Coal companies claim to be victims of a "war on coal," but for nearly two decades they've been conducting a war on Virginia taxpayers. Virginia's tax code offers so many preferences that a 2012 study concluded the coal industry costs Virginia more than it gives back. Among other preferences, two different subsidies in the Code have allowed coal companies to siphon off tens of millions of dollars annually from the General Fund since 1996.
The subsidies come with nominal sunset dates, currently January 1, 2017. Over nearly twenty years, no matter how fat or lean the state's financial condition, the legislature has repeatedly passed extensions, and they are being asked to do so again this year. HB 1879 (Kilgore) and SB 741 (Carrico) would extend the giveaway out to 2022.
(According to VPAP.org, Delegate Kilgore, chairman of the Commerce and Labor Committee, gets a check for $10,000 every year from coal giant Alpha Natural Resources. Alpha also gives ten grand a year to Senator Carrico, who just happens to sit on Senate Finance, which will hear the bill. I mention these facts only in passing. It would be cynical to suggest a connection.)
Supporters of the subsidies seem to believe coal companies need the inducement to blow up our mountains and dump waste into stream valleys. And they maintain this is a good thing for the people of Southwest Virginia, who can enjoy gainful employment by participating in the destruction of their communities.
The coal companies certainly do benefit from this arrangement, but coal jobs have declined to less than 5,000 total in Virginia today, and it's clear to everyone that Southwest Virginia needs to diversify its economy or face a future of poverty and high unemployment. The coal subsidies suck up money that could be spent on new jobs and a better-educated workforce.
Bills referred to Senate Commerce and Labor are heard by the full committee, which meets on Monday afternoons. It consists of 14 members: 11 Republicans and 3 Democrats. They form a tough lineup; none of these senators received better than a "C" on the Sierra Club's Climate and Energy Scorecard.
The House bills are typically assigned to the 13-member Special Subcommittee on Energy (10 Republicans and 3 Democrats, no fixed schedule, but we've heard February 3d is the likely date). Bills that do not meet the approval of Dominion Power can expect a quick death here on an unrecorded voice vote, never to be heard from again. But on the plus side, the meetings are often quite lively, like old-fashioned hangings.
Net metering bills
Net metering is the policy that allows owners of solar (or other renewable) energy systems to be credited for the excess power they feed back into the grid when the systems produce a surplus; the owners use the credits when their systems aren't supplying power and they need to draw electricity from the grid. Virginia law restricts who can use net metering, and how much. Expanding net metering is a major goal of renewable energy advocates, who argue it offers a free market approach to growth-give customers the freedom to build solar projects, get the utility out of the way, and solar will thrive.
This year's initiatives include:
The Winchester Star reports that the 20-megawatt array-100,000 solar panels, capable of powering 20,000 homes-had been planned for 145 acres of agricultural land in Clarke County. A spokesman for the developer, OCI Solar Power, said the company allowed its land option to lapse "due to the lack of long-term solar procurement efforts by Dominion and other VA utilities."
This shouldn't surprise anyone. Virginia has done little to encourage our utilities to buy solar power, and so for the most part they haven't. The state's voluntary renewable energy goal is a sorry dishrag of a law. It can be-and is-met with old, out-of-state hydro plants, trash burning, and wood. And because our utilities have a state-sanctioned monopoly on power sales, customers who want solar power can't go buy it from someone else.
But if it isn't surprising for Virginia to lose a big solar opportunity due to utility intransigence, it is stupid. Virginia consumers would love to buy solar energy, local governments would love to have solar farms generating tax revenue, and local businesses would love to create solar jobs. A win-win-win opportunity is being wasted, at a time when lawmakers complain about how hard it is to reduce our carbon emissions.
Even Dominion says it wants utility-scale solar (eventually), but it wants to build its own so it can earn the fat return on equity guaranteed to it by Virginia law. (If the utility buys power from someone else, it can pass along the cost to customers, but it doesn't earn a profit.)
Last year the General Assembly overwhelmingly passed a bill to support solar development, and then failed to fund it. Governor McAuliffe's energy plan talks a good game on solar, but it's toothless. We will continue to miss out on opportunities like this one until we have a law that requires Virginia utilities to buy solar, or lets consumers contract for it directly from any willing seller.
