COMMENTS OF WILLIAM PENNIMAN
CONCERNING NECESSARY ELEMENTS OF 2018 VIRGINIA ENERGY PLAN

I submit these comments as a citizen of Virginia with children and grandchildren.  My comments are for them and my fellow citizens.  My comments reflect 40 years practicing law relating to energy regulation and transactions and several years volunteering for environmental NGOs.

The authors of the 2018 Virginia Energy Plan must look to the future not to the past.  Every aspect of the Plan must be evaluated with reference to how it will reduce, continue or increase climate pollution.  The Plan must layout a program to sharply reduce greenhouse gas (GHG) emissions in the next 10, 20 and 30 years. A ten-year horizon is not long enough given the perils that face us.  

Virginia use the 2018 Energy Plan to announce the Commonwealth’s intention to become a leader in GHG reductions and in producing energy on a zero-GHG basis.  Taking steps to achieve that goal will make Virginia an economic leader with a future, which will attract businesses with a long-term future.

1. Climate Change is an Energy Issue. 

Climate change is harming our communities now and it is rapidly getting worse.  Flooding is routine along coasts and tidal rivers; flash flooding frequently occurs throughout the Commonwealth; dangers of major storms and storm surges (like Sandy, Katrina, Harvey, etc.) are growing; heat illnesses, asthma, Lyme disease and other health harms are spreading; heat and other adverse impacts are raising business costs and reducing economic efficiency.  Harm to the economy is growing with property values falling in newly flood-prone areas and with dangers to coastal economies and naval installations rising.   

These changes are largely caused by human emissions from energy supplies, particularly fossil fuels.  Coal is the worst source of carbon dioxide (CO2) from combustion, but it is also a significant source of methane (CH4) from mining and nitrous oxide (N20) from combustion.  Oil and natural gas follow with emissions of CO2 from combustion and CH4 from production, and CH4 is also leaked during processing, gathering, transportation and local distribution.  Natural gas may produce less CO2 than coal at the point of combustion, but we cannot afford to add the climate pollution from natural gas (either the CO2 or the CH4 emissions) at this stage in our descent to a steadily worsening climate.  Instead, we need to sharply decrease GHG pollution and to stop investing in GHG-emitting fossil fuel technologies, most of which will have operating lives that run decades into the future.

More than ever, Virginia must act to sharply cut its GHG emissions with a long-term plan to achieve a zero-carbon electric supply by 2050 and a 50% reduction in carbon emissions by no later than 2035.  As the electric sector’s carbon emissions are being reduced, Virginia needs to dramatically improve energy efficiency in buildings, appliances, heating and cooling and industrial equipment and convert its transportation system to electric vehicles which produce no emissions in their operations.  Virginia must also act to reduce GHG emissions from other parts of the energy sector.

1. Cutting CO2 Emissions in the Electric System

It is very possible to reduce CO2 emissions in the electric system to net-zero.  The zero-carbon technology exists and it is getting better and cheaper.  Political leadership and commitments are the major missing ingredients.  The 2018 Energy Plan needs to supply the zero-GHG vision and the climate-imperatives upon which that vision is based.

