Industrial Escape from Green Energy Costs Blocked

by Steve Haner

Virginia’s major energy-intensive industries will not get a requested path to avoid some of the coming cost shock from the 2020 Virginia Clean Economy Act (VCEA). The bill that sought them a lifeline was tied to an anvil and sunk in a House of Delegates subcommittee today.

It didn’t even help when the Virginia Manufacturing Association’s president mentioned that California is seeing the same problem for its manufacturers and is working on similar relief. Virginia companies were admonished that “they don’t want to pay their fair share,” a phrase used by opponents more than once. A Dominion Energy lobbyist said that about her best customers.

Even more ridiculous were two other arguments put forward for killing House Bill 2281 by the delegate who moved to table it, Del. Mark Keam, a Democrat from the heavy industry desert of Fairfax County. (It was tabled, on a 6-4 straight party vote.)

Keam claimed the state could not afford to have the State Corporation Commission hire another specialist to help work out these industrial user issues. The most recent SCC estimate is that building out the redundant wind and solar projects mandated in the VCEA will cost tens of billions of dollars and add hundreds of dollars to annual homeowner bills (meaning tens of thousands to industrial bills.)

But a $145,000 senior level analyst might bust the SCC budget, Keam feared.  Keam is apparently unaware that the SCC is not funded by tax money, but by fees paid by those regulated. The utilities would be paying for the economist who might help their customers reduce their rates.  Perhaps that was the problem.

And Keam seemed concerned about federalism, of all things, as this one possible new SCC staffer would be dabbling in international trade concerns, better left to the federal government. The state doesn’t do international trade, Keam argued, ignoring Virginia’s huge marketing effort through the Virginia Economic Development Partnership, including foreign offices and regular foreign travel.

House Bill 2281 relates to “energy intensive, trade exposed industries,” or EITE, and warns against the coming problem of “carbon leakage.”  In plain English, industries that need a lot of electricity may lose market share – and jobs – to sister facilities or their competitors in lower-cost energy states or overseas. Jobs can leave Virginia, just as they now flee other high energy-cost states.

Manufacturers Association President Brett Vassey said it could be up to 1,200 Virginia firms in industries ranging from textiles and plastics to steel and chemical manufacturing. These tens of thousands of jobs are among the best paying, for both college graduates and skilled trades workers.

The 2020 VCEA is peppered with mandates that various costs be imposed on all classes of electricity user in a uniform manner, ignoring the traditional volume pricing for the largest users.  Even worse for these customers are various “non-bypassable” charges, meaning even if they seek an independent supplier other than Dominion or Appalachian Power Company, they cannot escape that part of the utility bill. That makes it more expensive to leave the utility for an independent. Utilities like that.

The details of the workings of the failed bill are not the key point of this post. For that, read the bill.

The opponents of the VMA’s bill were correct in pointing out that if the bill were to pass, and if the SCC had then approved the relief sought, the electricity prices paid by every other utility customer would have risen.  It would have simply shifted substantial costs to both other businesses and residential customers.

One of those non-bypassable charges the industrial customers cannot escape, and which will be imposed with a flat rate with no industrial discount, involves the new Percentage of Income Payment Plan, or PIPP.  That will “tax” every ratepayer a flat amount per kilowatt hour to provide rate relief to low-income residential customers.  So, there are some customers the majority party legislators are shielding from the coming cost tsunami, and others they are not.

But for a master’s class lesson on hypocrisy, go study House Bill 1907 which deals with “accelerated renewable energy buyers” who are favored utility customers and who would be granted new exemptions from some of these non-bypassable costs.  It moved forward on an 8-2 bipartisan vote.

Defenders of the VCEA dismissed the SCC’s staff estimates of coming costs as “worst case scenarios.” Certainly, they are still estimates, and as the various elements are run through the SCC’s review process the real costs will begin to emerge. Many of us will spend the rest of our lives paying for these long-term projects through higher electric bills. Unless we follow those jobs out of Virginia.

