Clean Economy Act: A Refresher on What it Does

By Steve Haner

A senior Democratic state senator is leading an effort to review and possibly revise the 2020 Virginia Clean Economy Act (VCEA), which orders the future elimination of hydrocarbon fuels (oil, natural gas, and coal) used in making electricity.  His goal is to conduct a stakeholder process and bring legislation to the 2025 General Assembly.

Before delving into what those changes might look like (or what we might propose the changes look like), it is helpful to understand what the current law requires. To use a common colloquialism of the Assembly, “what do the bill do?”

The final version approved in 2020 was long and written mainly to be read by utility lawyers and regulators.  The vote was largely along party lines, but one Republican in the House and one in the Senate joined with Democrats in approving it.  Two years later, when the Republicans regained control of the House of Delegates, a repeal of the entire statute passed the House but stalled in the Senate, where Democrats remained in control.

The law applies to the two large, investor-owned electric utilities serving Virginians.  It makes no demands on the rural electric cooperatives or the Kentucky utility serving part of far Southwestern Virginia.

The dominant utility, Dominion Energy Virginia with 2.6 million customers, is directed under the VCEA to steadily reduce its reliance on coal or natural gas to produce electricity within the state’s boundaries, with the goal of eliminating those fuels by 2045.  So, in 20 years Dominion’s many gas and coal facilities are supposed to disappear.  In the case of coal generation, they largely already have or will soon disappear, except for Dominion’s large West Virginia coal plant and a small plant in Wise County.

Appalachian Power Company serves about 500,000 customers in Western Virginia and under the VCEA is ordered to eliminate its use of hydrocarbons by 2050.  This goal is less of a problem for Appalachian Power because it is down to one natural gas plant inside the state, Clinch River, and plans to close those two generator units in 2025 and 2026.  Appalachian also uses Virginia hydro power, but mostly imports electricity from outside Virginia’s boundaries, where coal is still a major fuel.

The law includes language that allows the SCC to keep a gas facility open for longer, or even to approve a new hydrocarbon generator, if the regulator deems it to be necessary to maintain reliable electricity services.  In fact, Dominion sought such an approval in its most recent integrated resource plan application, but the SCC failed to approve that plan.

One part of the VCEA authorized the Virginia Air Pollution Control Board to enter a multistate cap and trade program to reduce carbon dioxide emissions from power plants.  Supporters of the Regional Greenhouse Gas Initiative view the language as a mandate and are litigating Governor Glenn Youngkin’s decision to exit RGGI last year.

Both power companies face a fixed schedule of rising renewable power use under the VCEA, but if they are not using sufficient qualifying renewable power (mostly wind or solar), they can satisfy the law by purchasing renewable energy credits generated by other companies.  Failure to meet the goals by either method will result in a huge financial penalty of $45 per megawatt hour (4.5 cents per kWh), which the utilities are allowed to recover from customers.

The VCEA as it now reads is compatible with nuclear power.   Under the VCEA, nuclear power is not considered “renewable” per se, but the amount of nuclear electricity generated can reduce the need for Dominion to produce from renewable sources.  There is no impediment to adding more nuclear capacity, and both utilities are considering that.

Under traditional rules of utility regulation, any future power plant would need to be reviewed by the State Corporation Commission and determined to be “in the public interest.”  The VCEA short circuits that process by simply declaring massive future wind, solar and battery projects to be automatically in the public interest:

  • 16,100 megawatts of solar or onshore wind generation.
  • 5,200 megawatts of offshore wind generation (the project Dominion is now building uses half of that advance approval, with another 2,600 MW to go.)
  • 2,700 megawatts of energy storage capacity, mainly batteries which will be charged by solar and wind facilities, and which will provide some coverage when those intermittent energy sources are not working.

Dominion is directed to plan and seek approval of up to 24,000 MW of wind, solar or battery power by 2035, with Appalachian to add another 1,000 MW by then.  The law only requires the projects to be proposed and applied for, but with most deemed “in the public interest” a big hurdle is avoided.  There is no “in the public interest” designation for an amount of new nuclear power, however.

