Dominion Withdraws Renewable Tariff Effort

In the wake of the State Corporation Commission’s recent approval of a renewable energy tariff for residential customers of Appalachian Power Company, Dominion Energy Virginia has given up the application for its own more expensive proposal for a similar service to its residential and smaller business customers.

 

Late Wednesday the state’s dominant electric utility petitioned the SCC for permission to withdraw its effort, which started back in 2017, stating it wants to revamp the proposal “consistent with the principles” outlined in the APCO case.  But with the General Assembly in town for its regular session, legislation to change the rules and establish new “principles” becomes a possibility.

In existing law, the General Assembly opens a small window for electricity customer choice, allowing customers who want 100 percent renewable power (whatever that is) the option of buying it from some other provider than APCO or Dominion, whichever monopoly provider serves them.  The window slams shut and no competition is allowed if the utilities can get the SCC to approve a utility-provided 100 percent renewable tariff.

The approval of APCO’s proposed renewable energy tariff Monday followed an SCC hearing examiner’s recommendation against it.  Dominion’s application, which has been moving slowly along the same track with many overlapping issues, got a more favorable ruling in December from a different SCC hearing examiner, but only with several recommended changes the utility probably didn’t want to accept.

One suggestion from the Dominion examiner’s ruling, that the plan be based on seeking to match customer demand with green generation on a monthly basis, showed up in the final APCO ruling.  Dominion preferred an hourly standard. APCO also didn’t ask for, and thus did not get, a profit margin on the program – something else that Dominion wanted but it’s hearing examiner recommended against.  (More here.)

The next step in the case was to be comments from the participants on that hearing examiner’s ruling, due at the end of this week, but Dominion asked that the comment process also be suspended.

As is regularly noted, these customers are not really getting what they want – pure “green” power.  Even if their demand matches renewable generation flowing into the utility grid on an hour-by-hour basis, not the month-by-month basis the SCC just recognized, fossil-fuel power is still essential to keeping their lights on.

Both APCO and Dominion’s applications were contested by the Office of the Attorney General, by private firms who seek to compete with the monopoly utilities on providing this service, and by large retail users eager to keep their promises of environmental virtue to customers and investors.

Because of its portfolio of hydroelectric power, APCO proposed to charge customers who volunteer for their program about 0.425 cents per kilowatt hour, adding $4.25 to the monthly bill of that mythical 1000-kWh customer. Dominion’s initial proposed prices were more than twice that high, and even after the hearing examiner cut out the profit margin and made other changes, would still have been about 50 percent higher than APCO’s.

Opponents complain that the price is so high few or none would pay it.  But if the service was approved and offered, by law the competitive window closed anyway.  Lower cost options, or options using other more-favored sources of energy, were shut out.  The same complaints were leveled in debate over a renewable tariff for large industrial customers of Dominion, which was allowed but was deemed to be an experimental tariff, so it didn’t close the door to competition. (More on that here.)

Once again, the SCC has been moving gingerly in part because the legislature clearly authorized the utilities to try to create these special programs, preserving their monopolies, but was unclear on just what criteria the SCC should use when reviewing them.

“This statute allows a customer to purchase “electric energy provided 100 percent from renewable energy” from a competitive service provider (“CSP”), if that customer’s utility does not offer “an approved tariff for electric energy provided 100 percent from renewable energy” (emphasis added)” the Commission wrote in its APCO ruling Monday.  “As the Commission has previously noted, although this statute requires the utility’s tariff to be “approved” by the Commission, it does not include an express standard of review for the Commission’s approval, nor does it include any express limitations on what the Commission may determine is relevant to such review.”

Just what the General Assembly might do to change the rules, and it usually does what the utility wants, remains to be seen.  The company plays 3D chess while its opponents play checkers.  Dominion asked for and didn’t get permission to layer on a profit margin, permission to build the program on an hour-by-hour basis, the price it wanted, and other things the SCC examiner rejected.  Those are small asks compared to other things the Assembly has swallowed in recent years.

 

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12 responses to “Dominion Withdraws Renewable Tariff Effort

  1. over and over, I do not understand how a non-Dominion company can put up a solar farm in Virginia and then sell it – actually to companies in Virginia no matter Dominion’s monopoly.

