Utility-Sponsored Energy Efficiency Benefits the Commonwealth

by Chelsea Harnish

The stage is set for a total transformation of the energy-efficiency industry in Virginia. With the passage of the Grid Transformation and Security Act of 2018, the electric utilities in Virginia have committed to proposing over $1 billion for energy-efficiency programs over the next ten years. However, none of these commitments are actually guaranteed.

The Virginia Energy Efficiency Council (VAEEC), a member-based organization headquartered in Richmond, is dedicated to ensuring that these commitments come to fruition. Energy efficiency is one of the easiest, most direct ways to save consumers money on their monthly bills while spurring economic development, cutting emissions, and reducing dependence on fossil fuels. Utility-sponsored programs are one of our top priorities, as they are among the largest opportunities to expand energy efficiency in the state.

Recognizing potential obstacles to fulfillment of the goals set by the Grid Transformation and Security Act, we crafted several pieces of legislation for the 2019 General Assembly session, which were all successfully signed into law last month.

First, HB 2292 will require the SCC to provide an analysis of how a budget reduction would affect the cost-effectiveness of an energy efficiency program or set of programs.

Second, HB 2293 will strengthen the stakeholder process, which we see as the biggest opportunity to ensure the utility commitments become reality. This law will require an independent monitor to report on the stakeholder process, addressing whether objectives are met and whether helpful recommendations to programs are being proposed and implemented. Before this law was passed, it was not required for utilities to note such information regarding the stakeholder process itself in their annual reports.

Together, these two laws will help ensure that the goals of last year’s legislation are fulfilled and that programs are not cut without good reason.

Utility-sponsored programs can benefit Virginians in a variety of ways throughout the Commonwealth. Ratepayers will win with lower monthly energy costs, businesses will win with lower operating costs and the economy will win with more jobs and economic activity, creating jobs that cannot be exported out of state. Research from E4TheFuture, consistent with VAEEC’s own 2017 report, found that Virginia has 76,621 jobs in the energy efficiency industry, comprising 24% of all construction jobs and 42% of all energy sector jobs.

In short, the VAEEC knows that investments in energy efficiency mean new jobs in every corner of Virginia, better rates for consumers and lower operating costs for businesses. The passage of the Grid Transformation and Security Act underscores the widespread, bipartisan agreement that energy efficiency is a smart investment for the Commonwealth and for consumers. We’ve built a lot of momentum, and we’re looking forward to witnessing the positive effects of energy efficiency in the near future.

Chelsea Harnish is executive director of the Virginia Energy Efficiency Council.

Update: The State Corporation Commission announced this morning that it had approved a package of 11 new energy-efficiency and demand-response programs requested by Dominion Energy Virginia  as well as an updated rate adjustment clause to cover the costs of Appalachian Power’s current programs. The Dominion package will cost an estimated $225.8 million. The ApCo adjustment will cost $5.68 million.

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7 responses to “Utility-Sponsored Energy Efficiency Benefits the Commonwealth

  1. I agree with her, this is an “industry” with the same profit motive as the utility it partners with, and the profits feed a lobbying effort. The two bills mentioned, sponsored by Delegate Rip Sullivan of Arlington, drew no opposition and are reasonable tweaks to the process, which indeed the General Assembly has already imposed on us at the behest of Dominion. I doubt any but True Believers will ever get on that stakeholder group, let alone an advocate for average ratepayers. Let’s stand by to see what the SCC does with the current set of proposals. Need to go check….two weeks of vacation leaves such a pile of work!

  2. Here is the text of the SCC announcement approving $225.8 million in Dominion Energy energy-efficiency and demand-response investments and a $5.68 million ApCo rate adjustment clause:

    The State Corporation Commission (SCC) has approved a package of 11 new energy efficiency and demand response programs requested by Dominion Energy Virginia to run for a five-year period beginning July 1, 2019. In another order, the Commission approved an updated rate adjustment clause to cover the costs of Appalachian Power’s current energy efficiency and demand response programs for the rate year July 1, 2019, through June 30, 2020.

    The Dominion package of programs includes six residential and five non-residential programs with an estimated cost of $225.8 million.  In the Appalachian Power case, the SCC approved a revenue requirement of $5.68 million for the company’s energy efficiency and demand response portfolio for the 2019 rate year. The company was not requesting the SCC’s approval of any new programs in this case.

    The Commission directed both companies to file in every future energy efficiency and demand side management (DSM) rate adjustment clause proceeding evidence of the actual energy savings achieved as a result of each specific program for which cost recovery is sought, along with revised cost-benefit tests that incorporate actual Virginia energy savings and cost data.

    The SCC stated that the information will be relevant to at least two foreseeable issues. The first issue is identifying the true cost-effectiveness of DSM programs, which will enable the SCC to determine which programs should be expanded in scope and budget to maximize the reductions in energy usage, which ones are least effective and should have their budgets shifted to more effective programs; and which ones are not cost-effective and should be discontinued. The second issue is evaluating any claim by Dominion and Appalachian to cost recovery for lost revenues.

  3. I agree about the benefits of energy efficiency and the long-term jobs that it produces. I also agree that it has the potential to lower energy costs, but not if the utility does it.

    The current rate freeze exists at least through 2021 (with a $50 million cap on rebates) and potentially until 2028 with clever utility expenditures. Any savings from utility funded efficiency programs are unlikely to land in the pockets of the families and businesses who are the customers.

    Ratepayers must repay Dominion $3-$4 billion for the $1 billion invested in efficiency programs. Dominion’s past behavior has been to propose programs that are just cost-effective enough to gain approval but not effective enough to make a major dent in energy usage.

    They way they are currently paid, they would be foolish to be too effective at saving energy. The current GA program is designed to increase revenues and profits for the utility rather than be a significant program for energy efficiency. There are better and much less costly ways for Virginia to use energy more efficiently in a way that lowers energy costs.

  4. I’m not fully understanding this. Is the RAC essentially a mechanism to increase rates for all ratepayers? How does this benefit folks? Does it result in lower electricity costs or lower generation costs or what?

    If I’am John Q electricity user – how does this help me?

  5. It doesn’t, IMHO. Unless you sign up and get a subsidy (there’s that word again) to participate and lower your bill to boot. But the system-wide benefits, helping non participants, are harder to see.

    Great timing – now have go read the full SCC opinion.

  6. I actually think the Utility (Dominion and APCO) CAN implement programs that WILL reduce consumption – other utilities in other states do it and many people will, without the utility’s “help” will take action on their own to reduce their use and cost.

    But what this program is really about is to essentially guarantee that Dominion and ApCo will be actually reimbursed for any less use of electricity In other words, the “value” of their monopoly will not be degraded.

    No matter how much people conserve – whatever amount that is – Dominion and ApCo will be compensated for that “loss”.

    How cynical is this? How can the GA and the SCC support this?

    Quite clearly – the utilities see conservation as a “threat” to their revenues and they have successfully convinced the GA and the SCC to help them preserve the “value” of their monopoly.

    You know we have all these folks who have their respective rumps up in the air all about Obamcare, and the MedicAid Expansion, congestion tolls, high cost of college and statues of Robert E Lee and meanwhile the utilities are running amok and 99% of citizens are clueless…

  7. Energy policy is very complex and nuanced. Fortunately there is a simple rule one can follow in Virginia to remove the complexity …

    If something is bad for Dominion it is good for Virginia. If something is good for Dominion it is bad for Virginia.

    This sounds good for Dominion so it is bad for Virginia.

    Dominion, Altria and Omega Protein – the three headless horsemen of the Virginia apocalypse.

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