Dominion lags behind peer utilities in meeting energy efficiency goals for residential customers
FOR IMMEDIATE RELEASE
Richmond — Energy reform organization Clean Virginia requested Wednesday in public testimony that the State Corporation Commission (SCC) require Dominion Energy to accelerate its energy efficiency outreach and education campaign, particularly in light of the company’s request to increase customer bills.
“Despite the value of energy efficiency to customers and the codified financial incentive for Dominion Energy included in the Virginia Clean Economy Act (VCEA), the company’s long-term plan still fails to meet the law’s minimum targets and the vast majority of Dominion customers have no awareness of Dominion’s residential energy efficiency programs at all,” Cassady Craighill, Clean Virginia’s Deputy Director testified in remarks to the SCC.
Dominion Energy, Virginia’s largest utility monopoly, has filed for approval of a set of Energy Efficiency programs necessary to comply with the energy savings targets established in the Virginia Clean Economy Act. Dominion is not yet on track to comply with these savings targets, according to an analysis ordered by the SCC.
Compared to peer utilities, the performance of Dominion’s residential energy efficiency programs is notably low. Only 19% of surveyed residential customers were familiar with Dominion Energy programs and only 13% participated in a program in the last three years, according to a long-term plan report required by the SCC. The report included several areas of improvement and emphasized the need to raise public awareness and consolidate the different utility programs.
“It shouldn’t be a battle to get energy efficiency tools in place, but it is because it interferes with the entrenched power and profit of utility monopolies. Regardless, putting energy efficiency first will put Virginians, and not profits, first. And that’s what we need,” said Laura Gonzalez, Energy and Regulatory Policy Manager at Clean Virginia.
Diana loves telling stories about the human experience. She’s the founder of Williams Multimedia, a production company specializing in audio storytelling. Her reporting has focused on histories of people of color, LGBTQ+ people and the intersections where those two communities meet. Diana holds an MA in journalism and public affairs from American University. Diana and her husband Clarence have lived with their two sons in the Shenandoah Valley since 1997. She is on the Board of Directors for the Community Foundation of the Central Blue Ridge and the Virginia School Boards Association. She is also Vice Chair of the Waynesboro School Board.
Dominion’s green energy package comes with a catch: coal. Businesses aren’t happy.
Dominion Energy’s newest plan for a renewable energy package that environmentally conscious customers can buy is causing some big businesses, including Walmart, to push back against what they call “an unattractive offering.”
Why? Companies and an industry group that represents some of Virginia’s and the nation’s largest employers have two complaints. First, the portfolio of renewable energy resources assembled by Dominion includes numerous carbon-emitting facilities, some decades old, including one in Southwest Virginia that derives 93 percent of its energy from coal and is listed by Dominion on its website as a coal asset.
Second, if the utility succeeds in winning approval for its plan, that will deal a blow to the state’s fledgling renewable energy market, leaving nowhere else for most customers in the commonwealth to turn if they want to buy renewables.
“Now is the time to foster innovation and development of renewable energy options, not stifle it,” Lisa Perry, Walmart’s senior manager of energy services, wrote in testimony filed this October with the State Corporation Commission, the regulatory body that will weigh the merits of Dominion’s proposal later this fall.
Unlike Dominion’s current proposal, however, the 2017 plans didn’t specify exactly where the renewable energy bought by customers would come from. Under the first, the company would have bought renewable energy through power purchase agreements with “existing or new facilities” while also developing its own fleet of renewables. Under the second, the company intended to craft a portfolio made up of “a combination of hydroelectric, wind and new solar (i.e., constructed after 2017) resources.”
The utility’s most recent proposal diverges from that approach, identifying a portfolio of 14 specific facilities that will supply program customers with renewable energy. Eight are solar, either owned by Dominion outright or with which the utility has a contract to purchase power. Two others — the Roanoke Rapids and Gaston power stations, which began operations in 1955 and 1963, respectively — are hydroelectric.
And four, the most controversial of the bunch, are associated with biomass. Besides the Altavista, Hopewell and Southampton stations, which began burning coal in 1992 and were converted to burn biomass in 2013, the portfolio includes the Virginia City Hybrid Energy Center in Wise County, which started operations in 2012 and can produce a maximum of 20 percent of its energy from biomass (with the other 80 percent generated by coal).
