Switch: Newsletter
Virginia Amends Proposed Renewable Energy Portfolio Standard to Address Stakeholder Concernsby: Patrick Tuffy
In the upcoming 2007 legislative session Virginia lawmakers will once again debate whether or not Virginia will join 20 other states, plus the District of Columbia, in establishing a Renewable Energy Portfolio Standard (RPS). The bill was originally introduced by Senator Mary Margaret Whipple, of Arlington, in the 2006 legislative session. The proposed bill was met with both support and skepticism and eventually carried over to the 2007. In the interim the bill has been reevaluated and amended to address the concerns of stakeholders.
An RPS is a policy which requires that all retail seller of electricity include a certain percentage of electricity from renewable sources in its resource portfolio. Renewable sources, defined in the RPS, include: solar, wind, biomass, hydropower, geothermal amongst others. Electricity retailers can meet this requirement by either owning a renewable energy facility or purchasing renewable power from someone else’s facility. Often RPS systems will have provisions which allow implementation of energy efficiency practices to count towards the total requirement. In addition, retailers can “trade” their requirements by purchasing renewable energy credits (REC). Instead of maintaining renewable energy in their own resource portfolios retailers can use purchased RECs to prove that someone else is generating the required amount of electricity from renewable sources.
When first introduced, the Virginia RPS bill sought to have the state run on a minimum of 20% renewable energy by 2016. This would have been an increase of 16% over ten years. Proponents of the bill argue that the RPS would not only yield the environmental benefits of reducing harmful emissions, but would also benefit the state's economy. They contend that the RPS would diversify the energy resource base of Virginia, making energy more reliable, and reduce the impact of a volatile energy market to the state. The RPS would also, it is argued, expand the energy market to include smaller generators which would create jobs and lower prices for consumers through competition. Those who did not support the bill, generally, did not disagree with these points, but were concerned with certain ambiguities in the language of the bill that could affect energy retailers.
One concern that was expressed had to do with the possibility that retailers would have to go outside of their generation area to purchase renewable energy. Some worried that if a utility was forced to buy renewable energy at a premium outside of their generation area they would have to take a loss because of Virginia’s capped rate system. Other concerns centered around defining more clearly what types of energy efficiency programs would qualify under the RPS as well as how it would affect those with long term purchasing contracts with utilities. These concerns were enough for the Commission on Electric Utility Restructuring to send the bill to the Virginia general assembly without a recommendation, effectively ending any chance of an “up or down” vote in the 2006 session. As such Sen. Whipple recommended that the bill be carried over to the 2007 session to be considered again.
Since then the Virginia RPS Stakeholders Group has been meeting regularly to discuss ways of improving the bill. One of the more notable and pragmatic changes was to extend the deadline in which standards had to be met to 2020. This new deadline not only accounts for the year the bill carried over but adds an extra two years for retailers to comply. Also, the distinction between “energy efficiency” and “renewable energy” and how they apply to RECs is more clearly defined. Under the new language of the bill energy co-ops and municipalities who maintain long term purchasing contracts are exempted from RPS implementation until those contracts have expired. All of these improvements seek to ensure that RPS implementation will not have a negative effect on the state's economy.
If carefully planned and implemented, a RPS could provide Virginians with more reliable and affordable energy while simultaneously improving the states environment and economy. As the 2007 legislative session approaches those who support the adoption of a RPS in Virginia are hopeful that the bill will pass. By amending the bill to address the concerns of stakeholders this prospect has become more likely.