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Developed and maintained by the Division of Legislative Automated Systems.
2016 SESSION
16104300DBe 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 sources through a renewable energy portfolio standard program.
A. As used in this section:
"Qualified
investment" means an expense incurred in the Commonwealth by a
participating utility in conducting, either by itself or in partnership with
institutions of higher education in the Commonwealth or with industrial or
commercial customers that have established renewable energy research and
development programs in the Commonwealth, research and development activities
related to renewable or alternative energy sources, which expense (i) is
designed to enhance the participating utility's understanding of emerging
energy technologies and their potential impact on and value to the utility's
system and customers within the Commonwealth; (ii) promotes economic
development within the Commonwealth; (iii) supplements customer-driven
alternative energy or energy efficiency initiatives; (iv) supplements
alternative energy and energy efficiency initiatives at state or local
governmental facilities in the Commonwealth; or (v) is designed to mitigate the
environmental impacts of renewable energy projects.
"Renewable energy" shall have the same meaning ascribed to it in § 56-576, provided such renewable energy is (i) generated in the Commonwealth or in the interconnection region of the regional transmission entity of which the participating utility is a member, as it may change from time to time, and purchased by a participating utility under a power purchase agreement; provided, however, that if such agreement was executed on or after July 1, 2013, the agreement shall expressly transfer ownership of renewable attributes, in addition to ownership of the energy, to the participating utility; (ii) generated by a public 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 the Commonwealth, in the interconnection region of the regional transmission entity of which the participating utility is a member, or in a control area adjacent to such interconnection region; or (iii) represented by renewable energy certificates. "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 certificate" means either (i) a certificate
issued by an affiliate of the regional transmission entity of which the
participating utility is a member, as it may change from time to time, or any
successor to such affiliate, and held or acquired by such utility, that
validates the generation of renewable energy by eligible sources in the
interconnection region of the regional transmission entity or (ii) a
certificate issued by the Commission pursuant to subsection J and held or
acquired by a participating utility, that validates a qualified investment made
by the participating utility.
"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
electric utility may apply to the Commission for approval to participate in a
renewable energy portfolio standard program, as defined 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.
C. It
is in the public interest for utilities that seek
to have a renewable energy portfolio standard program to achieve the goals standards
set forth in subsection D E, such goals standards being referred to
herein as "RPS Goals Standards." A utility shall receive double credit toward
meeting the renewable energy portfolio standard for energy derived from
sunlight, from onshore wind, or from facilities in the Commonwealth fueled
primarily by animal waste, and triple credit toward meeting the renewable
energy portfolio standard for energy derived from offshore wind.
D. C. Each investor-owned
incumbent electric utility shall participate in a renewable energy portfolio
standard program, as defined in this section.
D. Each investor-owned incumbent electric utility shall make investments in solar energy generation, onshore wind generation, offshore wind generation, and cumulative energy efficiency savings by calendar year 2030, as described in this section.
E.
Regarding any renewable energy portfolio standard program, the total electric
energy sold by a utility to meet the RPS Goals Standards shall be composed of
the following amounts of electric energy or renewable thermal energy equivalent
from renewable energy sources, as adjusted for any sales volumes lost through
operation of the customer choice provisions of subdivision A 3 or A 4 of §
56-577:
RPS Goal Standard I: In calendar year
2010, 4 percent of total electric energy sold in the base year.
RPS Goal Standard 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 Standard III: For calendar
years 2017 through 2021, inclusive, an average of 7 10 percent of total electric
energy sold in the base year, and in no less than half of which is generated from
sources located within the Commonwealth. In calendar year
2022, 12 15
percent of total electric energy sold in the base year, no less
than half of which is generated from sources located within the Commonwealth.
RPS Goal Standard IV: For calendar
years 2023 and 2024, inclusive, an average of 12 20 percent of total electric
energy sold in the base year, and in no less than half of which is generated from
sources located within the Commonwealth. In calendar year
2025 and thereafter, 15 25
percent of total electric energy sold in the base year, no less
than half of which is generated from sources located within the Commonwealth.
A utility may not apply
renewable energy certificates issued pursuant to subsection J to meet more than
20 percent of the sales requirement for the RPS Goal in any year.
For compliance with any RPS Standard for calendar years 2016 through 2025, inclusive, a utility may only apply (i) renewable energy generated from renewable energy generation facilities owned by the utility, (ii) renewable energy purchased or acquired by the utility from a non-utility generator located within the Commonwealth, (iii) renewable energy certificates purchased or acquired by the utility from customer-generators within the Commonwealth participating in net energy metering pursuant to § 56-594, or (iv) renewable energy certificates purchased or acquired by the utility from generators in the interconnection region of the regional transmission entity, except that a utility may not apply such renewable energy certificates to meet more than 20 percent of the sales requirement for the RPS Standard in any year.
