Virginia SCC Rejects Dominion's Sought "Around The Clock" Renewable Energy Matching, Capacity Showing For Customers To Take Competitive Retail Energy Supply Under Renewable Exemption

SCC Affirms Retail Suppliers May Meet Renewable Requirement Via Monthly Matching

SCC Says Direct Energy, Calpine Have Demonstrated Compliance To Serve Retail Customers

September 18, 2019

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Reporting by Paul Ring • ring@energychoicematters.com

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The Virginia State Corporation Commission rejected a petition for a declaratory judgment from Dominion Virginia Power which had sought a finding that retail suppliers must demonstrate that they have control of sufficient renewable "capacity", with renewable energy provided on an "around the clock" basis, in order for the retail supplier to qualify for the statutory exemption allowing retail choice for 100% renewable energy

As previously reported, Direct Energy and Calpine sought to serve customers under the statutory provision which allows customers to take service from a competitive retail supplier for 100% renewable energy supply, in the absence of a utility tariff for 100% renewable energy supply (Section A 5)

Dominion argued that the suppliers must make a showing that they have control of sufficient renewable "capacity" to qualify for the statutory exemption allowing retail choice for 100% renewable energy, and refused to process enrollments barring such a showing (until ordered to process enrollments pending disposition of its petition for a declaratory order). Dominion also argued that retail suppliers must provide renewable energy on an "around the clock" basis to qualify for the Section A 5 exemption

The SCC denied the relief sought by Dominion, and affirmed that retail suppliers may serve customers under the Section A 5 exemption if load is matched on a monthly (not around-the-clock) basis

Comparing the case to recent precedent at APCo, the SCC said, "The Commission's Rider WWS Order found that APCo's proposed tariff satisfied Section A 5. Nothing in that order, however, found that APCo's proposal was the only way to comply with Section A 5. That is, contrary to Dominion's assertion, nothing in the Rider WWS Order found that the only way to satisfy Section A 5 is to possess a renewable generation portfolio with characteristics similar to that proposed by APCo."

"In sum, contrary to Dominion's current claim, Commission precedent requiring a customer to take its 'full load requirements' under Section A 5 speaks to the amount of energy supplied, not to the time period for matching load and supply. There is also no Commission precedent establishing a 'renewable capacity' or 'around the clock' requirement under Section A 5. Rather, pursuant to Commission precedent, a retail supplier (i.e., either the utility or a CSP) under Section A 5 may match a customer's load with renewable supply on a monthly basis," the SCC said

During a hearing on August 20, 2019, Dominion presented -- for the first time -- a new sought interpretation that the Company titled 'Standard necessary to satisfy requirements of Section A 5,' which would mandate as follows: The retail provider must be able to demonstrate the ability to provide energy (i.e., capacity) through ownership or contract rights from sufficient renewable energy resources to serve the full load requirements 100% of the time, including at peak demand, for any customers they intend to serve, to a high degree of statistical certainty. Once this is demonstrated, compliance is measured monthly.

The SCC rejected this interpretation

"First, as detailed above in response to the specific relief requested in the Company's Petitions for Declaratory Judgment, Commission precedent under Section A 5 does not mandate renewable 'capacity,' 'peak demand,' or '100% of the time' requirements. Indeed, such proposals have been rejected by the Commission to date. Thus, Dominion's proposed standard does not serve as a restatement or declaration of current law," the SCC said

"Because the Company [Dominion] does 'not offer an approved tariff for electric energy provided 100 percent from renewable energy,' the plain language of Section A 5 mandates that Dominion's customers 'shall' be permitted to purchase renewable energy from a CSP [competitive service provider]. This is a statutory right given to customers. The statute says 'shall,' not 'may.' The General Assembly has not given the Commission the discretion to take that specific right away from customers; rather, the statutory right exists if the utility does not offer 'electric energy provided 100 percent from renewable energy,' the SCC said

"The plain language of Section A 5 also says 'energy,' not 'capacity.' Section A 5 gives customers the right to purchase 'electric energy provided 100 percent from renewable energy,' as well as the right '[t]o continue purchasing renewable energy' under certain conditions after the utility has an approved tariff for such. Electric energy and electric capacity are two different things, and the General Assembly has referenced both in Code § 56-577. Accordingly, the plain language of the statute does not require customers to buy renewable electric 'capacity,'" the SCC said

