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2011 SESSION
11102761DBe 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:
"Community-based project" means a renewable energy source that (i) has a rated capacity of not greater than 30 megawatts, (ii) is located in the Commonwealth, and (iii) is owned by (a) individual residents of a community, (b) an organization or cooperative that is controlled by individual residents of a community, or (c) a locality.
"Customer-generator" means an eligible customer-generator as defined in subsection B of § 56-594.
"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.
"Retail distributed generation" means electric generation added to a utility's distribution network by a customer-generator pursuant to its participation in the net energy metering program established under § 56-594.
"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.
"Wholesale distributed generation" means electric generation connected to a utility's distribution network that provides wholesale capacity and energy to a utility for use by multiple customers in contiguous distribution substation services areas at normal distribution voltages.
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 2013 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, 2011, the Commission shall not approve
any request for a rate adjustment clause in connection with an
investor owned electric utility's
participation in the RPS program that
existed prior to July 1, 2011.
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 and2015, an amount equal to five percent of the total electric energy sold in the base year, of which renewable energy an amount equal to one percent of the total electric energy sold in the base year shall be from wholesale distributed generation and retail distributed generation;
3. In calendar year 2016, an amount equal to five percent of the total electric energy sold in the base year, of which renewable energy an amount equal to 1.25 percent of the total electric energy sold in the base year shall be from wholesale distributed generation and retail distributed generation;
4. In calendar year 2017, an amount equal to 12 percent of the total electric energy sold in the base year, of which renewable energy an amount equal to 1.25 percent of the total electric energy sold in the base year shall be from wholesale distributed generation and retail distributed generation;
5. In each of calendar years 2018 and 2019, an amount equal to 12 percent of the total electric energy sold in the base year, of which renewable energy an amount equal to 1.75 percent of the total electric energy sold in the base year shall be from wholesale distributed generation and retail distributed generation; 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, of which renewable energy an amount equal to two percent of the total electric energy sold in the base year shall be from wholesale distributed generation and retail distributed generation.
D. The following shall apply in determining whether a participating utility has complied with its obligations under this section, provided that any provision in this subsection granting extra credit toward meeting a renewable power goal cannot be combined with any other credit, and only one type of additional credit may be claimed with respect to any renewable energy source:
1. A
utility shall receive double credit toward meeting the
renewable energy portfolio standard a renewable
power goal for renewable energy
derived from sunlight or from onshore wind, and triple credit toward meeting the renewable energy portfolio standard a renewable power goal
for renewable energy derived from
offshore wind.;
2. A utility shall receive 125 percent credit toward meeting a renewable power goal for renewable energy that is generated within the Commonwealth but which does not qualify as retail distributed generation;
3. A
utility shall receive 150 percent credit toward meeting a renewable
power goal for renewable energy that is generated at a
community-based project;
D4. 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.; and
5. A
utility may apply renewable energy sales achieved or renewable energy
certificates acquired during the periods covered by any such RPS Goal renewable power goal that are in excess of the sales
requirement for that RPS Goal renewable power goal to the
sales requirements for any future RPS Goal renewable power 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 verify whether the RPS renewable power goals are met
in accordance with this section.
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 participating 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 purposes 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 each year 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, 2011, was authorized to receive a Performance Incentive as a consequence of its participation in the renewable 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.