HB 1526

Abstract

Virginia Clean Economy Act. Establishes a schedule by which Dominion Energy Virginia and American Electric Power are required to retire electric generating units located in the Commonwealth that emit carbon as a by-product of combusting fuel to generate electricity and by which they are required to construct, acquire, or enter into agreements to purchase generating capacity located in the Commonwealth using energy derived from sunlight or onshore wind. The measure replaces the existing voluntary renewable energy portfolio standard program (RPS Program) with a mandatory RPS Program. Under the mandatory RPS Program, Dominion Energy Virginia and American Electric Power are required to produce their electricity from 100 percent renewable sources by 2045 and 2050, respectively. A utility that does not meet its targets is required to pay a specific deficiency payment or purchase renewable energy certificates. The proceeds from the deficiency payments are to be deposited into an account administered by the Department of Mines, Minerals and Energy, which is directed to distribute specific percentages of the moneys to job training and renewable energy programs in historically economically disadvantaged communities, energy efficiency measures, and administrative costs. The measure requires the State Air Pollution Control Board to adopt regulations to reduce the carbon dioxide emissions from certain electricity generating units in the Commonwealth and authorizes the Board to establish, implement, and manage an auction program to sell allowances to carry out the purposes of such regulations and to utilize its existing regulations to reduce carbon dioxide emissions from electric power generating facilities. Among other things, the measure also (i) requires, by 2035, American Electric Power and Dominion Energy Virginia to construct or acquire 400 and 2,700 megawatts of energy storage capacity, respectively; (ii) establishes an energy efficiency standard under which each investor-owned incumbent electric utility is required to achieve incremental annual energy efficiency savings that start in 2022 at 0.5 percent for American Electric Power and 1.25 percent for Dominion Energy Virginia of the average annual energy retail sales by that utility in 2019 and increase those savings annually; (iii) exempts large general service customers from energy savings requirements; (iv) revises the incentive for electric utility energy efficiency programs; (v) provides that if the Commission finds in any triennial review that revenue reductions related to energy efficiency measures or programs approved and deployed since the utility's previous triennial review have caused the utility to earn more than 50 basis points below a fair combined rate of return on its generation and distribution services or, for any test period commencing after December 31, 2012, for Dominion Energy Virginia and after December 31, 2013, for American Electric Power, more than 70 basis points below a fair combined rate of return on its generation and distribution services, the Commission shall order increases to the utility's rates for generation and distribution services necessary to recover such revenue reductions; (vi) establishes requirements regarding the development by Dominion Energy Virginia of qualified offshore wind projects having an aggregate rated capacity of not less than 5,200 megawatts by January 1, 2034, and provides that in constructing any such facility, the utility shall (a) identify options for utilizing local workers; (b) identify the economic development benefits of the project for the Commonwealth, including capital investments and job creation; (c) consult with relevant governmental entities, including the Commonwealth's Chief Workforce Development Officer and the Virginia Economic Development Partnership, on opportunities to advance the Commonwealth's workforce and economic development goals, including furtherance of apprenticeship and other workforce training programs; and (d) give priority to the hiring, apprenticeship, and training of veterans, local workers, and workers from historically economically disadvantaged communities; (vii) requires each utility to include, and the Commission to consider, in any application to construct a new generating facility the social cost of carbon, as determined by the Commission, as a benefit or cost, whichever is appropriate; (viii) removes provisions that authorize nuclear and offshore wind generating facilities to continue to be eligible for an enhanced rate of return on common equity during the construction phase of the facility and the approved first portion of its service life of between 12 and 25 years in the case of a facility utilizing nuclear power and for a service life of between five and 15 years in the case of a facility utilizing energy derived from offshore wind; (ix) removes a provision that declares that planning and development activities for new nuclear generation facilities are in the public interest; (x) increases the limit from 5,000 megawatts to 16,100 megawatts on those solar and onshore wind generation facilities that are declared to be in the public interest and increases the