"In addition, as explained above, the plain language of Section A 5 does not specify the time period that must be met for matching customer load and renewable supply. Under Dominion's proposal, a CSP must demonstrate the ability to serve a customer's full load requirements 100% of the time. There is nothing in the plain language of Section A 5, however, that mandates Dominion's '100% of the time' (i. e. , 'around the clock') requirement. Rather, as found in the Rider WWS Order, this question is left to the Commission's sound discretion ... In sum, the plain language of Section A 5 does not mandate -- as a matter of law -- adoption of Dominion's proffered standard," the SCC said

"Based on the record in this case, the Commission again finds that it is reasonable for a supplier (i.e., either the utility or a CSP) under Section A 5 'to match renewable generation with a participating customer's load on a monthly basis,'" the SCC said

"[I]t is important to recognize that it is not possible to direct specific types of energy (i.e., renewable electrons) to specific customers on an interconnected electric grid such as PJM. The physics of the electric grid make it impossible for any load serving entity ('LSE'), including Dominion, to ensure that any customer receives 'around the clock' renewable energy. That is, all of Dominion's customers physically receive a mix of energy types (renewable and non-renewable electrons) based on the customer's location and the generation mix providing service to the grid at a given time. The question of whether an offering is 'electric energy 100 percent from renewable energy' under Section A 5, therefore, must be a function of offsetting customer load on the grid with supply from renewable resources over a specified period of time," the SCC said

The SCC said that Dominion conceded that its proposed 'renewable capacity' standard does not reflect the realities of the capacity construct established in PJM

"In PJM, there is no such thing as a capacity market for 'renewable-only' capacity. As such, there is no option under Dominion's standard for CSPs to procure renewable-only capacity through the PJM capacity market. Instead, Dominion asserts that control of renewable capacity would have to be procured by CSPs through either owning renewable generation or contracting with renewable generators. Such a requirement, however, is not otherwise applicable to LSEs operating in PJM. Moreover, Dominion acknowledges that the actual dispatch of resources is not governed by a hypothetical 'renewable capacity' construct but, rather, by physics and the operational needs of the PJM pool," the SCC said

"Dominion's '100% of the time' standard would also significantly hinder a customer's right to purchase, as permitted by Section A 5, electric energy provided from wind and solar generation due to the intermittent nature of these resources. For example, a CSP that had 100 megawatts of offshore wind generation and 100 megawatts of customer peak load would not meet Dominion's '100% of the time' standard, because wind power is intermittent and does not generate electricity when the wind does not blow, requiring the delivery of electrons from other generators. Indeed, a CSP with a portfolio consisting of 100% solar generation — no matter how much nameplate capacity met or exceeded peak load — would be prohibited from serving even a single customer under Dominion's '100% of the time' standard, because such a portfolio could not produce electricity at night," the SCC said

"There was also evidence that an hourly matching standard could significantly increase the cost of providing service under Section A 5, potentially to the point of being cost prohibitive," the SCC said

"In sum, the Commission continues to find that matching customer load with renewable supply on a monthly basis represents a reasonable standard under Section A 5, and, further, that Dominion's most recently proffered standard is not necessary in order to implement Section A 5 in a reasonable manner," the SCC said

Next, Dominion asked the Commission to declare that Direct Energy and Calpine have not satisfactorily demonstrated that they can supply their customers with electric energy provided 100 percent from renewable energy.

"The Commission denies this requested declaration," the SCC said

"We find that the information provided by Direct Energy and Calpine (regarding each CSP's customer load and wholesale generation contracts) reasonably establishes that these CSPs have contracted for sufficient renewable energy in order to match renewable supply with a participating customer's load on a monthly basis," the SCC said

The SCC did find that Direct Energy and Calpine shall provide subsequent data to verify continued compliance with the Commission's requirements under Section A 5.

The retail suppliers shall:

(1) provide Dominion with information comparable to the documentation provided in this proceeding regarding subsequent wholesale generation contracts to establish that these CSPs have continued to contract for sufficient renewable energy in order to match renewable supply with their customers' load on a monthly

(2) submit documentation to the Division and Dominion within 90 days from the end of each calendar quarter, which confirms that such CSP matched renewable supply with customer load during each of the three months comprising the respective calendar quarter.

To summarize, with regard to the three specific pleas contained in Dominion's Petitions for Declaratory Judgment, the SCC found that:

(A) Commission precedent permits a CSP to match customer load with renewable supply on a monthly basis and does not require CSPs to provide 'renewable capacity';

(B) Direct Energy and Calpine have satisfactorily demonstrated that they can supply their customers with electric energy provided 100 percent from renewable energy on a monthly matching basis; and

(C) Direct Energy and Calpine shall continue to provide information as directed herein.

Case PUR-2019-00117 et al.

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