Energy Omnibus: What it Does, How it Costs You

What will Virginians see due to the Virginia Clean Economy Act? “Lots and lots of solar,” said the patron, Del. Richard Sullivan, D-Arlington. Higher bills, added the State Corporation Commission.

By Steve Haner

The General Assembly adopted Governor Ralph Northam’s clean energy package Tuesday, with party-line votes in both the House of Delegates and Virginia Senate. Two House Democrats joined the Republicans in opposing the House version.

House Bill 1526 and Senate Bill 851 appear identical but amendments were being adopted at the last minute. Now that they have crossed over to the other chamber, they likely will become identical.  And expect furious efforts to recruit some Republican votes in favor, as this new vision for Virginia’s energy economy will be disruptive, expensive and politically explosive.

Using the House version as it passed, here is a tour of some (not all) highlights, with line references so you can follow on this PDF version of the engrossed bill. If you want to see it without line numbers, but with highlighting of the new language instead, look here. For that I’ve used the Senate bill.

The bill overrides State Corporation Commission authority to look out for consumers in too many places to count, but you’ll find the clearest and most important example of that on line 1399 of the House bill. 

Notwithstanding the provisions of subsection C or D of § 56-585.1 or any other provision of law, each Phase I or Phase II Utility shall procure zero-carbon electricity generating capacity as set forth in this subdivision and energy storage resources as set forth in subdivision E.

Subsections C and D of that Code provision are crucial statements of the SCC’s authority, in C its authority over rates and in D its ability to accept – or reject – proposed investments or expenses as being reasonable and prudent. The language in subsection D goes back to the original 2007 revision of the regulatory process, and since 2007 Dominion Energy Virginia has sought more than once to eliminate or weaken it. With that “notwithstanding” in this bill, it is simply negated. That alone rated a “nay” vote.

One person who will remember that language well is former senator and now Dominion lobbyist John Watkins, who helped me save that provision (in 2013, I think) while he was chairman of Senate Commerce and Labor. Well, that was then, and this is now. Dominion will be building all this wind and solar generation with the SCC completely handcuffed.

The bill all but mandates construction of 2,600 to 5,200 megawatts of offshore wind. The main elements of that start on line 1195, with references sprinkled elsewhere. The bill continues to require that the project expenses “shall be presumed to be reasonably and prudently incurred” (line 1209) if the utility meets some easy hurdles. The “cost cap” set is based on the levelized cost of energy of a very expensive gas peaking plant. It means we could be paying three or four times as much for offshore wind electrons as New England utility customers.

At the very end of the bill, in line 2026, the SCC is granted authority to review increases in costs for the offshore wind or the other elements of the renewable portfolio standard, but only increases. In setting up the initial programs, the utility has carte blanche.

Line 638 allows the rider charge on utility bills “to mitigate impacts to marine life caused by construction of offshore wind generating facilities.” Only a legal analysis will reveal if that is inside or outside the “cone of protection” from SCC oversight.

On line 762, the existing goal of 5,000 megawatts of wind and solar energy which is deemed “in the public interest” for Dominion, set in 2018, is moved up to 16,100 megawatts. I read it to include wind and solar, but some discussions have said 16,100 megawatts of solar alone.

The Renewable Portfolio Standard language starts on 1264. This applies to both Dominion and Appalachian Power Company, but the electric coops are exempted. (There are several places where the electric coops and their customers are exempted.) The long RPS section includes schedules for the retirement of existing fossil fuel plants (line 1284) and the percentage of renewable replacements (line 1339). You can see what qualifies as a renewable source on line 1316. In general, there is a push away from burning biomass (wood waste), but one paper plant in particular had the political clout to preserve its status as a renewable supplier.

The retirement of existing fossil fuel plants way in advance of their normal lifespans, of course, creates stranded costs. The utility still collects from its customers, through various rate adjustment clauses, the capital costs and profit margin on those investments. The realization that the hybrid coal and biomass plant in Wise County is slated for early retirement drew opposition to the bill from Del. Terry Kilgore, R-Gate City, who spoke on the floor.

How much will those stranded costs continue to add to electric bills for decades? That element of the cost was not included in the SCC’s rough estimate released to a Senate Committee Sunday. It will be in addition to the $280 to $372 in annual residential costs the SCC outlined.

Not all Virginians (or even all Dominion customers) will pay the same. Low-income Virginians will be eligible for the new Percentage of Income Payment Plan, giving them free energy efficiency measures and bill subsidies (it starts on line 1844)  Low-income customers will be exempt from the rate rider placed on all bills to pay for the offshore wind, estimated by the SCC as between $11-13 per month. Low income persons will be given preference in hiring on the offshore wind construction project (line 716).

