Alternative Energy Planning in Virginia Involves Cost$ of Options

by admin on February 11, 2020

Solar panel installation underway at Washington and Lee University in Lexington, VA

At Virginia Senate panel, a clash over the costs of shifting away from carbon

From an Article by Sarah Vogelsong, Virginia Mercury, February 9, 2020

The Virginia Clean Economy Act, the Democrats’ energy omnibus bill designed to achieve Gov. Ralph Northam’s goals of reducing Virginia’s carbon emissions to zero by 2050, sparked sharp questions from senators Sunday over how the costs of shifting away from carbon should be calculated.

“You can’t do this stuff for free,” said a visibly irritated Senate Majority Leader Dick Saslaw, chair of the powerful Commerce and Labor Committee, at an unusual Sunday meeting designed to clear the Senate’s legislative decks before the crossover deadline Tuesday. “Everybody says that we’ve got a climate problem, and you know, you can’t fix the climate problem for free. You all need to understand that.”

Saslaw’s comments were addressed to Kimberly Pate, director of the Division of Utility Accounting and Finance for the State Corporation Commission, the body that regulates all electric utilities in Virginia. But while they reflected an ongoing tension between the legislature and the SCC over who should take the reins in energy decision-making, they also touched on a question increasingly troubling governments forced to grapple with the consequences of climate change: What are the costs of doing nothing?

The SCC estimates that the Clean Economy Act, which is being backed by a coalition that includes the renewable energy industry, environmental groups and Virginia’s two electric monopolies, will cause the average electric ratepayer’s bill to increase by at least $23.30 per month by 2027-2030. Annually, customers would see a roughly $280 jump in their bills.

According to the SCC, the majority of that increase will come from the buildout of 5,200 megawatts of offshore wind and 16,100 megawatts of solar, both of which the legislation would declare to be in the public interest.

Some legislators seemed skeptical of those numbers: Sen. John Bell, D-Loudoun, in particular questioned Pate about the SCC’s decision to not include estimated fuel savings in its calculations of the offshore wind component of the cost. “The problem is the fuel savings may or may not occur. And so we have not quantified that,” said Pate.

In an email to the Virginia Mercury, SCC Division of Information Resources Director Ken Schrad pointed to the uncertainty surrounding the offshore wind units’ capacity factor, a measurement that compares how much energy a unit actually produces to how much it’s capable of using.

“All of the risk is on the ratepayer. If the project does not generate electricity at its expected capacity factor, the utility company will have to purchase power from the wholesale market or construct backup generation (i.e. — gas-fired generation),” Schrad wrote. “Purchased power and fuel costs are recovered through the fuel factor. So, while (Dominion Energy) claims the possibility of fuel savings, staff cannot quantify what those savings might be because of the unknown capacity factor of offshore wind.”

Fuel savings aren’t the only variable that Clean Economy Act backers claim were incorrectly omitted from the cost analysis.

The Executive Director of the Virginia Advanced Energy Economy is Harry Godfrey, one of the key players involved in drafting the legislation,. He told the Mercury that the commission had also failed to take into account ratepayer savings from such provisions as binding energy efficiency targets and investments, cost caps and a rate relief program for low-income customers. “I don’t know that they have considered any of this,” he said.

Disagreements between the SCC and other officials on energy costs are not uncommon. Last spring, the commission and the Department of Environmental Quality quarreled over the cost to Virginia of joining the Regional Greenhouse Gas Initiative, a cap-and-trade agreement between 10 states that aims to reduce carbon emissions. The SCC estimated the average customer would see their bill rise by $7 over 25 years; DEQ said joining the market would decrease monthly bills by about 54 cents.

The SCC’s current estimate of the costs of RGGI membership, according to the analysis presented by Pate Sunday, is a $2 to $2.50 increase in the average customer’s monthly bill. RGGI is the Regional Greenhouse Gas Initiative.*

At Sunday’s meeting, however, lawmakers’ criticism went beyond whether fuel savings should or should not be included in the financial impact estimate, with Sen. Scott Surovell, D-Fairfax, questioning whether the very foundation of the SCC’s analysis was sound.

“You all do this analysis every time, and all you focus on is the cost you can identify on a bill,” he said. “If you all quantified what the cost of however many more Virginians are going to have asthma or cancer, or what happens when Norfolk goes underwater, or all the other costs that we continue not to count of puffing carbon in the atmosphere — do you all ever look at that when you make these decisions?”

“That is not the charge of the commission,” Pate responded. “We are an economic regulator. We look at the applications before us … and we analyze the costs there and what the impact is on customer bills. That is what the commission does.”

If the Clean Economy Act is passed, that may change: among the many provisions of the 75-page bill is one that would require the SCC to consider the “social cost” of carbon in evaluating new generation facilities. That, said Godfrey, could begin “to rebalance the equation and analysis” of what energy proposals cost.