The same arguments were used earlier in the meeting to defeat House Bill 2265, an effort by Del. Nick Freitas, R-Culpeper, to repeal many of the major elements of the VCEA. It died on the same party-line 6-4 vote. Along with cost, Freitas warned of the massive loss of forest and farmland to the oceans of solar farms being developed here now.

William Cleveland of the Southern Environmental Law Center said it is too soon to know what VCEA will cost. Correct. He then went on to state: “It is the SCC’s job to make sure we only build what we need and that we do it at least cost.”

Well, there he is also correct, but it is not that simple. In bill after bill over many years, culminating in the 2020 VCEA, the General Assembly has openly sought to curtail the SCC’s authority. Dominion itself took the lead on getting that done, often with either the assistance or acquiescence of large industrial users and some environmental interests. Few hands are clean on that.

Cleveland and his group are working on various bills that would restore some or even much of that authority, at least over project cost and prudence, mentioned earlier on Bacon’s Rebellion, but they were not up today. Today we were reassured the SCC is there to protect us.

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11 responses to “Industrial Escape from Green Energy Costs Blocked”

  1. djrippert Avatar

    Shame on you Steve. Someday soon all this expensive green new energy production will have the air above Virginia pristine, Whales, seals and mermaids will re-enter the Virginia portion of the Chesapeake Bay and Tidewater will be spared the negative effects of rising sea levels. This is because, as liberals all know, Virginia is in an ecological bubble where the actions of other states and other countries don’t matter. The new state of Greenginia will be like Eden (prior to that whole snake and apple affair).

    More seriously, now that the Dems have control of everything at the federal level … should these efforts be directed by the Feds? What possible sense does it make for each individual state to set their own policies on something as fungible as the air over the US and the world?

    1. Steve Haner Avatar
      Steve Haner

      Maybe we can use the abandoned factories and their parking lots for solar panels and save a few trees and cornfields….And yes, part of me suspects many of these state level issues will moot soon. Vassey’s clients may have nowhere to run except overseas.

  2. Baconator with extra cheese Avatar
    Baconator with extra cheese

    Now couple this with the Environmental Justice push to have no new emissions in any Environment Justice community, regardless of permitting to human health standards, and Virginia won’t have to worry at all about that pesky $15 minimum wage…

  3. So much for Virginia’s No.1 ranking as the “Best Place for Business.”

    1. Steve Haner Avatar
      Steve Haner

      Best Place for Blaming Business.

    2. VDOTyranny Avatar

      and when are the rankings going to be released?

  4. Baconator with extra cheese Avatar
    Baconator with extra cheese

    Putting hurdles in the way of any potential manufacturing coming to Virginia definitely helps People of Color and economically disadvantaged people reach Equity….. Not.

  5. VDOTyranny Avatar

    Look… Corporations are people, and like some people Corporations should pay their fairshare… except when they are not people, and they should shut-up like other people who don’t say the right things… don’t you get it, people?

  6. “….William Cleveland of the Southern Environmental Law Center said it is too soon to know what VCEA will cost. Correct. He then went on to state: “It is the SCC’s job to make sure we only build what we need and that we do it at least cost.””

    That’s silly statement?…we going pell-mell on the most expensive possible form of energy, because the Dems have put the enviro groups in charge of the policy and the state wants to “take the lead”, and already passed a mandate law saying all this is in the public’s interest and off-limits to SCC control

    1. Steve Haner Avatar
      Steve Haner

      That’s his story and he’s sticking to it. To his credit, he has been arguing that in front of the commission. But the black letter law kinda wins out….The problem is some just don’t get that any time you gut the commission it is a Bad Thing. It is a bad thing if the issue is rates and costs, but it also a bad thing if the issue is the generation sources. “Public Interest” is the key NewSpeak Orwellian phrase in this arena.

  7. […] in the two monopoly territories who use other suppliers still must pay. It cannot be bypassed. Resistance has proved futile.  Residential, commercial, industrial and government customers all pay the same charge per kilowatt […]

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