limit from 16 megawatts to 3,000 megawatts on those offshore wind generation facilities that are declared to be in the public interest; (xi) amends the net energy metering program by increasing the maximum capacity of renewable generation facilities of participating nonresidential eligible customer-generators from one to three megawatts, increases the cap on the capacity of generation from facilities from the customer's expected annual energy consumption to 150 percent of such amount for customers in Dominion Energy Virginia's service territory, increases each utility's systemwide cap from one percent of its adjusted Virginia peak-load forecast for the previous year to six percent of such amount, five percent of which is available to all customers and one percent of which is available only to low-income utility customers; (xii) establishes the Percentage of Income Payment Program (PIPP), which caps the monthly electric utility payment of low-income participants at six percent, or, if the participant's home uses electric heat, 10 percent, of the participant's household income, requires the Commission to issue its final order regarding the PIPP by December 31, 2020, and requires the Department of Housing and Community Development and the Department of Social Services to convene a stakeholder group to develop recommendations for implementing the PIPP and to submit the stakeholder recommendations to the Chairs of the House Committee on Labor and Commerce and the Senate Committee on Commerce and Labor by December 1, 2020; (xiii) increases the cap on third party power purchase agreements to 500 megawatts for jurisdictional customers and 500 megawatts for nonjurisdictional customers of Dominion Energy Virginia and to 40 megawatts for customers of American Electric Power; (xiv) requires each investor-owned utility to consult with the Clean Energy Advisory Board in how best to inform low-income customers of opportunities to lower electric bills through access to solar energy; (xv) requires the Department of Mines, Minerals and Energy, in consultation with the Council on Environmental Justice, to prepare a report to the Chairs of the House Committee on Labor and Commerce and the Senate Committee on Commerce and Labor that determines if the implementation of the measure imposes a disproportionate burden on historically economically disadvantaged communities; (xvi) requires the Secretary of Natural Resources and the Secretary of Commerce and Trade, in consultation with the State Corporation Commission and the Council on Environmental Justice and appropriate stakeholders, to report to the General Assembly by January 1, 2022, any recommendations on how to achieve 100 percent carbon-free electric energy generation by 2045 at least cost for ratepayers; and (xvii) provides that it is the policy of the Commonwealth that the State Corporation Commission, Department of Environmental Quality, Department of Mines, Minerals and Energy, Virginia Council on Environmental Justice, and other applicable state agencies, in the development of energy programs, job training programs, and placement of renewable energy facilities, shall consider those facilities and programs being to the benefit of low-income geographic areas and historically economically disadvantaged communities that are located near previously and presently permitted fossil fuel facilities or coal mines. This bill is identical to SB 851.

Electric utility regulation; environmental goals. Establishes a schedule by which Dominion Energy Virginia and American Electric Power are required to retire electric generating units located in the Commonwealth that emit carbon as a by-product of combusting fuel to generate electricity and by which they are required to construct, acquire, or enter into agreements to purchase generating capacity located in the Commonwealth using energy derived from sunlight or onshore wind. The measure replaces the existing voluntary renewable energy portfolio standard program (RPS Program) with a mandatory RPS Program that applies to electric utilities and licensed competitive suppliers. Under the mandatory RPS Program, utilities and suppliers are required to produce their electricity from 100 percent renewable sources by 2045 for Dominion Energy Virginia and any retail supplier operating in the service territory of Dominion Energy Virginia and by 2050 for American Electric Power and any retail supplier operating in the service territory of American Electric Power. A utility or supplier that does not meet its targets is required to pay a specific deficiency payment or purchase renewable energy certificates. The proceeds from the deficiency payments are to be deposited into an account administered by the Department of Mines, Minerals and Energy, which is directed to distribute specific percentages of the moneys to job training and renewable energy programs in historically economically disadvantaged communities, energy efficiency measures, and administrative costs. The measure directs the Department of Environmental Quality to incorporate into regulations previously adopted by the State Air Pollution Control Board certain provisions establishing a carbon dioxide cap and