December 23, 2024
Virginia SCC Gives IOUs a Pass on RPS Plans — for Now
Utility Request to Combine RPS and IRP Plans Rejected
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The Virginia State Corporation Commission on April 30 gave Dominion Energy the go-ahead to spend $10.4 million to build three solar projects totaling 82 MW.

The Virginia State Corporation Commission on April 30 gave Dominion Energy the go-ahead to spend $10.4 million to build three solar projects totaling 82 MW, saying the company had submitted a “reasonable and prudent” plan for complying with the renewable portfolio standards of Virginia’s landmark Clean Economy Act (VCEA) (PUR-2020-00134).

The commission also approved Appalachian Power’s RPS plan, which did not request any immediate spending (PUR-2020-00135).

But, acknowledging criticisms of the plans from clean energy advocates, the commission set more rigorous requirements for the utilities going forward while leaving some issues open for further debate, for example, a VCEA carve-out for distributed generation in low-income communities.

Under the VCEA, Dominion is required to produce 100% of its electricity from clean sources by 2045, and Appalachian Power, by 2050. Both utilities will have to submit yearly RPS plans to the SCC.

The SCC also approved Dominion’s proposal to procure 498 MW of new solar through six power purchase agreements with developers.

Critics complained the plan did not provide a “least-cost” option for reaching the VCEA’s 100% mandate, saying Dominion was using a too narrow reading of the VCEA, that focused only on one section of the law, requiring the SCC to approve new projects, advocates said. The company said the proceeding was limited to meeting the development targets in the VCEA, “not cost-effective compliance with the RPS program.” The commission disagreed, ordering a least-cost plan in future filings.

“The central issue in the case, from where we stand, was whether the Clean Economy Act that was passed in 2020 mandates that Dominion, and APCo build a bunch of solar, wind and energy storage projects, regardless of need or costs,” said Will Cleveland, senior attorney for the nonprofit Southern Environmental Law Center. “And we argued that the Clean Economy Act does not mandate that; it mandates a transition to zero-carbon energy.”

Virginia Dominion Energy
Dominion Energy will be adding 82 MW of new solar to the Virginia grid. | Shutterstock

The utilities “were cherry-picking out the provisions that they liked, that fit with their business model … but it does not result in the optimal mix of resources, and it doesn’t result in the least-cost implementation,” said Harrison Godfrey, executive director of Virginia Advanced Energy Economy, a clean energy business association. “We care about a diversity of resources, and we care about that diversity in no small part because it [affects] reliability and affordability, fundamental things that are at the core of everything.”

Still, both Cleveland and Godfrey were encouraged by the requirements the SCC laid out for Dominion and Appalachian Power’s future RPS plans. The detailed list includes providing least-cost options for complying with the VCEA, updating the data used for fundamental load and business forecasting and commodity pricing, and detailed charts on how each utility has complied with the law’s RPS mandate.

Renewable power procured by “accelerated renewable energy buyers” — that is, large corporations, such as Walmart and Amazon — will not be counted toward the utilities’ RPS compliance, the rulings say.

The SCC also turned down Dominion’s request to combine its integrated resource plan and RPS plan filings. Advocates had argued that the two plans cover different aspects and time frames for utility planning and should be kept separate. IRPs are filed every three years, versus the yearly filing the VCEA requires for RPS plans.

APCo will also have to keep its IRP and RPS filings separate, but the rulings do anticipate that the modeling, projections and figures each utility uses for its IRP and RPS plans should be consistent.

The commission also left the door open for Dominion to file a “consolidated bill analysis that pertains to both the IRP and RPS proceedings, a subset of which would be RPS-related costs.”

The $10.4 million for the three utility-owned solar projects will be recovered through a bill rider adding 19 cents a month to the average residential electricity bill.

Appalachian Power said its RPS procurements for the VCEA will add 3.5% to customers’ bills over a five-year period.

‘The Letter of the Law’

Both Dominion and APCo responded to the rulings by focusing on the renewable projects they have in the pipeline.