Technically, under Virginia law, all of these sources are considered renewable. The state’s definition of renewable energy is expansive, including energy derived from biomass, “sustainable or otherwise,” even if it is produced at a facility that also burns fossil fuels like coal.
But while opponents of Dominion’s renewable energy plan acknowledge that its portfolio is in line with the letter of the law, they argue in SCC filings that the proposal’s mismatch with state goals of encouraging development in renewables means that it falls well short of what customers seeking to buy clean energy are looking for.
Virginia’s changing definition of renewable energy
2007: “Renewable energy” means energy derived from sunlight, wind, falling water, sustainable biomass, energy from waste, wave motion, tides, and geothermal power, and does not include energy derived from coal, oil, natural gas or nuclear power.
2008: “Renewable energy” means energy derived from sunlight, wind, falling water, sustainable biomass, energy from waste, municipal solid waste, wave motion, tides, and geothermal power, and does not include energy derived from coal, oil, natural gas or nuclear power.
2009 (current definition): “Renewable energy” means energy derived from sunlight, wind, falling water, sustainable biomass, sustainable or otherwise, (the definitions of which shall be liberally construed), energy from waste, municipal solid waste, wave motion, tides, and geothermal power, and does not include energy derived from coal, oil, natural gas or nuclear power. Renewable energy shall also include the proportion of the thermal or electric energy from a facility that results from the co-firing of biomass.
“Customers are participating in utility programs to drive additional renewable energy deployment, to lower emissions, and to demonstrate leadership,” wrote Caitlin Marquis, a director of energy industry trade association Advanced Energy Economy, in testimony opposing Dominion’s proposal to the SCC. “Providing financial support to existing projects that are more than 15 years old and to emitting resources — including a seven-year-old coal plant co-fired with biomass — is inconsistent with customers’ motivation and objectives.”
Of the case’s players, none have taken as firm a stance as Walmart, which Perry says will not participate in Dominion’s program if approved by the SCC, even though the retailer has set an ambitious target of supplying 50 percent of its energy needs from renewables by 2025.
“The program fails to meet our expectations as a customer because it offers a product that only results in additional costs to Walmart and does not allow Walmart to realize the benefits (or the costs) of opting to be served by renewable resources,” she wrote.
Just what do businesses want out of a renewable energy program? Bryn Baker, director of policy innovation for the Renewable Energy Buyers Alliance, an industry group that counts leaders from corporate titans like General Motors, Google and Amazon on its board of directors and is opposing Dominion’s proposal, pointed to the Corporate Renewable Energy Buyers’ Principles as a guide.
First formulated in 2014, these principles include such goals as “greater choice in procurement options” and “access to new projects that reduce emissions beyond business as usual.” And, according to Baker’s testimony, Dominion’s renewable energy proposal isn’t in line with them.
Key among her criticisms are that the plan relies on facilities that already exist — and in some cases have been operating for decades — rather than incentivizing the development of new renewable facilities, and that it relies on the largely coal-fired Virginia City plant.
That facility, SCC filings show, has never operated without burning coal.
“There is not a single second where [Virginia City] operates 100% on biomass feedstocks; whenever electric power flows out of [the facility], it is necessarily combusting coal,” argued William Cox, CEO of energy policy analysis firm Greenlink Analytics in testimony for Appalachian Voices, which is also opposing Dominion’s application.
On financial grounds, too, opponents argued that Dominion’s plan — which charges a premium of about 3.6 percent above the typical cost of service — also falls short.
“The costs of renewable technologies have dropped dramatically and zero-emission resources like wind and solar operate are now cost-competitive with existing fossil-based supply,” testified Travis Wright, vice president of energy and sustainability for data center developer QTS Realty Trust, on behalf of REBA. “In these economic conditions, rational commercial consumers are no longer willing to pay a premium cost for renewable energy without receiving a premium level of benefit.”
A Dominion spokesman did not respond to a request for comment for this story. Spokespeople have previously said that they have a policy of not speaking with the Virginia Mercury.
Closing the renewable energy market?
