The Maryland-DC-Virginia Solar Energy Industries Association (MDV-SEIA) is the regional trade organization of the photovoltaics and solar thermal manufacturers, distributors, and component suppliers. Our membership also includes companies that design, sell, install and maintain solar energy equipment for residential, commercial, and institutional customers throughout the state. MDV-SEIA believes an electricity market restructuring that incorporates free and fair competition as well as meaningful customer choice presents tremendous opportunities for the developing solar energy industries in Virginia. Electricity customers have consistently indicated that, given a choice, they would prefer to buy solar electricity over all other technology options. While an important element of increased competition is reduced prices for energy services, survey after survey indicates that customers and the general public want a broad range of service options, reliability, and improved environmental quality, in addition to lower prices.
Fair and open competition in electricity markets will create an economic bonanza for all energy technology industries, energy service providers (including what we now call electric utilities), and the American consumer. Consider a comparable market transformation: the restructuring of the telecommunications industry, where increased competition provided customers with a broad range of service options, lowered prices, and encouraged tremendous technological innovation making the U.S. communications industry the leader in global markets. The Commonwealth of Virginia has the opportunity to maintain and expand its leadership in the booming national and global markets for new energy technologies.
To this end, the Virginia General Assembly should establish one or more policy goals for renewable energy as a part of restructuring legislation. A primary goal should be to structure the Virginia electricity market such that Virginia consumers have fair, convenient and professionally facilitated access to renewable energy products, e.g. products produced in Virginia by Virginia companies. For example, such consumer access will involve not just world class solar manufacturing plants but, more importantly, a profitable rooftop solar distribution, integration, installation and service industry.
In preparation for and as a part of restructuring legislation, the Virginia General Assembly should clearly specify who will be accountable to develop and advocate steps to implement Virginia's renewable energy policy goals. All other states that have implemented or are considering renewable energy in the restructuring process have done this. As a result it is easily possible to create a menu of programs and actions developed or adopted by other states, choose those most appropriate for Virginia, and adapt them to conform to Virginia's policies and purposes.
At a minimum, MDV-SEIA proposes the following guidelines and principles for consideration by the Joint Subcommittee legislators as they debate and make decisions on the complex issue of restructuring our domestic electricity markets:
* Retail Customer Choice: All customers should be able to choose among the broadest range of electricity options from the largest variety of suppliers as soon as possible.
* Consumer Right-to-Know and Electricity Product Labeling: Legislation should require all companies that sell electricity to consumers to provide basic information in marketing information and in bills about the product so consumers can make informed purchase decisions. Information should include disclosure about the total energy generation mix; the amount of each renewable technology in the mix; the amount of energy imported from out-of-state and waste created; information on compliance with air, water (environment) and safety rules (federal, state and local); and number of power outages (reliability record).
* Public Benefit Charge (PBC) for Trust Fund: Legislation should provide for the creation of a state trust fund -- similar to the National Highway Trust Fund -- for state-level renewable energy deployment, energy efficiency for low-income energy assistance programs, and for consumer education programs. The Trust should be based on a per kWh line charge and could be used as a matching fund for the proposed federal PBC matching requirement (see the Clinton Administrations national deregulation proposal). The Trust needs to be designed to promote the deployment of emerging and distributed renewable technologies, including distributed PV, solar thermal electric, and solar water heating and space conditioning (heating and cooling).
* Renewables Portfolio Standard (RPS): Legislation should establish a "portfolio" to encourage development of renewable energy resources. A RPS should encourage a broad portfolio of technologies, not just those which are most cost effective at the present time. Furthermore, the portfolio standard should provide for aggregation of generation from small-scale installations, such as small wind and distributed solar thermal water heating, solar thermal electric, and PV systems.
Net Metering and Simple Interconnection for Small Renewable Energy Systems: Legislation or regulation should provide for open access for interconnection with the grid in a transparent, user-friendly process. To facilitate the use of small-scale renewable energy technologies, states should be required to allow for net metering for small-scale renewables with uniform, national interconnection standards for safety and power quality. Legislation should protect solar consumer rights via barring property association restrictive covenants on solar equipment just as the Telecommunications Act barred restriction on the use of satellite antennas.
No Exclusion: Any electricity market restructuring should encourage a broad array of technologies. All solar energy technologies -- solar water heating, PV, and solar thermal electric -- should have the opportunity to compete on their merits for renewable incentives. Thermal technologies should not be excluded just because they do not generate electrons. If their power output is quantifiable in comparative terms (Btu to kWh is a simple mathematical conversion), then thermal technologies deserve to be included in all renewables restructuring initiatives.
