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Published on February 10th, 2014 | by Guest Contributor

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Dominion Virginia Power Blocks Net Metering Bill

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February 10th, 2014 by  

Originally published on Energy and Policy Institute.
By Gabe Elsner.

This 54kW solar PV system provides electricity to a multi-family low-income housing complex owned by a non-profit in Russell County, Virginia.Last week, Dominion Virginia Power, the largest utility in Virginia, successfully blocked a solar net-metering bill from moving forward in the Special Subcommittee on Energy in the House of Delegates Commerce & Labor Committee. Days earlier, Dominion had attempted to hijack a bill meant to boost the installation of solar on multi-family housing communities. According to Virginia Sierra Club’s Ivy Main, Dominion lobbied for “substitute language that would give the utility the exclusive right to build and own community systems and sell the power to the customers” thereby forcing multi-family residents to purchase solar only from Dominion. The utility company was unsuccessful, but still managed to stop the bill in its tracks.

From Ivy Main’s Power for the People VA blog: “Solar advocates and industry members successfully beat back Dominion Power’s bid to hijack the multi-family net metering provisions of HB 879 (Yost) and HB 906 (Krupicka). Alas, Dominion got its revenge Thursday in the House Commerce & Labor energy subcommittee, where the Republican majority had clearly come prepared to kill the bills. The two bills, plus Delegate Surovell’s solar gardens bill, HB 1158, were tabled with little debate, though with dissenting votes from the subcommittee’s three Democrats.”

The ten delegates who were against the solar bills all came from the Republican party but more importantly, Dominion’s campaign contributions to these ten delegates may have led to the delegates’ opposition to the pro-solar bill.

Dominion is the largest contributor to candidates’ electoral campaigns than any entity in the state besides the two political parties. In 2013, Dominion spent over $800,000 to influence Virginia state elections. Chairman of the Special Subcommittee on Energy Terry Kilgore received $23,500 from Dominion for his 2013 reelection effort, and another $31,000 in 2011, making Dominion his largest campaign donor in the past two election cycles. In total, Dominion contributed $45,750 to these ten Republican candidates in 2013.

The company also very likely lobbied the Subcommittee to table the pro-solar net metering bill. The latest lobbying expenditures report details that Dominion spent$299,753 from May 2012 through April 2013 lobbying the state legislature and had at least eight lobbyists as employees and retained four additional lobbyists as contractors.

Dominion Virginia Power power plant in Southwest Virginia. Dominion Virginia Power has an interest in maintaining it’s dominance of the Virginia electricity market and stopping growth of emerging clean energy industries, especially distributed clean energy because of the threat it poses to Dominion’s profits. The Edison Electric Institute (EEI), the utilities trade group, released a report (.PDF) entitled “Disruptive Challenges” in January 2013, outlining the threat that distributed energy generation presents to the traditional utility industry business model of selling electricity from large, centralized, mostly fossil fuel power plants. According to the latest disclosures to the Securities and Exchange Commission, Dominion Virginia Power primarily generates electricity from large power plants using nuclear technology (33%), coal (22%), and natural gas (17%).

It’s no wonder Dominion wants to limit the growth of distributed solar energy by blocking net metering from reaching multi-family communities. Republican delegates support for Dominion’s protectionism is the equivalent of supporting an attempt by Kodak to stop people from buying digital cameras. Dominion’s lobbying effort is anti-competitive and anti-free market. It’s meant to slow the growth of clean energy in order to maintain one special interest’s “dominion” on the sale of electricity in Virginia, and should generate bipartisan opposition.

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  • lifematters

    Also, I’m no fan of big utilities but Dominion is already doing net metering for residential solar in VA.

  • lifematters

    For some reason the author conveniently avoided the fact that Dominion donates almost equally between republicans and democrats in VA. Depending upon which party is in the majority.
    .
    If only democrats supported this proposed bill then there is automatically something “funny” about it like mandatory tax subsidies for specific suppliers or a quiet, state contract for a large dem contributor. I worked in the VA. Legislature so I know these guys reasonably well.
    .
    If you like credibility Gabe (article author), try a little objectivity next time. You blew it on this one.

    • Jon__H

      @lifematters:disqus I would suggest that you read the bills prior to commenting. HB 906, HB879, and SB350 did not have any “mandatory tax subsidies for specific suppliers or a quiet, state contract for a large dem contributor”. In fact it was previous legislation from 2011 that Dominion amended that allowed them to perpetuate their bogus Solar Partnership Program on the rate payers of Virginia. They’ve installed 632 kW of their planned 30 MW in 2013, 2.1% of what they promised by the end of 2015 at a cost of $4 per watt. 33% higher than the entire industry average for the 3rd quarter of 2013. These 500kW or more sized installations could easily be installed by the private sector for under $3/watt. DVP will own these installations that are paid for by an $80 million rate increase (they asked for $111 million), including the associated RECs, and then charge the rate payers for the power they produce.

