by James A. Bacon
Appalachian Power has proposed an alternative rate for customers who want to purchase 100 percent of their electricity from renewable sources. A rider attached to the company’s Virginia tariff bundles the energy output of renewable generators to provide around-the-clock, carbon-free generation.
The company, whose service territory encompasses the southwestern third of the state, designed the green tariff so that subscribing customers would not be subject to charges relating to fossil-fuel energy generation, and standard retail customers would not subsidize renewable energy.
“We are increasing the amount of renewable energy in our generation portfolio and developing programs to help our customers meet their energy needs with renewables,” said James Fawcett, Appalachian’s manager for energy efficiency and alternative energy initiatives in a press release yesterday. “The proposed Rider REO is the latest addition to our renewables strategy.”
Initially, the portfolio will consist of 423 megawatts of Appalachian’s current wind and hydroelectric resources. As new renewable resources—including wind and solar—are added, the subscribed portion of those resources will be assigned to Rider REO.
Who will buy this product? Appalachian suggested that the main appeal may be to industry. Said Fawcett: “We expect that the ability to deliver 100 percent renewable energy will also provide economic development benefits to potential commercial and industrial customers seeking that requirement.”
Bacon’s bottom line: If one overlaid Appalachian Power’s territory with an electoral map, it would skew heavily Republican red, with a Trumpian tint. Buchanan County, once a major coal producing county, was recently profiled in the Wall Street Journal for the highest percentage of votes cast for Donald Trump anywhere in the country. I can’t imagine that the company anticipates a surge in retail demand for higher-priced green energy.
The real play is for industry. Just as Amazon Web Services and other data center providers in Northern Virginia are being pressured to use more solar electricity, so are many of the industrial and warehousing companies (think Walmart) that might consider investing in western Virginia. Thus, Appalachian is converting the liability of higher cost electricity into an economic development asset. Very clever. It will be interesting to see what kind of issues arise in the SCC deliberations.
One issue, I expect, would focus on how Appalachian allocates the cost (if any) of (a) upgrading the transmission and distribution grid and (b) maintaining fossil fuel backup capacity for when the wind isn’t blowing and the sun isn’t shining. The accounting discussions, I expect, could get very arcane. Another question is what happens if Appalachian can’t find subscribers for 423 MW of pure-play renewable energy. Do regular ratepayers shoulder the costs, as they undoubtedly would if the green tariff didn’t exist?
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