Virginia Utilities Back Legislation to Offer Consumers a Solar Option
- December 14, 2016
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A group comprised primarily of Virginia utilities and solar industry members has proposed four pieces of legislation for the 2017 Virginia legislative session. The bills address four areas the group agreed to work on: creating a pilot program to offer solar energy to customers on a voluntary basis, under the name of “community solar”; raising from 100 MW to 150 MW the size limit for wind and solar projects that can take advantage of the streamlined Permit by Rule process, and allowing utilities to use that process in some circumstances; creating a program to allow farmers to sell some surplus solar to the grid; and allowing utilities to earn a profit on solar facilities they don’t build themselves (an incentive for them to do more deals with developers, whose costs are less and who receive more favorable tax treatment).
The group, referred to as the Rubin Group after its moderator, Richmond lawyer Mark Rubin, formed earlier this year when the Commerce and Labor Committees of the General Assembly refused to act on a suite of renewable energy and energy efficiency bills offered during the 2016 session. The committee chairmen, Senator Frank Wagner and Delegate Terry Kilgore, said members needed more time to consider the proposals, though they were similar to ones submitted (and killed) in previous years. Wagner and Kilgore assigned a special subcommittee to study the legislation and make recommendations for next year.
The subcommittee met once in the spring to hear summaries of the bills. It took no further action until December 8, when four members showed up to hear presentations from the Rubin Group and ask a few questions. The hearing took half an hour. No one mentioned energy efficiency.
Setting aside more contentious issues, the Rubin Group had agreed to focus on drafting legislation where they felt compromise between the solar industry and the utilities was possible. That left out a lot, including the many bills dealing with net metering issues and third-party ownership. They also chose not to bring in environmental or consumer groups until they had nearly completed drafting their bills, though they did include an advocacy group called Powered by Facts that focused on agricultural customers. Representatives from Southern Environmental Law Center and League of Conservation Voters were finally brought in to review and comment solely on the community solar bill. Other stakeholders were briefed on the bills in late November but not allowed to see the legislation until today. (As of this writing, the bills had not yet been posted anywhere I can link to.)
The community solar bill has generated the most interest, especially from residential customers who can’t put solar on their own roofs and are eager for options. And a review of the language suggests that in concept, at least, this bill holds a great deal of promise for bringing solar to average Virginians.
However, the name “community solar” is something of a misnomer for the Rubin Group’s bill, which might better be described as enabling a program for utility-administered, community-scale solar. The legislation provides for the utility to solicit bids for new solar facilities to be built by private developers around the state. The utility will contract for the output of the facilities and sell the electricity to customers who want to buy solar. Customers will never own the projects.
The bill is labeled a three-year pilot program. It consists of generating facilities up to 2 megawatts in size, for an initial total of 4 MW for APCo and 25 MW for Dominion. When a program is 90% subscribed, the utilities will add facilities up to a total of 10 MW for APCo and 40 MW for Dominion. Each utility will issue requests for proposals (RFPs) from developers, and will purchase the output and the associated renewable energy certificates (RECs). The utility will retire the RECs on the customer’s behalf, which assures customers they are actually getting solar. Electric cooperatives are also authorized to conduct similar pilot programs.
The utilities will be allowed to recover all of their costs through a rate schedule, including for squishy categories like administrative and marketing charges, plus a margin determined by the “weighted average cost of capital.”
The legislation does not set the price of the electricity, something left to the State Corporation Commission to decide under tight parameters. Leaving the price out of the legislation is reasonable, given that the RFPs haven’t even been issued yet, but it does mean we have no idea at this point whether customers will see a savings from the program either immediately (highly unlikely) or in the future. But the legislation does allow customers to lock in a fixed price for as long as they are in the program, giving them the price stability that is one of the major benefits of solar.
In addition, the members of the Rubin Group say they have agreed to abide by a Memorandum of Understanding they drafted to guide implementation of the bill at the SCC. This MOU has not been made public, and in any case the SCC would not be bound by it, but it may help ensure that regulations implementing the pilot program meet the parties’ expectations.
So how much of a difference could this program make? As a rule of thumb, supplying an average Virginia household with 100% solar energy requires the output of 10 kilowatts (kW) worth of solar panels. Thus the program total of 50 MW (50,000 kW) would be enough to supply 5,000 average Virginia households if they were to meet their entire electric load this way, or more if they are energy efficient or plan to meet only a portion of their load with solar. By comparison, Dominion alone claims to have over 30,000 customers in its Green Power Program. That program offers mostly wind RECs from other states, and does not reduce customers’ use of ordinary grid power from fossil fuels and nuclear. Thus there seem to be more than enough customers primed to sign up for a program that is infinitely better than what they are paying extra for today.
The astute reader will wonder why Dominion didn’t just change its Green Power Program to a Virginia solar program, something it could do through the State Corporation Commission without new legislation. If any astute reader figures that out, please let me know, because I’ve been wondering about it for years.
Regardless, the Rubin bill holds promise as an option for customers who can’t put solar on their own rooftops. It would mean more solar projects get built in Virginia, creating jobs and bringing new economic development to localities across the state. It would decrease demand for dirty power and possibly persuade our utilities that the future really does lie with solar, not with fracked gas.
Calling it community solar seems unwise, however. Virginians are wary of a bait-and-switch from a utility with a long history of promising the moon and delivering green cheese.
For real community solar, we will have to look to legislation developed by the Virginia Distributed Solar Collaborative. This broad-based group of solar stakeholders includes consumers, local government employees and environmentalists as well as solar industry representatives (but not utilities). The Collaborative developed its own model bill this summer based on legislation from other states. The model bill gives much greater freedom to customers to cooperate in the development and ownership of renewable energy facilities for their own benefit. Customers don’t have to wait for their utility to choose a developer, and they can choose to own a share of a facility, not just buy some of the electricity generated. Utilities can own facilities, but so can non-profit or for-profit entities. Utilities are required to purchase the output of the community facilities, and to issue bill credits to its customers who are subscribers.
As a practical matter, members of the Virginia Distributed Solar Collaborative don’t expect the General Assembly to adopt their model instead of something that comes with the Dominion Power seal of approval. But it’s important for legislators to understand what the alternative looks like, and why their constituents may feel that a utility-operated program shouldn’t be the only option.