The phrase used often in this bill is “historically economically disadvantaged communities.” In the first drafts the bill defined that as “(i) a community in which a majority of the population are people of color and (ii) a low-income geographic area.” In later drafts, the “and” became an “or” to expand its application (both racially and financially – the “people of color” won’t have to be low income).

There’s much more to this bill, for additional posts. You’ll note starting on line 1412 that only about a third of the new renewable facilities can be owned by somebody other than the utility (a huge rip off of consumers), and on line 1512 you will find provision for major “deficiency payments” from the utilities if they fail to hit their renewable energy targets.

Somebody must expect that to happen, because line 1523 designates how the monies will be spent by the state once collected. Will the deficiency payments (fines?) hurt utility bottom lines? Oh no, line 1518 makes it clear that ratepayers will cover for any utility failures, with money collected through – you guessed it – another rider charge on their monthly bills.

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69 responses to “Energy Omnibus: What it Does, How it Costs You

  1. Great work Steve. We can expect not so much as an “oops” when the estimates of costs are far too low and deadlines pass. Being a Democrat means never having to apologize when huge schemes at public expense fail dramatically. They will rail just against Dominion. Book it.

    • This bill does exactly what Michael Bills and Clean Virginia said they opposed. Such incredible hypocrites. They were just in the business of electing Democrats, and having done so, went right back to playing the same old corrupt game of gutting the SCC when it suited them. Not having supported any Republicans (of course), they now have their team very exposed on this POS bill….

  2. For all the progressive caterwauling about Republicans being the friends of big business I have seen nothing but our new Democratic majority on their knees to kiss Dominion’s butt this GA session. I guess when Slick Dick Saslaw took over from Tricky Tommy Norment we all should have realized that things would only get worse. Where is the outcry from the prog-libs about this accelerating capitulation to Dominion by the new Democratic majority?

    I also find it fascinating that Janet Howell and Scott Surovell opposed fellow Democrat Chap Petersen’s bill to ban political contributions from regulated utilities like Dominion. I guess greased palms have a hard time holding onto promises of limiting the power of special interests.

  3. It will be very difficult to create a modern energy system in Virginia if this bill becomes law. Dominion got exactly what they wanted – ownership or control of nearly all of the renewables.

    I was very surprised to see that a bill written by environmental organizations cut the SCC out of the process. Dominion did a wonderful job orchestrating this behind the scenes.

    Our energy system in 2050 will be run in much the same way as it was in 1950. Electricity will be generated from cleaner sources, but our politics and our energy system will be determined by a single dominant utility.

    Other states have maintained the important role of utilities while opening up the system to innovation, lower costs, and greater choice. We appear to be willing to give that away in Virginia. The opportunity to reduce carbon emissions while generating energy at a lower cost has been lost.

  4. Thanks for the analysis, Steve. I continue to be concerned about this and to think that this bill is not in our best interest. Prior experience with Saslaw prepared me to expect nothing different than that he’d do only what Dominion approved and made me skeptical from the outset that real progress would be made. Likewise, I suspected that the new Speaker would not challenge Dominion and we’ve found that to be true. Sad that only 2 D’s opposed this in the House.

    Think there’s any hope of derailing it? With it Virginia will still be in horse and buggy days in terms of utility models and regulation and our regulators will be handcuffed for decades more. We, the people, still won’t be able to do what we want for energy but will be paying Dominion investors forever. It’s a bad deal.

  5. Is there any evidence to contradict the conclusion that Virginia has the most naïve and stupid voters in the nation, most especially in suburban parts of the state? The D’s are doing all of the procedural things that they raved against when done by the R’s. And to the extent the R’s had overreached to the right, the D’s are overreaching as far to the left. The only things that will save the Old Dominion are the presence of Uncle Sam in NoVA and Hampton Roads and the continued downsizing of the MSM, who purposely confuse a hopelessly confused electorate. The less news reported; the less the level of misunderstanding and confusion.

    How does having overpriced green energy as opposed to overpriced fossil fuel energy help economic growth and protect/advance the quality of life especially for those in the working class? This is especially true since the vast bulk of any benefits from “saving the planet” will inure to those owning property near bodies of water, a group that probably has much higher incomes than those paying the price. Northam and his band of radicals are launching the biggest transfer of wealth to the rich in the history of Virginia.

    But my son, who is ethnically Korean, can pay a lower power bill because he is a “person of color.”

  6. Why… I’ve not seen this much angst since…. the GOP was in control!


    So much for the Dems being the heroes of utility reform, eh?

    Looks like BOTH the GOP and the Dems don’t think much of the SCC role any more…….

