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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.

SCC Decision Expands Access to Competitive Electric Supply

transmission towers for electricityWhile many political observers were focused on Senate Bill 966, the omnibus utility legislation that was just passed by the General Assembly, the Virginia State Corporation Commission (“Commission” or “SCC”) recently issued an important decision affecting customers’ rights to purchase energy from competitive suppliers.

On February 21, 2018, in Case No. PUR-2017-00109, the Commission approved the first ever “customer aggregation” petition under § 56-577 A 4 of the Code of Virginia. As explained in detail below, this section of the Code allows customers to aggregate their demand for the purposes of satisfying the 5 MW demand threshold required to purchase generation from non-utility companies.

In most circumstances, Virginia’s incumbent electric utilities, including Dominion Energy Virginia (“Dominion”), have a monopoly on the sale of electricity in their service territories. Customers must purchase energy from their utility. Virginia law, however, provides two exceptions to the utilities’ monopoly rights. (Under these two exceptions, customers may purchase generation from non-utility suppliers. But shopping customers must still pay for the utility’s distribution services.)

First, under Va. Code § 56-577 A 5, customers may purchase “100 percent renewable energy” from competitive suppliers if  the customer’s monopoly electric utility does not offer an SCC-approved 100% renewable energy tariff. No utility currently offers an SCC-approved 100% renewable tariff.

Second, Va. Code § 56-577 A 3 law allows large customers with annual demands over 5 MW to purchase generation from competitive suppliers. Importantly, the law also allows a group of customers to “aggregate” their demands in order to reach the 5 MW threshold. The statute treats large customers with multiple meter locations as different customers but allows them to aggregate to meet the 5 MW threshold. Once aggregated, the group will be treated as a “single, individual customer” under the law. Before allowing an aggregation, however, the Commission must find that the requested aggregation would be “consistent with the public interest.”

SCC Case No. PUR-2017-00109 was the first test of this statutory provision – that is, the first time a group of customers sought to combine their demands in order to reach the 5 MW threshold. In this case, Reynolds Group Holdings, Inc. (“Reynolds”), a metals and packaging manufacturer, petitioned the SCC for approval to aggregate six of its retail accounts in Dominion’s service territory.

Dominion and Appalachian Power Company (“APCo”) intervened in the case and opposed the petition. Dominion argued that allowing customers to aggregate their demand “would unreasonably expand the scope of retail access [and would] have the potential effect of eroding a significant portion of the utility’s jurisdictional customer base.” Dominion also suggested that the General Assembly – despite authorizing customer shopping and aggregation – intended to allow retail choice “only in limited circumstances.”

But the SCC, relying on the plain language of Va. Code § 56-577 A 4, rejected Dominion’s and APCo’s arguments and approved the petition. Dominion and APCo have until March 23, 2018, to appeal the decision to the Virginia Supreme Court.

The SCC is also currently considering additional aggregation requests filed by over 160 Walmart customer accounts in Case Nos. PUR-2017-00173 and PUR-2017-00174. (In both of these cases, GreeneHurlocker is representing competitive suppliers who are supporting approval of Walmart’s aggregation requests.)

Should you have any questions about customer aggregation or competitive supply options in Virginia, please contact one our regulatory attorneys.

Additionally, GreeneHurlocker recently published Principles of Electric Utility Regulation in Virginia, which provides a plain-English explanation of Virginia’s electric utility laws, including the statutes affecting retail choice.

Virginia Moves Forward with Carbon Cap and Trade Plan

But some uncertainties remain.

coal-fired plant in VirginiaOn Thursday, November 16, the Virginia State Air Pollution Control Board unanimously approved a draft rule designed to reduce carbon emissions from fossil generating facilities operating in the Commonwealth. The highly complex regulation, if implemented, would require Virginia generating facilities to participate in the Regional Greenhouse Gas Initiative (“RGGI”) trading system. The regulation will be administered by the Air Board and the Virginia Department of Environmental Quality (“DEQ”).

Following the publication of the rule, which is expected to occur in December or early January, 2018, there is a 60-day period in which the public and interested parties may provide comment on the rule. Following this public comment period, the Air Board would vote on the final rule in 2018.

