Virginia To Begin Pilot PPA Program

Virginia shines a glimmer of light on renewables by passing a wind and solar “pilot” program, after a surprising about-face by Dominion Power in supporting PPA legislation in 2013.

On March 18, 2013, Governor Bob McDonnell signed into law, power purchase agreement (PPA) legislation, directing the State Corporation Commission (SCC) to conduct a solar and wind PPA pilot program in Dominion Power service territory.

PPA’s represent the most recognized financing method in the renewable industry, allowing customers to enjoy the benefits of renewable energy, without the enormous upfront costs. A third-party financer owns the solar equipment, while the customer purchases renewable energy at a fixed rate. PPAs are extremely attractive for tax-exempt entities, unlocking a path to access federal tax credits that otherwise are unattainable.

The legislation, of course, has limits:

1. Applies to Dominion territory only
2. Applies to solar and wind energy
3. Project size minimum of 50 kW, maximum of 1 mW (tax-exempt entities are exempt from any minimum)
4. Total cap of 50 mW on PPAs as a sub-cap of the overall 1% net-metering cap (about 30% of the 1%).
5. PPA arrangements are not public utilities, or CSPs and do not need to provide 100% of a customer’s energy requirements.

Prior to the 2013 legislative session, PPAs were challenged by Dominion Power on the basis that utilities were given exclusive service territories in which only the utility could sell electricity to customers – in return the utility is responsible for providing 100% of the customer’s electricity requirements.

In 2011, Dominion issued two “cease and desist” letters to Secure Futures, LLC for using a PPA between Secure Futures, LLC and Washington and Lee University. Dominion raised legal concerns over the selling of electricity to a customer in their exclusive service territory (W&L). Looking down the barrel at massive litigation costs, Secure Futures and W&L agreed to convert the PPA into a lease.

In response, Secure Futures – with support from the Virginia Renewable Energy Association, the Virginia solar industry, and statewide environmental groups – pushed for 2012 legislation (HB 129) sponsored by Delegate Terry Kilgore (R-1).  The legislation passed unanimously in the House, yet was ultimately tabled in the Senate Commerce and Labor Committee.

The 2013 legislative session provided hope for PPA legislation, as Senator John Edwards (D-21) introduced PPA legislation in the form of SB 1023, at the request of Secure Futures, modeled after the previous year’s HB 129.   In a surprise move in mid-January, Dominion supported PPA legislation, and requested amendments to the Edwards bill, that Secure Futures and other stakeholders agreed to as compromise legislation.  Delegate David Yancey (R-94) then introduced mirror legislation in the House. The two bills sailed unanimously through both of their respected branches in late February, moving to the Governor’s desk, where it was inked without a hitch.

PPA legislation is a step in the right direction for renewable energy in Virginia. A state that imports a significant percentage of its electrical needs, renewable energy can support Virginia domestic energy production and begin the process of truly making Virginia “the energy capital of the east coast”.