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Virginia SCC Rules on Direct Energy Petition Regarding Viability of Electric Choice Market

March 15, 2017

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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

The Virginia SCC has ruled on a petition from Direct Energy concerning several interpretations of the statutory provisions regarding electric choice, as Direct Energy had said that certain interpretations were necessary for the market to remain viable in cases where certain statutory milestones which foreclose one of the exemptions allowing retail choice were triggered

Notably, one of the carve-outs [Section A 5] allowing customers to take electric choice in Virginia provides that a customer may be served by a competitive supplier with, "electric energy provided 100% from renewable energy," if the utility, "does not offer an approved tariff for electric energy provided 100% from renewable energy."

Statute provides that, once a utility begins offering such a renewable energy tariff, "individual retail customers," are permitted to, "continue purchasing renewable energy pursuant to the terms of a power purchase agreement in effect on the date," that the incumbent utility begins offering a 100% renewable tariff, "for the duration of such agreement."

Direct Energy had sought the SCC's confirmation that such language would allow a competitive service provider [CSP] to offer service to new customers under the renewable energy exception even after a utility begins offering a qualifying renewable energy tariff, if the supplier supplies the new customer under an existing power purchase agreement. Direct Energy further sought the SCC's confirmation that service pursuant to existing, "standardized rates and terms and conditions associated with providing this product," which Direct Energy will use to serve such new customers, qualifies as a power purchase agreement in effect on the date of the utility green tariff. In other words, Direct Energy argued that it could continue to serve new customers even after the utility adopts a qualifying green tariff under an existing set of T&Cs which would meet the definition of PPA

The SCC rejected Direct Energy's interpretation, noting the term PPA is not defined in the statute.

"Based on the ordinary meaning of 'agreement,' the Commission finds that a CSP's [supplier's] general offering available to the utility's customers, without acceptance by an individual customer, would not constitute 'a power purchase agreement' pursuant to which individual retail customers would be permitted to continue purchasing renewable energy under Code § 56-577 A 5 b. This is consistent with Section A 5, which specifically refers to the rights of 'individual retail customers' 'to continue purchasing renewable energy. . . . ' An offer alone - without the agreement of the customer - would not result in the purchase of renewable power by an individual retail customer," the SCC said

"Direct Energy's interpretation of 'agreement' would permit a CSP to serve - and to market to - all of the utility's customers, including new customers who are not currently taking service from the CSP. However, the plain language of Section A 5 b addresses only the continuation of service for 'individual retail customers,' which presumes an existing relationship between the retail customer and the CSP, something that would be absent for a new customer," the SCC said

The SCC also dismissed arguments that a competitive supplier relying on an existing wholesale PPA, executed before the effective date of a utility green tariff, could continue to offer service under such PPA to new customers, as the SCC said that such scenarios do not involve an end user customer purchasing power pursuant to a PPA as required by statute. "[I]f the customer is not a party to the power purchase agreement, the retail customer would not be purchasing power pursuant to the power purchase agreement - as required by the statute to continue purchasing said power," the SCC said

"The intent of the statute, gleaned from its plain language, is to allow a customer who has a pre-existing power purchase agreement with a CSP for 100% renewable power to continue purchasing under that agreement for the duration of the agreement, in the event the incumbent if utility begins offering a 100% renewable tariff while the agreement is effective," the SCC said

The SCC did affirm that renewable energy exception allowing electric choice, "contains no size limitations," and the provision allows any customer, including residential customers, to purchase 100% renewable energy from a CSP if the incumbent utility does not have an approved tariff for 100% renewable energy

The two other exceptions allowing customers to take electric choice are for commercial and industrial customers whose demand for the previous calendar year exceeded five MWs, and for C&I customers aggregating to 5 MW.

The SCC said that, to the extent customers are served under the 5 MW exception (Sections A 3 and A 4), "those customers receiving service would have to qualify under Sections A 3 and A 4 and would be subject to the requirements of those sections."

Notably, the 5 MW exception includes a five year minimum stay on competitive supply (through a five-year notice requirement to return to the utility).

Direct Energy had requested that the Commission determine that individual or aggregated customers with a demand of five MW or greater receiving 100% renewable energy from a CSP be exempt from the five-year minimum stay requirement

The SCC said that such a determination would depend on the exception being used to serve such a customer

The SCC did confirm that, if such customer is being served under the renewable energy exception, then no minimum stay applies as there is no statutory provision for a minimum stay for these customers. "[C]ommercial and industrial customers are not subject to a minimum stay provision if they are purchasing a 100% renewable energy product from a CSP under Section A 5," the SCC said

"Sections A 3 and A 4 permit retail access for certain large customers regardless of the type of electricity being sold, subject to certain size and other limitations. In the event the incumbent electric utility offers a 100% renewable tariff, and Section A 5 no longer permits a customer to purchase 100% renewable energy from a CSP under Section A 5, this does not impact the availability of retail access under Sections A 3 and A 4. However, retail access under Sections A 3 and A 4 is subject to the requirements of those sections, including, among other things, size limitations and the requirement that '[i]f such customer does purchase electric energy from licensed suppliers after the expiration or termination of capped rates, it shall not thereafter be entitled to purchase electric energy from the incumbent electric utility without giving five years' advance written notice," the SCC said

Case No. PUE-2016-00094

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