Virginia Regulatory Town Hall
Department of Energy
Department of Energy
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9/16/22  4:53 pm
Commenter: Brett Vassey

Virginia Energy Plan

The VMA’s mission is to create the best business environment in the United States for world-class advanced technology businesses to manufacture and headquarter their companies for maximum productivity and profitability. Our members are Virginia’s 6,750 manufacturers and their suppliers across the entire Commonwealth. They are committed to environmental sustainability, healthy employees and communities, economic opportunities for all Virginians, and affordable, reliable, secure, and sustainable energy.

The VMA believes that energy policies are essential to ensuring sustainable economic growth in manufacturing. Further, the organization places an emphasis on reliable supply at affordable prices, conservation, increased cost-effective energy efficiency technology and programs, cost-effective distributed generation, strengthened infrastructure and investments in new technologies. In order to assure future energy supplies and national energy independence, alternative energy sources must be developed along with traditional resources. The decision to develop energy alternatives, which are not market-competitive but are found to be in the public interest by policy-makers, should be supported through federal and state tax incentives or general fund appropriations to the extent necessary to render them cost-competitive in voluntary energy markets. Virginia should reject renewable portfolio mandates and similar energy regulation mandates, particularly the “Green New Deal,” due to their economic inefficiencies and higher costs for consumers. Virginia should fully utilize its natural and technological assets in expanding affordable, reliable, and environmentally responsible energy derived from nuclear, natural gas, renewables (e.g., solar, wind, hydro, landfill gas, biomass), combined heat & power, and all offshore resources (e.g., oil, gas, wind and wave). Virginia should also adopt a process that will better outline the economic costs and benefits of electric utility regulation to producers and consumers prior to legislative action including State Corporation Commission protections for consumers from costs that are not competitive.

The VMA also believes that environmental regulations must recognize the Commonwealth’s responsibility in maintaining efficient, lean, cost-effective, and responsive state environmental agencies that result in the state administration of federally delegated programs. These agencies and regulations should maintain an appropriate balance between environmental protection and economic development, be based on exemplary science, consider cost-benefit analysis and comparative risk assessments in the regulatory process, allow for flexible and performance-based approaches, and regulation of point sources and non-point sources equally. This analysis should also include the long-term funding needs of wastewater treatment infrastructure and climate change adaptation. Finally, Virginia must eschew itself from attempts to impose environmental regulations more stringent than or in the absence of Federal regulations without a cogent demonstration of necessity.

The Commonwealth should promote affordable, reliable, secure, and sustainable energy with the following considerations for change in the Virginia Energy Plan:

• Restore the State Corporation Commission’s “Chapter 10 authority” to protect ratepayers from excessive costs.• Eliminate Virginia’s participation in the Regional Greenhouse Gas Initiative (RGGI).
• The Commonwealth should support, through incentive and regulatory flexibility, not through mandatory regulation, the use of cost-competitive renewable and low-emission energy resources. The decision to develop energy alternatives, which are not market-competitive but are found to be in the public interest by policy-makers, should be supported through federal and state tax incentives or general fund appropriations to the extent necessary to render them cost-competitive. Where government regulation has intervened in the market by placing artificial fuel purchase mandates on generators, prices have increased for consumers, the net environmental benefit has not been adequately quantified and unintended consequences have occurred which threaten industry cost competitiveness. Expanding renewable energy tariffs and similar options for customers, even at higher prices, should be available to companies and organizations that can afford higher priced electricity. However, mandating Virginia’s electric utilities to generate renewable energy that is not price competitive should be avoided as should mandating that Virginia consumers purchase renewable energy that is not price competitive. Further, consumers should be shielded from predictable future price spikes created by unreliable government renewable energy subsidies.
• Decouple marginal price of electricity set by natural gas-fired generation. Pricing should be based on “System Lambda” to avoid surging costs related to fuel or generation disruptions that drive up costs.
• Establish a clear energy policy that recognizes and prioritizes low-emission natural gas generation.