The commission’s approval of Dominion’s solar projects “is another major step forward in building a clean energy economy in Virginia,” Ed Baine, the utility’s president, said in a Monday news release. “Our customers deserve reliable and affordable energy, and they also deserve a clean environment. These projects will help us deliver on that promise.”

APCo spokesperson Teresa Hamilton Hall said, “We were pleased that our annual plan and what we intend to do meets the letter of law and is in the best interest of our customers, and we will abide by the letter of the law.”

While the APCo plan had no requests for project approvals, APCo said it expects to add 210 MW of solar by 2023, including 105 MW of utility-owned capacity from a solicitation issued last year.

Hall pointed to APCo’s February announcement of a request for proposals for wind or solar projects of 50 MW or more for a procurement that will total up to 300 MW, the largest RFP the utility has issued in a single year, according to the release. Bids are being reviewed, she said.

At Dominion’s first quarter earnings call May 4, CEO Robert Blue said the company’s next RPS filing will be larger in scale and more heavily weighted toward utility-owned solar. (See related story, “Dominion Confident in OSW Price Despite Rising Costs.”)

“The Clean Energy Act is quite specific on this point that for the new solar build, 65% is to be utility owned and 35% is to be third-party PPAs,” he said. “The total amount of that is on the order of 1,000 MW a year for the next 15 [years].”

Blue said although Dominion may build some renewables for corporate customers, “our focus on growing our solar portfolio is on the regulated side.”

Despite the increasing amounts of solar they will be putting on the grid, both utilities are planning a gradual ramp-up of energy storage. While the VCEA requires Dominion to have 2,700 MW of storage online by 2035, the utility only expects to install 16 MW in 2021 and 14 MW in 2022, with no procurements of 100 MW or more before 2025.

APCo will need 400 MW of storage by 2035, but does not anticipate adding any resources until 2025. One chart in the utility’s RPS shows the cost of energy storage remaining more than $1,100/kW through 2046.

However, storage prices are usually measured per kilowatt-hour and continue to fall. Bloomberg NEF recently pegged battery energy storage prices at $137/kWh and predicted prices as low as $100/kWh by 2023.

Hall said APCo will be updating its pricing projections for storage in its next RPS plan.

David Murray, executive director of the Chesapeake Solar and Storage Association (formerly MDV-SEIA) said pushing the utilities on storage will be one of the organization’s priorities going forward. Storage will help get more “solar on the grid a lot faster,” he said.

Another key issue not mentioned in the SCC ruling on Dominion’s plan is the VCEA’s distributed generation carve-out, which requires the utility to meet at least 1% of its RPS mandate with distributed projects of 1 MW or less. The Behind the Meter Solar Alliance (BTM-SA), a small group of Virginia installers, argued that the carve-out is intended to promote behind-the-meter solar but that the utility’s plan could circumvent the requirement with utility-owned, front-of-meter projects.

“The 1% [carve-out] was attached to job growth and economic development,” said Karla Loeb, chief policy and development officer at Sigora Solar, one of the companies behind the BTM-SA. Residential, behind-the-meter solar accounts for more than half of the jobs in the industry, according to the Solar Foundation’s 2019 Solar Jobs Census.

“It becomes very clear that the way you get the real economic wins in the industry and the state is by making sure there is a reserved segment for behind-the-meter resources because those jobs are not six-month projects; they are day-in, day-out,” Loeb said.

Another flashpoint is the VCEA’s requirement for 25% of the DG carve-out to be low-income projects. SCC staff and the BTM-SA raised concerns about how Dominion would define these projects, and the commission ordered the utility to “utilize a reasonable stakeholder process” to address the issue.

Both Loeb and Cleveland see the SCC rulings as the opening round in an ongoing process to ensure that their concerns around low-income solar and least-cost compliance with the VCEA remain priorities for the commission and the utilities.

“Next year will be a fight about what constitutes a least-cost model,” Cleveland said. “It’s an iterative process, continually refining how these utilities look at the legal obligations they have and how they go about proposing to comply with those legal obligations. There’s going to be a lot of work to do to make sure that these laws are implemented in an equitable, fair way.”

Rich Heidorn Jr. contributed to this article.

State and Local PolicyVirginia

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