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Virginia SCC Approves Utility Renewable Energy Offering Meeting Statutory Definition, Foreclosing Availability Of Competitive Supply Offerings

January 7, 2019

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Copyright 2010-19
Reporting by Paul Ring •

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The Virginia State Corporation Commission has approved at Appalachian Power Company (AEP) a voluntary renewable energy option tariff which the SCC found meets the statutory definition for such an offering, which means that, under statute, there is no longer an exemption for customers at Appalachian Power to take competitive supply for 100% renewable energy.

Under the approved Rider WWS, participants will receive 100 percent of their energy and capacity from a portfolio of resources owned or contracted by Appalachian Power that meet the definition of renewable energy in Code § 56-576. A premium of $0.00425 per kilowatt-hour ("kWh") will apply

Furthermore, participating customers will pay a "balancing" charge that credits the utility's base rates and riders in amounts that keep non-participants unaffected by participation on the renewable tariff.

Statute provides for a limited exemption allowing customers to take competitive supply in the absence of such a utility 100% renewable tariff.

Specifically, statute provides that customers are permitted:

a. To purchase electric energy provided 100 percent from renewable energy from any supplier of electric energy licensed to sell retail electric energy within the Commonwealth, other than any incumbent electric utility that is not the incumbent electric utility serving the exclusive service territory in which such a customer is located, if the incumbent electric utility serving the exclusive service territory does not offer an approved tariff for electric energy provided 100 percent from renewable energy; and

b. To continue purchasing renewable energy pursuant to the terms of a power purchase agreement in effect on the date there is filed with the Commission a tariff for the incumbent electric Utility that serves the exclusive service territory in which the customer is located to offer electric energy provided 100 percent from renewable energy, for the duration of such agreement.

The SCC has previously ruled that utility REC tariff options do not meet the statutory standard of a renewable "energy" offering.

In contrast, the SCC said that Appalachian's Rider WWS proposal, "identifies the specific renewable energy portfolio from which a customer's full load requirements will be supplied by 100 percent 'renewable energy' as defined by statute."

The SCC said that the price under Appalachian's Rider WWS is reasonable when compared to proxies such as: the rates charged to multiple customers by the only retail supplier providing 100 percent renewable energy under Code § 56-577 A 5 in Appalachian's service territory; the market price of RECs; and premiums paid by customers nationally in "green pricing" programs.

The renewable energy premium built into Rider WWS is specifically based on the going and projected value of the RECs produced by the generators in the WWS Portfolio

In contrast, prior applications had been denied based on uncertainty in renewable pricing under the utility tariff

The offering of the Appalachian Power renewable energy tariff means the conditions under which customers in the service area could qualify for the 100% renewable exemption in order to take competitive supply no longer exist, and such ability to take competitive supply has ceased.

Having approved Rider WWS, the SCC further said that such tariff may be "offered" under the terms of Code § 56-577 A 5 until it becomes fully subscribed, or until the utility fails to accomplish the monthly matching of load and supply as approved under the order

A hearing examiner had recommended denial of Appalachian Power's application to institute the program

Collegiate Clean Energy, LLC had argued that the program amounts to a REC program because customers will pay the same amount they pay for standard service, plus a premium to buy RECs from the utility, and thereby earn the rights to the renewable attributes.

Collegiate Clean Energy had also argued that, because the tariff includes a balancing charge, referred to as a hold harmless provision (so that non-participating customers do not pay increased rates), the utility offering is not 100% renewable, because the balancing charge reflects costs associated with Appalachian's standard portfolio of resources

"Although participating customers will no longer pay the standard non-renewable generation charges (the generation components of base rates, the fuel factor, and the G-RAC), the balancing charge means they will still be responsible for the costs associated with those charges. The balancing charge will always equals—down to the last penny—the amount a customer would have paid for non-renewable generation had the customer continued under a standard rate schedule," Collegiate Clean Energy had said

Case Number PUR-2017-00179

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