  7. If this is what is in the omnibus, then I want off the bus…

  8. I thought whatever Dominion generated – went through PJM where it was sold at auction.

    Is it not that way for wind/solar?

    3rd party companies can also build solar and sell the generation through PJM presumably at less profit than Dominion…

    All this stuff about Dominion and profits from solar but what allows Dominion to build solar and use that solar rather than buy solar from PJM? If PJM offer solar for less than what it costs Dominion to produce it – can Dominion choose to use it’s own higher-priced solar?

    I strongly suspect that Dominion has got a sweet deal – but I’m not sure I really understand it well enough to draw an informed opinion.

    and suspect others do not also.. but maybe it’s purely my own ignorance.

    • Larry,

      I thought I answered this the last time you asked.

      Solar and wind are sold through PJM but at a different auction because they are not dispatchable. Their output is accepted whenever it is available because it has zero marginal cost (no fuel cost). I think every generating source (including renewables) gets paid the current marginal price that is based on the price bid by the last source of generation that was dispatched.

      That price paid will be lower at night when only baseload units operate and highest during peak demand when the expensive peaking units are dispatched.

      Third-party developers get paid the same price as Dominion if they are operating at the same. The big difference is Dominion gets paid in full for their solar projects plus a significant guaranteed profit that is on top of what they earn in the energy market.

      That really tips the scale in favor of the utility. That is why nearly all other states that have a modern energy policy have kept renewables out of the ratebase. It levels the playing field and keeps costs down.

    • As we discussed the other day, Larry, you have to keep the investment cost and the operating cost separate in talking about these solar units because the owner recovers them differently.

      Dominion Energy has the sweetest deal possible on investment costs: the GA has directed the SCC to guarantee that Dominion will recover a generous rate of return from retail ratepayers on everything DE invests in those new solar units.

      In addition, DE sells its solar power in the PJM wholesale energy market, and the capacity value of these units in the wholesale capacity market Generally it will make a small operating profit doing so, since solar’s operating cost is near zero (although solar’s unreliability cuts its capacity value, and the presence of lots of solar generation, approaching or even exceeding the daytime load, will drive the energy market price way down, cutting the operating profit overall to less than the cost to pay for that investment). This operating profit ought to go to ratepayers, since they are paying for the investment — but since there won’t be much operating profit, the ratepayers will be left holding the bag (because operating profit is less than the carrying cost on the investment). But DE doesn’t care, because its return on investment is “guaranteed.”

      So yes, PJM is in the loop. But if the only money flowing to DE were the operating revenues from those PJM sales, DE would never build those units! DE won’t make enough operating profit to pay the costs of debt and equity sunk in its investment in these units. It’s the ratepayers who end up the suckers here — they pay a “guaranteed return” to DE stockholders for solar units that, over their lifetime, are in excess of what the market can absorb and will not pay for themselves. in other words, no independent generator company with its own investors’ money at risk would ever build them.

      Why would an independent ever try to compete in a market where one of the competitors will deliberately build production capacity far in excess of what makes economic sense?

      Guess what? You want third party solar companies to invest and build in Virginia? This is how you ensure there won’t be any! As for the poor retail ratepayers, one of these days the SCC will be asked to investigate what happened to cause all this over-building of uneconomic solar generation in the 2020s. But you already knows DE’s answer: the GA ordered DE to do it.

  9. Interestingly, if this bill goes through it probably flips my business case for installing solar panels at home from “ROI is far too long” to “call an installer tomorrow”. So maybe the greens really are getting what they want?

    • Yes, increased demand for home solar in Virginia goes up. Because the Dems now have full control and can force the electrical provider to perform stupid green tricks through higher prices. Now, how do we trade on that? Virginia is too small a bump to move the panel manufacturers’ stock much. But … if this is happening elsewhere…. Or will happen elsewhere….

      You may have just given me an idea to monetize a good state election prediction model for 2020. How many states will see a shift to a Democratic trifecta this Fall? What are the populations of those states? Assuming that gouging ratepayers through higher electrical costs in order to pursue possible environmental benefits will be an immediate action (in early 2021) of any state that hits the Dem trifecta we might have enough to trade here. And, as I recall, 46 or 48 states will hold elections this Fall. That could be big enough to trade on.

  10. Wonderbread, it actually improves the case for home solar. The 2018 energy bill and this Clean Economy Act will greatly increase the cost of energy from Dominion. The price of solar panels will continue to go down. But the investment tax credit is phasing out, so don’t wait too long.

    Customer sited solar, as long at it produces energy below your current rates, makes sense now. It will be better each year that the cost of energy from the utility goes up. Which it is going to do for a long time.

