At Last, a Green Tariff for APCo Customers

Western Virginians paying APCo’s renewable energy tariff will receive electricity from, among other sources, the Beech Ridge wind farm in West Virginia.

The State Corporation Commission has approved a proposal allowing Appalachian Power Company (APCo) customers to purchase electricity generated 100% from renewable energy. An average residential customer using 1,000 kilowatt hours of electricity would pay a premium of $4.25 a month.

The Commission had rejected two previous APCo proposals for a 100% renewable energy tariff. In an order issued Monday, however, the Commission found that under the latest iteration of the plan (1) the participating customer is receiving 100% renewable energy, (2) the tariff includes safeguards that do not offload costs to customers who do not participate, and (3) the rate is reasonable for the purposes of the renewable energy product being supplied.

In its application APCo stated that the renewable energy would come from nine hydro and five wind facilities.

Electrons generated by renewable energy sources are impossible to distinguish from electrons generated from conventional sources, and electrons from all sources mix indiscriminately when they enter the grid. Furthermore, output from renewable sources rarely aligns exactly with customer load: While APCO may exercise some control over when it generates power from hydro sources, it cannot control when the wind blows. Thus, a question arises of how to justify the assertion that a given customer is receiving 100% renewable energy. The SCC determined that for purposes of supply 100% energy under Virginia’s statute, it suffices to match renewable generation with the participating customer’s load on a monthly basis.

APCo and the Commission encountered another challenge: how to set the tariff. The renewable service does not neatly fit the dominant regulatory scheme in which the SCC calculates aggregate revenues from the service, deducts aggregate costs, and allows for a fair profit margin. Also complicating the issue, states the SCC order:

Unlike market prices for undifferentiated electricity or natural gas, there currently are no standard, publicly available market prices for a “100 percent renewable energy” product (as fashioned by the Virginia statute) for the Commission to use for purposes of comparison. Nor are there other retail tariffs or market products directly equivalent to the Company’s proposed 100 percent renewable energy product to use for comparison purposes.

The Commission identified three proxies for price: the rate charged by the only CSP (competitive service provider) providing 100% renewable energy in Appalachian’s service territory, the market price of renewable energy certificates, and premiums paid by customers nationally in “green pricing” programs.

By providing a 100% green tariff, APCo fends off the possibility, allowed under Virginia law, for a competitor to enter a service territory if the incumbent utility fails to offer one.

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8 responses to “At Last, a Green Tariff for APCo Customers”

  1. LarrytheG Avatar

    I think these green tariffs are mostly a scam – and I take pride in beating TMT to the punch on this!

    Getting “green” power from PJM is different from buying it from APCO or Dominion.

    Corporate entities who buy “green” from PJM are actually buying actual allocations of a real renewable power site. The owners of the site cannot sell more than the site actually generates (I hope),, so those who buy it are actually buying renewable-generated power – and if they buy enough of it to cover a 24/7 period – then even though they use grid power at night – they have bought enough of the renewable to provide all of their use, i.e. they buy an “offset”.

    so the question is when APCO and Dominion and others sell “green” are they also restricted to selling only the amount they actually generate with renewable power facilities or can they just sell as much as they want and call it “green”?

    1. TooManyTaxes Avatar

      Congrats Larry. You did, indeed, beat me to the punch.

  2. A scam, indeed. You anticipated my own thoughts, LG. I will believe Apco is thinking green when they implement true net metering and quit trying to curb their customers who want to install as much solar capacity as their location and resources allow.

  3. Net metering can be a good thing. But advocates of net metering want to capture the full benefits of solar power (lower cost per kilowatt) while under-paying (or not paying at all) for the cost of maintaining backup generating capacity and electric grid to supply electricity when the sun isn’t shining.

    A key consideration in the SCC finding was ensuring that APCo’s tariff does not “offload costs to customers who do not participate.”

    1. LarrytheG Avatar

      What prevents the SCC for implementing a tariff that does allow the utility to get compensated for maintaining the availability of the grid and still allow folks to install solar and receive a credit after paying for the availability fee – AND it meets the test of not offloading costs to others?

      At the very least – an analysis should be presented so that everyone is on the same page? Right now, it’s basically an excuse basically to prevent people
      from being able to get ROI from their own investment. Basically the utilities consider residential solar to be a “competitor” to their monopoly business.

      We have to change the rules for utility monopolies in Va. They are NEVER going to give up anything that basically reduces the amount of power they can sell – for a profit.

      Something is wrong – when we have a system that basically prevents people from using less power and generating less pollution… who are trying to reduce their energy footprint – and even willing to pay more for electricity to achieve it but the utilities are demanding to continue to generate more power than is actually needed if people did install solar AND they want the same profit on electricity even if it is generated by consumers on their own rooftops.

      hmm…I seem to have fixed on “basically”

      1. The answer to your first question is, Nothing. In fact, the separation (“unbundling”) of distribution, transmission, customer-billing and generation costs already mandated in Virginia provides the groundwork for this; all the SCC has to do is order the retail utilities to allow it. As SH says, the pivotal decision will be on Dominion’s similar application.

  4. In general I like the idea of allowing consumers the choice. If it is a scam, then that is no good. But I am not auotmatically assuming that.

  5. Steve Haner Avatar
    Steve Haner

    The more important decision (in terms of market impact) on Dominion’s similar application is pending. Stand by.

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