Commission on Electric Utility Restructuring Special Subcommittee on HJR 686

October 3, 2007

The Commission on Electric Utility Restructuring established a special subcommittee at its September meeting to explore the efficacy of a voluntary program to encourage the production of electricity from renewable resources. The special subcommittee is chaired by Delegate Plum, the patron of HJR 686.
HJR 686 cites North Carolina's NC GreenPower program as an example of an initiative that may offer an efficient, voluntary way to encourage the use of electricity generated from renewable resources. The focus of the special subcommittee's work will be analyzing whether the NC GreenPower initiative should be the model for a similar program in Virginia.

NC GREENPOWER PROGRAM

Maggy Inman and Vicky McCann of NC GreenPower briefed the subcommittee on North Carolina's voluntary renewable energy program. NC GreenPower is a nonstock, nonprofit 501(c)(3) corporation formed to administer the NC GreenPower program. The goal of the NC GreenPower program is to supplement the state’s existing power supply with electricity generated from renewable resources. The program uses financial contributions made by North Carolina citizens and businesses to purchase the "green" attributes of qualifying renewable electricity.
NC GreenPower provides producers from renewable sources with a premium over and above the payments they receive from their local utility for power added to the grid. The NC GreenPower payments supplement the payments that the generators receive from the electric utility to which they sell the power at rates under its avoided cost tariff. Because the cost of power from the renewable sources is higher than power produced from traditional resources, the NC GreenPower payments incentive, which bridges the gap between the utility's avoided cost payments and the amount needed to make the renewable energy viable, is a valuable tool for the development of renewable generation. The largest premium, at 18 cents per kWh, is paid for the "green" attributes of power from solar photovoltaic facilities, and the average premium payment is about one cent per kWh.
The program was developed pursuant to a proceeding of that state's Utilities Commission that asked Advanced Energy, a nonprofit corporation formed by the Utilities Commission, to investigate the establishment of a voluntary "green" check off program. The NC GreenPower program was developed by Advanced Energy, with stakeholder participation, over a period of two years. The plan provides that Advanced Energy would establish an independent corporation (NC GreenPower) to administer the program. NC GreenPower has no employees; rather, Advanced Energy provides staffing for NC GreenPower.
A typical contribution of $4 per month adds one block of 100 kilowatt hours of green energy to North Carolina’s power supply. Large-volume users – usually from the corporate sector – may contribute towards 100 or more blocks at a rate of $2.50 per block with a different energy mix. The contributions are tax deductible to the extent permitted by law. Participants generally commit to buy the selected number of blocks of power, the cost of which is then added to each month's utility bill for a minimum period of 12 months. Approximately 25 percent of the funds contributed are used for administrative and marketing costs. The balance of the money collected is paid to the producers of renewable power.
The program currently has nearly 12,000 monthly contributors, and since its inception over $2 million has been contributed to the program. The program has entered into agreements with over 90 producers of electricity from renewable sources. The rate of growth in the program over each of the past two years has exceeded 20 percent.

PERSPECTIVE OF DOMINION

David Koogler of Dominion noted that Dominion, which is North Carolina's third largest investor-owned utility, participates in the NC GreenPower program. Over the past four years, Dominion has sought to promote participation in the program by placing articles about the program in its monthly customer newsletter, providing an annual customer bill insert, placing stories about the program with media in its service area, and encouraging participation at meetings of local civic clubs. The utility also provides administrative assistance to the program at no charge. Such assistance includes billing participating customers and remitting all contributions directly to NC GreenPower.

Dominion intends to seek State Corporation Commission approval next year for a "green" tariff that will be available to all customer classes. The tariff will be intended to address the provisions of the 2007 re-regulation legislation that gives any customer the option to buy from any competitive supplier electricity generated 100 percent from renewable resources, if the customer's incumbent utility does not offer an approved tariff for electricity that is generated 100 percent from renewable resources. Koogler expressed confidence that if the General Assembly decides that Virginia should have a renewable portfolio standard, green pricing tariffs, and an independently administered voluntary green power program similar to the NC GreenPower program, his company can make it work.
FUTURE ACTIVITIES

The subcommittee will continue its examination of this issue at a future date, to coincide with a meeting of the Commission on Electric Utility Restructuring. Interested persons who wish to address the subcommittee at that meeting are encouraged to contact staff in order to be placed on the agenda. The State Corporation Commission will be invited to address relevant issues, and major utilities will be asked to report on the request that they conduct an investigation, perhaps through a poll, to determine the extent to which the public would contribute to renewables programs.

Subcommittee Chairman:
The Hon. Kenneth R. Plum

For information, contact:
Frank Munyan, Commission Staff Attorney at 804-786-3591

Website:
http://dls.state.va.us/elecutil.htm

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