Both utilities have a long way to go to meet the renewable project goals of the VCEA.  Appalachian Power has 575 MW approved.  Dominion has about 2,800 MW of solar capacity approved, and 170 MW of battery capacity, along with the 5,200-megawatt offshore wind project currently under construction.   Meeting the VCEA goals will require tens of thousands more acres of land covered by solar panels, given Virginia is proving unsuitable for onshore wind projects.

Under the law, both utilities submit annual plans to the SCC seeking approvals for additional solar, wind and battery projects.  The law states that 65% of the projects will be utility-owned and 35% can be from outside suppliers through power purchase deals, which is usually less expensive to consumers.  The outside suppliers can be outside of Virginia but must be within the PJM electricity transmission region.

One of the most aggressive provisions of the law requires both utilities to reduce their sales of electricity, using their 2019 sales amount as a baseline.  Dominion is required to shrink 5% from that by next year and Appalachian must shrink by 2%.  This was included in the law before the incredible growth spurt of Virginia’s data center industry  which accounted for 24 percent of Dominion’s electricity sales in 2023.

The VCEA also created the Percentage of Income Payment Program, or PIPP, intended to subsidize the electricity bills of low-income households.  Four years later, PIPP is just getting underway, and under the law as it now reads those PIPP households will also be spared from paying for the Dominion offshore wind project.  This will raise the bill for the wind project for everybody else.

Those are the highlights.  More details are in a VCEA summary (here) passed out at one of the first stakeholder meetings. Which of the provisions discussed above may be targeted for change will be the topic of another column.

First published this morning by the Thomas Jefferson Institute for Public Policy. 

 


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60 responses to “Clean Economy Act: A Refresher on What it Does”

  1. LarrytheG Avatar
    LarrytheG

    Pretty good summary… I wonder if the folks on the other side of the table agree with how you laid it out.

    " One of the most aggressive provisions of the law requires both utilities to reduce their sales of electricity, using their 2019 sales amount as a baseline. Dominion is required to shrink 5% from that by next year and Appalachian must shrink by 2%. This was included in the law before the incredible growth spurt of Virginia’s data center industry which accounted for 24 percent of Dominion’s electricity sales in 2023."

    is this total sales regardless of how it was generated?

    And a question on nuclear. Would you support nuclear even if it cost more than gas/fossil fuels?

    1. Stephen Haner Avatar
      Stephen Haner

      Well, if you open the document I linked at the end, passed out by Senator Marsden, it will look quite similar to what I just wrote! And I do support adding more nuclear even though it might cost more than hydrocarbons on the construction front. But if you get 80 years out of the investment, as Dominion is getting with its four reactors, then the life cycle cost gets very attractive. As I've said umpteen times, I'm not fan of coal for power generation. But I think NG will remain a staple despite the dreamers. I think you agree with that?

      1. LarrytheG Avatar
        LarrytheG

        I think gas is not going away anytime soon and yes, it is needed and I think there is a decent chance
        that some modern nuclear/similar technology could come to the fore – and at that point the question
        WILL BE – ‘ do we choose nukes over gas even if more expensive”?

  2. DJRippert Avatar
    DJRippert

    "One of the most aggressive provisions of the law requires both utilities to reduce their sales of electricity, using their 2019 sales amount as a baseline. Dominion is required to shrink 5% from that by next year and Appalachian must shrink by 2%. This was included in the law before the incredible growth spurt of Virginia’s data center industry which accounted for 24 percent of Dominion’s electricity sales in 2023."

    How is that even remotely possible?

    Between data centers, population growth, economic growth, and electric vehicles …

    And how can the utility decrease its sales of electricity? Raise prices until it becomes too painful to buy electricity? Stop generating once the annual limit of kWh's have been sold? Rolling blackouts?

    1. energyNOW_Fan Avatar
      energyNOW_Fan

      I would ask what the data centers pay for electricity?

      I believe Virginia gives larger than normal (huge) discount to commercial users, which puts John Q. Public on the hot seat to pay the higher cost for all of this. And re: PIPP Virginia is among the friendliest states to lower incomes, so that higher cost is further concentrated to middle class.

      If we continue like this unabated, I foresee very high electricity cost for consumers. I already lived through this once in New Jersey, in the 1970's, when NJ went full nukes, as a young adult NJ had about the highest elec costs in the nation. All the industry left due to high electric, and now what do they have left? NoVA look-alike.

