Thursday, March 08, 2007

Environmental Fixes For Dominion Re-Regulation Bill

Governor Kaine has his plate full with the defective, but still fixable, transportation bill sitting on his desk.

That leaves little time for him to focus on an equally important bill dumped in his lap by the General Assembly, which would dramatically change the way electric utilities--particularly Dominion Virginia Power--are regulated in the Commonwealth.

Among other things, the bill is an environmental disaster. Here, we explore some ideas for improving the bill on the environmental side. However, the entire bill needs careful consideration--which it did not get this term. The Governor should veto it so that he, the Attorney General and the General Assembly can more carefully consider these important issues next year.

Others have done an excellent job of detailing the way Dominion rammed this bill through the General Assembly this term without anyone really understanding what it will do to electric power consumers in the state.

Our focus today is on the environmental side. For all practical purposes, Dominion is the only electric utility in the state of Virginia. We are fortunate that it is a well-managed company that has kept electricity rates relatively low.

Dominion, however, is behind on the environmental curve, and it won't even try to catch up unless the legislature, Public Service Commission, Governor and Attorney General force it to.

Dominion badly wants new legislation that will change the way it is regulated and allow it to raise the capital needed to meet Virginia's future power demands. That puts the state in an excellent bargaining position to obtain some key environmental concessions.

First, Dominion should be required to offer its Greenpower program--which is available in NC--to Virginia customers. This program, similar to programs offered by other utilities around the country--allows a customer to pay a bit extra to obtain his or her power solely from renewable resources, such as wind energy. These programs incentivize utilities like Dominion to expand their investments in renewable energy.

Second, Dominion should be required to expand its net metering program in Virginia by providing a set amount of financing for consumers who want to install their own renewable energy generation onsite. This further encourages development of wind and solar energy in the state. At present, there is a cap on the amount of net-metered energy that Dominion must accept, equal to 0.1% of its total energy demand in Virginia. The cap should either be removed, or raised to at least 5%. There is some other tinkering that can be done with the net metering provisions to further encourage individuals and businesses to develop their own alternative sources of renewable electricity.

Third, Dominion should be required to make aggressive investments in conservation. There are ways to structure regulation that will give Dominion appropriate incentives to promote electricity conservation programs. We should study successful programs from other states and implement them here. Remember: a 100 megawatt reduction in electric demand is just as good as building a new 100 megawatt powerplant. There is plenty of room for Virginians to reduce their consumption without any impact on lifestyle. (I have detailed on my own blog how I reduced my power bill by as much as 30 percent in some months by taking simple steps that don't require any sacrifice.)

[One way to improve conservation is to raise rates. We note that higher rates does not necessarily mean higher bills: if rates go up 25% but as a result you use 25% less energy, your total bill will stay the same. Californians use, on average, almost half the electricity of Virginians. Their electric rates are higher, but their total electric bills are not.]

Fourth, we need to explore incentives to discourage Dominion from building new coal-fired power plants in Virginia (or elsewhere for purposes of supplying Virginia). With prospects high for the enactment of national legislation to discourage carbon emissions, it would be economic folly for Dominion to commit the state to new generation from coal. In any event, it is environmentally irresponsible. Virginia has a long and sensitive coastline that is vulnerable to rising sea levels and increased storm activity. We can ill afford to endanger our historically significant and economically vital coastal communities through such short-sighted actions as building new coal electric plants. If anything, we should be looking for ways to retire the existing ones.

With its good management and sound financial base, Dominion could, with the right incentives, become an environmental leader that would do Virginia proud. Now is the time to make sure those incentives are put in place.

Governor Kaine should veto the bill hastily pushed through the General Assembly this term, followed by a commitment to work with Dominion, environmental groups and consumer advocates for a bill that suits all Virginians in the next term. (We might add that Attorney General Bob McDonnell is at grave political risk on this bill, since his office undertook to study and attempt to modify Dominion's original draft bill. Unless he wants to be known as "Dominion Bob" when he runs for Governor, McDonnell should support efforts to bring in a wider array of citizens groups to meld a better bill in a future term.)


The Green Miles said...

It's hard to imagine a worse environmental/conservation power set up than the one in Virginia right now. People are shocked when I tell them I'm not allowed to buy green power in Virginia -- they all assume it must be available. This bill would only make it worse, and I hope Gov. Kaine vetoes it!

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