Bacon's Rebellion

Democracy Thrives in Sunlight

Environmentalists Oppose Apco’s Green Tariff

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by

James A. Bacon
in ,

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Appalachian Power Company’s proposal to offer a special green-power tariff (which I covered here) has run into heavy resistance from environmentalists on the grounds that (1) it would be expensive and (2) it would prohibit competition in Apco’s service territory. Jim Pieroban explores the controversy in Southeast Energy News.

The proposed tariff, Apco spokesman John Shepelwich told Pierobon, “responds to consumer and industrial demand/requests for 100% renewable energy generation. The goal … is “to provide customers with easy access to cost-effective renewable energy with low transaction costs and a fixed energy component that provides price certainty and avoids fuel price volatility, without impacting other ratepayers.”

Critics say that Apco is overpricing the renewable energy, which will be supplied mainly by wind farms in Illinois, Indiana and West Virginia. The average cost of wind nationally is about $20.75 per megawatt hour, and Apco likely could purchase it for less than that. But Apco’s tariff would average $72 per megawatt hour because it would include projects brought online between 2001 and 201o when the cost was much higher.

As Pierobon notes, third-party sales of electricity are generating increasing interest in Virginia and throughout the Southeast. The regional chapter of the Solar Energy Industries Association (SEIA) contends that Apco’s proposed tariff would effectively remove solar supplied by third parties as an option for ratepayers. Said Dana Sleeper with the Maryland-DC-Virginia chapter: “Ironically, [approval]  could result in fewer options for customers to purchase renewable energy and support renewable energy development in Virginia.”

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6 responses to “Environmentalists Oppose Apco’s Green Tariff”

  1. TomH Avatar
    TomH

    These types of tariffs and regulatory prohibitions of development within utility territory have been effective at limiting small-scale third-party development of distributed generation in Virginia and elsewhere.

    I understand that this is a utility’s way of protecting its business model and revenue stream. But we should not be finding ways to prolong an obsolete business model. We should be looking for ways to allow the lowest cost installation of these types of projects (which is usually by third-parties). These developers argue that they should have the freedom to compete on a level playing field. This means that if a utility wants to develop similar projects they should not be allowed a guaranteed profit by being able to put the project into the rate base. Independent developers must face the full risk of the marketplace and price their projects accordingly.

    We should revise our rules so that utilities can be financially healthy by providing services, such as grid improvement and transaction services, that have value to ratepayers. The current business model for utilities encourages them to build to gain more revenues even when new projects are not justified by load growth; or when load could be reduced at a much lower cost than building something new.

    Other states are doing this, so it is possible. It requires popular support and a political will which is currently missing in Virginia. Lacking that, both the ratepayers and utility shareholders will suffer if we maintain the current course.

  2. LarrytheG Avatar
    LarrytheG

    I agree. I think the way the monopoly is structured and regulated leaves few options to seek profits from anything other than electricity itself – and if Virginia and the SCC do not change – they’re ultimately going to harm the ability of Dominion to evolve as technology evolves.

    OTOH – DOminion seems to want to stay in the core energy business and not really pursue other paths – but keep others from doing it also if that undermines their business model.

    Finally- TomH and CW and I do not quite agree on how solar “works” without gas. I’m convinced that it needs gas until storage gets practical and cost-effective which I do not yet see on the horizon and they believe it’s going on right now.

    Any major breaththrough changes the game – which might result in the unraveling of Dominion’s stable business model but pundits are not the folks who actually run Dominion who probably think they know how things will play out.. then again so did Kodak and Enron and a few others.

  3. Rowinguy1 Avatar
    Rowinguy1

    The two Jims (Bacon and Pierobon) have done a good job explaining the snow job that this Apco proposal represents. I’ll be surprised if it gets approved.

    The law regarding 3rd party sales in Virginia is sort of oddly worded. It permits sales by suppliers of “100% renewable energy” but only if the utility itself does not offer such an option.

    So, a few years back a solar developer started connecting with some of the smaller colleges to install solar facilities to occupy a part of the college’s electricity load. No, no, said DVP, the law requires a 3rd party supplier to meet 100% of the customer’s load with renewable power, not part of the load with 100% renewable power. The developer could not afford a lengthy legal battle and changed its business model. But, the case was withdrawn before the Commission could construe the law either way. In the case referred to in Jim P’s article, the Hearing Examiner construed the statute to permit 100% green power sales of any portion of a customer’s load, but Apco withdrew so again the Commission could not rule.

    But now the utilities were hoist by their own petard, because they can’t meet 100% of customers loads with 100% renewable power either. Sometimes itis cloudy and sometimes the wind quits blowing and then what power is delivered? Grid power. Even Apco’s current proposal, tying wind and hydro admittedly falls short of 100% guaranteed renewable power 24/7. Close enough to be considered 100%, says Apco, thereby shutting out competitors from its service area. Lots of opposing viewpoints as the articles indicate.

    So, this 10 year old statute might finally get a construction from the Commission and then the door may finally open a crack for 3rd party renewable developers wanting to make direct sales to customers.

    Well, until the General Assembly reconvenes, that is…….

  4. LarrytheG Avatar
    LarrytheG

    I would not hold my breath. How the Va GA prioritizes issues in general these days is less than resolute towards true conservative economic principles.. more talk than there is walk.

  5. LarrytheG Avatar
    LarrytheG

    Oops – just saw this.. surprised it has not been mentioned by Jim or commenters:

    Virginia utilities back legislation to offer consumers a solar option

    A group comprised primarily of Virginia utilities and solar industry members has proposed four pieces of legislation for the 2017 Virginia legislative session. The bills address four areas the group agreed to work on: creating a pilot program to offer solar energy to customers on a voluntary basis, under the name of “community solar”; raising from 100 MW to 150 MW the size limit for wind and solar projects that can take advantage of the streamlined Permit by Rule process, and allowing utilities to use that process in some circumstances; creating a program to allow farmers to sell some surplus solar to the grid; and allowing utilities to earn a profit on solar facilities they don’t build themselves (an incentive for them to do more deals with developers, whose costs are less and who receive more favorable tax treatment).

    https://powerforthepeopleva.com/2016/12/13/virginia-utilities-back-legislation-to-offer-consumers-a-solar-option/

    1. James A. Bacon Avatar
      James A. Bacon

      Good catch, Larry. I’ll follow up on this.

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