1. Solar, wind and hydropower are known renewable energy technologies to produce electricity.  The costs of these sources has dropped substantially over the past decade and they are now cheaper than traditional sources.  Their value is also greater because they can supply electricity without climate and other pollutants.  It is true that they are intermittent, but diversity of facility locations (e.g., onshore, offshore, and distributed throughout homes and businesses around the state and technologies across a large electric grid, combined with storage technologies and demand-side management (DSM), can get the system to net carbon neutrality over time. These technologies continue to improve and their prices continue to fall (e.g., with a record low bid for offshore wind recently received in Massachusetts).
2. All barriers to privately owned solar and wind generation should be eliminated.  User-owned, collectively-owned and third-party-owned generation that provides zero-carbon electric or thermal energy should be opened to market innovations and encouraged.  Net metering should be retained and expanded for residential solar.  Generation by  communities and third-parties should be left to private contracts without the burdens of utility regulation.  Among other possibilities, developers of condominiums, apartment buildings, or commercial complexes should be able to provide (by sale or by lease agreement) solar energy to tenants whether or not the tenants are individually metered by utilities.  This would help building owners to benefit their tenants and distinguish themselves from their competitors—while also benefiting the public with lower air pollution. (See, e.g., H.B. 421 introduced by Del. Rip Sullivan in 2018 session.)
3. Storage technologies (batteries, flywheels, and other technologies) are improving rapidly, and pumped storage is a well-established technology.  Batteries can be implemented at the utility scale or on-site in homes, electric vehicles (EVs) and businesses ready to serve the utility’s needs, or in the event of outages, the immediate needs of individuals or businesses.  Microgrids can further supplement the system and provide local security.  Investments in batteries should be permitted whether by utilites or by private owners or third parties.
4. Apart from these technologies, Virginia has operating nuclear plants, at least for the near term, and carbon-capture and sequestration can develop if utilities are obligated to achieve carbon neutrality.  (Nuclear plants are not a healthy long-term answer but they are a present reality.)
5. Virginia must avoid the trap of treating forest-based biomass as somehow being carbon neutral.  The theoretical view that future trees will recapture the carbon from combustion is not supported by the realities.  The climate crisis is now and our energy-related emissions must be cut by 90-100% by 2050.  Existing forests with mature trees do capture CO2 and provide an important climate-mitigation function.  But they are large and well-established.  There is no carbon neutrality in making carbon emissions worse for decades by burning wood now based on unenforced “promise” that seeds planted today may grow enough over 50-200 years to match what mature trees to now.  Nor is there any legal enforcement of claims that only scraps and waste wood is being burned.  Moreover, wood burning is less efficient from a Btu standpoint and its emissions of CO2 and N20 per MWH is inordinately high.
6. Energy efficiency and DSM can help to achieve a net-zero electric system, by reducing the total electricity that needs to be generated and by temporarily curtailing uses during peak or other stress periods.  Energy efficiency can lower electric bills even if electric generation and storage costs were to rise.
7. A rational, public-oriented plan for grid modernization and transformation could knit the evolving distributed generation and demand-side resources into a well-balanced, reliable system, which takes full advantage of competitive markets’ ability to provide better services at lower costs.  In contrast, leaving grid “modernization” in the hands of the traditional monopolies will stifle innovation, allow them to defend old investments and supply strategies, and allow them to promote demand growth and payments to affiliated businesses, like natural gas pipelines and supply companies.  The Governor should take the lead in conducting an independent review, led by independent experts, of the opportunities for grid transformation.

1. Energy Efficiency Improvements Are Critical.

Energy efficiency improvements can dramatically reduce the amount of electricity and natural gas that is needed to heat, cool and operate our homes and businesses.  Reducing energy consumption is a critical component to reducing GHGs emitted. The Electric Power Research Institute recently found that Virginia had achieved only 2% of the energy efficiency improvements available to it.

The problems with achieving greater energy efficiency are several.  Building codes are inadequate and secrecy often surrounds the costs of energy usage. Builders and building operators (landlords) can get higher returns for themselves by lowering their own costs even if the customers will pay higher total energy bills over time.  They do not have to publicize these costs or offer a better deal for customers.  It will cost buyers more to retrofit dwellings (often much more, as in the case of building envelopes) than it would have for the builder to include a more efficient designs in the first place and the higher construction costs would be paid with mortgages in the case of new home purchases.  Renters have no ability or incentive to retrofit a rental property. 

Another problem is that many of the state’s utility efficiency programs are run by companies that want to increase their sales and justify their past and future investments, not reduce sales.  (What would General Motors do if you asked it to reduce car sales in the public interest?)

Even public bodies, like local governments, are often more interested in short-term costs than in costs that will be faced by future taxpayers and officials.

The 2018 Energy Plan needs to address these issues with several recommendations, including the following:

1. The energy efficiency components of building codes for dwellings, commercial and governmental buildings should be tightened to reduce energy consumption in all new and refurbished buildings. The highest possible levels of efficiency should be required for building shells, ductwork, HVAC systems, water heating systems.  Measures, like ground source heat pumps, should be required as long as they are technically feasible.  Local governments should be empowered to require even greater efficiency improvements.  Appliances in new homes or buildings should exceed industry minimums and be at least Energy Star where applicable.
2. Net-zero energy buildings should be rewarded with tax benefits and favorable publicity.  Developers will value assistance and encouragement to build net-zero housing from the state government
3. Utility efficiency programs need to be dramatically revised or replaced.  Look for guidance at Delegate Sullivan’s 2018 bill H.B. 963.  That bill proposed several changes to the current utility efficiency programs.  (1) It proposed mandatory reduction goals.  Voluntary goals have been a failure.  (2) It would have prioritized energy efficiency over constructing new generation whenever efficiency could balance a utility’s supply and demand at lower cost and environmental impacts.  (3) It would empower the SCC to order utilities to implement more effective energy efficiency programs rather than just rejecting poor programs proposed by utilities.  (4) It would require the SCC to consider health and environmental benefits, as well as simple implementation costs and results, when evaluating costs and benefits of efficiency programs.  It makes no sense for energy cost savings to be evaluated solely relative to their implementation costs when they also save lives and reduce health harms (e.g., asthma) and mitigate climate change and other pollution harms. 

