff to its customers. The APCo proposal, designated Rider WWS, would include energy generated at several wind and hydroelectric facilities that are currently part of the utility’s generation portfolio. For residential customers taking service under the tariff and using 1,000 kilowatt hours per month, the monthly bill increase would be $4.25. Customers would also pay a “balancing” charge that is intended to ensure that non-participating customers are not affected by the tariff.

Several renewable energy and environmental advocates opposed APCo’s proposal. APCo and the intervening parties disagreed about whether the price of the tariff was based on current market prices for renewable energy and whether it is appropriate for APCo to sell energy that is already in its utility’s generation portfolio at a premium rate. Appalachian Voices, represented in the case by the Southern Environmental Law Center, argued that APCo’s proposal would “charge customers more than they currently pay for the privilege of claiming the output of certain resources already in APCo’s fleet.” Several parties noted that the rate customers would pay is tied to renewable energy credit (“REC”) market prices, as opposed to the actual cost of the underlying renewable energy. The Commission’s staff also questioned whether Rider WWS would constitute a renewable energy tariff at all, since the tariff price would be based on the cost of RECs – not on the price of renewable energy itself.

Finally, several parties noted that approval of the application would eliminate the rights of many APCo customers to shop for renewable energy. The effect on retail choice is due to Virginia’s unique regulatory structure. Virginia is, for the most part, a traditionally regulated jurisdiction. This means that incumbent electric utilities such as APCo hold state-protected monopolies on the sale of electricity in their service territories. Virginia law, however, provides a few exceptions under which customers can purchase electric generation from non-utility companies licensed by the SCC to sell retail electricity.

One of these exceptions is for 100% renewable energy purchases. The Code allows any Virginia customer – including residential customers – to purchase electricity “provided 100% from renewable energy” from non-utility suppliers. Pursuant to the statute, however, this option is only available if the customer’s incumbent electric utility does not offer an SCC-approved tariff for 100% renewable energy. Prior to the SCC’s decision in this case, no Virginia utility had an SCC-approved 100% renewable tariff in place. The Commission’s final order did not reference the tariff’s implications on retail choice.

The Commission’s final order also rejected the recommendation of the hearing examiner who conducted the evidentiary hearing. The hearing examiner recommended that the Commission deny the application because the proposal would result in “unjust and unreasonable” rates. The hearing examiner found that the evidence presented by APCo to support the application was “unsubstantiated” and based on outdated market prices for renewable energy.

Should you have any questions about this case, please contact one of our energy regulatory attorneys. The Code sections authorizing retail choice are discussed in our firm’s Virginia electric regulation guide.

SCC: Dominion Must Refile Its 2018 IRP

On Friday, December 7, the Virginia State Corporation Commission (“SCC” or “Commission”) entered an order directing Dominion Energy Virginia (“Dominion”) to revise and refile its 2018 Integrated Resource Plan (“IRP”). This order is significant in that the SCC has never rejected an IRP, or required a utility to refile its plan. We discuss several takeaways from this order below.

What is an IRP?

An IRP is a utility’s plan to meet customer demand and service obligations over a 15-year planning horizon. The IRP statute, Va. Code Section 56-599, directs utilities to evaluate various options to meet forecasted demand, including building new generation; entering into power purchase agreements with third parties; purchasing energy from the PJM market; and investing in energy efficiency resources. The statute directs the Commission to review the utility’s plan and to “make a determination … as to whether [the IRP] is reasonable and is in the public interest.” It is important to note that an IRP is not binding on the Commission or the utility in any way. The Commission states that approval of an IRP does not create any presumption that any particular resources are prudent.

Before determining whether Dominion’s 2018 plan is “reasonable,” however, the Commission wants more information. In particular, the SCC wants Dominion to update several aspects of the modeling used to generate the plan. Dominion was directed to provide these new modeling results within 90 days of the order.

“True Least Cost Plan”

First, the SCC wants Dominion to provide what it calls a “true least cost plan” that will “serve as a benchmark against which to measure the costs of all other alternative plans.” The Commission wants to know what Dominion’s modeling software would select if it were permitted to choose the least-cost resources to meet the company’s forecasted demand. The Commission’s order asserts that Dominion – instead of letting the model choose the lowest-cost resources mix – actually “forced” certain resources into the IRP. The Commission referenced Dominion’s offshore wind demonstration project as a resource that was “forced” into Dominion’s alternative plans.

“SB 966 Plan”

Second, the Commission wants Dominion to file a plan that incorporates all of what the SCC calls the Senate Bill 966 (“SB 966”) “mandates.” This legislation declared that it is “in the public interest” for Virginia utilities to construct or acquire up to 5,500 MW of new renewable energy resources. The legislation also referenced certain distribution and transmission undergrounding priorities. (Note that the Commission, in this and other orders, characterizes the priorities outlined by the General Assembly as “mandates.” The use of this term, however, is misleading when applied to renewable energy. SB 966, while declaring such renewable energy projects to be “in the public interest,” does not require utilities to make these investments, nor does it require the Commission to approve them.)

By requiring both a “Least Cost Plan” and a “SB 966 Plan,” the Commission wants to estimate the incremental costs of the SB 966 investments. The SCC may want to include this estimate in its final order on Dominion’s IRP. Moreover, the Commission may choose to include this analysis in one of the written reports provided Governor and the General Assembly regarding the implementation of Virginia’s electric regulation statutes.

Anticipated load growth

Next, the SCC directed Dominion to utilize the PJM load forecast for the Dominion Zone, which has a 15-year growth rate of 0.8%, versus Dominion’s 1.4%. At the evidentiary hearing, the Commission Staff and environmental advocates argued that Dominion’s internal load growth was too high, thus overstating the for need for new generation.

Solar capacity factors

The Commission also directed Dominion to update its modeling to use a 23% capacity factor for its solar facilities. A generation plant’s capacity factor represents the amount of time it is available and generating electricity. Dominion’s IRP assumes that new solar resources will achieve capacity factors of 26%, in part due to the use of single-axis tracking facilities which follow the sun, resulting in greater production. But the Commission noted that Dominion’s “existing [solar] resources have experienced actual capacity factors of approximately 20% on average over the last five years.” Therefore, the SCC split the difference between the actual, observed capacity factors and those forecasted by Dominion. The solar industry supported Dominion’s capacity factor projections, finding them to be achievable.

Pipeline and fuel costs

Finally, the Commission’s order does not address the proposed Atlantic Coast Pipeline (“ACP”), which would be constructed by affiliates of Dominion and may serve some of the company’s gas generation facilities. The SCC previously declined to review the ACP fuel supply contracts under the Virginia Affiliates Act, a statute which directs the Commission to approve any contracts entered into between public utilities and their affiliates.

The Commission did direct Dominion, in a footnote, to “include a reasonable estimate of fuel transportation costs … associated with natural gas generation facilities.” This could be an indication that the Commission does not believe Dominion’s forecasted gas costs are reasonable. Elsewhere in its order, however, the Commission seemed to express concern that “[Dominion’s] modeling was not permitted to select highly-efficient natural gas-fired combined-cycle facilities” and as a result Dominion’s modeling “forces in higher-cost resources [while] excluding other lower-cost resources [which] results in a more expensive plan.”

The SCC’s Order and other documents for this case are available online in Docket No. PUR-2018-00065. GreeneHurlocker represented the Solar Energy Industries Association in the evidentiary hearing at the SCC.

Should you have any questions about this case, please contact one of our energy regulatory attorneys.

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.

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.