      I am in the industry and two weeks ago was involved in the lobby for these bills and against DVP’s proposed changes. Regardless of the fact that DVP donates to both parties the Dems are much more willing to take them on. Not sure why since you would think the GOP would be for open market competition. I have no political agenda, just want a fair fight to compete with the utilities for business in Virginia.

  • http://electrobatics.wordpress.com/ arne-nl

    The real thing that’s going on is that these utilities have the freedom to demand whatever money they need from their ratepayers. Ratepayers have no choice anyway, so there is no incentive for utilities to offer any kind of value for money. Ratepayers are considered powerless pawns and a source of easy money for the fossil barons that own the utilities.

    Until now.

    PV is handing power back to where it belongs: in the hands of the ratepayers. They payed for the grid and are the moral owners. The government protected monopolies of course are trying to do everything to make you believe otherwise, simply to protect their gravy train. They will pretend it is about energy security scare you with horror stories of endless blackouts.

    Don’t be fooled. To frame it in post-financial-crisis terms: this is a battle between the 1% and 99%. If the 99% wants net metering, the 1% simply has to comply. That’s democracy.

  • Richard

    People tend to forget that they still need their electric utility even though they have a rooftop solar PV system. And, that there electric utility won’t be there if it doesn’t continue to make its guaranteed return on investment.

    The reason that people (customers) still need the electric utility is that their rooftop solar PV setup produces enough power through the day — which varies with the time of day — to meet their average power needs but not to meet their peak power needs. The result is that customers use the local grid and power generation as though it was a battery although, of course, it is not (yet) able to store energy.

    The electric utility has an investment in the local grid and generation facilities and they are entitled to their ROI on them, as well as the portion of the O&M expense even if the customer’s net use of electricity is zero. So, the customer with rooftop solar PV needs needs to pay their pro-rata fair share based on their usage of the utility’s facilities and O&M. If they are charged $0.00 under net metering because their net usage of electricity is zero, they are receiving a subsidy paid for by the other customers that do not have solar PV. Charges need to be based on and reflect costs and we need to realize that net metering won’t work if a lot of people are using it. It violates Kant’s first principle; it won’t work if everybody does it.

    • Joe

      Richard,

      You seem to think that the current utilities business model is the only way forward.

      Here in WA, Australia any excess power from a solar panel is put back into the grid and the homeowner makes about 8 cents per kwh. This is then sold by the utility, our utility charges around 22 cents per kwh.
      So the utility gets to profit off household solar panels and you don’t think the homeowner should receive any money?

      You are right about solar customers still relying on the grid at night though. This is something that is going to change in the next few years. There have been many advancements in solar power storage and going off grid is soon going to be financially viable for many people.

      Utilities have a huge task ahead of them dealing with the ‘death spiral’ that is to come. Anti-renewable politics will only hold back the tide for so long. The technology is here and the benefits are plain to see. Centralised power generation is a dying business and the utilities will need to adapt.

      • Richard

        There is absolutely no problem with solar PV customers buying power at retail and selling excess power back to the grid at a ‘wholesale’ rate as you describe. The problem we have in the US is so-called net metering where the price is the same for power purchased from the grid or for power fed back into the grid — they pay only for the net amount used. And, I note again, as I said that solar PV customers don’t just purchase electricity at night. The output of their solar PV panels varies through the day and there are times when the peak power load demand of their home is greater than the solar PV setup can supply.

        • Isiah Smith

          Richard, your local power company sells you power and charges you by the kWh. If you used 100 kWh (day and night) and paid $10 then you paid $.10 for each. Fair enough..

          Lets say you do the same thing next month. However, you now produce the 100 kWh from your home because you installed solar. Well you should reasonably assume to not have to pay anything besides a metering fee right?

          In Virginia you would be incorrect.

          Though you produce all 100 kWh during the day, you still need power at night. You will buy power again at night from Virginia Power EVEN THOUGH THEY TAKE YOUR POWER AND SELL IT … you get NOTHING!

          They make PLENTY already since electricity is a NEED and they are the ONLY source. BUT THEY WANT MORE!

          Net-metering allows you to receive credits (not cash) on your account for the power that you produced earlier in the day. That way when you turn on your lights in the evening you’re just taking from what YOU ALREADY EARNED with the utility who SOLD YOUR POWER.

          A distributed supply of energy allows the utility to invest divest in infrastructure, reduces the incidence of rolling blackouts, and even makes us less susceptible to terrorist attacks. Pressure from competition in the market drives the arbitrarily controlled rising cost of power DOWN.