    After 6-10 years, or whatever your solar installer tells you it takes to pay it off, your home solar will give you free energy for another 20+ years.

    This new bill gives everyone a reason to have your own solar except Dominion has limited the number of people who can have net metering which makes solar so attractive – using the grid as a battery.

    • Tom, you are right, provided the distributed solar is net-metered against averaged retail rates. As for utility-scale construction, I predict this amount of mandated renewables is going to harm the wholesale market for independent solar builders catastrophically – see reply to Larry above. California here we come.

  11. Right now, today, you can buy residential battery storage that can power most homes through the night. It’s being sold as part of a system that includes solar panels and a stand-by backup generator.

    I’m not sure if they have a positive ROI in less than 20 years or so.

    But the point is, they do exist and the price is coming down.

    As the price comes down, some folks with the financial ability to pay up-front for a long ROI pay back, – will do so and they’ll stay connected to the grid in case they end up needing electricity and it is cheaper from the grid.

    This and other options for reducing grid demand will happen especially if electricity becomes more expensive.

    In fact, in States like California and New York where electricity is quite a bit more expensive – monthly use per houshold is far less than in states where electricity is less expensive. It’s the same thing we see with cars when gasoline gets expensive.

    Basically people change their consumption behaviors when it gets more expensive. They don’t cut what they do with electricity – they cut their use of it. For instance, they don’t use stop heating or air conditioning their home. They insulate and replace their HVAC with more efficient HVACs.

    look at this graphic to see which states have the highest BILLS:

    now look at electricity cost per state:

    • My, my, my – compare that second map to the list of RGGI states. VA is climbing to join them in the top 10!

      • yes – and that leads to LESS USE , and smaller bills than Virginia – look at the TOP map!

        whenever electricity or gasoline costs more – people use LESS !

        • Yes and no. There are also states where gas and heating oil are far more common for heating (and gas for cooking) than the heat pumps now prevalent in VA. That’s a bit more complicated. But in general, yes, the demand is elastic.

          • whatever the fuel – if it is or becomes expensive, people do what they can to use less of it.

            the most expensive states for electricity have the lowest per capita/per household consumption because people take steps to use technology and other factors to reduce use.

        • You’ve got it! Just raise taxes to $10 per kWh and we’ll stop producing measurable carbon or methane right away. You just won the Hugo Chavez Award for Applied Economics.

          1) Get the government more involved
          2) Raise prices
          3) Reduce use
          4) Save the planet

          Caracas has dramatically reduced its carbon footprint since the elevation of a socialist leader. Why can’t we do the same? Oh wait, we already have a Democratic trifecta in Virginia. Are we adopting the Caracas Green Plan? LarryTheG? AOC? Anybody?

          • Total BS. California has some of the highest electricity costs in the nation, and also among the lowest per-capita use – and bills and is the worlds 7th largest economy.

            That’s Chavez “socialism”?

            nope… it’s BS!

      • Bingo!

        And that’s the goal all along.

  12. In the past I fought Democrats wanting to force coal-fired power plants down my throat. Now they want to force offshore wind down my throat. Not being a fan of coal-fired, I am at least in somewhat better position. Growth of natural gas has exceeded my expectations, I always knew nobody ever liked natural gas, too cheap to build plants (not enough payola) and I anticipated the resistance was going to be more on safety grounds, though I feel the eco-benefit vs coal is very important.

  13. That is why RGGI has been so effective there. Their utilities don’t have generation in the ratebase so they are not hurt when they sell less and don’t build more. The RGGI funds go to energy efficiency and customer-sited solar so that although the rates remain high their bills are lower. They have saved over $2.3 billion in energy costs in the RGGI states.

    Even RGGI says it is not their caps that have made the difference, even though they have steadily declined, it was incentivizing customer solar and efficiency that saved the money and reduced emissions.

    We could do the same here without the RGGI auction. But Dominion uses the profits from putting generation in the ratebase to pay higher dividends and would not favor that option.

  14. Larry, please see my reply above to your PJM question.

    • yes… I did ask twice. And have a quibble about zero cost. There are O&M costs for solar and wind…for sure… and I presume that the 3rd party cannot sell solar for less than their own capital + O&M costs.

      This is so confusing.

      Can Dominion buy solar from PJM and then sell it for what they paid for it plus a profit?

      Wouldn’t any company that provides grid power – also do that?

      If Dominion bought non-solar fossil-fuel power from PJM, wouldn’t they also buy it wholesale and sell for a profit?

      Can Dominion build a solar farm and feed it directly into their grid or do they have to give it to PJM and buy it back then add profit?

      Right now – it appears that what folks want for solar in Dominion’s territory is not only not profitable to Dominion but a loss. How should solar be done so that it is fair to Dominion AND consumers?

