By Steve Haner
A senior Democratic state senator is leading an effort to review and possibly revise the 2020 Virginia Clean Economy Act (VCEA), which orders the future elimination of hydrocarbon fuels (oil, natural gas, and coal) used in making electricity. His goal is to conduct a stakeholder process and bring legislation to the 2025 General Assembly.
Before delving into what those changes might look like (or what we might propose the changes look like), it is helpful to understand what the current law requires. To use a common colloquialism of the Assembly, “what do the bill do?”
The final version approved in 2020 was long and written mainly to be read by utility lawyers and regulators. The vote was largely along party lines, but one Republican in the House and one in the Senate joined with Democrats in approving it. Two years later, when the Republicans regained control of the House of Delegates, a repeal of the entire statute passed the House but stalled in the Senate, where Democrats remained in control.
The law applies to the two large, investor-owned electric utilities serving Virginians. It makes no demands on the rural electric cooperatives or the Kentucky utility serving part of far Southwestern Virginia.
The dominant utility, Dominion Energy Virginia with 2.6 million customers, is directed under the VCEA to steadily reduce its reliance on coal or natural gas to produce electricity within the state’s boundaries, with the goal of eliminating those fuels by 2045. So, in 20 years Dominion’s many gas and coal facilities are supposed to disappear. In the case of coal generation, they largely already have or will soon disappear, except for Dominion’s large West Virginia coal plant and a small plant in Wise County.
Appalachian Power Company serves about 500,000 customers in Western Virginia and under the VCEA is ordered to eliminate its use of hydrocarbons by 2050. This goal is less of a problem for Appalachian Power because it is down to one natural gas plant inside the state, Clinch River, and plans to close those two generator units in 2025 and 2026. Appalachian also uses Virginia hydro power, but mostly imports electricity from outside Virginia’s boundaries, where coal is still a major fuel.
The law includes language that allows the SCC to keep a gas facility open for longer, or even to approve a new hydrocarbon generator, if the regulator deems it to be necessary to maintain reliable electricity services. In fact, Dominion sought such an approval in its most recent integrated resource plan application, but the SCC failed to approve that plan.
One part of the VCEA authorized the Virginia Air Pollution Control Board to enter a multistate cap and trade program to reduce carbon dioxide emissions from power plants. Supporters of the Regional Greenhouse Gas Initiative view the language as a mandate and are litigating Governor Glenn Youngkin’s decision to exit RGGI last year.
Both power companies face a fixed schedule of rising renewable power use under the VCEA, but if they are not using sufficient qualifying renewable power (mostly wind or solar), they can satisfy the law by purchasing renewable energy credits generated by other companies. Failure to meet the goals by either method will result in a huge financial penalty of $45 per megawatt hour (4.5 cents per kWh), which the utilities are allowed to recover from customers.
The VCEA as it now reads is compatible with nuclear power. Under the VCEA, nuclear power is not considered “renewable” per se, but the amount of nuclear electricity generated can reduce the need for Dominion to produce from renewable sources. There is no impediment to adding more nuclear capacity, and both utilities are considering that.
Under traditional rules of utility regulation, any future power plant would need to be reviewed by the State Corporation Commission and determined to be “in the public interest.” The VCEA short circuits that process by simply declaring massive future wind, solar and battery projects to be automatically in the public interest:
- 16,100 megawatts of solar or onshore wind generation.
- 5,200 megawatts of offshore wind generation (the project Dominion is now building uses half of that advance approval, with another 2,600 MW to go.)
- 2,700 megawatts of energy storage capacity, mainly batteries which will be charged by solar and wind facilities, and which will provide some coverage when those intermittent energy sources are not working.
Dominion is directed to plan and seek approval of up to 24,000 MW of wind, solar or battery power by 2035, with Appalachian to add another 1,000 MW by then. The law only requires the projects to be proposed and applied for, but with most deemed “in the public interest” a big hurdle is avoided. There is no “in the public interest” designation for an amount of new nuclear power, however.
Both utilities have a long way to go to meet the renewable project goals of the VCEA. Appalachian Power has 575 MW approved. Dominion has about 2,800 MW of solar capacity approved, and 170 MW of battery capacity, along with the 5,200-megawatt offshore wind project currently under construction. Meeting the VCEA goals will require tens of thousands more acres of land covered by solar panels, given Virginia is proving unsuitable for onshore wind projects.
Under the law, both utilities submit annual plans to the SCC seeking approvals for additional solar, wind and battery projects. The law states that 65% of the projects will be utility-owned and 35% can be from outside suppliers through power purchase deals, which is usually less expensive to consumers. The outside suppliers can be outside of Virginia but must be within the PJM electricity transmission region.
One of the most aggressive provisions of the law requires both utilities to reduce their sales of electricity, using their 2019 sales amount as a baseline. Dominion is required to shrink 5% from that by next year and Appalachian must shrink by 2%. This was included in the law before the incredible growth spurt of Virginia’s data center industry which accounted for 24 percent of Dominion’s electricity sales in 2023.
The VCEA also created the Percentage of Income Payment Program, or PIPP, intended to subsidize the electricity bills of low-income households. Four years later, PIPP is just getting underway, and under the law as it now reads those PIPP households will also be spared from paying for the Dominion offshore wind project. This will raise the bill for the wind project for everybody else.
Those are the highlights. More details are in a VCEA summary (here) passed out at one of the first stakeholder meetings. Which of the provisions discussed above may be targeted for change will be the topic of another column.
First published this morning by the Thomas Jefferson Institute for Public Policy.
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