The proposed rule would establish an initial statewide carbon cap of either 33 or 34 million tons, which represents the amount of carbon dioxide forecasted to be emitted in the Commonwealth in 2020. The carbon rule does not require generators to purchase emissions allowances from the Commonwealth in an auction, thus avoiding a state requirement that all revenue-raising measures must be approved by the General Assembly. Instead, generators will be freely allocated allowances, which they will thereafter consign to the RGGI auction.

Allowances purchased at the RGGI auction would no longer be conditional – meaning that generators will surrender these RGGI allowances to DEQ in order to cover their emissions. For each conditional allowance consigned to the auction, the generator will receive the clearing price of the auction. This allows generators to consign all of their conditional allowances but only purchase what they need.

Under the rule, therefore, utilities and other power plant operators would have an incentive to reduce emissions to avoid having to purchase additional allowances. Any unneeded emissions allowances must be sold in the RGGI trading system, with the proceeds credited to Virginia utility customers. However, the rule does not specify precisely how such proceeds would flow back to consumers.

The regulation would only apply to generation facilities that are 25 MW or larger in capacity. There are approximately 32 such facilities in Virginia that will be subject to the rule.

Between 2020 and 2030, the statewide carbon cap would be reduced by 3 percent each year, meaning that generating facilities would either need to reduce emissions or purchase additional emissions allowances.

The draft regulation represents the first time Virginia has attempted to regulate the amount of carbon that may be emitted by existing power plants. DEQ has regulated carbon emissions from new power plants since 2011.

Attorney General Mark Herring, in an official opinion issued in May, 2017, found that a carbon cap and trade program would be lawful. The Attorney General found that the Virginia State Air Pollution Control Board, under existing law, is “authorized to regulate ‘air pollution’” and to promulgate regulations “abating, controlling and prohibition air pollution.” Under Virginia law, “air pollution includes “substances which are or may be harmful or injurious to human health, welfare or safety, or to property.” The Attorney General also stated that “it is well settled that [greenhouse gases] fall within this definition.”

Virginia’s regulation will take the place of the federal Clean Power Plan, which is in the process of being repealed by the Environmental Protection Agency. Please contact one of our regulatory attorneys should you have questions about this draft rule.

SE Renewable Energy Conference 

Great two days in Atlanta with solar and wind developers, financiers, regulators and utilities discussing state of the market in the Southeast.  New tax reform and panel tariff cases at the forefront of discussions.  If you would like an update on the conference or have other renewable energy development questions, don’t hesitate to contact one of our energy lawyers.

More Appalachian Power Customers Choosing Solar Energy

An article in yesterday’s News & Advance profiled a Lynchburg business that has invested over half a million dollars to produce solar energy at its headquarters. BMS Direct, a company that processes invoices and billing statements, now has over 900 solar panels on the roof of its 80,000-square-foot facility in Lynchburg. The solar panels now supply about half of the company’s electric needs, and the resulting energy savings are expected to pay for the cost of the system in six years.

Several factors, including declining solar panel prices and federal investment tax credits, make it a great time to invest in solar energy. According to the Solar Energy Industries Association (“SEIA”), solar has experienced an average annual growth rate of 68%, while installed solar prices have dropped 55% over the last five years. The installed cost of a solar installation is now between $2.30 per watt and $2.75 per watt for residential systems and $1.40 per watt and $2.20 per watt for commercial systems. Federal law currently authorizes a 30% tax credit for residential and commercial solar systems, although this percentage is scheduled to decline beginning in 2020.

Virginia law allows all customers to generate their own renewable energy on site by “net metering.” Electric utilities in Virginia are required to offer net metering programs, which allow residential customers and businesses like BMS Direct to install renewable energy facilities on their property. Net metering customers only have to pay their utility for their electricity usage that is in excess of what they generate on site. Appalachian Power (“APCo”) says that about 750 of its customers participate in the net metering program.

Moreover, Virginia customers are also currently permitted to purchase 100% renewable energy, including solar, from non-utility companies. Under Virginia law, most customers are allowed to purchase renewable generation from third-party suppliers only if their incumbent electric utility does not have an approved tariff for 100% renewable energy. See Va. Code Section 56-577(A)(5). However, no Virginia utility currently offers a 100% renewable energy option for its customers. As we have written about here, the Virginia State Corporation Commission (“SCC”) recently rejected a renewable energy tariff proposal by APCo that, if approved, would have prevented its customers from purchasing solar energy from third-party suppliers.

