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This spring Dominion Virginia Power unveiled a proposal to buy 3 megawatts (MW) worth of power from its customers who have solar panels, and resell the electricity to its Green Power Program through renewable energy certificates (RECs). It represents a very small amount of electricity--a mere rounding error for the utility giant--but its implications are much bigger, and they have the solar industry concerned.

Most homeowners and businesses that put up solar panels currently “net meter,” paying the utility only for power in excess of what their systems generate. Owners of solar systems also earn RECs that they can sell to help offset the cost of the system if they choose. RECs represent the “environmental attributes” of renewable energy, allowing the market to buy and sell what amounts to the bragging rights to renewable energy even when the actual electrons can’t be delivered.

Dominion presents its “Solar Purchase Tariff” as a way to meet customer demand for Virginia-made renewable energy and incentivize new solar installations. The good news is that it creates publicity for solar, so it might stimulate interest. The bad news is that the devil is in the details, and there are a lot of details.

Under the proposal, some homeowners and businesses that qualify to net-meter could instead enter a “buy-all, sell-all” contract. Dominion would buy their entire output and its associated RECs at 15 cents per kilowatt-hour (kWh), and sell them power from the grid at the normal retail price of about 11 cents/kWh. Solar system owners would pocket the 4-cent difference.

We’ll get back to the solar owners in a moment, but for now let’s follow the money: Dominion would turn around and sell the RECs to its Green Power Program, not for that 4-cent difference in price, but for 11 cents/kWh.

The Green Power Program is a voluntary program under which Dominion customers who want to do so can pay more for their electricity to support renewable energy. Over 14,000 Virginians participate through added payments on their electric bills. The program uses the money to buy RECs, which currently come mostly from Midwestern wind farms and landfill gas.

Why would the Green Power Program be so stupid as to pay 11 cents for something that cost Dominion only 4 cents? Well, because Dominion controls the program. Dominion assures us it won’t raise the cost of participating in the Green Power Program as a result, but that’s only because the power produced by 3 MW is just a drop in the program’s bucket, and the rest of the RECs it is buying are extremely cheap in today’s market.

This may not always be true, though. As a precedent for future buys of distributed generation, charging participants 11 cents for a product that nets the producer only 4 cents sounds like a great way to drive away participants.

There is also the question of whether Green Power customers want their money spent subsidizing solar panels on other people’s houses, rather than helping build Virginia wind farms or solar installations that put new clean energy on the grid. Paying extra on my bill for some rich guy’s solar panels makes me feel like a chump, but others may not mind.  

But let’s get back to the money. If Dominion is charging the Green Power Program 11 cents of the 15-cent solar purchase price, that leaves 4 cents that Dominion itself will pay for customer-generated solar power, even while it charges the same customers about 11 cents for ordinary “brown” power. Dominion says this is because solar power, when reduced to electrons like any other, is worth only what the company would otherwise pay for electricity on the open market (the “avoided cost”), and that’s about 4 cents.

The solar industry disputes the claim that distributed solar generation is worth no more than the avoided cost of brown power, and considers it a dangerous precedent with ramifications for future battles, including over standby charges. Distributed generation has a high value to the electric grid, they contend, adding stability and reducing the need for new transmission lines. Moreover, solar panels can reduce peak demand on hot, sunny days, and they do so without adding pollution. Valuing solar energy at the same rate as brown power bought off the grid just has to be wrong, and the only question is how wrong.

So although the Solar Purchase Program is so small that it seems hardly worth all the ink being spilled on it, it appears to be a proxy for a much bigger battle. And this may be the real point, because otherwise the program could prove irrelevant. Solar industry members say the 15-cent price is too low to induce people to install solar. Sure, it’s more than the 11 cents saved by net-metering, but many homeowners are already selling their RECs for anywhere from 2 to 20 cents/kWh. Other details of the program—an interconnection fee, a monthly charge for a second meter, and doubts about whether the payments might be taxable—will make most solar customers opt to stick with net-metering and either continue selling their RECs elsewhere or keep those bragging rights for themselves.

Oddly, this spring Dominion, through a broker, started offering 4 cents/kWh to net-metering customers for their solar RECs, outright, with no strings attached. Homeowners were told the RECs will be sold to the Green Power Program. Although it was framed as a one-time buy, this is obviously a much better deal for the solar owners than the proposed Solar Purchase Program. And assuming Dominion doesn’t plan to make a profit on the resale of the RECs to the Green Power Program, it is also hugely better for those customers.

All this suggests that Dominion may not even expect any net metering customers to sign up for the Solar Purchase Program. This proposed program may just be part of the bigger power game, in which control over electric generation is the real point.

Originally posted to Power for the People on Mon Aug 13, 2012 at 12:43 PM PDT.

Also republished by Kosowatt.

