Don't Be Evil: Google Applauds Effort to Introduce Utility Tariff Seen as Suppressing Retail Choice

Google recently released a white paper (click here) calling for regulated utilities to offer customers the option of purchasing renewable energy via green tariff options, but in the paper applauded an effort which is seen as eradicating a retail choice option for customers in Virginia.

Google said that its white paper, "outlines a new, more scalable approach that will allow a broad range of companies like Google to buy large amounts of renewable power directly from electric utilities."

What the white paper makes no mention of is retail choice as a solution to providing customers access to renewable energy options.

In fact, Google "applaud[ed]" certain efforts by utilities which are experimenting with tariff structures allowing large users to buy an "integrated" (asset-backed) renewable energy product via tariff.

Specifically, Google cited "Dominion Energy in Virginia" [sic] as an example of one of these types of experiments to be applauded, apparently referencing Dominion Virginia Power's proposed Renewable Generation Pilot Program, which would be a green tariff option for large customers.

However, Dominion Virginia Power's large customer renewable tariff was only proposed after the imminent market entry of a retail supplier focused on serving large institutional customers with renewable energy via competitive retail sales, under one of the few allowances for retail competition in Virginia.

In testimony opposing Virginia Power's proposal, retail supplier Collegiate Clean Energy said, "Dominion may seek to use the program as a basis for attempting to prohibit its customers from purchasing renewable energy directly from renewable energy suppliers."

Despite the general prohibition on retail choice in Virginia, Va. Code § 56-577 A 5 allows customers, "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 ... 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."

While noting that PPAs, REC purchases, and distributed generation are available green options even at regulated utilities without green option tariffs, Google cited several drawbacks to sole reliance these programs. Google has market-based rate authority and has entered into various wholesale PPAs for renewable power.

"First, companies still must accept the generation mix offered by the local electric utility, even if it includes relatively few renewables. In some locations the generation mix can be quite carbon intensive. Second, companies cannot request and procure renewables directly from the local utility in a transparent and straightforward manner, where they know how much renewable power they are getting (and from where). With few exceptions, utilities and the state commissions that regulate them do not provide a way for large users to request renewable power. In short, even though companies want renewable power and are willing to pay for it, the product is not being offered," Google said.

Google's solution? "What's needed is a new tariff structure that allows companies to request and purchase renewable energy directly from their utilities," Google said.

Specifically, Google is seeking a bundled or "integrated" renewable option, tied to specific renewable generation capacity and which serves customer load. Google noted there may need to be a shaping requirement included from non-renewable power.

Google said that customers voluntarily electing the renewable option would bear all costs of the program, holding other utility customers harmless. However, as seen with Nstar Green, this is easier said than done, particularly with a load-following type of renewable product where green option users may be relying on the broader energy supply portfolio for shaping requirements, raising cost allocation and recovery issues. Additionally, reconciliation poses challenges with non-REC products due to misalignment between customer load forecasts and actual usage, as well as renewable production.