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2012 SESSION
12101150DBe it enacted by the General Assembly of Virginia:
1. That § 56-585.2 of the Code of Virginia is amended and reenacted as follows:
§ 56-585.2. Sale of electricity from renewable energy sources.
A. As used in this section:
"Electric utility" or "utility" means an investor-owned electric utility or an electric distribution cooperative.
"Renewable energy" shall have the same meaning
ascribed to it in § 56-576, provided such renewable energy is (i) generated or
purchased in the Commonwealth or in the interconnection region of the regional
transmission entity of which the participating electric utility is a member,
as it may change from time to time; (ii) generated by a
public an electric
utility providing electric service in the Commonwealth from a facility in which
the public utility owns at least a
49 percent interest and that is located in a control area adjacent to such
interconnection region; or (iii) represented by certificates issued by an
affiliate of such regional transmission entity, or any successor to such
affiliate, and held or acquired by such an electric utility, which
validate the generation of renewable energy by eligible sources in such region.
"Renewable energy" shall not include electricity generated from
pumped storage, but shall include run-of-river generation from a combined
pumped-storage and run-of-river facility.
"Renewable energy source" means a facility at which a form of renewable energy is used to generate electricity.
"Renewable power goal" means the amount of electric energy sold by an electric utility to retail customers in the Commonwealth that is required to be generated by a renewable energy source in a calendar year as specified in subdivisions C 1 through C 6.
"Total electric energy sold in the base year" means total electric energy sold to Virginia jurisdictional retail customers by a participating utility in calendar year 2007, excluding an amount equivalent to the average of the annual percentages of the electric energy that was supplied to such customers from nuclear generating plants for the calendar years 2004 through 2006.
B. Any investor-owned incumbent Each electric utility may
apply to the Commission for approval to participate in a renewable energy portfolio standard program, as defined that fails to meet the renewable power goals
commencing in 2014 shall be required to
pay an alternative compliance payment as set forth in this section. The Commission shall
approve such application if the applicant demonstrates that it has a reasonable
expectation of achieving 12 percent of its base year electric energy sales from
renewable energy sources during calendar year 2022, and 15 percent of its base
year electric energy sales from renewable energy sources during calendar year
2025, as provided in subsection D. Effective July 1, 2012, the Commission
shall not approve any request for a
rate adjustment clause in connection with an investor-owned
electric utility's participation in
the renewable energy portfolio standard program
that existed prior to July 1, 2012.
C. It is in the public
interest for utilities to achieve the goals set forth in subsection D, such
goals being referred to herein as "RPS Goals". Accordingly, the
Commission, in addition to providing recovery of incremental RPS program costs
pursuant to subsection E, shall increase the fair combined rate of return on
common equity for each utility participating in such program by a single
Performance Incentive, as defined in subdivision A 2 of § 56-585.1, of 50 basis
points whenever the utility attains an RPS Goal established in subsection D.
Such Performance Incentive shall first be used in the calculation of a fair
combined rate of return for the purposes of the immediately succeeding biennial
review conducted pursuant to § 56-585.1 after any such RPS Goal is attained,
and shall remain in effect if the utility continues to meet the RPS Goals
established in this section through and including the third succeeding biennial
review conducted thereafter. Any such Performance Incentive, if implemented,
shall be in lieu of any other Performance Incentive reducing or increasing such
utility's fair combined rate of return on common equity for the same time
periods. However, if the utility receives any other Performance Incentive
increasing its fair combined rate of return on common equity by more than 50
basis points, the utility shall be entitled to such other Performance Incentive
in lieu of this Performance Incentive during the term of such other Performance
Incentive. During each calendar
year commencing on or after January 1, 2013, the
minimum amount of renewable energy acquired by
an electric utility for sale to its retail
customers in the Commonwealth shall be:
1. In calendar year 2013, an amount equal to three percent of the total electric energy sold in the base year;
2. In each of calendar years 2014 and 2015, an amount equal to five percent of the total electric energy sold in the base year;
3. In calendar year 2016, an amount equal to five percent of the total electric energy sold in the base year;
4. In calendar year 2017, an amount equal to 12 percent of the total electric energy sold in the base year;
5. In each of calendar years 2018 and 2019, an amount equal to 15 percent of the total electric energy sold in the base year; and
6. In calendar years 2020 and each year thereafter, an amount equal to 20 percent of the total electric energy sold in the base year.
