TO: SJR 91 Task Force on Legislative Drafting
Delegate Woodrum
Delegate Plum
Senator Holland
Senator Norment
Senator Watkins
Delegate Jones
FROM: Trip Pollard, Senior Attorney
Southern Environmental Law Center
DATE: December 1, 1998
RE: Additional Input for December 8 Meeting
Although most of the Southern Environmental Law Center's positions on what any committee restructuring bill should contain are adequately summarized in the task force reports, we would like to submit a few specific statutory proposals (using the SB 688 format) for your consideration.
I. General environmental provision; comparability
§ 56-590.1 EnvironmentA. Electric utility restructuring shall be implemented so that the competitive market for electric generation services operates in a manner that maintains environmental quality, and offers opportunities to enhance the quality of the environment.B. Under federal and state clean air laws and regulations, electricity generators built or licensed prior to 1977 are not required to meet the same emissions standards that apply to generators constructed since that time. This disparity in environmental standards gives older generation sources an economic advantage over new sources in a competitive marketplace, and could lead to increased operation of older, more polluting generators, thereby increasing air pollution. The General Assembly supports changes to federal clean air laws and regulations that will protect Virginia's environment and ensure that all electricity generators are subject to the same emissions requirements. The Commission shall consult with the Department of Environmental Quality regarding this issue during the transition to retail competition.
The purpose of the first subsection is to express the intent of the General Assembly that the restructuring bill be construed and implemented in a way that will protect and enhance environmental quality.
The purpose of the second paragraph is to address the potential for restructuring to create incentives for running older, dirtier power plants. These plants have two primary cost advantages -- first, they are subject to less stringent environmental controls than newer plants; and, second, most of them have been substantially depreciated. Other states have attempted to directly address the first of these two advantages; the proposed language, which we understand is similar to that adopted in Pennsylvania, recognizes that this problem can be dealt with more appropriately at the federal level, and endorses changes to federal clean air laws to apply equal standards to all electricity generators.
II. Information disclosure
The following language could amend § 56-589(B) or be a separate section:
In order to assist consumers in making informed purchasing decisions, not later than January 1, 2000, each electric utility and any other retail seller of electricity shall disclose to customers, to the maximum extent practicable, the price, resource mix, and key environmental characteristics of the electricity they provide. This information shall be included in all written marketing materials provided to prospective customers (including materials appearing at Internet sites), and with bills to each customer on a quarterly basis. The Commission shall develop a standard, simple, and understandable reporting format for disclosure to customers. The information disclosed shall include, at a minimum:(1) Average price of electricity, length of contract, and price variability;(2) The percentage of each type of fuel (coal, natural gas, oil, nuclear, hydro, biomass, wind, solar, waste, and other resources) used to generate electricity sold to customers. To simplify the presentation of information, sources comprising less than three percent of the total mix can be combined;
(3) Total emissions of nitrogen oxides, sulfur dioxide, and carbon dioxide resulting from generation, as well as the regional average for each reported emission.
The purpose of this provision, which is similar to those adopted by other states that have moved toward electric utility restructuring, is to enable consumers to make informed choices among competing power providers. Consumer choice is meaningless without adequate information. Public opinion surveys and focus groups consistently show that consumers are very concerned about price and price stability, and that, given the choice, consumers want to purchase power from cleaner resources. To be useful, this information needs to be in a uniform, easily, understandable format. And this information should be provided in all marketing materials and on customer bills to enable consumers to comparison shop among competing suppliers.
III. Public Benefits Fund
Section 56-590 should be modified since it merely gives the State Corporation Commission authority to approve and impose requirements to implement public purpose programs. These programs should be required by the General Assembly. Given the status of the Joint Subcommittee's deliberations, it may be better at this time for the draft bill to establish legislative support for public benefits funding, and to establish a process for developing further recommendations regarding the details of such a fund. SELC joined Virginia Power and a number of other organizations in supporting a set of principles that endorsed public benefits funding for consumer education, low income bill assistance, energy efficiency, and renewable energy. The provision for energy efficiency and renewable energy investments might read as follows:
A public benefits fund shall be established to invest in (I) energy efficiency measures, particularly programs to promote energy efficiency for low income residential customers, and (ii) the development and commercialization of renewable energy technologies.The Joint Subcommittee Examining Electrical Utility Restructuring in the Commonwealth, first established pursuant to Senate Joint Resolution No. 118 of the 1996 Session of the General Assembly, shall be continued. The joint subcommittee shall, with input from the Commission, recommend to the General Assembly no later than December 1, 1999 legislation to establish the appropriate funding mechanism, level of support, and process for administering energy efficiency and renewable energy programs. Legislation based on this report will be considered by the 2000 session of the General Assembly.
The purpose of this language is to recognize that investments in energy efficiency and renewable energy must be secured in a restructured industry. Residential consumers -- particularly low income, elderly, and rural consumers -- are vulnerable to price hikes and are the least likely to see lower rates after restructuring. Energy efficiency measures provide consumers the best opportunity to control their electric bills, since these measures provide essential services while using far less electricity. In addition, energy efficiency and renewable energy resources offer the best opportunity for reducing the adverse environmental impacts of power production, and they offer other important public benefits such as economic development, fuel diversity, and system reliability benefits.