If these changes are not made, then the best alternative would be to transfer a portion of a utility’s charges (e.g., $0.01-0.02/kwh) to an independent, non-profit entity charged with maximizing consumer energy savings.Utilities have an inherent conflict of interest with respect to energy usage reductions—they want to increase load and investments in new generation.An independent entity would be better positioned to maximize energy savings for the same amount of expenditures.Other states (e.g., Vermont) have successfully implemented this approach.

1. The state should strengthen its own efficiency policies by (1) setting clear goals for annually reducing energy usage by each state agencies; (2) making leaders within each department personally responsible for achieving the energy-reductions; (3) tracking and publicizing energy usage and progress; and (4) rewarding employees who make the most meaningful contributions to achieving the goals.  Generally announcing energy reduction goals (e.g., 10% over 5 years) is not going to be effective without clear assignments of responsibilities and consequences for meeting or not meeting the goals.  Energy efficiency performance contracting should be encouraged and facilitated.
2. Local governments need help and encouragement.  It is far too easy for local officials to take a short-term view that avoids investments in longer term savings which would benefit taxpayers, but not necessarily the officials who approve the energy savings investments.  To try to address this problem, the state should (1) provide technical and contracting assistance to local governments (including school systems) to help them understand the savings opportunities and ways to achieve them, including energy efficiency performance contracts which avoid or minimize up-front costs; (2) track and annually publicize progress (relative and absolute) that each local government make in reducing its energy usage;  (3) provide awards (financial or honors) to those who do the best job reducing their energy consumption through energy efficiency or through self-generated solar energy.  In addition, the legislature should create a revolving fund to provide financial assistance to local governments to help them cover their up-front costs, which would be repaid out of savings and re-loaned to other local governments.
3. Landlords and potential sellers should be required to track and publicize the energy usage and energy costs of building users.  This information should be publicized with recognition given to best and worst performers.
4. More help should be extended to reducing energy usage and costs of low-income tenants and home owners.

1. Electric Vehicles.

Electric vehicles have no point-of-use pollution emissions, have much less need for maintenance, and lower per-mile operating costs.  They can be a major benefit for consumers and the environment, particularly as electric systems shift to zero-carbon energy production. 

The central problems to getting to much greater EV usage are (a) lack of buyer awareness of benefits and (b) fears that the low availability of charging facilities will interfere with convenient travel particularly over longer trips.  Virginia should address these issues with at least the following measures:

1. Building codes should be revised to require that Level 2 EV chargers or, at least, NEMA 14-50 electrical outlets be installed in garages, carports and parking lots of all new single-family or town house developments.
2. Building codes for multifamily dwellings should be required to install Level 2 or Level 3 chargers (or a combination of the two) in parking lots.  A minimum percentages of parking spaces (e.g., 10-20%) should be equipped with such chargers from the outset with preinstalled conduits and related equipment to add to the availability of chargers whenever requested by residents.
3. Building codes for hotels and motels should require installation of a mix of Level 2 and Level 3 chargers covering a minimum percentage of parking spaces (e.g. 20-30%).
4. Building codes for gas stations should require that a Level 3 charger should be installed for each 6 nozzles for gasoline.
5. Building codes for other commercial buildings and government buildings should require that a certain number of spaces provide Level 2 or Level 3 charging capabilities.
6. Schools should be encouraged to replace diesel buses with electric buses.  The opportunity for charging overnight and limited driving distances will make school buses good candidates for electric operations.  The benefits will be enhanced by reducing children’s exposure to diesel exhaust.

1. Methane emissions.

Methane is a dangerous GHG with a potency over 20 years of 87 times that of CO2.  Since we need to reduce climate changes as rapidly as possible, it is not acceptable to continue to emit methane from fossil fuel production (natural gas, petroleum or coal) or from pipelines, local distribution facilities or processing operations – all of which contribute significantly to methane emissions.

The Energy Plan should call for prompt regulatory measures to reduce methane emissions from the fossil-fuel supply chain DEQ and DMME have the authority to require reductions in methane emissions from these fossil fuel operations and should use that authority to require emissions reductions.  Much of the reductions come from poor maintenance, carelessness or conscious decisions to vent methane.  Those can be regulated with the result of significantly reducing methane emissions.  Regulatory proceedings should be initiated as soon as possible.

In sum, Virginia’s 2018 Energy Plan should be a plan to reduce GHG emissions from the energy sector through clean energy and energy efficiency.  It should reflect the old advice: when you are digging yourself into a hole, stop digging; and, when you are digging your children into a hole, stop digging, pull them out and start filling the hole.

Respectfully submitted,

William Penniman
2007 Upper Lake Dr.
Reston, VA 20191

August 23, 2018