    2. how_it_works Avatar
      how_it_works

      "How is that even remotely possible?"

      It's easy. They just pass a law saying it shall be so.

    3. Stephen Haner Avatar
      Stephen Haner

      There is a fairly new proceeding at the SCC on the issue but I need to take a morning and read the file. The utilities I think are asking the SCC to just void the stupid provision, but lemme see if I can find time to read the file. 🙂

    4. energyNOW_Fan Avatar
      energyNOW_Fan

      I would ask what the data centers pay for electricity?

      I believe Virginia gives larger than normal (huge) discount to commercial users, which puts John Q. Public on the hot seat to pay the higher cost for all of this. And re: PIPP Virginia is among the friendliest states to lower incomes, so that higher cost is further concentrated to middle class.

      If we continue like this unabated, I foresee very high electricity cost for consumers. I already lived through this once in New Jersey, in the 1970's, when NJ went full nukes, as a young adult NJ had about the highest elec costs in the nation. All the industry left due to high electric, and now what do they have left? NoVA look-alike.

      1. how_it_works Avatar
        how_it_works

        Far as I can tell, NoVA never had much in the way of industry.

        1. energyNOW_Fan Avatar
          energyNOW_Fan

          Just to be clear, it was NJ who lost the industry due to high electric. In the case of Virginia, our energy policy seems to be very pro-industry (eg; cloud) so it would be the consumer rate payers hit with the hefty bill if we go that way. Not sure how that will impact (NC and TN will perhaps benefit from Va escapees).

        2. energyNOW_Fan Avatar
          energyNOW_Fan

          Just to be clear, it was NJ who lost the industry due to high electric. In the case of Virginia, our energy policy seems to be very pro-industry (eg; cloud) so it would be the consumer rate payers hit with the hefty bill if we go that way. Not sure how that will impact (NC and TN will perhaps benefit from Va escapees).

        3. energyNOW_Fan Avatar
          energyNOW_Fan

          Just to be clear, it was NJ who lost the industry due to high electric. In the case of Virginia, our energy policy seems to be very pro-industry (eg; cloud) so it would be the consumer rate payers hit with the hefty bill if we go that way. Not sure how that will impact (NC and TN will perhaps benefit from Va escapees).

    5. how_it_works Avatar
      how_it_works

      "How is that even remotely possible?"

      It's easy. They just pass a law saying it shall be so.

    6. LarrytheG Avatar
      LarrytheG

      On it's face, it sounds like something stupid as well as downright contradictory (with respect to reliability), so I'm thinking more BS than actually true. How could the SUPPLIER of electricity actually do anything about DEMAND other than increase prices (perhaps on their current volume discounts)? More to this story we don't know.

      1. how_it_works Avatar
        how_it_works

        It's quite easy for the supplier of electricity to do something about demand.

        Flip the switch to "OFF" and you've just reduced demand!

        1. LarrytheG Avatar
          LarrytheG

          If the supplier cuts it , that's called an outage and outages are grid reliability issues that very quickly get the public's attention and immediate feedback from the powers that be.

          Not so easy. When power drops, they better have a good excuse beyond " the law requires us to do it".

          1. how_it_works Avatar
            how_it_works

            Dominion Power routinely has outages in perfectly clear weather, has for years, and Virginians seem to accept it as a normal state of affairs.

          2. LarrytheG Avatar
            LarrytheG

            If they come out and say they purposely cut the power because the law said they had to?

          3. how_it_works Avatar
            how_it_works

            It’s what happens in California, isn’t it?

          4. LarrytheG Avatar
            LarrytheG

            don’t think so. They let you know when they’re getting ready to have a planned outage but that’s
            not a strategy to reduce consumption – which would be pretty dumb given the re-start problems that
            would be involved. Friends went to Pakistan to see family and said that at night they cut power and sometimes during the day with no warning….. 3rd world stuff

          5. energyNOW_Fan Avatar
            energyNOW_Fan

            We rarely lose D power here, I guess we may be close to substation and have underground cable mostly

          6. energyNOW_Fan Avatar
            energyNOW_Fan

            We rarely lose D power here, I guess we may be close to substation and have underground cable mostly

          7. how_it_works Avatar
            how_it_works

            You’re lucky.