          The system we have now folks is COMMUNIST! It’s not socialist, but it’s owned by one party and controlled by the state. There is no free market for power the same way there is for telecom. Those of you that believe in a free market should be on the side of net metering.

          Anything else is anti-american!

    • Jim Smith

      The greedy utilities are not “entitled” to anything

      • Bob_Wallace

        The utilities own the grid. They are entitled to a fair return on their investment.

        The utilities provide the electricity one uses when the Sun is not shining. They are entitles to a fair return for that product/service.

        • Jim Smith

          they are not entitled to a return on their investment anymore than i am entitled to a return on my stock market investment.

          • Bob_Wallace

            They’ll get a return on their investment or they’ll take their wires and go home.

            You have any idea what it costs to be your own utility company?

          • Jim Smith

            so you think everyone should just bend over and get price gouged by the mega utility monopolies. No thanks. The utilities are going no where.

            excess solar generated by a homeowner is bought for wholesale rates by the monopoly electric utility who turns around and sells the “free” power at full retail price. They are making out quite well thanks to rooftop solar.

          • Bob_Wallace

            I said “reasonable return”.

            Are you aware what happens to the wholesale cost of electricity with only a modest amount of solar? Take a look at Germany pre- and post.

            Put not all that much end-user solar on the grid and the sunny-hour price of electricity collapses. In Germany’s case the midday price can drop below the late night price.

            You saying that the grid should be required to take on boat loads of low value midday end-user solar and then pay them back with very much more expensive electricity in the late afternoon and evening?

            eta: Looks like Disqus has changed the display order of images. The top graph is post-solar. The bottom graph is pre-solar.

          • Jim Smith

            the utilities take on wholesale power during peak hours and resell that extra power at peak retail prices. They dont pay to generate or transmit it. My neighbors use it.

            Look, it is clear you have a horse in this game. There is no other reason someone would be pushing so hard for the utilities ability to double dip and charge solar power producers extra while making more money by getting “free” wholesale power during peak usage times.

          • Bob_Wallace

            Electricity prices are (in general) regulated. As wholesale prices are lowered by midday demand decay regulating bodies will ratchet down retail prices.

            The old financial model for utilities is broken. We need a new model which is fair to all. Net metering is not that model.

            As for your accusations that I’m working for the utilities, or for anyone, I’ll give you a pass this one time. You’re new here and don’t yet know the players.

          • Jim Smith

            it is not broken by any stretch of the imagination. The current model is completely fair. As more people get solar, the utility monopolies business models will have to evolve. it is that simple.

            Massively distributed power generation is coming. It will result in much cheaper, cleaner, and more reliable power generation and transmission. this is a win for everyone, except the dinosaur electric utility monopolies.

          • Bob_Wallace

            “The current model is completely fair. ”

            It’s fair to require utilities to operate at a loss?

            How can you force utilities to accept low value electricity and repay with more expensive electricity? How can either a public or private grid stay in business always losing money?

          • Jim Smith

            what utility is losing money? did they declare bankruptcy?

            peak rates are during the day, right? This is because it is when there is the most demand, right? You really cant be this dense. They buy power at wholesale during peak demand. And resell that wholesale power at peak retail rates. You are not making any sense what so ever.

            Again, what utility is showing losses on their balance sheets?

          • Bob_Wallace

            The first graph shows German wholesale electricity cost on a day before there was much solar on the German grid.

            The second graph shows price decay after solar is added. The midday wholesale price drops below nighttime costs.

            Here’s what net metering would mean. Once enough consumers installed solar they would be dumping a lot of low value electricity on the grid. Low value because there’s not much demand.

            And then as the Sun sets in the west the utility would have to buy a bunch of expensive electricity and give it to the solar users. For free.

            You can’t expect a company to accept 4 cent electricity and repay it with 6 cent electricity and stay in business.

            You can’t expect the utility to keep increasing midday prices for those customers who don’t have solar in order to cover their losses.

            There’s got to be a new pricing system that is fair to all.

          • Jim Smith

            this chart is showing what?

          • Bob_Wallace

            As I said, that comment was a work in progress.

            Up until a day or so ago Disqus displayed the first graph loaded last. I was checking to see how they would get displayed today.

        • Jim Smith

          And what about the billions annually taxpayers subsidize the utilities with? corporate welfare at its finest.

          • Bob_Wallace

            Any subsidies for the grid should be included in “reasonable return” calculations.

        • http://electrobatics.wordpress.com/ arne-nl

          Utilities are unnatural monopolies. They got it handed to them. The only reason for them to exist is to offer a reliable service to their customers. Afaik, there is no obligation whatsoever from the rate/taxpayers to offer any kind of roi, reasonable or not.

          The utilities don’t have to compete for their customers and likewise, the customers have no choice. So the only means the ratepayers have to not be robbed is regulation by law.