  15. Larry,
    Zero cost for solar – it has no significant O&M. But you are right, definitely O&M for offshore wind, but I’m not sure if they bid it that way at auction. It would be used whenever it was available, because it is still cheaper than anything else available.

    The lowest cost bid for conventional units is usually includes at least their fuel cost, but can also include O&M and other things too. They more a generator puts in its bid, the more expensive it is and the less often it is dispatched.

    In states like Virginia, the ratepayer pays in full for the cost of the project, plus interest charges and a significant profit (usually around a 10% return). This is guaranteed for the financial life of the project, even if it doesn’t operate anymore. Dominion bids their units at marginal costs so they run as often as they can. Basically, they make money running power plants that other people (ratepayers) have paid for. If they generate more than they buy, they share the profits with the ratepayers.

    A Load Serving Entity (a utility) does not buy a particular type of generation from PJM. They purchase, at wholesale, whatever energy they need at that moment from PJM. This is a mixture of all of the generators that are operating at that time in PJM. The price for any amount of energy purchased at that time is set by bid price of the last unit dispatched by PJM.

    That is why the wholesale price varies throughout the day.

    I don’t know the details well enough to know if a utility gets any special deal for using energy from their own generators. I suspect it is covered in the locational marginal pricing scheme that factors in the cost of using the wires and how far the source is away from the demand. Using electricity closer to where it is produced would make it a tiny bit cheaper.

    Every utility buys its energy at wholesale prices from PJM and sells it at their retail prices for different customer classes, as far as I know. Unless they have a supply contract with a specific generator, like the co-ops do with ODEC.

    Neither Dominion, nor any other utility, buys “solar” from PJM. The energy from PJM is always a blend of whatever is operating throughout the PJM region and priced based on the last unit in.

    Dominion would make money buying energy from PJM when solar is a significant part of the mix. Because solar lowers the wholesale price of the electricity purchased at wholesale from PJM.

    If Dominion had a power purchase agreement with an independent solar provider, let’s say at 5 cents per kWh, Dominion would pay the provider that price per kWh, PJM would administer the wires charge and bill Dominion. Dominion would recover all of those costs from the ratepayer (this would be considered like a fuel charge) and sell the energy at its retail rates for a profit. Dominion would not suffer a loss buying third-party solar. They just wouldn’t make as much of a profit as they would if they owned it.

    This would lower the cost of energy for Dominion because it would be less than the average wholesale cost that Dominion pays PJM. That would be good for ratepayers. Eventually, if Dominion bought more third-party solar, the SCC would reduce (or slow the increase) in Dominion’s rates.

    This is not what Dominion wants. If it owned that same solar plant, which is what the Clean Economy Act proposes. Dominion would be paid 6 – 12 cents/kWh (or whatever the current PJM price is) for energy they generated for next to nothing (because the ratepayers cover the capital costs). Dominion would resell that energy for the retail price.

    They also would get the ratepayers to pay for all of the capital and financing costs of that solar facility, plus a handsome profit, no matter how much it generated.

    Can you see the difference that owning the solar makes to Dominion? And how much more expensive that makes it for the ratepayer?

    The third-party developer is happy with 5 cents/kWh (or whatever the price might be). They have covered their costs and make a reasonable profit. We don’t need a utility to build and operate solar facilities. The independents do it best and at the lowest cost.

    Solar developers like this bill because it gives them a guaranteed market. But when Dominion buys the solar facilities from them, it greatly raises the cost to ratepayers.

    • “Dominion would not suffer a loss buying third-party solar. They just wouldn’t make as much of a profit as they would if they owned it.”. Precisely.

      There is no wires charge for any PPA sales to Dominion for resale at wholesale; PJM doesn’t work like that. Only LSEs pay transmission charges to PJM. Dominion is, of course, an LSE as it serves retail load; its retail customers pay the PJM transmission charge passed through by DE. But if an independent sells long term PPA power to DE at 5¢/mwh, then DE (wearing its generator hat) has to sell that power at 5¢ in the wholesale energy market or lose money on the deal. DE cannot sell power from a generator located within the PJM region directly and exclusively to its own retail customers. It can, however, enter into a financial deal whereby it guarantees the independent generator 5¢ for every mwh generated even if the PJM market price is less (but the independent must pay any amount it makes in the market greater than 5¢ to DE). That’s simply a hedging contract, a financial side deal, and does not go through PJM.

      • I think I understood SOME of that. With regard to side contracts with 3rd party generators. How does DE (Dominion Energy?) know who supplied the power to PJM when they buy some?

        Does any LSE know who is the supplier of power they’d buy from PJM?