            I drove around and looked at some of “D”‘s overhead infrastructure and compared it to NOVEC’s.

            All the NOVEC transformers I saw have squirrel guards on them, but only some of the D transformers.

            “Highly effective in preventing electrical outages caused by squirrels and birds”

          8. LarrytheG Avatar
            LarrytheG

            NOVEC is better than D from what I hear. We get power from REC and I think they're pretty good also – and we are heavily treed in general. Fifty-plus years ago, the then-rural subdivision that we bought a lot in had two things that sealed the deal for us. 1. subdivision road built to VDOT standards that would be accepted into the state system. 2. REC buried the electric – not only on the subdivision spine road but to the houses also. This was 50+ years ago, long before other subsequently built neighborhoods that chose to do neither and suffered issues as a result, and "blamed" others for their chosen situations.

          9. how_it_works Avatar
            how_it_works

            Only the last 500 feet between the pole and my house is underground, rest is all overhead all the way to the substation, yet I rarely have power outages.

          10. LarrytheG Avatar
            LarrytheG

            I'm more than a mile from the above-ground poles… and 400 feet from the subdivision road. – All underground. It was all put in before any lots were sold and driveways cut or other underground utilities. I'm wondering from a undeveloped parcel – if underground is more expensive than above ground. After the fact, where you have driveways out the wazoo, underground has got to be more costly. You might know some of this.

          11. how_it_works Avatar
            how_it_works

            NOVEC charged me $8000 to put the last 500 feet underground. There would have been no charge for going overhead, but that would have required me to get an easement from my neighbor to allow it. I doubt my neighbor wanted his trees removed to make way for an overhead line…

            Comcast, on the other hand, charged me $0 to go underground for the same distance.

          12. LarrytheG Avatar
            LarrytheG

            Well.. NOVEC could not follow a regular right of way, the same that Comcast probably did?

          13. how_it_works Avatar
            how_it_works

            NOVEC used the VDOT right-of-way, same as Comcast. This is not in the road, but next to the road, probably about 5 feet from the edge of the pavement.

          14. LarrytheG Avatar
            LarrytheG

            I thought you said they had to buy right of way from a property owner?

          15. how_it_works Avatar
            how_it_works

            Only if it was going overhead. The overhead line path would not fit on the VDOT right of way, I think. The underground will fit there.

          16. LarrytheG Avatar
            LarrytheG

            and you had to pay if they used a public-right-of-way? I’ve heard of people having to pay
            to bring it from a right-of-way to their property if it was further than some distance (not sure
            how far)… but I thought electricity access was like road access… VDOT is REQUIRED to give
            you a connection and I thought Va law was that property cannot be landlocked… there has
            to be access …

          17. how_it_works Avatar
            how_it_works

            I had to pay for the additional costs of going underground. For whatever reason, NOVEC (actually their contractor) directionally bored their line, which is a pretty expensive way to do it…I believe the rig they used costs something like $150K!

            They didn’t give me an itemized bill explaining in detail why the cost is $8000 more than going overhead. But I am guessing that the directional boring done the way they did it is a large part of the cost.

            Comcast, on the other hand, also directionally bored their line, but their contractor used a pneumatic mole, which is more like a $5K piece of equipment. Those have some disadvantages over the more expensive rig, biggest one is that you can’t steer them. You hook them up to compressed air and they hammer their way underground and you hope that it doesn’t hit a rock or something and go off course and come up in the middle of the street or something. Or go off course and start heading towards the center of the earth, at that point you can’t get it back so you cut the hose and abandon it.

          18. LarrytheG Avatar
            LarrytheG

            or run into other underground utilities? 😉 From the cul-de-sac down, Verizon used some kind of shallow ditch machine, got it deep enough that a grubber did not get it later.

          19. how_it_works Avatar
            how_it_works

            When they installed FIOS conduit, Verizon's contractor used the same $150K machine that NOVEC's contractor did.

            But Verizon's contractor wasn't using a sonde to track the location of the drill, from what I could see, which is probably why they hit several Comcast and Verizon cables.

