In response to FERC’s decision to exclude clean energy resources from future capacity auctions in PJM, federal and state jurisdictional boundaries will be tested in 2020 as state legislators begin introducing numerous bills that will set ambitious clean energy goals.
In this series, we will be exploring regional policy updates that will influence the energy buying market from 2020 onward. We will also be breaking down what these updates will mean for energy buyers, and how we can help you navigate these changes.
Virginia Legislation We’re Watching
The now Democrat-controlled General Assembly in Virginia will seek to pass legislation codifying Governor Northam’s executive order to set a goal to produce 30% of electricity from renewables by 2030 and 100% from carbon-free resources by 2050. The most comprehensive energy bill introduced thus far is the Virginia Clean Energy Economy Act (HB 1526), which creates a Clean Energy Standard of 100% clean energy by 2050. This bill authorizes the state to join the Regional Greenhouse Gas Initiative, sets a statewide storage target of 2,400 MW by 2035, requires the State Corporation Commission (SCC) to create a community solar program, and replaces the existing voluntary Renewable Portfolio Standard (RPS) with a mandatory RPS.
On February 11, 2020, HB 1526 passed out of the House by a vote of 52-47 and the Senate version (SB 851) passed the full Senate on a party-line vote of 21-19. The passed House version sets more aggressive decarbonization goals, such as pushing up the deadline for zero carbon emissions from 2050 to 2045, doubling the cap on solar PPAs from 500 MW to 1 GW and doubling the energy efficiency targets. A House provision that is likely to face opposition in the Senate would allow state officials to issue a moratorium on new fossil fuel generation in 2030, if they find that emission reductions are not on target by 2028. It remains to be seen if one chamber will take up the bill as passed by the other, or if the two bills will head to conference.
Other bills we are following would expand retail choice so that all customers can continue to shop for renewable energy from a competitive third-party supplier, even if the utility has an approved 100% renewable energy tariff. Virginia is a partially deregulated energy market that allows only the following customers to shop for competitive electricity supply:
- Large energy customers (> 5 MW peak load or those that aggregate and receive approval from the SCC)
- Customers purchasing a 100% renewable energy product where the utility doesn’t offer a similar product
The broader bill retail choice bill, HB 889, allows all customers to buy 100% renewable energy from any licensed supplier regardless of whether their utility has its own approved tariff. In addition, large customers also gain the ability to aggregate their demand from various sites in order to switch to a competitive supplier that offers a greater percentage of renewable energy than the utility is required to supply under any RPS, even if it is not 100% renewable. Large customers in investor-owned utilities’ territory who buy from competing suppliers must give three years’ notice before returning to their utility, down from the current five-year notice requirement. HB 868 and HB 889 passed through the House but their companion bills ( SB 376 and SB 379) were passed by indefinitely in the Senate. This means if the Senate takes no further action, the bill is dead, but advocates expect the full Senate to act on one of the bills soon.
Why It Matters
Virginia’s regulatory and policy landscape has historically presented challenges to companies looking to reduce their greenhouse gas Scope 1 and 2 emissions and energy spend. The passage of the Virginia Clean Economy Act will expand commercial and industrial customers’ opportunities in the state through scalable customer-sited renewable and energy storage programs. Additionally, this bill will allow large energy consumers the option to opt-out of paying energy efficiency surcharges and self-direct those funds to their own savings programs, giving customers greater autonomy on how they reduce their Scope 1 emissions. Of importance to corporate renewable buyers, there are efforts underway to allow voluntary buyers that meet or exceed the RPS goals through their own actions to be exempt from incremental RPS costs so that they’re not double-charged for decarbonization efforts. However, legislators in Virginia must act quickly as the session is scheduled to conclude on March 7, 2020.
Negotiations are ongoing over the final form of the Virginia Clean Economy Act and we anticipate Senate action soon on the various retail choice bills. Our team is here to help companies stay on top of legislative changes that impact their energy costs and renewable procurement opportunities. Our local office in Tysons, Virginia allows us to provide ongoing support to clients in helping them pursue their energy goals. We are also actively involved in the Virginia Energy Efficiency Council (VAECC), a local organization that advocates at the state level to support smart energy efficiency policies and programs.
To find out more, please contact Shannon.Weigel@EdisonEnergy.com