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Direct Energy Files For Injunctive Relief Directing Dominion Virginia To Process Electric Choice Enrollments Pending Utility's Declaratory Order Proceeding

Dominion Is Seeking Determination Which Would Require Retail Suppliers To "Control" Renewable Energy Capacity In Order To Serve Customers

July 22, 2019

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Copyright 2010-19
Reporting by Paul Ring •

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Direct Energy Business, LLC has submitted to the Virginia SCC a motion for temporary injunctive relief directing Virginia Electric and Power Company d/b/a Dominion Energy Virginia ("Dominion" or "Dominion Virginia") immediately to process all pending enrollment requests by Direct Energy Business to provide competitive supply service to its customers, and to process in a timely manner any such future enrollment requests, at least until such time as a petition from Dominion Virginia for a declaratory judgment against Direct Energy Business concerning retail provider supply requirements is resolved

As more fully discussed below, Dominion Virginia has refused to process the Direct Energy enrollments of several commercial customers onto choice service, as Dominion alleges that retail suppliers must make a showing they have control of sufficient renewable "capacity" to qualify for the statutory exemption allowing retail choice for 100% renewable energy. Direct Energy argues that no such standard exists under the law or SCC regulations

Ron Cerniglia, Director of Corp. & Regulatory Affairs at Direct Energy, stated, "Dominion Energy has taken its hostility towards electricity choice to a new level, serving as judge, jury, and executioner over all Virginians by trying to block customers from choosing 100% green energy."

"This abuse of power prevents Direct Energy from offering consumers in Virginia with the same affordable, renewable energy choices consumers across the country can access," Cerniglia said

"The malevolent tactics employed by Dominion must be finally called out. Dominion cannot be allowed to impose its own, self-serving interpretation of the laws that govern this state," Cerniglia said

Dominion Virginia has sought a declaratory order finding that, for a competitive service provider ('CSP') to serve customers under Va. Code § 56-577(A)(5) ('Section A5'), it must have control of sufficient renewable generation resources, including renewable capacity and associated renewable energy, to enable it to serve the full load requirements of the customers it intends to serve, "consistent with the standard approved by the Commission for Appalachian Power Company’s ('APCo') Rider WWS in Case No. PUR-2017-00179," and declaring that Direct Energy Business, LLC ('Direct Energy'), a CSP seeking to serve customers in the Company’s service territory, has not satisfactorily demonstrated that it can serve customers "electric energy provided 100 percent from renewable energy" pursuant to Section A5

Dominion Energy Virginia does not currently have an approved 100 percent renewable energy tariff whereby participating customers can voluntarily elect to purchase, Dominion Energy Virginia, 100 percent of their energy and capacity needs sourced from renewable energy resources. Due to the lack of such tariff, customers are permitted, under one of the statutory exemptions allowing for retail choice, to be served by a competitive supplier offering 100% renewable energy

In its petition, Dominion Virginia stated, "Dominion Energy Virginia asserts that a CSP must possess adequate renewable generation, including both the renewable capacity and the associated renewable energy, to serve the customer’s full load requirements to legally provide the service contemplated by Section A5."

In its petition, Dominion Virginia stated, "Unless CSPs serving customers pursuant to Section A5 are required to control sufficient renewable generation resources, including renewable capacity and associated renewable energy, how can there be assurance that the customers are in fact receiving 100% renewable energy in accordance with the statute?"

In its petition, Dominion Virginia alleged, "Here, Direct Energy has asserted that it intends to serve its customers solely through the provision of renewable energy without control over any accompanying renewable capacity. Based on information from Direct Energy, it seeks to provide service that amounts to little more than a financial transaction instead of the service contemplated by Section A5. Indeed, the information provided by Direct Energy is not even sufficient to substantiate that the energy provided to customers will be electric energy provided 100 percent from renewable energy and will be able to meet those customers’ actual requirements. Under the limited standard that Direct Energy asserts is the extent of its obligation, it could avoid its full service obligation by over-procuring renewable energy when there is excess renewable energy in the market (e.g. off-peak wind or run-of-river hydro generation) and provide non-renewable energy service to customers in all other periods. In reality, PJM Members’ non-100% renewable resources could, and likely would, be generating the energy that Direct Energy would be using to serve these customers most of the time. Unless a CSP purporting to provide 100% renewable energy has both the renewable capacity and the associated renewable energy from the renewable generation resources necessary to serve the full load of its customers, it will not be meeting its obligation to serve its customers who have contracted to receive electric energy provided 100 percent from renewable energy."

In its petition, Dominion Virginia stated, "In light of Direct Energy’s refusal to show it has sufficient renewable capacity such that its service will meet the requirements of Section A5, the Company has been unable to validate, in accordance with the provisions of its CSP Coordination Tariff, the enrollment requests submitted by Direct Energy. Therefore, the Company has not proceeded with the enrollment process at this time for those customers that Direct Energy is currently seeking to enroll. Until the Commission rules on this Petition and confirms the requirements for serving customers under Section A5 so that the Company can make a final determination regarding the validity of the enrollment requests, Dominion Energy Virginia does not intend to continue the enrollment process for the customers that Direct Energy is currently seeking to enroll or any other enrollment requests that the Company receives from Direct Energy under Section A5."

Dominion Virginia argues that in a recent case at APCo, "Far from rejecting any requirement that CSPs provide renewable capacity, these statements confirm that CSPs are in fact responsible for providing renewable capacity. The Commission simply rejected the imposition of a specific capacity standard based on PJM’s wholesale reliability requirements in the context of the specific facts presented in that proceeding."