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Comment Preferences

  •  Thanks for warning us of these scandalous (2+ / 0-)
    Recommended by:
    Just Bob, Lujane

    and outrageous Dominion Power vultures.  

    Yet, another example of how regular citizens have to be eternal vigilant to avoid being ripped of by predatory corporate lobbyists.

    Sadly, they have people paid full time to specialize in how to take advantage of us, while we are relying on volunteer efforts.  

    Making post like yours so much more noble and appreciated.

    Republished in Kosowatt.  

    The means is the ends in the process of becoming. - Mahatma Gandhi

    by HoundDog on Mon Aug 13, 2012 at 12:51:43 PM PDT

    •  Problem is government, not Dominion Power. (2+ / 0-)
      Recommended by:
      erratic, Lujane

      Dominion Power is supposed to make profits for its stockholders.

      Government is supposed to make sure public utilities serve the public interest. And the public interest most certainly includes ensuring the world doesn't fry.

      I know, Virginia is a swing state, largely under the sway of the usual GOP suspects like Big Bidness and climate deniers. It could be worse--I live in Georgia! Perhaps someday our state governments will pull their heads out of their asses and enact at least one of the following:

      * A feed-in tariff high enough to make renewables financially attractive to those who actually go to the trouble and expense of installing them.

      * A renewable portfolio standard strict enough to prompt utilities to raise the prices they pay for renewable energy.

      The true blame for this not happening already lies with your fellow Virginians who vote GOP...or who don't vote.

      "The true strength of our nation comes not from the might of our arms or the scale of our wealth, but from the enduring power of our ideals." - Barack Obama

      by HeyMikey on Mon Aug 13, 2012 at 02:20:59 PM PDT

      [ Parent ]

  •  Thank you for this ... (2+ / 0-)
    Recommended by:
    tidalwave1, Lujane

    1.  Perhaps also worth noting that Dominion VA Power is fighting, hard, to drive up the fix costs for net metering and is driving down -- via its lobbyists -- the size of solar system acceptable under net metering.

    Dominion: Global Warming Starts Here

    2.  Dominion VA Power has been profiteering, like crazy, off its carbon offsets program -- buying the cheapest RECs possible and making serious $s off those signing up for green credits.

    3.  Wow -- my solar means that I don't pay Dominion for about 80 percent of my electricity use and I'm able to sell my SRECs into the DC market at $250/mWh (or 25 cents per kWh).  E.g., I "earn" 33 cents per kWh (though, with fees/taxes, not that much) while Dominion would offer 14.  Wow, I better run out an cancel my existing contracts so I can go with Dominion.

    Thank you for this discussion / call out of another reason to hate Dominion.

    PS:  Can I crosspost to GESN?

    Blogging regularly at Get Energy Smart NOW! for a sustainable energy future.

    by A Siegel on Mon Aug 13, 2012 at 04:00:03 PM PDT

    •  No links - can't find any supporting evidence (0+ / 0-)

      I'm tempted to HR this diary until the hit and run diarist provides back up. I'm afraid that Ivy has completely misinterpreted the deregulated energy market which is a little scary if this is true:

      Ivy Main is the Vice Chair of the Virginia Chapter of the Sierra Club and a frequent writer on energy issues.

      Kiss my ass. This is a Holy Site...

      by jam on Wed Aug 15, 2012 at 05:14:19 AM PDT

      [ Parent ]

  •  Can you provide any links? (0+ / 0-)

    because this link:
    https://www.dom.com/...

    Pricing Details: Enrolling in the 100% Option means you are purchasing Renewable Energy Certificates (RECs) equal to your entire monthly electricity use. This additional cost is calculated by adding a penny and a half ($0.013) per kilowatt-hour (kWh) of electricity used to your monthly bill.
    which would mean you are off by an order of magnitude and DOM would be losing money on each REC transaction.

    Kiss my ass. This is a Holy Site...

    by jam on Tue Aug 14, 2012 at 10:37:41 AM PDT

    •  Actually ... (0+ / 0-)

      You should take a look at Dominion VA Power's scandalous record when it comes to RECs.  Yes, it sells RECs to "green" customers for 1.3 cents ... but buys most of them for far less.

      Dominion Virginia Power, the state's largest electricity provider, is currently receiving a $76 million renewable energy bonus, even though they haven't developed any new renewable energy since the program was created. To get this reward, Dominion opted to buy an estimated $1-2 million worth of cheap energy credits from decades-old facilities in other states, most of which burn landfill gas or wood.
      And ...

      for another Ivy Main piece for you to be angered at -- this time in Washington Post:

      For us in Virginia, Dominion buys cheap certificates that no one else wants.

      That’s a great deal for Dominion. According to the Southern Environmental Law Center, $1.7 million could buy enough of these certificates to satisfy Dominion’s 2010 RPS targets, qualifying the company to collect an extra $76 million over two years from its ratepayers.