The SCC is also currently considering a similar renewable tariff application filed by Dominion Energy Virginia (“Dominion”) in SCC Case No.PUR-2017-00060. If approved, Dominion’s tariff would limit clean energy choices for its large customers, and potentially other classes of customers in the future.

If you want to learn more about the regulations governing solar installations, and whether developing a solar energy project may make sense for you or your business, please contact one of our renewable energy lawyers or regulatory attorneys.

Will Reisinger On Faculty for Renewable Energy CLE

Will ReisingerWill Reisinger energy lawyer, counsel in energy law and regulation, will be one of the faculty for the Renewable Energy in Virginia CLE, co-sponsored by the Environmental Law Section of the Virginia State Bar and produced by the Virginia CLE section of the Virginia Law Foundation, on Friday, September 22.

The two-hour session will be a live web broadcast on the Virginia CLE website on Friday, September 22 at 10:00 a.m. and will be rebroadcast Tuesday, October 24 with a live question and answer session.

Virginia CLE said the educational program will be a “primer on the regulatory environment for renewable energy in the Commonwealth” [and] “will spotlight the most pressing issues new projects face, offer must-knows to advise a client in this space, and take a look ahead at the evolving landscape.” In addition to Reisinger, faculty will include Will Cleveland of the Southern Environmental Law Center and Matt Gooch of the Office of Attorney General of Virginia.

Before joining GreeneHurlocker in 2016, Reisinger served in the Office of the Attorney General of Virginia representing ratepayers in energy and utility matters before the Virginia State Corporation Commission, Federal Energy Regulatory Commission, and the Supreme Court of Virginia. Earlier, he was a staff attorney for a non-profit environmental organization, where he worked to enforce state and federal environmental standards. Reisinger is a frequent speaker on energy law and environmental regulation.

If you want informaiotn on this CLE, or on any issues in renewable energy law, please contact Will or one of our energy regulatory lawyers.

 

Get Your Lobby On! Virginia Clean Energy Lobby Days 2017

We’re big on advocating the expansion of development and use of renewable energy sources in Virginia and, as members of the Maryland-DC-Virginia Solar Energy Industry Association (MDV-SEIA), we show up on Clean Energy Lobby Day. CELD is an annual advocacy day which allows legislators and constituents to connect regarding energy policy under consideration by the General Assembly. It’s always a great time to talk with legislators and our industry partners.

This year, there will be two CELD opportunities at subcommittee meetings at the Capitol in Richmond: Thursday, January 26th, for the Senate Energy Subcommittee and Tuesday January 31st, for the House Energy Subcommittee. If you want more solar development, this might be a chance to make your opinion heard by the General Assembly. Come join us!

If you want to know more about MDV-SEIA, where GreeneHurlocker co-founder Eric Hurlocker serves on the Board, or about renewable energy development in Virginia, please call Eric or any of our Virginia energy lawyers.

News about APCo Proposed Tariff Includes Reisinger

GreeneHurlocker energy lawyer Will Reisinger was interviewed by the Richmond Times Dispatch for an article on Monday, November 14, 2016, because we are involved in Appalachian Power Company’s (“APCo”) proposed green Tariff, Rider REO (“Rider”) proceeding in Virginia. His comments are related to the firm’s representation of the Maryland, DC and Virginia Solar Energy Industries Association (“MDV-SEIA”), which filed testimony with the Virginia State Corporation Commission (the “SCC”) in Case No. PUE-2016-00051, opposing APCo’s proposed Rider.  Reisinger also participated in the hearing on the case at the SCC on Tuesday, November 15, 2016.

In the proceeding, APCo requested approval by the SCC of the Rider, a voluntary, 100% renewable energy rider.  MDV-SEIA and other opponents of the Rider argue that it actually impedes competition from third-party renewable energy providers in APCo’s service area in Virginia.  In testimony filed with the SCC, MDV-SEIA argues that the Rider will not offer customers the access to solar energy that APCo’s customers desire, nor will it support the development of solar energy in Virginia.  It is also unclear from the Rider whether its efforts would result in the development of any new renewable generation in Virginia, as the Rider would simply bundle the output of several existing, out-of-state renewable energy facilities that are currently under long-term power purchase agreements.

We will be preparing and filing post-hearing briefs in the coming months and will continue our efforts to bring more renewable energy projects to the Commonwealth. If you have any questions about this proceeding, or other regulatory matters at the SCC, please contact Will or our other regulatory and energy lawyers.