We, the undersigned, represent organizations within the Virginia Grassroots Coalition.  One of our top priorities is moving Virginia toward a clean energy economy and drastically reducing statewide greenhouse gas emissions.

We appreciate the opportunity to comment on the development of the 2018 Virginia Energy Plan.  We understand that the Plan will focus on five stakeholder tracks: solar and wind, offshore wind, energy efficiency, electric vehicles, and energy storage.  While critically important, these tracks do not address comprehensive grid transformation and offer at best piecemeal solutions to some of our most pressing energy and environmental issues.  

I.  The Energy Plan Should Call for a Comprehensive Grid Transformation Study

To successfully compete in the 21st century economy, Virginia must transition from the status quo and modernize its grid and its utility laws.  Effective grid transformation should:

• Lower carbon emissions by reducing the need for carbon-emitting central station power;
• Provide greater grid efficiency with lower costs, thereby benefitting consumers and ensuring economic competitiveness;
• Provide greater reliability in the face of increasing extreme weather and associated power outages;
• Use demand-side resources to balance the grid and reduce expensive peak demand; and,
• Integrate much larger quantities of distributed solar, wind and battery energy.

Other state governments including those of New York, Minnesota, Rhode Island, Massachusetts, Michigan, Nevada and Ohio are aggressively pursuing grid transformation. 

In Virginia, however, grid modernization is largely left in the hands of the for-profit utility monopolies.  Thus, hundreds of millions of rate-payer dollars will continue to pay for projects that benefit utility shareholders rather than the public.  As clear from Dominion’s first filing in 2018 with the State Corporation Commission, Dominion intends to use money it previously overcharged consumers for capital projects that “harden” the existing grid, rather than for projects that provide consumers’ choice, produce economic efficiencies, reduce the carbon footprint, or in any way create a truly modern grid.

A.  Independent Grid Transformation Study with Recommendations

We strongly urge that the 2018 Virginia Energy Plan include a recommendation for the Governor to initiate a comprehensive Grid Transformation Study.  The study, along with its recommendations, should be completed before multi-millions are spent on grid modernization measures, as defined by the for-profit utilities, which are at best ineffective and at worst counterproductive.   Thus, the study should be final by the fall of 2019 – at which time, a final report with recommendations must be provided to the Governor, the General Assembly, relevant regulatory agencies and the public.  The study should include a strong stakeholder process with participation by consumer and environmental groups, local governments, the electric utility industry, relevant state representatives, experts and the general public.

The study should be led by an organization that is independent from the utilities.  The organization must have technical expertise in grid transformation technologies and should be knowledgeable of different regulatory and incentive-based approaches as well as other states’ grid modernization efforts.  Finally, it must be capable of evaluating the potential environmental and economic benefits of different grid transformation options and tools. 

B.  Grid Transformation Study Components

The grid transformation study must be far broader than the limited grid modernization definition in SB966.  At minimum, it should address:

• Utility Business Models and Rate Reforms.  Evaluate market-based alternatives to monopoly utility control of distribution systems, including market-based or hybrid systems that allow competition from third-party suppliers.  Analyze different utility compensation models, particularly those that are “performance-based” rather than cost-based.

• Planning and Market Access.   Identify reforms to processes for integrated system planning and innovative approaches to distribution system planning, including consideration of “non-wires” alternatives (e.g. energy efficiency, distributed generation and demand response). 
• Improve Utility Oversight.  Evaluate whether the State Corporation Commission (SCC) has the appropriate roles, responsibilities, and regulatory authority to facilitate progressive grid modernization.  For example, while the SCC has the power to review utilities proposals, it does not have the mandate to (1) consider other regulatory or market options, (2) reduce CO2 emissions, (3) identify how to achieve specific energy efficiency goals, and (4) promote third-party distributed energy.  In short, the SCC’s current authorities are woefully inadequate.  Given the impact electrical generation has on the economy and in contributing to climate change as well as other forms of air, water, and groundwater pollution, it is critical that the SCC has the requisite authorities as well as expertise.  The study should provide recommendations on how best to improve authorities of the SCC and ensure that the SCC has the necessary level of technical expertise.

II.  Barriers to Solar Energy Must be Eliminated

The recent energy legislation, “Grid Transformation and Security Act” (SB966), has a number of significant flaws.  It failed to set a sufficiently high target for solar.  It also failed to remove a variety of barriers to third-party solar generation.  These barriers negatively impact the solar industry, local government solar, as well as residential and business solar.  The 2018 Energy Plan should provide a robust review of these barriers and recommend legislative remedies and other reforms.  Remedies and reforms are especially critical to open the market for investment in distributed solar.  Some of the most critical reforms are listed below.

• Remove the 1% cap on net metered solar.  Net metering reduces the need for utilities to build expensive new generation facilities, reduces carbon in the grid and increases grid resilience and emergency preparedness in communities.  Net metering is a critical component in any plan to reduce carbon and achieve cost effective clean energy goals.  The legislative cap on the amount of net metered solar in a utility territory stymies investment and threatens the viability of the rooftop solar installation business, which has created tens of thousands of jobs in other states.  The 2018 Energy Plan should recommend repeal of the 1% cap.