    I’m pretty sure the Va General Assembly would not have allowed that.

    So how did it happen?

    And perhaps, that’s the only way we’ll ever have residential folks be able to buy it because it’s pretty obvious that Dominion is never going to go for it and will use every tool at their disposal to prevent it.

    Just to reaffirm – I do not want to see Dominion harmed. I want them to continue to be an effective grid operator who will continue to provide reliable power – and make a profit doing it but where we are now is on a road to nowhere… and that’s not good for Dom or us.

  2. Not sure of what you speak, but why would the General Assembly care as long as a solar generation plant was built – that’s the goal. More solar power. Big federal subsidies underlie that market. Non-utility generators (NUGs) are a key part of the overall energy market, and over the years the SCC has approved scores of them using various generation methods. Dominion and APCO should be forced to let NUGs bid on new generation, with the ultimate cost compared to their preferred utility-built approach. TomH wants to turn the generation side of Dominion into a big competitive provider and split off the wires side of the business as the monopoly, and the idea attracts. Hugs for Nugs.

  3. My impression is that Virginia does not allow independent producers of solar to sell direct to folks who would buy it – and in large part because Dominion is opposed to it.

    Wrong?

  4. Right now, because Dominion does not have it’s own renewable tariff, yes – a consumer can go to another provider. I don’t think there are many if any choices is most areas, in part because of the continued uncertainty.

    • This is an area about which I know so little, so it is fascinating and enlightening to read this discussion.
      In my home county, Halifax, in the past year, the Board of Supervisors has approved the siting of several solar farms. To whom would the owners/operators of those farms be selling the electricity to?l

  5. what does Dominion have to do with other providers ability to build solar farms and sell it to individuals?

    My impression is that Dominion is opposed to that, does not support it and seeks to prevent it longer term and expects the General Assembly to help them be the only provider of solar to individuals in Virginia.

    no?

  6. It’s my understanding that consumers can purchase 100% of their electric power from another provider (green provider) so long as the incumbent doesn’t offer a similar option. Steve, is that right?

    If so, having a 100% green power retail tariff in effect shuts out other providers. Is that right?

  7. Re: “I do not understand how a non-Dominion company can put up a solar farm in Virginia and then sell it – actually to companies in Virginia no matter Dominion’s monopoly.” Larry, you are confusing wholesale and retail.

    All generation output, pursuant to federal law and FERC orders and regulations, is dispatched by the system operator, PJM, and commingled with all the other power delivered into the Grid by Dominion, by all those independent solar and wind providers, by Apco, by ODEC, etc. etc. These are wholesale sales into the PJM energy market. Dominion literally buys its power requirements back from PJM’s energy market for its retail customers, and for the coops that have contracts with Dominion; these are wholesale purchases by Dominion. The State of Virginia has no jurisdiction over wholesale purchases and sales of electricity.

    But, those “companies in Virginia” you are referring to are retail customers whose retail purchases are under State jurisdiction. Retail customers cannot buy directly or indirectly from PJM’s wholesale markets without SCC permission, which is usually granted in the form of a tariff filed by the retail electric supplier in that part of the State and approved by the SCC, permitting the transaction. The transaction could be a simple pass-through of the wholesale rate but usually the retail utility tries to tack on a profit margin and other onerous conditions. It’s up to the SCC to review such retail tariffs to determine if they are “just and reasonable.”

    How does Amazon do otherwise? They don’t. Amazon’s warehouse in Herndon VA is a retail customer of Dominion. Amazon also helped finance the construction of a solar power plant selling power into the Grid at wholesale. Dominion bought one of these developers, by the way, but that did not change the fact that this solar plant was selling into the Grid in one location at wholesale and Amazon was buying from the Grid at another location at retail. Connecting those transactions requires a complicated web of contracts: the solar plant sells its energy output to PJM; PJM sells energy to Dominion; Dominion sells energy to Amazon. At the same time, the solar plant sells RECs (“renewable energy credits”)to Dominion (or directly to Amazon; both are possible), allowing Dominion’s customer, Amazon, to tout the fact that it uses “all renewables power” — to be precise, Amazon can demonstrate (through REC transactions) that for every kwh of energy it withdraws from the Grid an equal amount of renewables energy dedicated to suppling Amazon was put in.