trade program to reduce emissions released by electric generation facilities. Such provisions are required to comply with the Regional Greenhouse Gas Initiative model rule. The measure authorizes the Director of the Department of Environmental Quality to establish, implement, and manage an auction program to sell allowances into a market-based trading program. The measure requires revenues from the sale of carbon allowances, to the extent permitted by Article X, Section 7 of the Constitution of Virginia, to be deposited in an interest-bearing account and to be distributed without further appropriation to the Virginia Community Flood Preparedness Fund, to the Department of Housing and Community Development for low-income energy efficiency programs, for administrative expenses, and for statewide climate change planning and mitigation activities. The measure continues the Virginia Shoreline Resiliency Fund as the Virginia Community Flood Preparedness Fund for the purpose of creating a low-interest loan program to help inland and coastal communities that are subject to recurrent flooding. Among other things, the measure also (i) requires, by 2035, American Electric Power and Dominion Energy Virginia to construct or acquire 400 and 2,700 megawatts of energy storage capacity, respectively; (ii) establishes an energy efficiency standard under which each investor-owned incumbent electric utility is required to achieve incremental annual energy efficiency savings that start in 2022 at 0.25 percent of the average annual energy retail sales by that utility in 2019 and increase those savings annually. Beginning in 2026 and every three years thereafter, the Commission is required to adjust the required energy efficiency goals for the successive three years. and thereafter when energy efficiency savings of at least two percent of the average annual energy retail sales by that utility in the three preceding calendar years are required; (iii) exempts large general service customers from energy savings requirements; (iv) revises the incentive for electric utility energy efficiency programs; (v) provides that if the Commission finds in any triennial review that revenue reductions related to energy efficiency measures or programs approved and deployed since the utility's previous triennial review have caused the utility to earn more than 50 basis points below a fair combined rate of return on its generation and distribution services or, for any test period commencing after December 31, 2012, for Dominion Energy Virginia and after December 31, 2013, for American Electric Power, more than 70 basis points below a fair combined rate of return on its generation and distribution services, the Commission shall order increases to the utility's rates for generation and distribution services necessary to recover such revenue reductions; (vi) establishes requirements regarding the development by Dominion Energy Virginia of qualified offshore wind projects having an aggregate rated capacity of not less than 5,200 megawatts by January 1, 2034, and provides that in constructing any such facility, the utility shall (a) identify options for utilizing local workers; (b) identify the economic development benefits of the project for the Commonwealth, including capital investments and job creation; (c) consult with relevant governmental entities, including the Commonwealth's Chief Workforce Development Officer and the Virginia Economic Development Partnership, on opportunities to advance the Commonwealth's workforce and economic development goals, including furtherance of apprenticeship and other workforce training programs; and (d) give priority to the hiring of local workers, including workers from historically economically disadvantaged communities: (vii) requires each utility to include, and the Commission to consider, in any application to construct a new generating facility the social cost of carbon, as determined by the Commission, as a benefit or cost, whichever is appropriate; (viii) removes provisions that authorize nuclear and offshore wind generating facilities to continue to be eligible for an enhanced rate of return on common equity during the construction phase of the facility and the approved first portion of its service life of between 12 and 25 years in the case of a facility utilizing nuclear power and for a service life of between five and 15 years in the case of a facility utilizing energy derived from offshore wind; (ix) removes a provision that declares that planning and development activities for new nuclear generation facilities are in the public interest; (x) increases the limit from 5,000 megawatts to 16,100 megawatts on those solar and onshore wind generation facilities that are declared to be in the public interest and increases the limit from 16 megawatts to 5,000 megawatts on those offshore wind generation facilities that are declared to be in the public interest; (xi) amends the net energy metering program by increasing the maximum capacity of renewable generation facilities of participating nonresidential eligible customer-generators from one to three megawatts, increases the cap on the capacity of generation from facilities from