The Clean Economy Act passed Senate Commerce and Labor on a 12-3 party-line vote. A House version of the legislation advanced to the floor last week.

* — Power plant emissions down 47% under the Regional Greenhouse Gas Initiative » Yale Climate Connections, Jan Spiegel, Yale Climate Connections, January 16, 2020

The Regional Greenhouse Gas Initiative is not a cap-and-trade program.

This first-in-the-nation regional effort to lower carbon emissions from power plants is actually a cap-and-invest program. Power plants buy emission allowances through quarterly auctions for the right to pollute above a set cap. The states get the money, most of which they’re supposed to invest in consumer benefits such as energy efficiency programs that help lower energy use further.

From 2009, when RGGI – pronounced Reggie – officially kicked in, through 2017, that system sent $2.4 billion back to the nine current member states, according to the most recent report from RGGI.

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Ivy Main February 12, 2020 at 12:31 am

CROSSOVER — Virginia energy policy made interesting

From Ivy Main, Power for the People VA, February 11, 2020

Welcome to “Crossover,” the day on which the Virginia House and Senate have to finish the work on their bills and send them over to the other chamber. This is sudden death time; if a bill didn’t get across the finish line in time, it is dead for the year.

In past years, henceforth to be known as “the bad old days,” almost nothing good even got out of committee, much less reached Crossover. Clean energy advocates could pretty much plan vacations for the second half of February.

This year the Democrats are on a tear, especially in the House. Yes, a lot of good bills have been heavily watered down. This is still the Old Dominion, with the emphasis on Dominion. And it is definitely too early to break out the champagne, because the action isn’t over for the bills still in play. But overall, 2020 is shaping up to be a watershed year for clean energy.


Energy Transition

HB1526/SB851, the Clean Economy Act, has been the subject of intense and continuous negotiation. First there were a bunch of amendments that weakened it; then there were a bunch that strengthened it. It’s been a wild ride, and we may still see more changes during the second half of Session. But it’s alive! (HB1526 passed the House 52-47; Democrats Rasoul and Carter voted no. SB851 passed the Senate on a party-line vote of 21-19.)

SB94 (Favola) rewrites the Commonwealth Energy Policy to bring it in line with Virginia’s commitment to dealing with climate change. The latest draft of the bill, as it passed out of subcommittee, sets a target for net-zero greenhouse gas emissions economy wide by 2045, and in the electric sector by 2040. This section of the Code is for the most part merely advisory; nonetheless, it is interesting that Dominion Energy supported the bill. (Passed the Senate 21-18, on party lines.)

Delegate Reid’s HB714 is similar to SB94 but contains added details, some of which have now been incorporated into SB94. (Passed the House 55-45 with a substitute.)

HB672 (Willett) establishes a policy “to prevent and minimize actions that contribute to the detrimental effects of anthropogenic climate change in the Commonwealth.” State agencies are directed to consider climate change in any actions involving state regulation or spending. Local and regional planning commissions are required to consider impacts from and causes of climate change in adapting comprehensive plans. (Passed the House 55-44 with a substitute.)

HB547 (Delaney) establishes the Virginia Energy and Economy Transition Council to develop plans to assist the Commonwealth in transitioning from the use of fossil fuel energy to renewable energy by 2050. The Council is to include members from labor and environmental groups. (Passed the House 54-45.)

Virginia supported the bill in subcommittee. (Passed the Senate 21-18.)

RGGI bills, good and bad

The Democratic takeover of the General Assembly means Virginia will finally join the Regional Greenhouse Gas Initiative (RGGI), either according to the regulations written by DEQ or with a system in place that raises money from auctioning carbon allowances.

HB981 (Herring) and SB1027 (Lewis) is called the Clean Energy and Community Flood Preparedness Act. It implements the DEQ carbon regulations and directs DEQ to enter the RGGI auction market. Auction allowances are directed to funds for flood preparedness, energy efficiency and climate change planning and mitigation. We are told this is the Administration’s bill. A similar bill, HB20 (Lindsey), was incorporated into HB981. (HB981 passed the House 53-46. SB1027 awaiting LIS update.)

SB992 (Spruill) requires the Air Board to give free allowances for three years to any new power plant that was permitted before June 26, 2019, the effective date of the carbon trading regulations. Essentially it gives special treatment to two planned gas generation plants that aren’t needed and therefore have sketchy economics unless they get this giveaway. Clean energy advocates will be looking to kill this one in the House. (Passed the Senate 27-13. A number of Democrats who should know better voted for the bill.)

Renewable Portfolio Standard (RPS)

The Clean Economy Act contains a renewable portfolio standard (RPS) requiring utilities to include in their electricity mix a percentage of renewable energy that ratchets up over time. In addition, HB1451 (Sullivan) is a stand-alone RPS bill that also includes an energy storage mandate. It appears to be identical to the RPS and storage provisions of the CEA (of which Sullivan is also the patron). (Passed the House 52-47.)


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