• Require utility stockholders to share risks for any generation technology costing in excess of the average MWH of combined cycle natural gas generation technologies or a similarly low-cost generation benchmark.
• Allow for generation, transmission, and distribution competition for all renewable energy.
• Ensure that all riders (rate adjustment clauses) are evaluated based upon their relative merits and costs by the SCC.
• Allow the SCC to restrict any requested rate or rider request that would put the retail price of electricity above the median cost of electricity for the southern states electric utilities that investor-owned utilities are required to benchmark against in their IRP to the SCC.
• Establish an Energy Intensive Trade Exposed (EITE) industries electric rate as a Carbon Border Adjustment Mechanism to maintain affordable electric costs, maintain economic competitiveness for critical industries, and protect against carbon leakage.
• Remove the VCEA non-bypassable charge from consumers that are not served by an investor-owned utility.
• Remove all regulatory and statutory barriers that limit industrial customers from building their own electricity generation behind the meter.
• Require the Virginia Department of Energy and Virginia Department of Environmental Quality to work collaboratively with industry to pre-permit natural gas infrastructure, specifically interstate and intrastate pipelines to ensure energy reliability.
• Remove the mandatory utility Energy Efficiency program mandate on industrial customers.
• Net metering programs, which pay residential solar customers high rates for their excess electricity production, should not shift fixed utility infrastructure costs onto other ratepayers.
• Incentivize government to pre-permit industrial sites for economic development purposes. If the Commonwealth were to take such a proactive approach to siting renewable energy projects, it could reduce some of the risk in these projects and make Virginia more attractive for these types of investments. Specifically, encourage renewable energy site pre-permitting collocated on all publicly funded industrial and commercial “mega-sites” and industrial parks.
• Require a lifecycle cost analysis for all renewable energy generation facilities to ensure that consumers are not obligated to undisclosed future costs for material recycling, landfill disposal, and land restoration/remediation.

• Require CO2 offsets equivalent to the carbon sequestration destruction created by deforestation to construct renewable energy generation facilities.
• Develop a state carbon sequestration strategy and prioritize these technologies as renewable energy technologies.
• Develop a state nuclear energy strategy, specifically for modular nuclear technologies, and classify them as renewable energy for purposes of the Virginia Clean Economy Act.

Further, the Virginia Energy Plan should consider the following new objectives:

• Competitive retail prices to consumers by class, not “competitive rates,” should be the primary driver in Virginia’s Energy Plan.
• National and economic security are not effectively considered within the Virginia Energy Plan. In light of the energy scarcity, consumer price escalation, and economic destruction situation in Europe, Texas, California, MISO, and NEISO, it is essential to adopt a Virginia Energy Plan that incorporates the lessons learned from these energy markets.
• A standardized lifecycle cost analysis should be employed for offshore wind, onshore wind, battery backup, transportation electrification (EVs/EV batteries), and solar generation facilities to better account for their true costs to consumers and the public.
• Renewable energy advocates have successfully expanded cost-benefit assessments for energy expenditures by utilities beyond the Ratepayer Impact Measure (RIM) Test over the last four years. These methodologies, such as the Societal Cost Test, have been used to justify various utility programs and their costs where they would have failed the RIM test. If the Societal Cost Test is to be included in the list of tests that projects will be evaluated against, then Virginia should account for the indirect costs created by renewable energy technologies such as additional landfill and recycling infrastructure in future years for their disposal as well as the externalities these technologies create such as increased reliance on cobalt unsustainably mined in the Congo by child labor and refined almost entirely in China.
• Virginia’s Energy Plan should encourage and reward Combined Heat and Power (CHP) for industrial businesses. Any “behind the meter” CHP facility should not be included in the cap.
• Virginia’s Energy Plan should be significantly expanded to accommodate carbon capture, hydrogen, fuel cell, low-carbon natural gas, modular nuclear generation, nuclear fuel recycling, and hydro technologies to assist in meeting the Commonwealth’s CO2 reduction goals.
• Virginia’s Energy Plan does not effectively address competitive and affordable electricity transmission and natural gas distribution costs. For example, the lowest cost solutions to identified transmission needs, when implemented, have resulted in significant savings to consumers. The lack of available low-cost natural gas transmission capacity into Virginia has not been effectively modeled for lower CO2 emissions or lower costs of fuel and NG-generated electricity. Electricity costs by consumer class have not been modeled or benchmarked against southern competing states to determine affordability.

In closing, a reliable and responsible energy system operates best with full retail competition where the consumer makes his/her choices based upon their needs and means. However, Virginia's energy markets are served by monopolies and this system works well for consumers IF the State Corporation Commission is enabled to protect consumers against unreasonable costs while also ensuring that the utilities earn a reasonable return on equity. Virginia's current energy system is out of balance due to General Assembly intervention.

CommentID: 128767