No Transition Charges on Renewables: States should be prohibited from subsidizing uneconomic utility investments in conventional generating plants by imposing transition charges or other similar fees on renewable generation or efficiency improvements.
Rather than elaborating here on these basic principles, we will address them within in the context of the questions provided by the Joint Subcommittee at its last meeting in early October. We have included those questions with MDV-SEIA's responses below. Unless otherwise noted, the comments below are made with respect to renewable energy programs although MDV-SEIA supports low-income energy efficiency programs.
Public Benefits Charges
1. As part of implementing electric utility restructuring in Virginia, should the General Assembly establish any rate subsidy and/or energy efficiency assistance programs for low-income households?
Yes although the Public Benefits Charge (PBC) Fund should not be limited to only low-income programs. The PBC funds should be used for at least three purposes: consumer education, renewable energy deployment programs, and energy efficiency deployment programs for low-income family support. MDV-SEIA would also support a research and development fund component to the PBC that could be used for all energy technology improvement. For example, the State of California is one of several states that has captured a portion (about $60 million) of the R&D funds their investor owned utilities used to spend on R&D. California is now targeting these funds toward efficiency and renewables via solicitations issued by their equivalent to the DMME. Something like this would be very beneficial to industry development in the state and could be used to fund industry-driven partnerships with the various state universities with research interests in energy. In any case, trade groups like MDV-SEIA should have a role in developing the PBC funded program rules to help avoid inefficient and ineffective program designs that do not meet industry's needs.
2. How should any such program(s) be structured in terms of eligibility?
Eligibility for assistance would vary depending on the fund, but many state models exist for both renewable energy and energy efficiency. PBCs of some kind have been put into place in almost every state that has passed legislation (or rulemakings) to deregulate their electricity marketplace. Renewable Energy funds are an explicit part of the proposed plans in the neighboring states of North Carolina (proposed by state industrial interests) and Maryland (proposed by the state's energy office and utility commission) - states which Virginia competes with for technology jobs in many fields including renewable energy. Such plans are also proposed or in place in California, Connecticut, Illinois, Massachusetts, Montana, New Jersey (proposed), New Mexico (proposed), New York, Rhode Island, Vermont (proposed), and Wisconsin and in many other early-stage proposals from across the country.
MDV-SEIA has two specific issues that should be addressed in this discussion. First, funds for renewable energy technologies should be segregated into funds for emerging (and/or distributed) technologies like photovoltaics, small wind systems and solar water heating and space conditioning systems and for emerged technologies that are already close to competitive like small hydropower, biomass, and conventional wind facilities. Second, if Virginia chooses to create a combined fund for energy efficiency and renewable energy, that the legislation should explicitly state the eligibility of distributed (that is, customer-sited) generation technologies like PV and solar water heating and space conditioning under the rationale of improved efficiency in transmission and distribution.
Any electricity market restructuring should encourage a broad array of technologies. All renewable energy technologies that have potential in the state -- solar water heating, PV, wind, small hydro, and biomass should have the opportunity to compete on their merits for incentives. In particular, thermal technologies should not be excluded just because they do not generate electrons. As we stated above, if their power output is quantifiable in comparative terms (Btu to kWh is a simple mathematical conversion), then thermal technologies deserve to be included in all renewables and efficiency restructuring initiatives.
3. How should any such program(s) be funded?
The PBC should be based on a per kWh line charge that is non-bypassable except for electricity generated by the types of renewable energy resources which we are trying to promote. MDV-SEIA suggests that the Commonwealth look at the size of PBC funds established or proposed in neighboring Maryland and North Carolina, as well as at funds put in place in states like California, Massachusetts, and Connecticut.
4. How should any such program(s) be administered?
The funds for Renewable Energy should be administered by the DMME. However, a mechanism for industry input should be created so that the administering agency(s) have the benefit of guidance from the local renewable energy business community including groups like MDV-SEIA. The State Corporation Commission or a public service oriented non-profit entity could administer funds for energy efficiency/low-income program.
5. Are there any programs that could or should serve as an alternative or supplement to any such programs? If so, describe.
MDV-SEIA is unaware of any alternative programs; however, it is likely that supplemental "matching-grant" funds could be made available by the federal government through a national PBC that has been proposed in many of the federal legislative bills submitted to date.
6. Please identify any other issue(s) falling under this topic you believe are important, and provide comments on that issue.
