A group of 18 major corporations, including big names such as Microsoft, Walmart, Best Buy, Ikea, Staples and Mars Inc., among others, have sent a letter to state lawmakers and the Virginia State Corporation Commission calling for “an explicit legal framework” to expand access to renewable energy from utilities and third-party sellers.
The letter was included last week as part of public comment on a request to the commission by Appalachian Power for a voluntary, 100 percent renewable energy rider that will come before the commission for a hearing today. Opponents contend the measure is actually aimed at thwarting competition from third-party providers and financiers of renewable energy in the utility’s Southwest Virginia service area.
“As global companies providing products and services to consumers around the world from our operations in Virginia, we value not only a reliable and affordable electricity supply but also a clean one,” says the letter, which does not reference Appalachian Power’s rider request directly but requests “further expanding options for companies to procure renewable energy in the commonwealth.”
Virginia currently lacks the specific legal pathways for companies to enter into power-purchase agreements with “non-utility energy service providers,” including third-party financing, which is attractive because it spares companies major upfront capital expenses and the “risk associated with operation and maintenance,” the letter says.
The companies request more choice, including the ability to negotiate direct arrangements; “cost-competitive renewable energy tariffs”; subscriptions to community solar projects; and “other policy mechanisms tailored to the needs of large buyers.”
The current regulatory landscape in Virginia for renewable energy creates a degree of legal doubt that makes financing difficult to obtain, said Walton Shepherd, a staff attorney at the Natural Resources Defense Council, an environmental nonprofit.
“The bottom line is all you need is a little uncertainly to prevent a market that is otherwise a mature market elsewhere,” he said. “It’s just enough to quash it. ... It’s booming everywhere else but in Virginia, and large global businesses are taking notice.”
State law says that customers can purchase electricity “provided 100 percent from renewable energy from any supplier of electric energy licensed to sell retail electric energy within the commonwealth ... if the incumbent electric utility serving the exclusive service territory does not offer an approved tariff for electric energy provided 100 percent from renewable energy.”
Critics argue that’s why Appalachian Power is pushing its tariff program, to stifle the entrance of third-party power providers, also known as competitive service providers. Such providers can either negotiate a deal to install solar panels on a resident’s or business’s roof and lease them to the owner, or build their own solar arrays or wind farms off-site and then sell the power to businesses, community organizations or other purchasers through long-term agreements.
“A typical small business or individual customer does not have the option to shop except to use this 100 percent renewable energy section in the code,” said William Reisinger, a former assistant Virginia attorney general now in private practice representing the Maryland-D.C.-Virginia Solar Energy Industries Association.
The trade association partly opposes the rider because APCO is relying on existing wind and hydroelectric power in its portfolio, all from other states, to meet the renewable requirements rather than building new renewable generating capacity.
“In our opinion, they’re signing up to pay an excessively high price for energy they are already receiving,” Reisinger said.
The rider would also prevent other third-party providers from entering APCO’s service area and negotiating arrangements with customers, opponents argue.
“They are not proposing to build any new renewable facilities with this rider. Not one. Not a single kilowatt of new energy,” said Cale Jaffe, director of the University of Virginia’s Environmental and Regulatory Law Clinic, which represents Appalachian Voices, another opponent of the rider. “(They’re) just going to shuffle some papers and repackage those as a renewable tariff. ... A rider that inhibits competition and inhibits free market choices for renewable energy, that’s a step backward.”
John Shepelwich, an APCO spokesman, said the company is indeed repackaging existing generation but plans to add additional renewable generation from wind and solar over the next 10 to 15 years. He said no competitive service providers are currently offering 100 percent renewable services to APCO customers.
“It’s not like we’re out there trying to shut out somebody. The offer’s not out there to begin with. We’re actually the first to make the offer,” he said, calling the opposition “unfortunate.”
“Much of the opposition has kind of been based on misinformation or a misunderstanding at best,” Shepelwich added.
In Dominion Virginia Power’s service area, which includes much of the rest of the state, the utility offers a state-sanctioned pilot program for wind and solar facilities on a customer’s property, though it still carries restrictions, including a 50-megawatt cap systemwide and limits on how much each customer can generate.
The legislation authorizing the program says a customer who wants to purchase electricity from a third party must utilize the pilot program in Dominion’s territory; otherwise, the customer’s supplier must provide 100 percent of the load requirements.
“Dominion fully supports the development of renewable energy and we have many renewable energy options available to our customers,” the company said in a statement, pointing to the pilot as well as net metering, which allows customers with renewable power resources like solar panels to connect with the grid and pay only for their “net usage.” Dominion also participates in a solar purchase program, which helps customers cover the cost of installing solar generation.
In 2015, APCO sought a separate, experimental rider that would have allowed participating nonresidential customers to enter into contracts with third-party developers to install and maintain renewable power generation on their properties, though the customer would have been required to continue to purchase all of his or her electricity from the utility and pay the third-party generator in exchange for a “renewable output credit” determined by market price of renewable energy.
In August, the commission’s hearing examiner recommended that the commission deny the rider request, which APCO subsequently withdrew over the objection of groups like the Southern Environmental Law Center, which wanted the commission and courts to settle legal questions surrounding who can enter into power purchase agreements with third-party providers.
“We ended up being in the curious position of opposing the application and opposing the request to withdraw,” said Will Cleveland, an SELC attorney who said APCO’s proposed plan would have allowed the utility to “dictate” all aspects of the agreements. “We wanted the courts to provide clarity on these legal issues.”
But that clarity may be coming.
Mark Rubin, executive director of the Virginia Center for Consensus Building at Virginia Commonwealth University, has been mediating meetings between utilities, electric cooperatives, the solar industry and environmental groups and other interested parties since last spring, with the goal of putting forward policy recommendations during the upcoming General Assembly session.
“The meetings have been really excellent,” said Rubin, also a former counselor to Gov. Tim Kaine. “The folks have been working together, from my experience, quite well. We’re working through a number of very complex issues.”