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Calpine and Direct Energy Win Again, Continue to Provide Renewable Energy in Virginia

The Virginia State Corporation Commission (the “Commission”) denied Dominion Energy Virginia’s (“Dominion”) July 16, 2019 petitions for declaratory judgment in Case Numbers PUR-2019-00117 and PUR-2019-00118 by Final Order on September 18, 2019. Dominion’s petitions sought to have the Commission standardize “around the clock,” “control of renewable capacity” requirements for competitive service providers (“CSPs”) to serve customers under Virginia Code § 56-577 A 5 (“Section A 5”). That section provides a statutory right to customers of all classes to purchase “electric energy provided 100 percent from renewable energy” from a CSP unless the utility has its own 100% renewable energy tariff. Dominion’s application for a 100% renewable energy tariff is pending before the Commission, and Dominion had refused to process enrollments submitted by Calpine Energy Solutions, LLC (“Calpine”) and Direct Energy Business, LLC (“Direct Energy”) under Section A 5 in the interim and initiated these cases at the Commission.

The Commission previously granted Calpine’s and Direct Energy’s requests for injunctive relief, requiring Dominion to process enrollments while these cases are pending. We blogged about that here.

Dominion’s petitions took aim at Calpine and Direct Energy, seeking a determination that CSPs seeking to serve under Section A 5 must establish that they can supply customers with electric energy provided 100 percent from renewable energy on an “around the clock” basis and that the CSPs must have “control” over “renewable capacity.” The Commission flatly rejected Dominion’s positions and declared that both Calpine and Direct Energy provided information to reasonably establish that they have contracted for sufficient renewable energy to match renewable supply with a participating customer’s load on a monthly basis, which is consistent with Section A 5 and Commission precedent.

Regarding Commission precedent, the Commission refused to adopt Dominion’s interpretation of a prior order approving Appalachian Power Company’s Rider WWS (“Rider WWS Order”), which Dominion believes requires a CSP to have “control of sufficient renewable generation resources, including renewable capacity and associated renewable energy, to enable it to serve the full load requirements of the customers it intends to serve.” The Commission’s refused to provide the requested declaration, explaining that the Rider WWS Order did not require “’renewable capacity,’ nor did it define ‘full load requirements’ to mean (as argued by Dominion) ‘full load at all times’ or ‘full load requirements around the clock.’” Significantly, the Commission’s Final Order makes clear: “Nothing in [the Rider WWS Order], however, found that [Appalachian Power Company’s] proposal was the only way to comply with Section A 5.”

The crux of the Commission’s decision relied upon its close reading of Section A 5. “The plain language of Section A 5 also says ‘energy,’ not ‘capacity.’” In acknowledging this critical distinction, the Commission put a finer point on Dominion’s efforts to muddy the waters between “energy” and “capacity” requirements, despite the fact that Section A 5 requires customers to purchase renewable electric “energy” – not “capacity.” In the same way, the Commission examined closely Dominion’s request for more stringent matching standards, noting several times that in other proceedings, Dominion has taken positions inconsistent with those it takes in its petitions for declaratory judgment: “There is nothing in the plain language of Section A 5, however, that mandates Dominion’s “100% of the time” (i.e., “around the clock”) requirement.”

The Commission also scrutinized Dominion’s proposal from a consumer protection perspective, finding that Dominion’s “100% of the time” standard would adversely affect a customer’s right to purchase renewable energy – essentially, upending the entire aim of Section A 5. Dominion’s argument would read certain renewable generating sources (e.g., wind or solar) out of the statute because of their intermittency regardless of the amount of nameplate capacity or peak load served. Finally, the Commission evaluated Dominion’s proposed standard with special focus on the fact that Virginia’s existing monthly matching standard is already one of the most stringent in the country for states with renewable energy markets, as other states generally require customer load and renewable supply to be matched on a yearly basis.

The Commission declined to accept Dominion’s proposed language that would adopt a new standard for Section A 5, presented for the first time at the hearing on August 20, 2019. The Commission reasoned that to do so would contravene the Commission’s past rejection of “capacity,” “peak demand,” or “100% of the time” requirements – including the Commission’s rejection of Dominion’s past requests (notably in the Rider WWS proceeding) for “around the clock” supply of renewable energy pursuant to Section A 5. Similarly, the Commission held that Dominion’s proposal at the hearing regarding what Dominion believes the current law should reflect “improperly goes beyond the specific relief requested in the Petitions for Declaratory Judgment… [and] does not reflect current Commission precedent and is otherwise procedurally improper.”

The Conclusion in the Commission’s Final Order makes clear that:

  • Commission precedent permits a CSP to match customer load with renewable supply on a monthly basis and does not requires CSPs to provide “renewable capacity”;
  • Direct Energy and Calpine have satisfactorily demonstrated that they can supply their customers with electric energy provided 100 percent from renewable energy on a monthly matching basis;
  • Direct Energy and Calpine are required to continue providing information as directed in the Final Order – regarding each CSP’s customer load and wholesale generation contracts, in accordance with Section A 5, the Commission’s Rules Governing Retail Access to Competitive Energy Services, as well as Dominion’s Competitive Service Provider Coordination Tariff; and
  • Even if Dominion’s new proposal were procedurally appropriate, which it is not, the Commission further finds that: (1) the plain language of Section A 5 does not mandate – as a matter of law – adoption of Dominion’s proffered standard; and (2) matching customer load with renewable supply on a monthly basis represents a reasonable standard under Section A 5, and Dominion’s proposed standard is not necessary in order to implement Section A 5 in a reasonable manner,

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