The public benefits charge fund is the best way for the state to protect its investment in developing a renewable energy technology-manufacturing base in the state. Virginia's success in attracting two major solar energy technology manufacturers to the state through our PV Manufacturing Incentive Program is impressive, but neighboring Maryland and North Carolina have done much more to support their local renewable energy technology dealers and installers through tax credits and "net metering" legislation. (Net metering is described in more detail below, in Question #35.) Virginia should also work to develop the state-based distribution infrastructure needed to continue to support our new renewable energy industries by helping to create a viable in-state market for their technologies.
Consumer Education
7. What should be the general purpose of any consumer education program preceding and accompanying Virginia's transition to retail competition?
While there are many possible purposes for such a program, MDV-SEIA strongly supports two: general education about choice in the marketplace (general awareness) and information on interpreting the information disclosed by generators under law in the customer bills. Since the general public may not understand the relevance and impacts of some disclosed information (like carbon dioxide, sulfur dioxide, etc.), customer education is an important component of disclosure.
Parallel with consumer education, a requirement is growing for building related public safety personnel, e.g. code inspectors, to become more competent in solar energy technologies so that they recognize well installed systems as well as poor ones. Technical training in this area should be supported along with consumer education for at least a five-year period.
8. When should these programs be conducted?
Inclusion of some information regarding the impacts of various energy mixes and emissions on the customer's monthly utility bill would be helpful, but more extensive education may be needed.
9. Who, if anyone, should have regulatory oversight over such programs?
The SCC and the DMME should share this responsibility.
10. Which state regulatory agencies, if any, should participate in this program, and in what capacity?
MDV-SEIA has no position on this issue at this time.
11. How should such programs be funded?
Consumer education programs should be funded by a PBC for that purpose. This is a separate fund from the Renewable Energy/Energy Efficiency/Low Income fund discussed above.
12. Should any long-term consumer education program be established, to continue after the transition to retail competition is completed? If so, describe its scope, oversight and funding.
The programs funded under the PBC should be reviewed for relevance every ten years after deregulation is complete.
13. Please identify any other issue(s) falling under this topic you believe are important, and provide comments on that issue.
MDV-SEIA has no other issues related to this topic at this time.
Customer Aggregation
14. Should customer aggregation be permitted in Virginia in conjunction with restructuring?
Yes.
15. Should aggregators be subject to mandatory licensing by any regulatory authority, or be required to furnish evidence of financial soundness?
MDV-SEIA has no position on this issue at this time.
16. Should aggregators be subject to any other requirements? If so, describe them.
MDV-SEIA has no position on this issue at this time.
17. Should localities (counties, cities or towns) be permitted to aggregate their residential load?
Yes. The Commonwealth of Massachusetts had a provision to allow for this in their recent deregulation legislation. MDV-SEIA would support similar language in Virginia.
18. Should localities be permitted to aggregate their residential load on an "opt out" basis?
Yes.
19. Should localities be permitted to form inter-locality aggregates?
Yes.
20. Should localities be permitted to aggregate load with private entities outside their territorial jurisdiction?
MDV-SEIA has no position on this issue at this time.
21. Should localities be permitted to aggregate load with private entities or localities outside of Virginia?
MDV-SEIA has no position on this issue at this time.
22. Please identify any other issue(s) falling under this topic you believe are important, and provide comments on that issue.
Aggregation is important not only in the overall market, but also in a Renewables Portfolio Standard (RPS) system. Aggregation procedures should be established in such a way that distributed renewable energy systems (for example, a housing subdivision with photovoltaics systems on all the rooftops) could be counted in a RPS. This is particularly important if a renewable energy credit-trading system is established among generators in the marketplace.
Consumer protection
23. Should electric service providers and aggregators be required to disclose standard information in their marketing materials, and in their proposals and contracts for service? If so, what basic information should be provided?
Legislation should require all companies that sell electricity to consumers to provide basic information about the product so consumers can make informed purchase decisions. Information should include disclosure about the total energy fuel mix, air emissions and other environmental impact information in a format similar to the food label. This information could be included in marketing material, bills and/or periodic bill inserts. Since the general public may not understand the impacts of carbon dioxide, sulfur dioxide, etc., customer education is an important component of disclosure. Inclusion of some information regarding the impacts of various emissions on the label would be helpful, but more extensive education may be needed.
One key issue that should be covered in basic marketing materials relates to net metering (discussed in more detail below under Question 35). Electricity retailers should be required to inform customers of rooftop solar net metering tariffs that may be established pursuant to legislation. Further, electric service providers must be required to train their sales and marketing people in a manner that ensures that consumers requesting renewable energy products and tariffs are given timely, accurate, and complete information regarding their rights to net metering and simple interconnection pursuant to relevant legislation.
24. Should any kinds of marketing practices by electric service providers or aggregators be specifically prohibited? If so, what practices should be barred?