    For Amazon or any other retail customer to do this, there has to be a tariff filed by the local retail supplier (in Herndon, that’s Dominion) that allows customers to buy dedicated renewables power.

    Now we come to the complicated part. The Virginia General Assembly in its wisdom years ago said that it was going to lower the “exclusivity” wall around each retail electric supplier’s exclusive retail service territory, requiring the wires companies to deliver electricity from competitors (as “common carriers”) not just from their own generators. That means, a third party supplier could contract directly with Amazon or retail customers like it to sell them retail electricity even though they are within the service territory assigned by Virginia to Dominion. This was called “retail bypass” because it bypassed the service territory rules. Most of the State laws allowing retail bypass were repealed; but for some large commercial customers and for those wanting to buy renewables-generated energy, some retail bypass options were left open. One of these was: if the local utility did not provide a tariff for renewables power it would have to allow others who would to sell directly to its customers. That’s what the Apco and Dominion tariffs were intended to prevent: by offering renewables power (albeit at a price few customers would want to pay) they could trigger the State law provision that said they could then prevent all retail competition from other suppliers of renewables power (in many other eastern States there is open competition among retail suppliers of electricity, natural gas, and other utility services).

    PJM and the REC markets in PJM are there waiting to supply at wholesale all the certified renewables power any retail customer in PJM could want. All that’s missing is a lawful middleman: the wholesale buyer with permission from the State of Virginia to resell that power at retail in Virginia. Such middlemen operate in just about every mid-Atlantic State north of Virginia, but Virginia is still hung up on retaining exclusive service territories for retail suppliers like Dominion. While the SCC recently has taken tentative steps to do what’s best for consumers, the GA could shut this experimentation down completely.

    What Steve is talking about is the review of those retail resale tariffs in Virginia.

  8. Re: “TomH wants to turn the generation side of Dominion into a big competitive provider and split off the wires side of the business as the monopoly, and the idea attracts.” Yes, and there are a lot more people than TomH who share that view, which is the dominant regulatory and business model for electric utilities in the northeastern and midwestern United States. Wholesale market competition between electric generators, dispatched by an independent system operator under federal regulation, actually works! The shame is that the GA effectively undercuts the efforts of Virginia regulators — efforts either to push Dominion in the direction of greater wholesale market participation or to make Dominion’s shareholders (rather than its ratepayers) responsible for the economic inefficiencies and risks to ratepayers of NOT going there.

  9. I have a recollection that, back in the 1990s, a number of states revamped their regulation of power companies. They split the generation operations from the distribution and retail customer serving operations. Some went so far as to require divesture of their generating operations. Customers then could have a choice of power sources.

    As I recall, Virginia did something along these lines but with no divestiture. I recall for short time I received marketing brochures that offered fixed rate power for a set period at a kwh that was somewhat higher than the Dominion rate or green power at a kwh rate substantially higher than Dominion rate. After a while the marketing stopped, likely because there were no lower prices being offered to consumers.

    Then I recall, the Virginia competition law was repealed. While today’s regulation is far from good and quite anti-consumer, why should the public believe that a return to the old competitive model would bring about consumer benefits in the manner in which telephone competition has done for decades? And consumer benefits means more power for less money. As I’ve written many times, I support the use of renewable sources of power but want lower prices than I’m paying today. That’s competition.

    • You recall correctly. But only parts of the retail competition law were repealed. The “unbundling” of distribution, generation and transmission rates was, in any case, mandated only for accounting purposes and the actual separation of these functions into separate subsidiaries was the logical next step but never required by the law.

      The problem with retail competition always was, the local integrated utility had a big “home court” advantage. And Dominion was, and still is relatively, a low cost provider overall, meaning a new competitor had to have a strong advertising campaign and incur perhaps greater losses to get established. And there was the problem of who had to take the ‘default” customer who wouldn’t choose.

      But Dominion had the GA gut the requirement to allow most competition — there are a couple of theoretical openings still left. And Dominion never stopped going to the Commission to rate-base its generation, and the Commission never pushed back to stop that like the commissions in most northern states.

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