        • No. No LSE knows; a blend of grid power is delivered directly to the LSE’s distribution substations by PJM’s network transmission service.

          Basically the way “network transmission service” works is, PJM is divided into transmission zones, with separate zones for each transmission owner. Each zone has a total transmission cost of service and this is divided by the total deliveries to retail customers (end users) in the zone to come up with a transmission rate per mwh (this is regulated by the FERC). Each LSE operating in that zone pays PJM that transmission rate for all power delivered to its customers in that zone (without regard for which delivery point the customer used). For example, Rappahannock Electric Coop has several delivery points in the Dominion transmission zone; every REC retail customer pays the same transmission charge per mwh as every Dominion retail customer. Cumulatively, if REC coop customers receive 1/10 of the retail deliveries within the Dominion transmission zone, then REC ends up paying a transmission charge to PJM equal to 1/10 of Dominion’s transmission cost of service; PJM in turn pays Dominion-as-transmission-owner for the use of DE’s transmission throughout the zone.

          The energy charge to the LSE for that grid power is the marginal energy cost (which varies from minute to minute) in the PJM energy market at the time of delivery. Whatever other charges are tacked on by the LSE are up to the State commission involved.

          As you can see from this description, the retail customer has no idea whether the power delivered by PJM came from renewable-fuel generators or what the individual unit’s output cost. There is an elaborate set of financial transactions on the side, not through PJM, that trace renewables power and allow a retail customer to claim “green” credit for consuming “only” renewables power. A couple of examples: There is an eastern multi-regional market in renewable energy credit certificates (RECs) in which an LSE can buy, for resale to its consumers, certification that “X” mwh of energy came from renewables generation; and there are retail customers (like Amazon) who cut deals directly with generation owners to claim end-user credit for creating “X” mwh of renewables energy (of course such credit cannot be claimed twice, so such renewables energy cannot also be the basis for RECs).

          Sometimes the Amazon-type generation deals are built into the financing to build a generator in the first place, particularly if it’s an independent generator owner doing the building. RGGI, by the way, is an interstate trading scheme among generator owners for emissions credits and debits that also will operate entirely outside the PJM energy market.

          • @Acbar – it’s complicated but good… not sure I’ll remember every bit but 2 steps forward, 1 step back… etc..

            So REC is NOT a LSE and they buy their power from a LSE like Old Doninion and not PJM?

            I thought that the NoVa Co-op bought all of it’s power directly from PJM, no?

    • “I don’t know the details well enough to know if a utility gets any special deal for using energy from their own generators.”. No, PJM treats the LSE and the generator functions entirely separately, even though they have the same corporate owner. 100% of DE’s deliveries to its retail customers comes from the PJM energy market. How the retail regulator (here the SCC) mixes the separate functions back together (by holding retail ratepayers directly responsible for generator investment “rate base” costs) is something PJM and FERC can’t prevent.

      • Dominion is guaranteed a profit on any/all electricity they sell. I assume that whatever they pay, they mark it up to insure their profit.

        But what I’m hearing is that whatever Dom generates – it goes to PJM first and then they essentially buy it back and mark it up?

        But when they buy power from PJM – there is no distinguishing where the electrons came from – from what Dom sent to PJM or other generators. Right?

        Dom is not not generating power and using it directly instead of delivering it to PJM? So.. none of the power from the two Nukes is used directly by Dom to serve demand without it first going to PJM?

        • “what I’m hearing is that whatever Dom generates – it goes to PJM first and then they essentially buy it back and mark it up?” Yes. Yes! And, yes!! — as to the energy output when the unit runs, and the energy charges that result.

          Now: totally different subject: whatever Dom paid to build that generator (its investment in the unit) came from Dom, and PJM has nothing to do with it.

          What a typical independent generating company does is look at the energy market and figure what kind of unit will sell energy to the grid at enough operating profit (revenues less operating expenses) that the net will pay all the financing costs also, plus enough profit left over to make the investors in the company happy. What Dom does is add the cost of all that financing to its retail rate base and charge retail customers for it whether or not the operating profit exceeds financing costs plus a return to shareholders; that in effect shifts all the risk of building an unneeded/uneconomic generator to the ratepayers, but that is between Dom and the SCC. Again, PJM has nothing to do with it.

          “none of the power from the two Nukes is used directly by Dom to serve demand without it first going to PJM?” That is correct. The wholesale energy market price is what the energy is worth at the time it is produced, and that is all that Dom receives for it. The wholesale energy market does not care where it came from. This prevents Dom from overcharging its captive customers for the energy. Of course that has not prevented Dom from going to the SCC to hike retail rates to cover Dom’s losses on its nuclear units (Dom’s generator runs at a loss whenever the operating profit from its unit is smaller than the financing/rate-of-return or “carrying” cost for that unit).