MDV-SEIA has no position on this issue at this time.
25. Should Virginia restructuring legislation establish limits on the size of utility service deposits that may be required by electric service providers and aggregators? If so, what limits should be established?
MDV-SEIA has no position on this issue at this time.
26. What kinds of standard information should electric bills contain after restructuring? If so, what information should each bill be required to provide?
Yes. Legislation should require at a minimum all companies that sell electricity to consumers to provide basic information about the product so consumers can make informed purchase decisions. Information should include disclosure about the total energy fuel mix, air emissions and other environmental impact information in a format similar to the food label.
27. Should Virginians be given any statutory rights to cancel utility service contracts with electric service providers or aggregators within a specified number of days following acceptance? If so, what special rights of recission or cancellation should be provided in statute?
MDV-SEIA has no position on this issue at this time.
28. Should Virginians be given any statutory protection against unauthorized switching of electric service providers, or "slamming?" If so, what anti-slamming protections should be adopted?
MDV-SEIA has no position on this issue at this time.
29. Should Virginians be given any statutory protection against any electric service provider or aggregator telemarketing practices? If so, what?
MDV-SEIA has no position on this issue at this time.
30. Should consumers be furnished assistance by any state regulatory agencies in resolving complaints against electric service providers or aggregators? If so, which agencies should be involved, and what should their responsibilities include?
MDV-SEIA has no position on this issue at this time.
31. Please identify any other issue(s) falling under this topic you believe are important, and provide comments on that issue.
MDV-SEIA has no position on this issue at this time.
Environmental Protection
32. Should Virginia restructuring legislation in any way promote or encourage the use of renewable energy in the generation of electricity? If so, how?
Yes. The state should support renewables development through the use of a Public Benefits Charge (PBC) fund oriented to emerging and distributed renewable energy. This should be balanced with a Renewables Portfolio Standard (RPS) which would benefit more established, central-station renewables like small hydropower, biomass, and wind. The Renewables Portfolio Standard would require a certain portion of electricity available in the Virginia market to come from renewable energy resources.
Note that unless specific requirements are imbedded in a RPS structure for distributed renewables, the RPS does nothing to support the state's growing PV companies. This is because energy generation companies would tend to find it easier to build a central-station plant than to aggregate a group of small solar energy systems on a group of diffuse buildings. Therefore, MDV-SEIA strongly supports the inclusion of a PBC for distributed resources like PV and solar water heating and space conditioning.
Distributed resources, such as grid-tied PV arrays, permit generated renewable electricity to be used more efficiently within Virginia's existing transmission infrastructure. This is particularly true among residential- and small commercial-scale users and generators at the 'end' of the transmission network. When kilowatts are generated nearer to their point of consumption, distributed resources reduce the voltage loss associated with distance transmission. This will help lower future capital investment in transmission systems.
If the Commonwealth chooses to implement a RPS, aggregation procedures should be established in such a way that distributed renewable energy systems (for example, a housing subdivision with photovoltaics or solar water heating systems on all the rooftops) could be counted toward a RPS requirement. This is particularly important if a renewable energy credit-trading system is established so that energy providers with renewables capacity beyond their required RPS percentage could trade credits to renewable energy deficient generators in the marketplace.
33. Should Virginia restructuring legislation in any way address air quality, directly or indirectly? If so, in what way?
Legislation should address air quality by forcing compliance by generators with the existing air quality statutes at the state and national levels. This will help to foster a more realistic and accurately priced marketplace in which to compete for all energy products.
34. Should Virginia restructuring legislation require electric service providers or aggregators to disclose generation fuels? If so, how should this requirement be implemented and administered?
Yes. Promoting consumer right-to-know and product labeling standards for the retail marketing of electricity is absolutely critical to the concept of a competitive market. Disclosure deals in facts, not value judgments. Disclosure rules would help to overcome one of the most pervasive economic market failures - the lack of information available to consumers making decisions. Disclosure is designed to facilitate comparison shopping so different products can be weighed against each other based on similar standards and measurements. The most well known example is the food product labeling process controlled by the Food and Drug Administration.
California, Massachusetts, Illinois and Pennsylvania are among several states that recently passed bills with disclosure requirements. The Regulatory Assistance Project (RAP), located in Maine, has conducted research with support from the Department of Energy and the National Association of Regulatory Utility Commissioners (NARUC) to determine what consumers think of various proposed labels and whether they consider this information when making their energy provider choices. Information on their work
35. Please identify any other issue(s) falling under this topic you believe are important, and provide comments on that issue.