Or better yet, both.
Coal falls hard; observers disagree on whether it bounces or goes splat. Nationwide, 2014 was a bad year for the coal industry. Coal stocks fell precipitously; mining jobs continued to decline; and the one thing electric utilities and the public found to agree on is that no one likes coal. Even in Virginia, with its long history of mining, coal had to play defense for what may have been the first time ever. So when Governor McAuliffe released the state's latest energy plan in October, what was otherwise a paean to "All of the Above" omitted the stanza on coal. And this month, the governor proposed a rollback of the subsidies coal companies pocket by mining Virginia coal.
Of course, coal is not going quietly; Senator Charles Carrico (himself heavily subsidized by Alpha Natural Resources) has already responded with a bill to extend the subsidies to 2022.
EPA opens a door to a cleaner future, and Republicans try to brick it up. Speaking of hard times for coal, in June the EPA unveiled its proposal to lower carbon emissions from existing power plants 30% nationwide by 2030. Instead of targeting plants one-by-one, EPA proposed a systemic approach, offering a suite of options for states to reach their individualized targets.
The proposal drew widespread support from the public, but Virginia's 38% reduction target set off howls of protest from defenders of the status quo. The staff of the State Corporation Commission claimed the rule was illegal and would cost ratepayers $6 billion. Republicans convened a special meeting of the House and Senate Energy and Commerce Committees, where they tried out a number of arguments, not all of which proved ready for prime time. The rule, they said, threatens Virginia with a loss of business to more favored states like-and I am not making this up-West Virginia. Also, Virginia should have received more credit for lowering its carbon emissions by building nuclear plants back in the 1970s when no one was thinking about carbon emissions.
The refundable tax credits were intended to make Virginia coal cheaper for utilities to buy, and thus more competitive with coal mined in other states. In theory, that was supposed to mean more coal mining jobs in southwest Virginia. In practice, the subsidies meant some coal companies paid no state taxes, and actually received significant cash handouts, even as coal jobs declined. And because the subsidies are based on tons of coal mined and not on the number of people employed, mining companies suffered no penalty from capital investments that maximized production while cutting jobs.
Critics of the subsidies thought they had won their point three years ago when the Joint Legislative Audit and Review Committee (JLARC) issued a critique of the various Virginia tax credits that was especially critical of the handouts to coal companies. As it describes beginning on page 67, the subsidies did not stop coal employment from falling 54% since 1990, or slow the steady decline in production:
If the state doesn't act, EPA will design its own plan for Virginia, ensuring reduced carbon emissions but without the flexibility the state would have by doing it for itself.
This presents a conundrum for Virginia's General Assembly, which is not known for embracing federal environmental regulations. The usual skepticism was on display on November 19, when the Senate and House Commerce and Labor Committees met in a joint session to take up the Clean Power Plan-or more precisely, to give utilities and the State Corporation Commission staff the chance to attack it.
At the conclusion of that meeting, the two Republican committee chairs, Senator John Watkins and Delegate Terry Kilgore, named three members of each committee-two Republicans and one Democrat from each chamber-to a special subcommittee tasked with deciding what kind of legislative action the General Assembly should take in response to the Clean Power Plan. Kilgore also named himself to the subcommittee, which now will take up any bills that Virginia legislators introduce related to the Plan.
This subcommittee has now scheduled its first meeting for December 17 at 1:00 p.m. in Senate Room A of the General Assembly building in Richmond. By law, all committee meetings are open to the public.
According to General Assembly procedure, before anyone else in the entire legislature can consider a bill, it will have to pass muster with these men. So who are these hugely important people, and what is the likelihood that they will seize this historic opportunity to make Virginia a leader in clean energy?
In its Final Order in case number PUE-2014-00026, dated November 26, the SCC ruled that APCo's standby charge complies with § 56-594 F of the Virginia Code, which provides for standby charges for net-metered residential systems between 10 and 20 kW. (The law does not allow for net metering of residential systems over 20 kW.)