A utility may apply renewable energy sales achieved or renewable
energy certificates acquired during the periods covered by any such RPS Goal Standard
that are in excess of the sales requirement for that RPS Goal Standard to the sales
requirements for any future RPS Goals Standards
in the five two
calendar years after the renewable energy was generated or the renewable energy
certificates were created, except that a utility shall be able to apply
renewable energy certificates acquired by the utility prior to January 1, 2014.
E. F. A
utility participating in such program shall have the right to recover all
incremental costs incurred for the purpose of such participation in such
program, 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. This
subsection shall not apply to qualified investments as provided in subsection K.
All incremental costs of the RPS program 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 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. G. A
utility participating in such program shall apply towards meeting its RPS Goals Standards
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 Standards
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, except for those
persons providing renewable thermal energy equivalents to the utility. A
participating utility shall be required to fulfill any remaining deficit needed
to fulfill its RPS Goals Standards
from new renewable energy supplies located within the
Commonwealth 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 goals Standards,
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 goals Standards,
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. H. The
Commission shall promulgate such rules and regulations as may be necessary to
implement the provisions of this section including a requirement that
participants verify whether the RPS goals Standards
are met in accordance with this section.
H. I. Each
investor-owned incumbent electric utility shall report to the Commission
annually by November 1 identifying:
1. The utility's efforts, if any,
to meet the RPS Goals Standards,
specifically identifying:
a. A list of all states where the purchased or owned renewable energy was generated, specifying the number of megawatt hours or renewable energy certificates originating from each state;
b. A list of the decades in which the purchased or owned renewable energy generating units were placed in service, specifying the number of megawatt hours or renewable energy certificates originating from those units; and
c. A list of fuel types used to generate the purchased or owned renewable energy, specifying the number of megawatt hours or renewable energy certificates originating from each fuel type;
2. The utility's overall generation of renewable energy; and
3. Advances in renewable generation technology that affect activities described in subdivisions 1 and 2.
I. J. The
Commission shall post on its website the reports submitted by each
investor-owned incumbent electric utility pursuant to subsection H I.
J. The Commission shall issue
to a participating utility a number of renewable energy certificates for
qualified investments, upon request by a participating utility, if it finds
that an expense satisfies the conditions set forth in this section for a qualified
investment, as follows:
1. By March 31 of each year,
the participating utility shall provide an analysis, as reasonably determined
by a qualified independent broker, of the average for the preceding year of the
publicly available prices for Tier 1 renewable energy certificates and Tier 2
renewable energy certificates, validating the generation of renewable energy by
eligible sources, that were issued in the interconnection region of the
regional transmission entity of which the participating utility is a member;
2. In the same annual
analysis provided to the Commission, the participating utility shall divide the
amount of the participating utility's qualified investments in the applicable
period by the average price determined pursuant to subdivision 1;
3. The number of renewable
energy certificates to be issued to the participating utility shall equal the
product obtained pursuant to subdivision 2; and
4. The Commission shall
review and validate the analysis provided by the participating utility within
90 days of submittal of its analysis to the Commission. If no corrections are
made by the Commission, then the analysis shall be deemed correct and the
renewable energy certificates shall be deemed issued to the participating
utility.
Each renewable energy
certificate issued to a participating utility pursuant to this subsection shall
represent the equivalent of one megawatt hour of renewable energy sales
achieved when applied to an RPS Goal.
K. Qualified investments shall
constitute reasonable and prudent operating expenses of a participating
utility. Notwithstanding subsection E, a participating utility shall not be
authorized to recover the costs associated with qualified investments through
rate adjustment clauses as provided in subdivisions A 5 and A 6 of § 56-585.1.
In any proceeding conducted pursuant to § 56-585.1 or other provision of this
title in which a participating utility seeks recovery of its qualified
investments as an operating expense, the participating utility shall not be
authorized to earn a return on its qualified investments.
L. A participating utility
shall not be eligible for a research and development tax credit pursuant to §
58.1-439.12:08 with regard to any expense incurred or investment made by the
participating utility that constitutes a qualified investment pursuant to this
section.
K. If an investor-owned incumbent electric utility fails to comply with the RPS Standards established for the applicable year, the utility shall pay into the Voluntary Solar Resource Development Fund established pursuant to § 67-1302, or successor fund, a compliance fee of 10 cents for each kilowatt-hour of shortfall from required renewable sources.