As the case rolls toward its Nov. 21 hearing, stakes are high. Renewable energy is increasingly big business in the U.S., and Virginia, with its burgeoning pool of data centers hungry for energy and close proximity to the nation’s capital, is a desirable market.
But the state’s uniquely complex regulatory structure has complicated development. As a semi-regulated state, Virginia allows few opportunities for businesses that are neither recognized monopolies nor electric cooperatives to sell energy within the commonwealth. One such exception is “100 percent renewable energy”: since 2007, licensed non-utilities have been permitted to sell such energy to customers as long as the monopoly utility isn’t also offering such a product.
There is, however, a catch: As soon as the utility receives approval to sell its own 100 percent renewable energy package, the market is closed, and no more non-utilities can begin offering such a product. Those that are already active can continue to serve their customers for the duration of their contract but can’t enroll anyone new.
It’s a scenario that played out recently in Appalachian Power Company’s service territory, where competition has been halted by the SCC’s approval of the monopoly’s own 100 percent renewable energy plan. And it’s one that the parties opposing Dominion’s tariff fear will come to pass in that utility’s territory, which has recently seen three non-utilities — known in this context as competitive service providers — begin offering renewable energy alternatives to customers.
Dominion has vigorously fought the advance of these companies and sought in the present case to speed up the commission’s proceedings, a move interpreted by competitive service provider Direct Energy, along with Costco and Advanced Energy Economy, as an effort to curtail CSPs’ enrollment of additional customers. Dominion argued that such arguments “lack merit” and that it would benefit the public interest to have the matter decided as quickly as possible; nevertheless, the State Corporation Commission denied the utility’s request to accelerate its deliberative process.
Although the window for competitive service providers to operate in Virginia remains open, further development would be stymied by commission approval of Dominion’s plan, Cox fretted in his testimony for Appalachian Voices: “Some opportunities to increase Virginia’s reliance on clean energy will be set back from day one by eliminating an option that competitively provide[s] 100% renewable energy to participating customers and replacing it with a utility construct that does nothing of the sort,” he contended.
Frank Lacey, a consultant for Direct Energy, also complained about the outcome that would result from commission approval of the utility’s tariff.
“Unfortunately,” he wrote, “the proposed tariff provides customers with only one option for a certain renewable energy service, taking away many other customer options.”
Other things to know about Dominion’s proposed renewable energy package
Dominion’s proposal, known as Rider TRG, is explicitly modeled on the 100 percent renewable energy tariff proposed earlier this year by Appalachian Power Company and approved by the State Corporation Commission.
The portfolio the utility has assembled is expected to meet “the capacity and energy requirements of approximately 50,000 residential customers or their commercial equivalent.”
Customers will pay a premium “based on the prevailing market value of retail renewable energy” equal to about $4.21 per megawatt-hour. They will also pay a “balancing charge” designed to hold non-participating customers “substantially harmless.”
The typical residential customer using 1,000 kilowatt-hours of energy who signs up to get 100 percent renewable energy from Dominion would see an average monthly bill increase of $4.21.
Customers who do not elect to participate in Dominion’s renewable energy program will see no increases in either rates or bills.
A hearing on the application will be held before a hearing examiner at the State Corporation Commission Nov. 21.
In ‘extraordinary’ ruling, SCC rejects small part of Dominion recovery claim
In what the State Corporation Commission termed an “extraordinary” finding, the panel on Monday rejected a small part of a request by Dominion Energy to recover money spent in environmental upgrades at its Chesterfield County power plant.
The commission approved most of the $247 million investment, which paid for improvements to the way the plant processes coal to comply with environmental regulations.
The commission rejected an $18 million portion of the investment, which it found was not “reasonable and prudent,” given that the company expected the units to quickly become obsolete.
The investment paid for upgrades to two power units in Chesterfield that allowed the company to process coal ash without using water that would later require decontamination.
The commission found that Dominion pulled the trigger on that project in June 2015, and that at the time, the company’s own analysis showed that those power units were expected to go offline or stop burning coal by 2020. The two Chesterfield units were indeed permanently retired in March 2019.
Dominion spokesman Jeremy Slayton said the ruling was “a good outcome for Dominion Energy customers and supports our plan to safely store and dispose of coal combustion residuals in compliance with federal and state environmental regulations.” Slayton added that the company is making “rapid progress” away from coal.