A utility shall
receive double credit toward meeting the renewable energy
portfolio standard for energy derived
from sunlight or from onshore wind, and triple credit toward meeting the
renewable energy portfolio standard for energy derived
from offshore wind.
D. To
qualify for the Performance Incentive established in subsection C, the total
electric energy sold by a utility to meet the RPS Goals shall be composed of
the following amounts In
determining the amount of a utility's sales of electric
energy from that is renewable energy sources, as adjusted the Commission shall adjust
for any sales volumes lost through operation of the customer choice provisions
of subdivision A 3 or A 4 of § 56-577:
RPS Goal I: In
calendar year 2010, 4 percent of total electric energy sold in the base year.
RPS Goal II: For
calendar years 2011 through 2015, inclusive, an average of 4 percent of total
electric energy sold in the base year, and in calendar year 2016, 7 percent of
total electric energy sold in the base year.
RPS Goal III: For
calendar years 2017 through 2021, inclusive, an average of 7 percent of total
electric energy sold in the base year, and in calendar year 2022, 12 percent of
total electric energy sold in the base year.
RPS Goal IV: For
calendar years 2023 and 2024, inclusive, an average of 12 percent of total
electric energy sold in the base year, and in calendar year 2025, 15 percent of
total electric energy sold in the base year.
A utility may apply
renewable energy sales achieved or renewable energy certificates acquired
during the periods covered by any such RPS Goal that are in excess of the sales requirement for that RPS
Goal to the sales requirements for any future RPS
Goal.
E. A An investor-owned
utility participating in such program
shall have the right to recover all incremental costs incurred for the purpose of such participation in
such program complying with the renewable
power goals, as accrued against income, through rate
adjustment clauses as provided in subdivisions A 5 and A 6 of § 56-585.1,
including, but not limited to, administrative costs, ancillary costs, capacity
costs, costs of energy represented by certificates described in subsection A,
and, in the case of construction of renewable energy generation facilities,
allowance for funds used during construction until such time as an enhanced
rate of return, as determined pursuant to subdivision A 6 of § 56-585.1, on
construction work in progress is included in rates, projected construction work
in progress, planning, development and construction costs, life-cycle costs,
and costs of infrastructure associated therewith, plus an enhanced rate of
return, as determined pursuant to subdivision A 6 of § 56-585.1. An electric distribution cooperative shall have the
right to recover all incremental costs incurred for the purpose of complying
with the renewable power goals to the
extent permitted under § 56-585.3. All
incremental costs of the RPS program complying with the renewable power goals
shall be allocated to and recovered from the utility's customer classes based
on the demand created by the class and within the class based on energy used by
the individual customer in the class, except that the incremental costs of the RPS program complying with the renewable power goals
shall not be allocated to or recovered from customers that are served within
the large industrial rate classes of the participating
utilities and that are served at primary or transmission voltage.
F. A Each electric utility participating in such program
shall apply towards meeting its RPS
Goals renewable power goals any renewable energy from existing
renewable energy sources owned by the participating
utility or purchased as allowed by contract at no additional cost to customers
to the extent feasible. A utility participating in such
program shall not apply towards meeting its RPS Goals renewable power goals any
renewable energy certificates attributable to any renewable energy generated at
a renewable energy generation source in operation as of July 1, 2007, that is
operated by a person that is served within a utility's large industrial rate
class and that is served at primary or transmission voltage. A participating utility shall be
required to fulfill any remaining deficit needed to fulfill its RPS Goals renewable power goals from new
renewable energy supplies at reasonable cost and in a prudent manner to be
determined by the Commission at the time of
approval of any application made pursuant to subsection B.
A participating utility may sell
renewable energy certificates produced at its own generation facilities located
in the Commonwealth or, if located outside the Commonwealth, owned by such
utility and in operation as of January 1, 2010, or renewable energy
certificates acquired as part of a purchase power agreement, to another entity
and purchase lower cost renewable energy certificates and the net difference in
price between the renewable energy certificates shall be credited to customers.