          Keep your eye on how the investment cost is recovered; where the bottom-line profit to shareholders comes from.

  16. re: solar O&M. Down my way, S-Power said that solar panels have to be washed regularly to keep them at optimum output. They also have to replace the panels which do wear out. They have other costs for maintaining the solar farm site itself.

    re: ” Dominion bids their units at marginal costs so they run as often as they can.”

    re: ” Can you see the difference that owning the solar makes to Dominion? And how much more expensive that makes it for the ratepayer?”

    well, yes.. you did a good job of explaining.

    The ratepayers pay for the capital investment and O&M – which one might think is a distinct advantage over 3rd party competitors who have to incorporate those costs in their marginal costs, no?

  17. I’m perplexed by the fact that apparently both parties no longer value the former role of the SCC – and for apparently, different reasons.

    Something has changed, especially for the Dems.

    I could understand (not always agree with) the GOPs traditional view that regulation hurts business in general but in Dominions case, they went along with the “deregulation did not work” ruse, then let them keep excess profits as well as the tax rebate AND allowed them to make a profit on the coal ash cleanup.

    So I thought the Dems would address at least some of this but instead they look like they sold their souls to get “green” even if it screwed ratepayers.

    $23 a month IS going to be noticed and you can bet the GOP is going to bring it up as an election issue and to further impugn renewables.

    And what about the SCC? it’s not only electricity – there are myriad other regulatory issues that they handle.

    • Yes. I think a lot of Dems want immediate credit for “fixing” things like percent renewables and carbon emissions trading — they don’t want to wait for the slow, patient, professional-staff process at the SCC to explore the options, recommend answers, listen to another round of criticism and make a final decision. They are so confident they know the answers to these complex issues they will just rush in and impose solutions immediately. After years of Republican inaction, and with an SCC weakened by years of GA interference with its independence, who will slow this pent-up over-reaction?

      These Dems are playing to their political bases, not the public at large. Climate change is real but many of them are naive about the costs involved. My fear is that going too far, too fast, will provoke a huge ratepayer reaction to the sudden retail price increase to pay for it all, which will discredit all the good things that might be achieved by a patient, incremental, careful, approach.

      They will learn soon enough that the SCC process not only sifts the data and comes up with good recommendations, but also gives everyone time to think; this helps insulate the GA from the opportunistic politics involved in such wild swings of public opinion.

  18. What about those people who own houses that don’t have good exposure to the southern sun? What about people who move a lot, such as military and employees of some large companies, and won’t have enough time for the payback period? What about older people who want to stay in their homes but don’t expect to be there for a 20-year payback period? I guess they are accidental casualties of the virtue signalers. To paraphrase a former queen of France, let them just pay more.

    My wife and I own a rental property in Prince William County. What is our incentive to spend the money to install solar? Do we need to raise rents above market and risk losing good tenants?

    And how about the huge transfer of wealth that will occur as these higher expenses protect people and companies owning property near large bodies of water? Once again, the “Party of the Little People” stands squarely behind the wealthy. And why did those former Obama voters cast their votes for Trump?

    • Excellent points.

      One translation:

      Wealth, health, happiness, and success of individuals, families, and groups rise with the options, flexibility, varieties, adaptability, freedoms, responsibilities, attachments, challenges, demands, opportunities, and loves life offers.

      Such wealth, health, happiness, and success rise exponentially as these “qualities” of a good life ebb and flow in endless variations and combinations over one’s lifetime.

      On the other hand, as to modern governments: leviathan state centrist mandates kills off these wondrous life giving cocktails of qualities, thus the leviathan state always ruins lives and societies over time, suffocating them into abject failure.

    • TMT, you are quite right; retrofitting solar to a house is hit-or-miss, and very expensive up front, and unsuitable to rental properties.

      If building codes and investment tax credits encouraged new homes and apartments to be constructed with solar built-in; if the popular awareness of solar cost savings were deep enough that home buyers would pay more for solar power capability as a home feature (like they do today for an emergency generator built-in); if solar equipment manufacturers could enter into PPAs with homeowners that allowed them to share the savings — then, maybe, homeowner “rooftop” solar generation would take off.

      We are a long way from devising the standard construction and contracting mechanisms to allow renters to share in rooftop solar, let alone the expectation of sharing. Perhaps this will come — the example from Europe is that distributed-solar for renters will come, fairly quickly if the savings are substantial. But in this country there’s a long way to go. So, who is going to lead the way? Those with the wealth to experiment, I suppose.