The commission did not go as far as the Virginia Attorney General’s Office had recommended. The agency had pushed to block Dominion Energy from charging ratepayers for the full $247 million, calling the spending “imprudent,” given that the company had thrown into question the viability of coal going back to 2011.
The company will be allowed to recover money spent on the construction of a modern landfill to store coal ash, a 1,400-foot bridge that connects the landfill to the power plant, and nearby roadwork. It will also be able to recover money spent to transition two other units away from transporting and storing coal ash with water.
Had the SCC allowed the company to recover the full cost of the projects, along with a profit of 9.2%, households using roughly 1,000 kilowatt-hours per month would have seen their bills rise by $2.15 starting in November. Given the rejection of just $18 million, that figure is expected to change little.
Dominion’s 100% renewables tariff could kill Virginia’s retail choice ambitions
In an increasingly changing energy world, state energy markets vary widely in how they allow companies to compete for and retain customers. And that’s beginning to matter more in states with large retail customers in a (mostly) regulated vertical energy market, such as in Virginia.
Dominion Energy, the state’s dominant utility, in May filed an application with the State Corporation Commission (SCC) for approval of its 100% renewable energy tariff. If approved, that tariff offering would prevent other retail electricity providers from competing in the market to give large and residential customers a 100% renewable option.
Virginia customers are only able to procure energy outside Dominion through two routes: If a customer has a load larger than 5 MW, it can apply to exit through the SCC. Or, customers of any size can shop for a 100% energy product from competitive services providers (CSPs).
Two CSPs — Direct Energy and Calpine Energy — have been soliciting business customers in the state to offer a 100% renewable energy package. On July 15, Dominion terminated processing all current and future interconnection applications with those CSPs, citing concerns over their ability to provide that offering to customers.
Policy watchers say this fight between Dominion and the CSPs highlights a larger tension in the state — whether Virginia should move toward a competitive retail choice market, something customer advocates, environmentalists, corporate customers and others are advocating for.
Battling for customers
The state’s other utility, Appalachian Power Company (APCo), had its tariff approved in January, meaning CSPs cannot offer their 100% renewables package through that power provider’s load zone. And though Dominion filed with regulators in 2017 for approval of its 100% tariff, it says it has modeled its new application off APCo’s.
“Our goal is to ensure that all customers in Virginia are protected. And so we want the competitive service providers to be held to the same standard that APCo and Dominion Energy are being held to,” Dominion spokesperson Audrey Cannon told Utility Dive. “We want them to have to be able to show the SCC that they have that generation in the same way that we’re showing it.”
Direct Energy serves almost a quarter million business customers across North America and says they “clearly have the expertise needed to provide renewable power to customers,” Direct Energy Director of Government and Regulatory Affairs Ron Cerniglia told Utility Dive. “We look forward to establishing in the course of this proceeding that we are supplying customers with 100% renewable energy. And we’ve certainly adequately documented [Direct Energy’s] ability to do so.”
That process is “very prescriptive,” according to Cerniglia. Direct Energy contracts with a renewable energy provider and delivers that power through Dominion’s load zone, pending its approval.
The only exception, is if the utility offers a 100% renewable option in the form of a tariff, regulators ruled in 2017 after pressure from Direct Energy to clarify the rules.
In May of that year, Dominion proposed one of those tariffs, but regulators shot down the proposal a year later, ruling the process would have allowed “extraordinary discretion delegated to the utility.”
But Dominion says this time around it expects to receive approval — because APCo pulled it off in January.
“We modeled that 100% renewable tariff really closely after the one that was recently approved by the Commission for APCo,” said Cannon. “We intentionally followed their guidance. So that’s why we feel good about, hopefully, the commission approving it.”
The utility, under its proposed tariff, would use wind, solar and its four biomass units, including its 600 MW Virginia City Hybrid Energy Center, which generates the majority of its power from coal, and up to 117 MW from biomass. By 2023, 10% of the plant’s power will come from biomass, which qualifies the plant as a renewable facility, said Cannon.
But the fight between the two providers and Dominion highlights a larger standoff in the state.
