25 Aug 2014

Do Enough Utility Customers Care about Cleaner Energy in Virginia and Other Conservative States?

Written by Jim Pierobon

Pressure from customers and other stakeholders is boosting utility commitments to programs and tools designed to save energy and enable markets for renewable sources of electricity, so says a report by Ceres, a sustainability-focused non-profit and Clean Edge, a research consultancy. But it depends on where you live.

In some states – you can probably guess which ones – public interest in cleaner energy is a real driver, as are high prices for power. There is no denying that a major motive for saving electricity is saving money. So it should come as no surprise, there may be not be as much interest in efficiency and renewables in the Southeast where rates, on average, or lower than in the ‘greenest’ states.  Or is there?

Many utilities from Virginia to Florida and Louisiana and states in between are quick to assert more efficiency and renewables will lead to higher rates. That may be the case. But those utilities are apt to gloss over – or deliberately steer clear of – addressing how efficiency and particularly rooftop solar can lower customers’ monthly bills, regardless of the rate they pay.  If there is a growing cultural awareness of the liabilities and risks of fossil fuels and nuclear power, then rates become less of a sticking point.

The question I’m asking myself is: are ratepayers and policymakers in Southeast states interested enough in lowering their monthly bills along with the benefits that come with cleaner and less risky energy sources to see their rates increase commensurately with those benefits?

Stakeholders on both sides of this issue have been and will continue debating as long as some utilities have monopoly control over their service territory. So part of what I’m writing about here is to explore the case of Dominion Virginia Power (“Dominion”) which maintains complete control of the electricity market in its service territory.

Dominion, as it turns out, ranked among the lowest among utilities surveyed on an apples-to-apples basis in the research by Ceres and Clean Edge.  Out of 32 utilities or utility holding companies surveyed, Dominion ranked:

  • 30th in renewable energy sales;
  • 31st in cumulative annual energy efficiency;
  • 32nd in incremental annual energy efficiency.

See accompanying table.


For the complete ranking of 32 utilities and their clean energy deployment by Ceres and Clean Edge, go to: http://www.ceres.org/resources/reports/benchmarking-utility-clean-energy-deployment-2014/view.

Drawing from the report and understanding the influence that Dominion wields throughout the state government – including the executive branch, State Corporation Commission and the Republican-controlled General Assembly — what Dominion wants, Dominion gets. Dominion accomplishes this in part by how it sells the benefits of low electricity rates and its generous contributions to the election campaigns of the state’s lawmakers.

Four things about Dominion ring true to most consumers and businesses with a stake in Virginia’s energy future. Dominion:

  1. Makes money for its parent company shareholders by selling more electricity; reducing consumption hurts its bottom line;
  2. Carefully guards its 75-year reign over the electricity business in its service territory which generates, transmits and distributes electricity to about 70 percent of the state’s users;
  3. Determines how energy efficiency and solar energy options are made available, despite a growing chorus of appeals to enable homeowners and businesses to generate some of their own electricity with rooftop solar systems; and
  4. Dictates the rules for efficiency and solar programs and therein effectively handicaps Virginia-based companies and others offering those clean energy products and services from competing the way their industry colleagues can in many other states.

Jon Wellinghoff, former Chair of the Federal Energy Regulatory Commission and now a partner at the law firm Stoel Rives LLP, was blunt in his assessment:

“Consumers must hold traditional electric utilities and their regulators accountable and insist upon accelerating the deployment of clean energy sources and managing the transition to distributed generation (including rooftop solar) and more open, competitive electricity markets.”

Wellinghoff added the transition is “largely a question of leadership, market structures and political will.”

Political will depends on having a constituency to back it up. Right now, any such constituency is concentrated in Northern Virginia, Norfolk-Virginia Beach and around Virginia’s college campuses. It needs to be a lot larger and more vocal to engage elected officials and the State Corporation Commission, which regulates utilities.

Dominion spokesman David Botkins said while it supports energy efficiency and renewables in principle, “we believe they must be prudent and realistic.”  He compared “typical” residential customer monthly bills in three of the ‘greenest’ and most expensive states with Dominion’s typical monthly bill of $112.45:

  • California: $228.85
  • Connecticut: $206.07
  • Massachusetts: $191.04

Clean energy advocates sometimes are remiss in remembering that a regulated utility’s obligation to provide its ratepayers with safe and reliable services at reasonable rates while maintaining and modernizing the power grid. That includes protecting it from cyber attacks.

Dominion’s critics assert it should be devising programs, especially those that save energy, so that rural and low-income ratepayers who don’t live in the progressive regions mentioned above can save even more money than Dominion currently offers.

“We try to balance the two,” said Botkins. “We offer programs and work hard to empower our customers regarding energy efficiency, but we also work hard to maintain low, affordable rates.”

Ken Rosenfeld, Executive Director of the Virginia Energy Efficiency Council, which includes Dominion as a board-level member, said, “A focus solely on electricity rates obscures what really matters to individuals and businesses — reducing their total energy bills, regardless of the rate.  Implementing energy efficiency programs is the most cost-effective way to meet demand and reduce bills, while ensuring that we’re good long-term stewards of our resources. “

Dominion offers a Green Power program which charges participants an extra 1.3 cents per kilowatt hour for purchasing power generating from qualifying renewable energy facilities in the Mid-Atlantic region.  As of July 1, he said Dominion has 23,377 customers enrolled out of about 2.4 million. That’s less than 1% of its customer base.

One could read that level of participation three ways:

a) at least Dominion is offering one ‘green’ option;

b) all of its other customers don’t care about clean energy; or

c) the Green Power  program is a relatively weak offering compared to what other electricity consumers served by  utilities ranking high in the Ceres / Clean Edge survey.

How Dominion moves forward vis a vis efficiency and renewables could depend on passage of the Environmental Protection Agency’s proposed amendments to Section 111(d) of the Clean Air Act which would mandate new carbon limits on existing power plants. Hearings about the EPA’s “Clean Power Plan” were held last week in Washington, Atlanta, Pittsburgh and Denver. Comments are due October 16, 2014. If interested, you can start here.

“Energy efficiency is the lowest-cost energy resource,” said Clean Edge’s Ron Pernick, who helped prepare the report. “The cost of renewable energy continues to decline dramatically and is quickly becoming competitive with fossil fuels.”

Rosenfeld of the Virginia Energy Efficiency Council asserted that with more than 1,300 companies in the energy efficiency business throughout the state there is a discernible demand for more efficient homes, buildings and equipment. “The Council is working to encourage the right mix of policies and incentives so that energy efficiency can be a main ingredient in planning for a sustainable energy future.  We have to make sure that we pay for our energy infrastructure. One way to do that is to reduce demand by encouraging energy efficiency.”

If the new carbon rules become law, Virginia must lay out how it will reduce its carbon emissions in pounds per megawatt hour of electricity generated 38% by 2030 compared to a baseline year of 2012. The utility has yet to explain how it would achieve those reductions.

It the past is prologue, Dominion will likely try to cut emissions without enabling real markets for efficiency and solar. Botkins said that by year’s end Dominion plans to have added 230 megawatts of solar generation to its fleet. It has also received a $47 million federal grant to build a two-turbine, 12-megawatt demonstration wind system off its Atlantic coast.  Both approaches are under its complete control, seeding nothing to market forces.

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