• Clarify that third-party financing through power purchase agreements (PPAs) for customer-sited solar is legal.  Under a third-party PPA, a solar developer owns and operates a solar facility on customer’s property and then sells the electrical output to the customer.  The customer gets access to solar without incurring up-front costs; the developer takes advantage of the Federal investment tax credit and depreciation rules.  While it appears that the PPAs are legal under the Virginia Code, the utilities have taken the position that PPA’s are only permissible as pilot programs.  This has severely restricted the opportunity for third parties to pursue PPAs and obtain PPA financing except in the limited case of pilot projects.  The 2018 Energy Plan should recommend a legislative provision to clarify that third-party financing through PPAs is legal.

• Permit local governments to install solar facilities of up to 5 MW on government-owned property and use the electricity for government-owned buildings.   Current law limits the output of a solar facility on government-owned properties to on-site use or use on contiguous property, and imposes a 1 MW cap on any project.  The 2018 Energy Plan should recommend legislation that would allow local governments to credit up to 5 MW of output of a solar array located on government-owned property where there is no electric load – such as in the case of a closed landfill – to other government-owned properties within the same jurisdiction, such as schools or municipal buildings.  This would enable local governments to host arrays on their properties above 1 MW and thereby also achieve savings to taxpayers. 

• Permit customers to attribute the output of a single renewable energy facility to more than one meter on the customer’s property or on adjacent property owned by the same customer.   The Virginia Code permits farm customers to aggregate their meters thereby enabling them to put solar on one building (such as a barn) and attribute the output to other buildings on the farm.  However, other customers do not have this flexibility and must limit use of the output of a solar array to one meter on the same property.  The 2018 Energy Plan should recommend that the Virginia Code be amended to permit all customers to use the output of their solar array on buildings they own located on the same or adjacent property.   Giving customers this flexibility will result in more solar installed, more efficiently.

• Increase the project size cap for net-metered non-residential projects from 1 MW to 2 MW.   The Virginia Code restricts net-metered non-residential projects to 1 MW.  This restriction artificially limits the size of solar projects that could otherwise produce more clean electricity in our communities.

• Allow customers to install a net-metered solar facility larger than that necessary to meet the previous 12 months of demand.  Currently, customers can only install a net-metered solar facility that is designed to meet the previous 12 months of demand.  This restriction prevents a customer from sizing a facility to meet future demand from, for example, purchases of electric vehicles or home additions.  It also allows power companies to second-guess customers’ decisions regarding the size of their solar arrays.  Yet, customers who produce more electricity than they consume over the year cannot sell the excess at retail.  Thus, there is no economic incentive for customers to install excess solar and no legitimate reason why the utilities should oppose repeal of provisions that limit the size of the net-metered solar facility to the previous 12 months of demand.    The 2018 Energy plan should recommend repeal of limitations currently imposed by the Virginia Code.

• Allow owner/operators of multi-family residential and commercial buildings to install a solar facility on the building or surrounding property and sell the output to tenants whether or not they are individually metered, without being treated as a utility.  Under the Virginia Code, owners or operators are prohibited from installing solar facilities on multi-family residential as well as commercial buildings and selling the output to tenants without being treated as a utility.  This restriction especially hurts low and moderate-income tenants of apartment buildings who would like the same access to onsite solar enjoyed by owners of single-family homes. 

• Eliminate standby charges on residential solar facilities between 10 and 20 kW.  Because of the growing popularity of electric vehicles, customers need larger residential solar systems.  Standby charges act as a tax on the larger systems making them economically prohibitive.  These charges, therefore, harm ratepayers by restricting the addition of privately-funded, clean peak power to the grid.  The 2018 Energy Plan should recommend that the Virginia Code be amended to eliminate standby charges on residential solar facilities between 10 and 20 kW. 

Thank you for your consideration of our comments and recommendations.   We look forward to your response.

Respectfully,

Sharon Shutler, We of Action (WofA)

Luisa Boyarski, Together We Will Northern Virginia

Stair Calhoun, Network NOVA

Cindy Cunningham, Virginia Progressive Legislative Alert Network (VAPLAN)

Robbin Warner, Postcards4VA

Chris LeMenestrel, Virginia Democracy Forward

Marianne Burke, Indivisible Virginia 11

Anne Moriarty, Hunter Mill Indivisible

Molly Bakal, Indivisible Northern Virginia

Cindy Speas, Lewinsville Faith In Action

Heidi Zollo, Herndon-Reston Indivisible

Matt Sowd, Herndon Huddle

Juliet Hiznay, Kristin Haldeman, Indivisible Arlington

Kathleen Mullen, Indivisible Below the Beltway

Alice Robie, Zero Carbon Virginia

cc:  NOVA Senators and House of Delegates Representatives

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