Dominion Virginia said that, "consistent with both the APCo Order and the Rider WWS Order, the Commission should find that a CSP seeking to provide service under Section A5 must at least demonstrate that it has control of a portfolio of renewable capacity and associated renewable energy that is capable of serving its customers and can verify on a monthly basis that the requirements of its proposed customers in fact are met by 100 percent renewable energy produced by such portfolio."

Dominion Virginia alleged in its petition that, "Direct Energy’s disregard for the Commission’s regulation and extreme interpretation of the Commission’s precedent would ultimately result in an unfair shifting of costs from the customers it enrolls to customers who remain with the incumbent utility. If such a standard was applied to service by CSPs in Virginia, it would create a significant and unfair disparity between the standard to which incumbent utilities are held and the standard applied to a CSP, which the Commission has repeatedly stated it will not do. If CSPs are held to a lower standard and are able to set lower prices accordingly, then this will create an unfair advantage for CSPs in Virginia’s retail access market-which was clearly not the intent of the General Assembly in §56-577 of the Code. This unfair advantage would inappropriately increase migration of customers to CSPs, exacerbating the harm to the remaining customers "

In its motion for temporary injunctive relief, seeking to require Dominion to process the enrollments, Direct Energy alleged, "Based upon its own interpretation of a 'renewable capacity' requirement, which has not been established by statute, regulation, or Commission order, Dominion has taken its hostility towards competitive suppliers to a new level, fulfilling the role as judge, jury, and executioner by unilaterally deciding not to process pending or future requests for enrollment of Direct Energy Business customers for service pursuant to Section A 5 while this proceeding on its Petition is pending."

In its motion, Direct Energy said, "Direct Energy Business vehemently disagrees with Dominion's 'renewable capacity' requirement, and looks forward to establishing in the course of this proceeding that it will supply customers served under Section A 5 with 100% renewable energy, and that it has already adequately documented its ability to do so. For the purpose of this Motion, Direct Energy Business will demonstrate that Dominion lacks any authority to unilaterally impose its 'renewable capacity' requirement by denying service to Direct Energy Business's customers while the existence of any such requirement is being litigated."

Dominion Virginia has sited the validation process permitted under Rule 70 E of the Commission’s Retail Access Rules as allowing it to deny the enrollments

However, Direct Energy said that Rule 70 only relates to "Marketing." Rule 70 E allows a local distribution company such as Dominion to request documentation from a CSP to substantiate claims of "special attributes."

"It does not, however, provide a local distribution company with the self-help remedy of refusing to process enrollments if it is dissatisfied with the documentation provided. And it most certainly does not provide such a self-help remedy where the adequacy of such documentation is disputed," Direct Energy said

"In fact, Section 10 of Dominion's CSP Coordination Tariff clearly establishes that Dominion may NOT refuse to enroll Direct Energy Business's customers in these circumstances. Section 10 provides the process for enrollment of CSP customers. The only requirements of Section 10 that require validation prior to enrollment relate to satisfaction of that process, which includes 'all provisions of 20 VAC 5-312-80.' Notably, it does not incorporate the provisions of Rule 70, or specifically Rule 70 E," Direct Energy said

Dominion Virginia's tariff provides that Dominion, "may discontinue or deny services to any Provider to prevent utilization of the Company's services by such Provider in connection with practices which are illegal, or which are detrimental to the provision of Electric Service to other Customers of the Company."

However, Direct Energy said that, "Direct Energy Business has complied with all of the requirements of the CSP Coordination Tariff and the Retail Access Rules for customer enrollment. Dominion is not empowered to declare Direct Energy Business's sales to customers under Section A 5 'illegal' based on Dominion's unilateral, unsupported and disputed 'renewable capacity' requirement- which is the very subject of this proceeding. Neither the Commission nor any other governmental authority has made such a ruling. Significantly, the only detriment to other customers that Dominion has alleged would be the result of any cost-shifting, which has not been established, and- to the extent it does result- would be the consequence of the General Assembly's unequivocal decision to permit shopping under Section A 5 in the first place. Dominion should not be allowed to unilaterally impose its own, self-serving interpretation of the rules and in doing so, prevent customers from exercising their statutory right to choose a CSP for a 100% renewable product."

Direct Energy said in its motion that, "Dominion's repeated efforts to frustrate the rights of its customers to obtain supply service from CSPs, which on multiple occasions have been proven to have no support under Virginia law, impose unnecessary and significant costs both on CSPs and on Dominion's own customers, who are forced to bear the costs of such actions. Clearly, this is another in a series of ironic and tragic examples of Dominion using dollars collected from its own customers to fund efforts to block those same customers who are trying to secure a 100% renewable product from CSPs allowed under the statute and thus contravening the will of the Commonwealth of Virginia's legislature."

Direct Energy stated, "Direct Energy Business has entered into a wholesale arrangement to provide the 100% renewable energy needed to comply with Section A 5. Contrary to Dominion's assertions in the Petition, but consistent with the unambiguous language in the Transaction Confirmation attached as Exhibit 4 to the Petition, the Transaction Confirmation 'will constitute binding and conclusive evidence of the Transaction.' Direct Energy Business entered into this wholesale arrangement to comply with Section A 5 and would not have entered into it otherwise. Thus, Direct Energy Business has arranged to purchase energy at wholesale but is unable to serve all of its retail customers that seek to purchase pursuant to Section A 5."

"Direct Energy will continue to fight to provide energy choice and serve customers in the Commonwealth using all legal means at our disposal. Renewable energy choice is currently allowed under the law and the Virginia State Corporation Commission has ruled frequently and consistently that customers can choose to purchase 100% renewable energy from competitive service suppliers, such as Direct Energy," Cerniglia said

"The world is changing and instead of evolving with it and allowing customers to make a simple choice, as mandated by current state law, Dominion Energy is trying to keep Virginia in the past and preserve its own power and profits," Cerniglia said

Case PUR-2019-00117

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