By Steve Haner

The enforcement mechanism for the Virginia Clean Economy Act is a cash fine imposed on the electric utility if it fails to utilize the mandated percentage of wind, solar or battery power. The statute calls it a “deficiency payment” and has set the penalty at $45 per megawatt-hour. 

The first of such penalty payments may be imminent. In debate Monday on a bill to eliminate the penalty, the statement was made that Dominion Energy Virginia has warned it may have to pay $450 million in a fine at the end of 2025. The report came from Glenn Davis, director of the Virginia Department of Energy, who said Dominion may fall short by 10 million megawatt hours.

Under the language of the 2020 statute, the utility is allowed to just pass the cost along directly to its ratepayers. And just like its cousin, the Regional Greenhouse Gas Initiative Carbon tax, the cash collected by the state is directed to be spent on various specific projects such as energy efficiency programs and job training in historically disadvantaged areas.   

The discussion took place in front of the Senate Commerce and Labor Committee, which of course promptly killed the bill on a party-line vote. That’s the thing about the Assembly’s odd-year short session – it starts like a rocket and important bills are heard from the first day. 

Opponents from the environmental community that helped write the law years ago said the bill would remove any incentive for Dominion or the other covered utility, Appalachian Power Company, to comply with the law. Supporters, including Davis, noted that the regional PJM Interconnection shares responsibility for Dominion missing the green energy goals because approvals for new solar and wind assets are backed up in a long queue.

The quick and firm rejection of this bill, sponsored by Senator William Stanley, R-Franklin County, demonstrated there has been no change in attitude among the Democrats who control that key committee. A parade of environmental activist groups rose to oppose the bill, led by Josephus Allmond of the Southern Environmental Law Center. The VCEA is untouchable to them.

(Alert readers may recall that when Senator David Marsden, D-Fairfax, put together a stakeholder group last year to consider issues around the VCEA, he identified Allmond and SELC as the panel’s “consumer advocate.” Today showed why it was a false flag operation from the start.)

The strongest advocate for the bill after Stanley was Director Davis. In this fourth year of the Governor Glenn Youngkin administration, in the memory of this observer, it was the first strong advocacy effort at the podium to amend the VCEA from anybody within the administration. It followed a statement from the Governor himself, in his State of the Commonwealth Address that morning, that the VCEA “simply is not working.” He continued:

It is driving up rates, driving down reliability, and constricting our economic growth. 2020 forecasts assumed very little power demand growth because leadership planned for very little economic growth and very little job growth. Today, Virginia’s demand for power is growing because Virginia is now growing rapidly. We now import roughly 40% of our power needs versus 18% in 2020.  

The Republican side of the chamber for the joint assembly applauded and the Democrat side sat in silence. The division appears set in concrete.  

Opponents of Stanley’s bill questioned whether Dominion really would face a deficiency payment yet, and claimed the utility had unused renewable energy certificates it could apply to avoid it. But VCEA includes a sliding scale and each year, a higher percentage of power from approved sources is required. If not this year, one day there will be a deficiency payment due if the law remains in place.

So along with the RGGI carbon tax, VCEA creates yet another way to extract money for favored constituent spending program from the utility. If the RGGI tax, now removed by Youngkin, is reinstated by a court or by a future governor, then the utilities in future years may pay both. Combined the payments could approach $1 billion annually. The utilities will then impose it all on their customers.

Their stockholders are protected. Which perhaps is why neither utility testified during the hearing on Stanley’s bill.