the customer's expected annual energy consumption to 150 percent of such amount, increases each utility's systemwide cap from one percent of its adjusted Virginia peak-load forecast for the previous year to six percent of such amount, five percent of which is available to all customers and one percent of which is available only to low-income customers; (xii) establishes the Percentage of Income Payment Program (PIPP), which caps the monthly electric utility payment of low-income participants at six percent, or, if the participant's home uses electric heat, 10 percent, of the participant's household income and sets forth eligibility criteria for participation in PIPP, establishes the PIPP Fund to pay electric utility providers the balance of low-income participants' accounts and to fund energy efficiency and weatherization initiatives, and provides directives to the Department of Housing and Community Development regarding the administration of PIPP; (xiii) requires each investor-owned utility to consult with the Clean Energy Advisory Board in how best to inform low-income customers of opportunities to lower electric bills through access to solar energy (xiv) requires the Department of Mines, Minerals and Energy to prepare a report to the House and Senate Committees on Commerce and Labor and to the Governor's Advisory Council on Environmental Justice that ensures that the implementation of this act does not impose a disproportionate burden on minority or historically economically disadvantaged communities (xv) requires the Secretary of Natural Resources and the Secretary of Commerce and Trade, in consultation with the State Corporation Commission and the Council on Environmental Justice and appropriate stakeholders, shall report to the General Assembly by January 1, 2022, any recommendations on how to achieve 100 percent carbon free electric energy generation by 2050 at least cost for ratepayers; and (xvi) provides that it is the policy of the Commonwealth that the State Corporation Commission, Department of Environmental Quality, Department of Mines, Minerals and Energy, Virginia Council on Environmental Justice, and other applicable state agencies, in the development of energy programs, job training programs, and placement of renewable energy facilities, shall consider those facilities and programs being to the benefit of low-income geographic areas and historically economically disadvantaged communities that are located near previously and presently permitted fossil fuel facilities or coal mines.

Electric utility regulation; environmental goals. Replaces the existing voluntary renewable energy portfolio standard program (RPS Program) with a mandatory RPS that applies to electric utilities and licensed competitive suppliers. Under the mandatory RPS, utilities and suppliers are required to produce their electricity from 100 percent renewable sources by 2050, with annual steps that direct the electricity be generated in specific percentages in nine tiers or sub-tiers. A utility or supplier that does not meet its targets is required to pay a specific deficiency payment or purchase renewable energy certificates. The proceeds from the deficiency payments are to be deposited into an account administered by the Department of Mines, Minerals and Energy, which is directed to distribute specific percentages of the moneys to low-income, disability, veteran, and age-qualifying energy efficiency programs; additional energy efficiency measures for public facilities; coastal resiliency efforts; and administrative costs. Among other things, the measure also (i) adopts a 2,400 megawatt energy storage deployment target for the Commonwealth and requires the State Corporation Commission (the Commission) to adopt regulations for the implementation of the energy storage deployment target that outline a deployment target of 2,400 megawatts by 2035 with interim targets that include Commission-approved energy storage system resources; (ii) establishes an energy efficiency standard under which each investor-owned incumbent electric utility is required to achieve incremental annual energy efficiency savings that start in 2021 at 0.35 percent of the average annual energy retail sales by that utility in the three preceding calendar years and increase annually until 2027 and thereafter when energy efficiency savings of at least two percent of the average annual energy retail sales by that utility in the three preceding calendar years are required; (iii) exempts large general service customers from energy savings requirements; (iv) revises the incentive for electric utility energy efficiency programs; (v) provides that if the Commission finds in any triennial review that revenue reductions related to energy efficiency measures or programs approved and deployed since the utility's previous triennial review have caused the utility to earn more than 50 basis points below a fair combined rate of return on its generation and distribution services or, for any test period commencing after December 31, 2012, for Dominion Energy Virginia and after December 31, 2013, for American Electric Power, more than 70 basis points below a fair combined rate of return on