Virginia Passes Major Renewable Energy Legislation

Published March 24, 2020

The newly minted Democratic majority legislature in Virginia narrowly passed sweeping legislation designed to overhaul how the state’s utilities generate electricity, sending the bill on to Gov. Ralph Northam for his expected signature.

Multiple Mandates

The Clean Economy Act (CEA), passed March 6, essentially codifies the 100 percent carbon-dioxide-free energy goals outlined in an executive order from Gov. Ralph Northam in September 2019. It also strips the state’s utility regulators of much of their oversight authority over the regulation and approval of electric utilities and puts Virginia on the path to 100 percent renewable energy by 2050.

CEA “directs the [State Air Pollution Control Board] to adopt regulations establishing a carbon dioxide cap-and-trade program to limit and reduce the total carbon dioxide emissions released by electric generation facilities, which regulations shall comply with the Regional Greenhouse Gas Initiative [RGGI] model rule,” the legislation states.

RGGI is a cooperative agreement between Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont to cap and reduce carbon dioxide emissions from the power sector through regulation.

Preapproval Requirements

Aside from taking Virginia into RGGI, CEA would restrict the Virginia State Corporation Commission’s (SCC) traditional authority to approve new power generation facilities, barring it from approving “any investor-owned utility to own, operate, or construct any electric generating unit that emits carbon [dioxide] as a byproduct of combusting fuel to generate electricity” until the state legislature has had a chance to review a report concerning carbon dioxide emissions being undertaken by Virginia’s Air Pollution Control Board.

The bill also requires utilities and the SCC to consider the social cost of carbon when reviewing the need for a new generation facility.

As part of the effort to meet the target of producing all the state’s electricity from sources that emit no carbon dioxide during operation by 2050, the legislation sets targets for energy storage and offshore wind. The law requires the SCC to approve a minimum of 2.4 gigawatts (Gw) of new energy storage projects by 2035 and set interim targets for storage between now and then. In addition, CEA directs the SCC to expedite the approval of 5.2 Gw of offshore wind by the end of 2034.

The CEA also requires utilities to undertake programs, overseen by the SCC, to reduce the use of electricity by Virginians through conservation measures and programs. Under the bill, utilities should reduce their customers’ electricity use 5 percent below current levels by 2025 and maintain programs to continue reducing use thereafter.

Concerns Energy Costs

Before CEA’s final adoption, state officials warned about the cost of its renewable energy requirements to ratepayers, because offshore wind and battery storage are more expensive than traditional fossil fuel power plants or even other forms of renewable energy.

An analysis of a preliminary version of the bill conducted by the SCC concluded the typical residential household would likely see an increase of $23.30 per month on its monthly electric power bills between 2027 and 2030, solely attributable to the bill’s renewable energy requirements.

In testimony before a state Senate committee developing the bill, Attorney General Mark Herring’s (D) office expressed reservations the bill expressly calls for eliminating the SCC’s role in determining whether the “enormous costs” of implementing the bill’s provisions are reasonable and prudent and therefore can be passed on to ratepayers.

“In our view, the legislation will prevent the regulator from being able to work to accomplish the Commonwealth’s clean-energy goals in a manner consistent with ratepayer protections,” Meade Browder, a senior assistant attorney general, testified before the Senate.

Unnecessary, Premature Closures

CEA will shutter valuable power facilities with years of useful operating life remaining, all for no environmental gain, says Paul Driessen, a senior policy analyst with the Committee for a Constructive Tomorrow (CFACT).

 “The Virginia bill would mean tearing down numerous generating stations that have many productive years remaining, and replacing them with hundreds of gargantuan offshore wind turbines, solar installations totaling several times the land area of Washington, D.C., and tens of thousands of Tesla-style backup batteries,” Driessen said. “The price of electricity for air conditioning, computing, cooking, heating, lighting, recharging cell phones and other mobile devices, refrigeration, and other costs will skyrocket for businesses, charitable organizations, churches, families, factories, government agencies, hospitals, and schools.

“The renewable energy technologies would require millions of tons of antimony, carbon fiberglass composites, concrete, copper, rare-earth elements, steel, and other raw materials mined on the cheap overseas with little attention to U.S. laws, regulations, or ethical standards for child labor, workplace safety, fair wages, air and water pollution, wildlife preservation, or mined land reclamation,” Driessen said.

‘Unregulated Corporate Protectionism’

Passage of the CEA reverses progress the legislature had been making to defend ratepayers from monopolistic practices, says Lynn Taylor, president of the Virginia Institute for Public Policy.

“This year there have been a number of promising bipartisan efforts within the General Assembly to regain control of the regional energy monopolies in Virginia,” Taylor said. “In lieu of reasonable reform, the legislature chose to support unregulated corporate protectionism.

“Virginians will ultimately be saddled with the environmental and financial costs of the governor’s poorly conceived ‘clean power’ act for years to come,” Taylor said. “In the long run, a dramatic expansion of nuclear power in Virginia may be the only fragmented solution to serious problems exacerbated by this act.”

Bonner R. Cohen, Ph.D. ([email protected]) is a senior fellow at the National Center for Public Policy Research and a senior policy analyst with CFACT.