Battling for a competitive market
“There are sort of two fights,” Harrison Godfrey, executive director of Advanced Energy Economy’s Virginia chapter told Utility Dive. “One is this very technical fight” around qualifying the CSPs to deliver renewable energy into Dominion’s load zone, he said.
“That’s a concern in of itself — obstruction by bureaucracy and slow walking these processes. That coincides with a concern about whether or not you essentially get the introduction of a tariff … that closes down the 100% market for consumers large and small, but provides them with an option that is substandard or does not meet their specific requirements.”
“Virginia is a little unique,” said Godfrey. The state currently operates under a “hybrid” market, somewhere between regulated and deregulated, he told Utility Dive.
Virginia began the process of deregulation, along with a lot of the Northeast, in the late 1990s, before the “Re-regulation Act” was passed in 2007, creating the current structure, which incorporates most customers into the vertical utility model, with a few exceptions.
If a business customer’s load is greater than 5 MW of electricity, it can apply to the SCC to leave Dominion’s service. Regulators earlier this year denied the exit applications of two of the utility’s larger customers, Walmart and Costco, citing concerns over impacts to other ratepayers.
That brings forward another concern outside customer access to clean energy: cost.
“As an entrepreneur I just prefer a competitive marketplace,” said Bob Pizzini, CEO of iFly, an indoor skydiving company in Virginia Beach, which has a demand capacity of approximately 1 MW. Pizzini is one potential customer of Direct Energy and says he has a problem with both the pricing structure and the accessibility of clean energy under Dominion.
Expense was a large driver for Walmart and Costco as well — Costco in its application complained Dominion’s “excessive costs” compounded through “piling on” rate adjustment clauses were unfair. The utility in April filed for a return on equity of 10.75% and last week a coalition of customer groups, including the U.S. Navy, Walmart and low-income advocacy groups protested that proposed increase.
And in May, several technology customers, including Microsoft, Apple and Salesforce, wrote a letter to the utility, criticizing its integrated resource planfor not incorporating enough renewable energy and relying too heavily on natural gas. Earlier that month, a group of environmentalists and free market advocates formed a coalition, calling for the state to deregulate its energy market.
“Big retail customers like Walmart, Costco, all the tech companies that are creating a data center right now in northern Virginia, they’re pretty much shackled to Dominion Energy,” Cassady Craighill, communications director at Clean Virginia, one of the groups in the coalition, told Utility Dive.
“But what’s important to remember that you shouldn’t have to be a major corporate customer to use and even have the option to buy renewable energy. … So in the case of Direct Energy, we’re not necessarily saying that that’s the choice for everybody, but the point is that there’s no choice right now.”
Written comments on the application are due by Nov. 14 and a public hearing to receive testimony on Dominion’s Tariff is scheduled for Nov. 21.
The Battle for Virginia’s Corporate Renewables Market Heats Up
Tensions are escalating in Virginia between Dominion Energy, rival electricity suppliers and the state’s growing list of big corporations demanding renewable power.
Direct Energy and Calpine, two competitive service providers (CSPs) working in utility Dominion’s Virginia territory, alleged in separate motions filed Monday that Dominion has stopped processing their 100 percent renewable electricity enrollment requests for large customers in recent months. The two companies asked state regulators to swiftly intervene to restart enrollment.
Virginia allows competitive service providers to offer 100 percent renewables to large customers as long as the regulated utility does not provide that option itself, which Dominion currently does not.
The appeals from Calpine and Direct Energy come in response to Dominion’s petitions filed earlier this month, which ask the regulators to confirm that competitive service providers have adequate renewable supply to sign on new customers. The utility suggested that neither Calpine nor Direct Energy has that capacity.
Direct Energy told Greentech Media that Dominion’s comments have “no basis in fact or law.”
The battle for Data Center Alley
The tensions over which provider will serve large customers, many of them seeking ever-increasing percentages of renewable power, represent a particular problem in Virginia, where cheap electricity has remade part of the state as “Data Center Alley.”
The number of large companies looking for affordable and often renewable power in the state has put a squeeze on Dominion, which currently produces just 5.6 percent of its electricity in the state using renewables. The utility has also weathered criticism from large corporate customers claiming that its rising rates make power unaffordable.