Another critical issue related to customer choice and renewable energy is the concept of net metering of solar energy systems. Net metering allows customers to receive credit for electricity that they generate in excess of their usage at home. Currently, 23 states have or are considering net metering legislation or rules. Legislation or regulation should provide for open access for interconnection with the grid in a transparent, user-friendly process. To facilitate the use of small-scale renewable energy technologies, states should be required to allow for net metering for small-scale renewables with uniform interconnection standards for safety and power quality based on national standards like the IEEE, Underwriters Laboratories (UL), and the National Electric Code (NEC).
Net metering encourages highest efficient use of renewable systems such as PV by returning to the grid all renewable energy generated which cannot be used on-site. The credit customers receive further repays their capital investment in renewable generation. With such an incentive, we foresee broader investment in renewables, and wider distribution of renewable generators.
Legislation should also protect solar consumer rights by barring property association restrictive covenants on solar equipment. This is similar to recent federal action in the Telecommunications Act that barred restriction on the use of satellite antennas. Fourteen states already have some form of solar access protection already in place.
Energy Efficiency
36. Should Virginia restructuring legislation in any way promote or encourage energy conservation or energy efficiency, e.g., encouraging installation of energy efficient equipment or energy efficiency monitoring equipment? If so, what incentives should the legislation include?
Yes. It is important to note that energy efficiency programs should also be explicitly open when appropriate to distributed (i.e. customer side of the meter) renewable energy technologies. For example, a rooftop solar electricity system provides identical system and societal benefits to those provided by efficient end-use devices and technology. Energy efficiency programs should also explicitly include integrated building design that takes advantage of natural energy flows, including passive solar architectural design.
The Commonwealth of Virginia should directly invest in 'seed' projects through its capital outlay for new and renovated facilities such as schools, university buildings, office buildings, operational facilities, and remote site structures. It should encourage Virginia localities to do the same through matching grant funds. Such a program would avail similar federal funds to Virginians for investment in renewable energy.
37. Should Virginia restructuring legislation establish a public benefits charge for the purpose of encouraging research and development in the areas of energy conservation and efficiency? If so, how should it be assessed and administered?
Yes, although the fund should not be limited to only energy efficiency technologies. This issue should be understood in the context of R&D efforts funded by other states. Virginia is practically unique among US states in having eliminated all programs and funding sources for renewables and end-use efficiency R&D. This builds a long term economic disadvantage for the Commonwealth, threatening its long term ability to compete for jobs and investment with states who pro-actively manage the transition to a more economical and efficient energy infrastructure less dependent on fuels and electricity imported from other states. An R&D fund is critical to all of Virginia's domestic energy industries.
38. Please identify any other issue(s) falling under this topic you believe are important, and provide comments on that issue.
MDV-SEIA has no other issues at this time.
Electric Utility Worker Protection
39. Should Virginia's electric utility workers be given any statutory protections in conjunction with the transition to a retail competition? If so, what protections should be provided, and through what mechanism?
MDV-SEIA has no position on this issue at this time.
40. If any statutory protections for utility workers result in additional costs or expense, how should they be funded?
MDV-SEIA has no position on this issue at this time.
41. Should providers of electric energy in a restructured market be required to maintain minimum staffing levels for purposes of reliability? If so, who should determine these levels, and what standards should be applied in doing so?
MDV-SEIA has no position on this issue at this time.
42. Should the purchaser of any generation unit or station sold after restructuring, be required to (i) hire or continue the employment of such unit or station's employees, and (ii) furnish such employees the same wages, working conditions and benefits and terms and conditions of employment that were in effect prior to the sale?
MDV-SEIA has no position on this issue at this time.
43. Should new entrants into Virginia's electricity market following restructuring be required to comply with any requirements concerning the qualifications of their electrical workers with regard to quality, safety and reliability of service? If so, who would establish such requirements.
Yes, except for homeowners and other customers who choose to net meter on-site generation with solar photovoltaics equipment. These very small systems should be made to comply with nationally accepted standards issued by the IEEE, Underwriters Laboratories (UL), and the National Electric Code (NEC).
44. Should Virginia, in conjunction with restructuring, establish mandatory training and skill standards for all electrical workers responsible for systems and equipment that affect system reliability and safety?
MDV-SEIA has no position on this issue at this time.
45. Please identify any other issue(s) falling under this topic you believe are important, and provide comments on that issue.
Along with electrical workers, buildings related public safety personnel, e.g. code inspectors, are finding their job to be increasingly complicated because of deregulation. To become more aquatinted with solar energy technologies so that they recognize well installed systems as well as poor ones, technical training in this area should be supported for at least a five-year period.