          The only rule I see is that the utility must have the means to effectively and efficiently manage the grid. So they need money, yes. But the question is HOW. If the public decides that net metering is desirable that utility has no business interfering in the democratic process. They should simply comply.

          • Jon__H

            The issue of Investor owned utilities (IOUs), net-metering, solar, etc. really is one of stranded cost recovery. The stranded costs are the capital costs of the utilities’ generation and distribution assets that are no longer required when more distributed generation is put onto the grid (solar). These are assets that are required to make the business model that they, the IOUs, put into place.

            Public utility commissions do not dictate how IOUs provide the service that they are tasked to provide. If an IOU does not correctly identify industry trends (distributed generation) and makes a bad business decision (centralized generation and expensive distribution) then why should I (a solar owner) pay for. Their choice, their cost, not mine.

          • Richard

            Perhaps because you still need these generation and distribution assets. As I explained above, you need these assets more than you think. People with rooftop solar PV installations that think that it provides all of their power needs during the daylight hours are simply wrong.

            And, I hope that realize that you need these at night unless you spent a lot of money on storage batteries. Do you know when non-AC peak residential usage is? It is typically at 8:00 PM; so having solar doesn’t change that usage or the need for the resources to supply that load.

          • Jon_H

            Actually I do not need “these assets”. What I need are the assets for generation and distribution that should have been built by a forward thinking utility that spent a lot less on centralized generation and instead implemented the strategy of distributed generation.

            And yes, I, and others reading this understand their panels likely won’t offset 100% of their usage and that I will be drawing from the grid. The amount of solar currently on the grid in Virginia is inconsequential in reference to your comment on peak usage. And when this no longer is the case, pumped hydro storage at facilities such as Bath County Pumped Storage Station are capable of storing power from solar when demand is low and releasing it when demand is high. There are more ways to store power from solar than batteries.

          • Bob_Wallace

            “If the public decides that net metering is desirable that utility has no business interfering in the democratic process. They should simply comply.”
            Let’s play it forward. Most end users have rooftop solar. The public decides that the utility has to accept their surplus electricity and then pay them back kWh per kWh.

            How does that work?

            Are you suggesting that utilities would have to set up storage and backup generation at their expense and get nothing in return?

            Net metering is/was a good deal for utilities back when there was little rooftop. We’ve seen in the case of Germany that with only modest amounts of solar that good deal disappears.

          • Richard

            I don’t see why you say that a utility is an “unnatural monopoly”. Perhaps you don’t understand the economic theory behind the fact that they are a natural monopoly.

            If the voters decided that they want net metering and net metering means that utility customers that have net metering don’t pay for the use of the grid, then the voters (taxpayers) are going to have to subsidize the construction, operation and maintenance of the grid.

    • paulroden

      These private, for profit “public utilities” supposedly regulated by state utility commissions and agencies are allowed a certain ROI. The question I have is how much profit is enough to satisfy their shareholders and provide for the capital for maintaining and upgrading their infrastructure? They are a state regulated monopoly that in my opinion should be run by the state or a worker/consumer owned cooperative. A decentralized, diverse and multi- sourced generating, co-generating renewable energy system connected by a smart grid, would be more resilient to breakdowns, malfunctions, weather and fluctuations of the global energy market and less vulnerable to terrorist attack. But it would also break the monopoly of a centralized electrical power utility or holding company. There wouldn’t be enough profit for Wall Street and their analysts. So the question remains, how much profit do you need to sustain your energy business and how much is enough?

      • Bob_Wallace

        “The question I have is how much profit is enough to satisfy their shareholders and provide for the capital for maintaining and upgrading their infrastructure?”

        High enough returns to attract investment.

        In the past people would accept lower returns from utilities because they were viewed as lower risk. Now things have changed. This is an industry that is entering a period of major disruption.

        My guess is that utilities are not going to see much investment. I won’t be surprised to see some bankruptcies for utilities that own thermal plants and some necessary bailouts/takeovers.

        I don’t think we can count on Congress to get in ahead of the problem. The libertarian knuckleheads won’t be willing to take preventative action. Were we smart we would probably jump in and require utility companies to split into separate “grid operation” and “power generation” companies. Then the generation companies (some of them) could be allowed to go under without disrupting the delivery system.

  • RamboSTiTCH

    No, Virginia, there is no Santa Claus.

  • GatsbyTheGreat

    Ugh. Virginia, this is why we can’t have nice things.

  • http://electrobatics.wordpress.com/ arne-nl

    As Germany paved the way for cheap solar for all the world to benefit, so are they now promoting self consumption and thus storage technologies. A few years from now, those will be cheap commodity items, a checkbox on the order form. SolarCity is already offering such solutions.

    These utilities are fighting a lost battle, but still think they can win. Or do they know and are they trying to stall things? That’s anyone’s guess.

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