          20. f/k/a_tmtfairfax Avatar
            f/k/a_tmtfairfax

            According to VDOT,

            Accommodation fees are annual compensation paid by utility companies for the use of limited and non-limited access rights-of-way, with the following exceptions: a.) cable television operators subject to the Public Right-of-Way Use Fee, b.) certified providers of telecommunications service, c.) municipal or
            authority owned sewer and water facilities, and d.) renewable energy generation transmission facilities.
            All others shall pay an annual accommodation fee of $50 per crossing of limited access right-of-way and $250 per mile for the longitudinal occupation of limited access right-of-way.

            https://www.vdot.virginia.gov/media/vdotvirginiagov/doing-business/technical-guidance-and-support/land-use-and-development/land-use-permits/Frequently_Asked_Questions.pdf#:~:text=Accommodation%20fees%20are%20annual%20compensation%20paid%20by%20utility,facilities%2C%20and%20d.%29%20renewable%20energy%20generation%20transmission%20facilities.

          21. how_it_works Avatar
            how_it_works

            On the subject of right of way fees, I was told by the public works director for Manassas Park (city) the following: Because Manassas Park does not charge a right-of-way use fee, Manassas Park does not have to pay for utility relocations required by road projects.

            I had asked how much revenue Manassas Park gets from ROW use fees.

          22. f/k/a_tmtfairfax Avatar
            f/k/a_tmtfairfax

            We had 8 outages in 16 months in McLean before we moved to North Carolina. Both Duke Power and Wake Electric Membership Cooperative regularly trim trees to protect powerlines. According to our Generac data, we had one outage since March 2022. We were out of town for that one.

          23. LarrytheG Avatar
            LarrytheG

            We have one of those also but not big enough to run the HVAC. And yes, it uses propane if Haner is reading.

          24. how_it_works Avatar
            how_it_works

            The first house I lived in when I moved to Virginia with my parents (I was 11 at the time), the power would go out every single time it rained. It would stay off for over an hour.

            This was finally corrected when they built a new subdivision across the street about 6 years later. I have no doubt that whatever changes were needed to connect the new subdivision fixed the problem. Dominion didn't intentionally fix the problem, it was a side-effect of work performed for other reasons.

            This experience and many others has certainly shaped my view of Virginia, which is not a view seen through rose-colored glasses.

          25. Stephen Haner Avatar
            Stephen Haner

            Larry there is this new fangled gizmo called a smart meter….

          26. how_it_works Avatar
            how_it_works

            There's also load management switches (been around for probably at least 40 years now) and smart thermostats, both of which utility companies can use to curtail load.

          27. LarrytheG Avatar
            LarrytheG

            Utilities have different techniques and options but they are also mandated to provide 24/7 power to customers unless there is some good reason why not. They can't be shutting off power as a method to reduce use – that's a 3rd world thing we don't do.

          28. how_it_works Avatar
            how_it_works

            When the Overton window shifts enough, what is considered “3rd world” today will be considered “normal” tomorrow.

          29. LarrytheG Avatar
            LarrytheG

            overton?

          30. LarrytheG Avatar
            LarrytheG

            okay but still don’t really understand it with respect to utilities and governance. 3rd world is
            strongman rule no matter what people think. Democracies are more linked to what voters
            want, in general. so… give me a short sentence or paragraph on your thinking about this so
            I don’t have to be clueless.

          31. LarrytheG Avatar
            LarrytheG

            Right. I have one but there are various kinds and they usually are controlled by the property owner, not the generator unless you give permission.

            That's NOT the same as the utility shutting down power across the board arbitrarily when it sees fit – to "reduce demand".

            So when we say the utility has to reduce power, it helps to also explain that it might be some not be the kind of Draconian thing the law is forcing them to do and we might have blackouts , etc.

            It's a reasonable thing that can be done and is actually expected to be done.