Utilities participating in such program
shall collectively, either through the installation of new generating
facilities, through retrofit of existing facilities or through purchases of
electricity from new facilities located in Virginia, use or cause to be used no
more than a total of 1.5 million tons per year of green wood chips, bark, sawdust,
a tree or any portion of a tree which is used or can be used for lumber and
pulp manufacturing by facilities located in Virginia, towards meeting RPS renewable power goals, excluding such fuel used at electric
generating facilities using wood as fuel prior to January 1, 2007. A utility with an approved application
shall be allocated a portion of the 1.5 million tons per year in proportion to
its share of the total electric energy sold in the base year, as defined in subsection A,
for all utilities participating in the
RPS program. A utility may use in meeting RPS renewable power goals, without
limitation, the following sustainable biomass and biomass based waste to energy
resources: mill residue, except wood chips, sawdust and bark; pre-commercial soft
wood thinning; slash; logging and construction debris; brush; yard waste;
shipping crates; dunnage; non-merchantable waste paper; landscape or
right-of-way tree trimmings; agricultural and vineyard materials; grain;
legumes; sugar; and gas produced from the anaerobic decomposition of animal
waste.
G. The Commission shall promulgate such rules and regulations
as may be necessary to implement the provisions of this section including a
requirement that participants utilities
verify whether the renewable power goals are met
in accordance with this section. RPS
H. A utility shall satisfy the renewable power goals of acquiring renewable energy for sale to its retail customers in the Commonwealth by (i) self-generating renewable energy, (ii) purchasing sufficient renewable energy certificates, or (iii) a combination of clauses (i) and (ii). A utility shall submit documentation of compliance with the renewable power goals to the Commission at such times and in such format as the Commission requests. The Commission shall create and administer a renewable energy certificate certification, tracking, and reporting program. This program should include a process for determining when and how renewable energy certificates shall be created, accounted for, transferred, and retired. The renewable energy certificates program shall include a true-up period during which utilities may obtain the required number of renewable energy certificates in the marketplace to meet each year's renewable power goals.
I. If, after notice and opportunity for a hearing, the Commission determines that a utility has failed to meet its renewable power goal for a year, the Commission shall order the participating utility to make an alternative compliance payment. The amount of a participating utility's alternative compliance payment shall be the end-of-year market price for the equivalent renewable energy certificates needed to achieve the renewable power for the total amount of electricity from renewable energy sources that would satisfy the applicable requirement of subsection C for that year. Alternative compliance payments shall be paid into the Virginia Sustainable Energy Fund established pursuant to subsection J. Alternative compliance payments made by a participating utility shall not constitute an incremental cost of compliance with this section incurred by the participating utility under subsection E and shall not be recoverable by the participating utility under this section or subdivision A 5 d of § 56-585.1.
J. There is hereby created in the state treasury a special nonreverting fund to be known as the Virginia Sustainable Energy Fund, hereafter referred to as "the Fund." The Fund shall be established on the books of the Comptroller. All alternative compliance payments collected by the Commission pursuant to subsection I shall be paid into the state treasury and credited to the Fund. Interest earned on moneys in the Fund shall remain in the Fund and be credited to it. Any moneys remaining in the Fund, including interest thereon, at the end of each fiscal year shall not revert to the general fund but shall remain in the Fund. Moneys in the Fund shall be used solely for the purpose of providing funding for projects and programs that have the purpose of increasing the amount of electric energy generated from renewable energy sources in the Commonwealth.
K. Each investor-owned incumbent
electric utility shall report to the Commission annually by November 1 commencing in 2013 on (i) its
efforts, if any, to meet the RPS Goals renewable power
goals, (ii) its overall generation of renewable energy, and
(iii) advances in renewable generation technology that affect activities
described in clauses (i) and (ii).
2. That an investor-owned electric utility that prior to July 1, 2012, was authorized to receive a Performance Incentive as a consequence of its participation in the renewable energy portfolio standard program pursuant to § 56-585.2 of the Code of Virginia as it existed prior to the effective date of this act shall continue to receive its Performance Incentive following the effective date of this act until the effective date of an order of the State Corporation Commission establishing the utility's authorized rate of return on equity in the utility's next biennial rate review proceeding conducted pursuant to § 56-585.1 of the Code of Virginia.