Dominion Re-Regulation Bill Amendments--A Start In The Right Direction

Governor Kaine made some important amendments to the Dominion Re-Regulation Bill passed by the General Assembly. For stories from the Washington Post and Richmond Times-Dispatch, see here and here. (The Times-Dispatch story has more detail.)

In a nutshell, Governor Kaine has strengthened provisions promoting greater energy conservation and increasing investment in renewable energy sources, which is certainly to the good.

Notably, the Governor raised from 5% to 10% a goal for reducing energy consumption through conservation measures between 2006 and 2022. (Still too modest a goal, but we can work to increase it further in the future.)

In addition, the amendments increase the incentives to invest in renewables such as wind, solar and hydro. Other provisions also provide incentives for "clean coal" and, more importantly, reduce the profit that can be made from conventional coal-fired electric plants. (National cap and trade legislation may further discourage new construction of conventional coal plants.)

Kaine also smartly decided to exempt large industrial consumers of electricity in the state from requirements that they help cover the "costs" to utilities if those consumers fund their own investments in renewable energy generation. (More on this below.)

Finally, the Governor tinkered with some other provisions to provide marginally greater protection to consumers from large rate increases.

We share the disappointment of the Piedmont Environmental Council and other conservation groups in the state that the Governor didn't do more on the environmental front, especially while he had clear leverage over Dominion since it desperately wants this bill. (Indeed, Dominion's spokespeople voiced support for the Governor's amendments, meaning plenty was left on the bargaining table.) (But, just imagine where we'd be on this if Republican Jerry Kilgore had defeated Kaine.)

That said, the amendments are a good step forward. We've never believed for an instant that Virginia will suddenly become a green mecca, a' la California. Rather, it will take a sustained effort over many years to make good progress. It will help if Democrats continue to gain seats in the Assembly, as we expect they will, and it will also help when farmers, fishermen, hunters, coastal residents and others realize they have a big stake in all this and become more natural allies on these types of measures.

The good news is that between the conservation/renewables provisions of the re-regulation bill and the energy bill passed last year, there is ample room for small, incremental amendments over the next few years to further boost conservation and renewable investment.

We also want to say a word about the provision that allows large industrial users to invest in renewable energy without compensating Dominion for the "cost" of opting out. This is an excellent amendment. We want to encourage the largest power users to search out and invest in renewable sources of electricity to service their needs. As a practical matter, today that means mostly wind energy, because it is economical, but the mix may change down the road.

In any event, it is a myth that there is somehow some "cost" to Dominion, or to other ratepayers, when large consumers decide to generate their own electricity from renewables. Quite the contrary, those investments reduce the need for Dominion to build new plants to meet growing demand, reduce the need for new high voltage lines, help distribute the energy load more efficiently around the state, help reduce the cost down the road for medium and smaller consumers to invest in renewables (by developing the technology infrastructure and expertise), and force Dominion to keep its prices competitive or lose customers.

For all those reasons, we should encourage the largest power consumers to "go for it" on renewable energy, and that's what Governor Kaine's amendment will do.

Now, the one thing we can't yet figure out is whether Dominion will be required to offer its "Greenpower" program--available in North Carolina--to Virginia consumers. That program allows a consumer to pay a premium for electricity generated from clean sources--in essence to help fund increased renewable generation. Getting that program to Virginia consumers is one of our priorities.