In rejecting an appeal by Dominion Energy on Thursday, the Virginia Supreme Court upheld a decision by state regulators that large electricity users seeking all-renewable power can shop for it without regard for a daunting requirement that they give five years’ notice if they want to return to utility service.
The decision, which proponents say will crack open the door for more competition for the largest electric customers in Virginia and answer mounting calls for more renewable energy options, stemmed from a case brought at the State Corporation Commission by Direct Energy Services.
Direct Energy, one of the largest retail providers of electricity in North America, is a licensed competitive service provider in Virginia, which means it is allowed to sell electricity in a monopoly utility’s service area under certain conditions. The company seeks to sign up utility customers, both residential and commercial, for a 100 percent renewable energy product that it says can compete favorably with Dominion’s prices.
Ron Cerniglia, Direct Energy’s director of corporate and regulatory affairs, said the decision should lead to more customer choice and lower electric prices in Virginia.
“We’re very excited for our customers and the fact that the State Corporation Commission twice and the Supreme Court today made clear that it’s time for Dominion to cease its efforts to really unilaterally impose barriers on its residential and retail customers,” Cerniglia said. He added that the decision also eliminates regulatory uncertainty that was chilling competition and “will give us the impetus to move forward in Virginia, particularly in the commercial and industrial market.”
The renewable energy that Direct Energy, which currently has no customers in Virginia, seeks to provide must come from the area served by PJM Interconnection, the regional transmission organization that runs the electric grid for all or parts of 13 states, including Virginia, and the District of Columbia.
Dominion spokesman David Botkins said the company is reviewing the order.
“It should be noted that as the sixth-leading solar energy producer in the country, Dominion Energy already offers renewable options for customers and has plans to increase our portfolio of renewable energy,” Botkins said. The utility regulation overhaul the company successfully pushed through the General Assembly this year, Botkins added, declares an additional 5,000 megawatts of Virginia wind and solar over the next decade in the public interest.
The court’s order Thursday makes it clear that all utility electric customers, regardless of their class and usage, can shop for 100 percent renewable energy, at least for the moment, said Will Cleveland, an attorney with the Southern Environmental Law Center who was among the lawyers who argued the case on behalf of Direct Energy and the SCC.
Currently, neither of Virginia’s large utilities, Dominion and Appalachian Power, have an approved 100 percent renewable energy tariff, though Dominion has an application pending before the commission. A hearing officer has recommended that it be rejected, in part because the rate schedules were not “just and reasonable.”
If the tariff is approved, however, it would trigger a restriction in state law that would prevent competitive providers such as Direct Energy from signing up new customers for their own 100 percent renewable products.
“There’s a window of opportunity to start signing up customers for a renewable energy product,” Cleveland said. “That window gets bigger if the commission rejects the current application.”
Dominion had argued that large customers, those using above 5 megawatts, were subject to the five-year return notice, even though that does not appear in the relevant code section.
“Time and again, we’ve seen Dominion throw up roadblocks to prevent customers from directly accessing renewable energy,” Cleveland said. “The Virginia Supreme Court today made clear that Dominion cannot control or impede the renewable energy industry, which is adding jobs faster than almost any other industry in the nation. If customers want clean energy, they have a right to get it, regardless of what the utilities say.”
Virginia’s regulations around competitive shopping and purchases of 100 percent renewable power are “some of the most complex in any jurisdiction we operate in,” Cerniglia said, particularly the requirement that large customers who opt to shop give five years’ notice if they want to return to utility service.
“In other places, it’s 30 to 60 days,” Cerniglia said. “There’s no justification for that from any type of operational or reliability perspective. It was put in place to disincentivize customers to shop.”
Legislation that would have eased those restrictions for both large customers looking to shop for renewable and conventional power died in this year’s General Assembly session after Dominion lobbyists opposed it in House and Senate committees. The court’s ruling Thursday does not affect customers above 5 megawatts that shop for power other than 100 percent renewable energy or those that use below 5 megawatts but aggregate their demand — such as Walmart Inc. is currently seeking to do for its stores — to hit the 5-megawatt threshold. Those customer classes are still subject to the five-year rule.
According to a report issued last fall by the SCC, Dominion’s residential rates, measured in cents per kilowatt hour, in 2016 ranked 10th-lowest among a group of 18 peer utilities. The company’s commercial rates were the lowest among the same peer group, and the industrial rates ranked fifth.
“Competitive suppliers are moving into Virginia and looking to do business,” said Will Reisinger, a former assistant Virginia attorney general in the consumer counsel office and attorney with GreeneHurlocker in Richmond who specializes in renewable energy and utility issues. “That’s certainly an indication that Dominion and APCO’s rates are not as competitive as they used to be.”