In 2018, companies including eBay and Salesforce argued in a letter to the State Corporation Commission that Dominion’s proposed integrated resource plan wouldn’t provide the renewables that companies flocking to the area are demanding. Other companies including Apple and Adobe followed up with another letter this May. The SCC ended up rejecting the IRP and approving an updated version last month.
But the SCC has also rebuffed some attempts from corporations to leave Dominion behind. This year regulators rejected bids from both Walmart and Costco to drop Dominion and procure electricity separately, though they suggested the companies should escalate their fight to the legislature. Other companies including Target, Cox Communications and Kroger have also filed applications requesting an exit.
The most recent dust-up over CSPs comes soon after Dominion filed an application with regulators in late May for its own 100 percent renewables offering, which the utility is seeking to get approved within six months. Regulators rejected Dominion’s last attempt at such an option in May 2018.
Ron Cerniglia, Direct Energy’s director of corporate and regulatory affairs, called Dominion’s move to halt enrollments “an overreach and an arrogant attempt to block competition” while Dominion’s own request is processed.
“They’re essentially running the clock by delaying customers’ statutory ability to secure a 100 percent renewable product,” said Cerniglia. “We think Dominion is just putting forward these legal theories with the real purpose of delaying the inevitable, hoping competitive retailers will leave and trying to dissuade customers from switching to a competitive service provider.”
Dominion questions CSPs’ offerings
Dominion, however, told Greentech Media its petition aims “to ensure that all electric customers in Virginia are protected.”
“We think it’s important to ensure that customers who take part in these programs are in fact receiving 100 percent renewable energy,” said spokesperson Samantha Moore in an email.
Calpine did not respond to requests for comment, but in its motion filed with regulators, the company argued that “Dominion should not be allowed to unilaterally impose its own self-serving interpretation of the rules, and, in doing so, prevent customers from exercising their statutory right to choose a CSP for a 100 percent renewable product.”
Without help from the SCC, Calpine said its business in Virginia would “suffer irreparable harm.” Direct Energy said Dominion’s decision has halted over a thousand customer accounts either in the queue or likely to join it soon.
The SCC has given Dominion until July 31 to respond to the motions from Direct Energy and Calpine. Those companies will then have until August 6 to respond.
The commission declined to offer a timeline on when it might rule on the issue.
Clean Virginia Announces First Wave of Candidate Endorsements and $1 Million Effort in Virginia’s General Assembly Elections
July 16, 2019
Clean Virginia Announces First Wave of Candidate Endorsements and $1 Million Effort in Virginia’s General Assembly Elections
Endorsed Candidates Refuse Utility Monopoly Contributions and Demonstrate Commitment to Clean Government and Clean Energy
July 16, 2019
Today, Clean Virginia announced its plans to invest over $1 million in Virginia’s 2019 state legislative elections to support candidates with a principled stance against taking campaign contributions from Virginia’s regulated utility monopolies. Clean Virginia also announced its first round of general election endorsements for Virginia’s General Assembly, all of whom are champions of clean government and clean energy.
“Virginians are ready to elect candidates who truly represent their communities and the future of Virginia,” Clean Virginia Executive Director Brennan Gilmore said. “Clean Virginia is thrilled to endorse 61 candidates who have demonstrated a commitment to a functional and fair democracy, 21st century energy policy, and a check on the powerful utility giants in Virginia who have stymied progress on both.”
Clean Virginia endorses candidates based on a variety of criteria, including: public statements, responses to our 2019 Candidate Questionnaire on clean governance and clean energy policy, legislative record (for incumbents), and their stances on accepting contributions from regulated utility monopolies — like Dominion Energy and Appalachian Power Company — and their employed lobbyists. Clean Virginia’s investment will support a wide range of candidates and incumbents of both political parties who have this principled stance. The efforts will include targeted digital campaigns, grassroots organizing, and direct campaign contributions from Clean Virginia Fund and Clean Virginia Board Chair Michael Bills.
Clean Virginia is a 501(c)4 independent advocacy organization with an associated Political Action Committee, Clean Virginia Fund. Clean Virginia works to fight corruption in Virginia politics in order to promote clean energy, a robust, competitive economy, and community control over our energy policy. We are motivated by the core belief that our democracy should serve average Virginians over special interests.