  3. walter smith Avatar
    walter smith

    How is the $20 minimum wage in California working out?
    Why are we letting California lead us into dystopia?
    How does this unscientific virtue-signaling pseudo science affect real people (you know, the ones the Dems falsely claim they love so much)?
    Here is a bigger world answer to that question – https://www.conservativewoman.co.uk/the-tragedy-of-net-zero-for-the-worlds-poor/
    Meanwhile, in Virginia, it raises the prices and reduces dependability. Solar and wind, just like "electric" cars, are currently a pipe dream, and a non-dependable one at that.
    Want to help rural Virginia have economic growth? Have dependable reasonably priced energy. Nuclear is the way to go, and quit shuttering existing carbon based. Absolutely ridiculous political decisions, not based in reality. Get rid of ESG and all of these political "science" mandates by people who don't know much of anything except their love for power (not the energy kind).

  4. Nancy Naive Avatar
    Nancy Naive

    … set the bar low, and fail to achieve.

    1. Marty Chapman Avatar
      Marty Chapman

      family motto? "posuit in bar humilis et non consequi"

  5. f/k/a_tmtfairfax Avatar
    f/k/a_tmtfairfax

    I'll try this one more time. WordPress is quite user unfriendly. It said my post was being moderated. But it simply disappeared.

    The General Assembly looks more and more like xxxxxx on parade. If the goal is to move energy use from fossil-fuel and fossil-fuel-generated energy, one must expect that there will be substantially more electricity used — not less. Of course, equipment will become more efficient over time, which, will lead to a drop in the use of electricity. However, the hoped for movement from gasoline and diesel vehicles to EVs; the replacement of natural gas furnaces, stoves, ovens, dryers, etc. with electric devices; and the growth of the cloud and datacenters (which enables remote work and huge increases in productivity) will cause the use of electricity to skyrocket. The statute is absurd.

    Improvements in the standard of living relies on access to inexpensive and reliable energy. And guess who suffers if this is not available? Those with lesser educations and skills, the elderly and others on fixed incomes and children.

    The only way for a person to eliminate use of energy is to commit suicide. And if one believes that human beings are destroying the world, suicide should be strongly considered. It's the only way to walk one's talk. On the other hand, if one believes that some improvement is better than none, one tries to make good choices and accepts that there are trade-offs in life.

    1. CJBova Avatar

      The platform is not unfriendly, it just doesn’t allow certain words. Eliminate id iots and mor ons from your comments and that will solve a lot of the problems.

      1. f/k/a_tmtfairfax Avatar
        f/k/a_tmtfairfax

        I'll need to find synonyms. Thanks for the direction.

    2. LarrytheG Avatar
      LarrytheG

      California seems to do that trick, i.e. lower per capita consumption and at the same time, the world's 7 biggest economy.

      https://uploads.disquscdn.com/images/99ffe64e22517f017d8e3707bd8504979772d4135a742bec4908d15b57a53a6a.png https://www.saveonenergy.com/resources/electricity-bills-by-state/

      1. f/k/a_tmtfairfax Avatar
        f/k/a_tmtfairfax

        What would the bills be if adjusted for weather? California generally has a Mediterranean climate while Texas, Florida and Virginia have more variation in temperature.

        1. LarrytheG Avatar
          LarrytheG

          the thing to notice is that Californians pay twice as much for electricity and use half as much and it's a huge state from the border with Mexico and Arizona to Oregon , east to Nevada.

          AND California remains the 8th largest economy – in the world. I don't think you can attribute all of that to "mild weather" alone.

          1. how_it_works Avatar
            how_it_works

            "AND California remains the 8th largest economy – in the world. I don't think you can attribute all of that to "mild weather" alone."

            Someone once said that the biggest boost to the Southern economy was air conditioning.

            Air conditioning, however, does nothing about the hot weather just saps the energy out of anyone who has to work outdoors.

          2. LarrytheG Avatar
            LarrytheG

            yep. I bet if the price of electricity in Texas and Florida doubled, the amt used would go down substantially.
            If we are going to export LNG to world markets, then the price of domestic LNG might do the same thing that gasoline prices do with respect to world benchmark prices. Of course, if that happens, some will blame it on wind/solar! 😉

  6. Clarity77 Avatar
    Clarity77

    Has no one noted that in other countries such as Germany their version of the Green New Deal is now being reversed as it was obvious to those of us on the right it was a fool's errand from the get go? Think current EV market in the USA, maybe? How stupid can the left continue to be? Are there really any bounds to their stupidity?

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