      • Appreciate the comments. But the problem is the radical enviros in the GA, along with those who are still sensible but under extreme pressure to signal their virtue, are raising the price of energy to the point where it will become a big burden on lots of people. Many of these people are not in a position to invest in solar. What if the only exposed part of one’s house faces north? What about Joe and Mary who are in their mid-80s but trying to stay in their home? How about Jose and Maria who just bought their first home?

        The screaming matches will come at the legislators’ town halls. And, in the absence of a robust media that goes after everything stupid, even when done by Democrats, nothing will happen until the heating and cooling bills come in the mail. But it will happen.

        Sooner or later, even the editorial staff at the Post should begin to get this.

  19. I think a similar argument could be made with respect to low income folks who cannot afford to install more efficient HVAC or insulation, etc.

  20. food for thought when we talk about the “cost” of electricity:

  21. TMT,

    Community solar provides easy access to solar energy for renters and homeowners whose home is not suited for solar or where they don’t want to invest long-term in the panels. A moderate size installation is usually installed on a large building, or in a neighborhood, or some other appropriate location. I think different groups, assess the costs in different ways and bill the energy in ways that are determined by the local utility.

    This concept is big in DC (run by a non-profit) and many other states. It has been resisted by utilities and co-ops in Virginia. Dominion wants to own and control all of the solar for the added profits. But customers miss out on the potential lower cost and the clean energy.

    • But you don’t explain why my wife and I should spend the money to join a coop for our rental house in Prince William County. I don’t see it as making us more money but probably causing us to raise the rent, which may cost us a good tenant. Meanwhile, the tenant has to pay higher utility bills or move out to find a more expensive place to live with access to solar. What is the payback period for a tenant in a single family home?

      I don’t even see it making economic sense to install solar panels on our house in McLean. We face south but not with a roof sloping in that direction. Our roof faces east and west and has considerable shade to the west. Are we supposed to cut down trees to get more exposure to the sun? And what if we decide to downsize in the next few years? What is the payback period if we move in five years?

      The bill sends price signals to move to renewable energy but fails to consider the physical, engineering and economics of moving to renewable energy. Many people simply cannot move to renewable energy, most especially rooftop or similar solar. A price signal works only when the consumer has the ready ability to take action in response to the higher (or lower) price. That does not exist in this instance.

      So most people will see substantially higher energy bills, less disposable income and a decline in their quality of life. Environmentalists are dangerous people. Virtue signalers even worse.

  22. Here’s something I’ve always wondered about. How many highway interchanges are there in Northern Virginia? Probably a couple hundred or more, right?

    Take a look at this unused land that could be solar panels for those who do not have a place for them on their homes:

    or sound walls

    • But who pays for the capital costs? What’s the payback period?

      • Imagine, wherever we went, we had to stare at and be surrounded by hot metal blades and metal and glass machines, all of them spinning, and humming and whining at us, who were now unable to escape this mind twisting, spirit eating brutally mindless landscape, a dystopian nightmare driving us mad.

        That nightmare, my friends, is the Green New Deal, Virginia style.

        • Reed … YIKES! That piece you quoted in the other discussion is soooo off base about eating up the land. NREL did a nationwide survey several years ago … maybe 5 … using GIS to see what was possible in each state. For VA, they calculated that roof-top solar, given that there would be cloudy days, could contribute 25% of the electricity the state required. Add another 25% for urban utility scale PV, and polish it all off with Offshore wind whose technical potential is 3x VA use, with maybe a bit of onshore wind at potential less than 5% …
          Rural solar can actually support farmers as onshore wind is doing in Iowa.

          Your rural solar could provide 10x VA’s total electricity, but closing fossil plants will not scar up VA open country, because we also have lots of other resources. That is, of course, if the Legislature opens up the market for urban and rooftop PV and rewrites those monopoly rules.

  23. I told supporters of the Clean Energy Act how disheartening it was to see the willingness of environmental groups to cut the SCC out of the picture in the same way that Dominion has.

    The rush to get clean energy by giving Dominion ownership over most and control over nearly all of it will cost ratepayers dearly.

    It also undermines the effort to adopt a modern energy system in Virginia. Other states create a regulatory environment that continues to reward utilities fairly, but puts the customers in charge of doing what is in their interest rather than leaving it up to the utility to decide.

    Excluding renewables from the ratebase would have put Virginia on that path. I am concerned that a modern energy system that revitalizes the economy through innovation and long-term jobs, while lowering energy costs has been put much farther out of reach in Virginia.

  24. yup – and it gives currency to the the GOP and skeptics claims that the
    Green folks are loons… that have no idea of what they are doing.

    Just when I think the GOP can’t get any dumber , the Dems outdo them!

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