its generation and distribution services, the Commission shall order increases to the utility's rates for generation and distribution services necessary to recover such revenue reductions; (vi) provides that in the case of a facility utilizing energy derived from offshore wind, the utility shall identify options for utilizing local workers, consult with the Commonwealth's Chief Workforce Development Officer on opportunities to advance the Commonwealth's workforce goals, including furtherance of apprenticeship and other workforce training programs to develop the local workforce, and give priority to the hiring of local workers; (vii) requires each utility to include, and the Commission to consider, in any application to construct a new generating facility the social cost of carbon as a cost adder; (viii) removes provisions that authorize nuclear and offshore wind generating facilities to continue to be eligible for an enhanced rate of return on common equity during the construction phase of the facility and the approved first portion of its service life of between 12 and 25 years in the case of a facility utilizing nuclear power and for a service life of between five and 15 years in the case of a facility utilizing energy derived from offshore wind; (ix) removes a provision that declares that planning and development activities for new nuclear generation facilities are in the public interest; (x) removes the limit of 16 megawatts on those offshore wind generation facilities that are declared to be in the public interest; (xi) amends the net energy metering program by increasing the maximum capacity of renewable generation facilities of participating nonresidential eligible customer-generators from one to three megawatts, increases the cap on the capacity of generation from facilities from the customer's expected annual energy consumption to 150 percent of such amount, increases each utility's systemwide cap from one percent of its adjusted Virginia peak-load forecast for the previous year to 10 percent of such amount, eliminates the ability of a utility to assess standby charges, and establishes the right to finance electrical generating facilities via leases and power purchase agreements; (xii) removes the ability of utilities in triennial rate reviews to attribute to test periods under review the booked costs of early retirement determinations made by the utility for utility generation facilities fueled by coal, natural gas, or oil; (xiii) directs the State Air Pollution Control Board (the Board) to report to the General Assembly by January 1, 2021, on how to achieve 100 percent carbon-free electric energy generation by 2050 and whether the General Assembly should permanently repeal the ability to obtain a certificate of public convenience and necessity for electric generating units that emit carbon as a by-product of combusting fuel to generate electricity; (xiv) bars the Commission from issuing a certificate for public convenience and necessity for any investor-owned utility to own, operate, or construct any electric generating unit that emits carbon as a by-product of combusting fuel to generate electricity until the General Assembly receives the Board's report; (xv) directs the Board to adopt regulations establishing a carbon dioxide cap and trade program to limit and reduce the total carbon dioxide emissions released by electric generation facilities, which regulations shall comply with the Regional Greenhouse Gas Initiative model rule; (xvi) exempts certain pilot programs from the requirements that an energy efficiency program be in the public interest; (xvii) establishes requirements regarding the development by Dominion Energy Virginia of qualified offshore wind projects having an aggregate rated capacity of not less than 5,200 megawatts by January 1, 2034; (xviii) directs the Board to adopt a regulation to reduce, for the period of 2031 to 2050, the carbon dioxide emissions from any electricity generating unit in the Commonwealth that serves an electricity generator with a nameplate capacity equal to or greater than 25 megawatts that supplies 10 percent or more of its annual net electrical generation to the electric grid or more than 15 percent of its annual total useful energy to any entity other than the manufacturing facility to which the generating source is interconnected; (xix) establishes a shared solar program that allows customers to purchase electric power through a subscription in a shared solar facility; (xx) repeals the Manufacturing and Commercial Competitiveness Retention Credit that allows certain large nonresidential customers that enter into a three-year minimum exclusive supply agreement to receive a two percent reduction in their base generation charges; (xxi) repeals the authorization for certain third-party power purchase agreements; and (xxii) requires the Department of Mines, Minerals and Energy to prepare a report to the House and Senate Committees on Commerce and Labor and to the Governor's Advisory Council on Environmental Justice that ensures that the implementation of this act does not impose a disproportionate burden on minority or historically economically disadvantaged communities.