Environmental groups intervened in the case and ran a grassroots campaign that generated over 1500 comments to the SCC, opposing what has been dubbed a "tax on the sun." The result, however, was never in much doubt. The SCC has repeatedly demonstrated a willingness to accept without scrutiny utility assertions that solar customers impose costs on other customers.
Attorneys at the Southern Environmental Law Center, who argued against the standby charges on behalf of the Sierra Club and other groups, say the SCC's reasoning is flawed. According to Cale Jaffe, Director of the SELC's Virginia office, "Appalachian Power actually conceded during the hearing that it was 'not in a position' to determine whether solar customers had 'a positive or negative impact to the distribution cost of service.' In other words, Appalachian Power said that solar customers might be having a positive impact in helping to reduce APCo's distribution costs, but that the power company didn't have the data and didn't know one way or the other."
At a stakeholder meeting in Chesterfield, Virginia, on Monday, Dominion Virginia Power revealed that it expects to have installed a total of 6 megawatts (MW) of distributed solar generation by year's end, out of the 30 MW approved by the General Assembly. But the program, which Dominion calls its Solar Partnership Program, may achieve only a total of "thirteen or fourteen megawatts" before it exhausts the $80 million that the State Corporation Commission authorized the company to spend on it.
Dominion had originally requested $110 million for the program, under which it develops large solar facilities on rooftops it leases from commercial, industrial or institutional customers in selected areas. But many solar industry members and advocates, including yours truly, argued that it should be possible to install 30 MW of solar for much less. It turns out that we were right that the private sector could do it for less, but wrong in thinking Dominion could.
This sad reality check shows that global warming has not paused or gone away, and Virginians had better try to understand what's coming so we can start preparing. It turns out our problems go well beyond sea level rise, as we learn this week from guest blogger Seth Heald.
Oh, and don't miss the note at the bottom about the November 6 event.
Virginia climate activists (and indeed all Virginians) should cheer Stephen Nash, whose Virginia Climate Fever (just published by The University of Virginia Press) lays out clearly the costs of our decades of inaction on global warming. The book's subtitle nicely sums up the point: How Global Warming Will Transform Our Cities, Shorelines, and Forests.
Why a climate book focused on just one state?
One of many confounding challenges of global warming is how to get people (and politicians and businesses) to take action commensurate with the size of the problem. As the popular British social scientist Roman Krznaric asks, "how can we close the gap between knowledge and action on climate change?" Krznarik's answer is to seek ways to increase our empathy for people who live in distant places, or will live in future times. Certainly that is needed. (The U.S. edition of Krznarik's book on empathy comes out in November.)
Now they've put their DNA on full display with comments they filed on the EPA's Clean Power Plan. The proposed EPA rules, under section 111(d) of the Clean Air Act, would require states to reduce the power plant CO2 emissions driving climate change. The staffers assert primly that they "take no position on the broad policy issues," but that they feel "compelled" to point out all the ways the plan is "arbitrary, capricious, unsupported, and unlawful." These mostly boil down to their claims that the plan will force coal plant closures, raise rates significantly and threaten service reliability-claims experts say are badly off-base.
Note that the commissioners themselves didn't sign onto these comments. They come from the career staff at the Energy Regulatory Division, led by Bill Stevens, the Director, and Bill Chambliss, the General Counsel. This is pretty peculiar. I can't think of a single other agency of government where the staff would file comments on a federal rulemaking without the oversight of their bosses.
Bill and Bill acknowledge in a footnote that the staff comments represent only their own views and not those of the commissioners. But that distinction has already been lost on at least one lawmaker. Today Speaker of the House William J. Howell released a statement declaring, "The independent, nonpartisan analysis of the State Corporation Commission confirms that President Obama's environmental policies could devastate Virginia's economy."
And really, "devastate"? But that's the kind of hysteria you hear from opponents of the Clean Power Plan. While the rest of us see healthier air, huge opportunities for job growth in the clean energy sector, and the chance to avoid the worst effects of climate disruption, the Friends of Coal see only devastation. And no wonder: according to the Virginia Public Access Project, Howell accepted $14,000 from the coal industry just this year alone.