      Blogging regularly at Get Energy Smart NOW! for a sustainable energy future.

      by A Siegel on Wed Aug 15, 2012 at 06:57:02 PM PDT

      [ Parent ]

      •  scandalous? (0+ / 0-)

        Honestly Adam, the scandal is how poorly the Virginia voluntary RPS is written if it allows vintage RECs to count, not that DOM is taking advantage of it.

        Kiss my ass. This is a Holy Site...

        by jam on Thu Aug 16, 2012 at 06:55:17 AM PDT

        [ Parent ]

        •  Commonwealth politics ... (1+ / 0-)
          Recommended by:
          jam

          Dom VA Power comes close to writing the law with a huge hole in it that they drive a Mac truck through.

          Yes, angered at how lousy the Commonwealth is re energy efficiency and renewable energy, but not going to give a pass for DomVAPower for their profiteering and their greenwashing.

          Blogging regularly at Get Energy Smart NOW! for a sustainable energy future.

          by A Siegel on Thu Aug 16, 2012 at 09:15:27 AM PDT

          [ Parent ]

      •  so (0+ / 0-)

        She's angry at DOM for making an ad with a wind turbine in it because they don't buy wind for RPS compliance but they do buy wind for the green power program and they also own wind farms and that is somehow misleading?

        Kiss my ass. This is a Holy Site...

        by jam on Thu Aug 16, 2012 at 07:03:29 AM PDT

        [ Parent ]

    •  please read more carefully (0+ / 0-)

      Your answer is already in my post: "Dominion assures us it won’t raise the cost of participating in the Green Power Program as a result, but that’s only because the power produced by 3 MW is just a drop in the program’s bucket, and the rest of the RECs it is buying are extremely cheap in today’s market."

  •  I've HRed this diary (0+ / 0-)

    until the diarist provides sources for her claims. The only information I can find (in a cursory search) indicates that this diary is completely wrong.

    Kiss my ass. This is a Holy Site...

    by jam on Wed Aug 15, 2012 at 05:16:14 AM PDT

    •  read the filing (0+ / 0-)

      SCC Case PUE-2012-00064
      If you still don't get how it works, contact Diane Corsello of Dominion. None of this is a secret.

      •  ok, found it (0+ / 0-)

        sorry for the HR (removed), but you didn't really explain it very well at all.

        Pursuant to Rate Schedule SP, the Company would purchase the solar energy output from a qualifying solar customer-generator at a fixed price of fifteen cents per kilowatt-hour for a period of five years from the effective date of the Service Agreement. According to Dominion Virginia Power, the proposed fixed price for solar energy generated would be made up of two components :  (1) an avoided cost energy rate component as determined by the PJM  Interconnection, LLC Dominion Zone day-ahead locational marginal price, including a provision for the line losses;  and (2) a voluntary environmental contribution component provided by customers participating in the Company's Green Power Program
        What you are saying is that the LMP for the DOM transmission zone is about $40/MWh ($42.30 for 9-16 August 2012 from 10 am to 2 pm (yes, I downloaded the PJM Aggregate Hourly Locational Marginal Price Results for the last seven days and did the math)) which means that rest of the $150 comes from the Green Power Program.

        OK, here's your error -

        Dominion would buy their entire output and its associated RECs at 15 cents per kilowatt-hour (kWh), and sell them power from the grid at the normal retail price of about 11 cents/kWh. Solar system owners would pocket the 4-cent difference.
        I believe that you should only be comparing the electricity supply charges not including the distribution charges. Energy Choice in Virginia:
        individual retail customers regardless of customer class may purchase Electricity Supply Service provided 100 percent from renewable energy from a Competitive Service Provider
        In other words, the 15 cents paid under the SP tariff is only for the energy commodity and thus only covers the 4-cent/kWh energy charge. Thus, the Green Power Program is covering 11 cents/kWh and it is essentially a wash. So, what I think is happening is that DOM is buying/selling RECs for about the same 11 cents/kWh, not buying at 4 cents and selling for 11 cents. Now, if you want to be outraged that they are buying them for 11 cents when could just buy more wind/LFG RECs for less than a penny, then have at it. If you want to applaud DOM for supporting local solar generation, have at THAT.

        In any event, it's a bad deal and residential customers in DOM-VA should opt for net metering if they can.

        Kiss my ass. This is a Holy Site...

        by jam on Sun Aug 19, 2012 at 12:32:07 PM PDT

        [ Parent ]

        •  besides (0+ / 0-)

          there doesn't seem to be anything linking the size of the PV system with the energy usage. The resident could sell 100 kWh per year while only using 1 kWh per year (in theory). So comparing it to the retail rate is entirely specious. That's why it could be better than net metering.

          Kiss my ass. This is a Holy Site...

          by jam on Sun Aug 19, 2012 at 01:27:04 PM PDT

          [ Parent ]

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