Manufacturing Development Commission

August 14, 2007

The first meeting of the Manufacturing Development Commission for 2007 was held at the Liebherr Mining Equipment Company in Newport News with Senator Frank Wagner as chair.

ENVIRONMENTAL BOARDS
Kathy Frahm, Director of DEQ's Division of Policy, briefed the Commission on legislation from the 2007 Session that would restructure Virginia's environmental boards.

House Bill 3113 and Senate Bill 1403 would replace the current Waste Management Board, Air Pollution Control Board, and Water Control Board with an 11-member Board of Environmental Quality. The new board would set regulations and environmental standards and the tasks of issuing permits and making enforcement issues would be assigned to the Department of Environmental Quality (DEQ). A new Environmental Appeals Board would be established to hear appeals on permit decisions. Ms. Frahm noted that the structure proposed by House Bill 3113 and Senate Bill 1403 increases transparency and public access in significant waste and air permitting decisions. To become law, these bills must be reenacted during the 2008 General Assembly.

Following the 2007 Session, DEQ was asked by the Senate and House Committees on Agriculture and Natural Resources to implement a stakeholder process to evaluate the legislation and recommend possible amendments. A public hearing was held on May 31, 2007, and three additional meetings will be held in September and October. DEQ will make its report to the Committees in November. Issues that will be discussed include:

• The proposed new appeals board.
• Three existing boards versus a single Board of Environmental Quality.
• Board membership and makeup.
• The decision making process regarding permits.

The Virginia Manufacturing Association asked that the members examine, as a model, the appeals board implemented in Tennessee.

VIRGINIA ENERGY PLAN
Stephen Walz, Senior Advisor to the Governor for Energy Policy, provided an update on the Virginia Energy Plan (VEP). Legislation from the 2006 Session directed the Department of Mines, Minerals and Energy to prepare a comprehensive VEP proposing actions covering the ensuing 10-year period that will implement the Commonwealth Energy Policy. The VEP, which is scheduled to be released by September 2007, has been revised since a draft was provided to the Commission in July. The latest draft clarifies four overall goals:

• Increasing Virginia's energy independence.
• Expanding consumer energy education.
• Reducing greenhouse gas emissions.
• Increasing energy-related economic development and research and development.

The VEP provides for increasing energy independence over the next decade by reducing the rate of growth in energy use by 40% and increasing in-state energy production by 20%. The VEP estimates the costs of energy efficiency programs by electric utilities to be an average of $300 million, of which $100-$120 million would be invested by utilities and $180-$200 million would be a consumer match. The savings from such programs are estimated to be $50 million per year, or $500 million of lifetime savings for each year's investment. Other recommendations expected to be included in the final VEP include:

• Enhancing the electric, natural gas, petroleum, and coal elements of the state's energy infrastructure.
• Reducing carbon emissions.
• Providing consistent funding for energy research and development.
• Targeting new jobs and capital investment in priority areas of nuclear technologies, alternate transportation fuels, coastal energy production, and carbon sequestration.

In response to discussion instigated by Delegate Purkey, Mr. Walz agreed to consider whether the VEP should address the advisability of changes in federal policies regarding tax incentives for ethanol production and tariffs on imported ethanol.

TECHNICAL DIPLOMAS IN VIRGINIA'S HIGH SCHOOLS
Michelle Vucci, Director of Policy at the Virginia Department of Education (VDOE), reported on efforts to implement House Bill 2039 and Senate Bill 1147, which direct the VDOE to establish requirements for a technical diploma and advanced technical diploma. The technical diploma is required to meet or exceed the requirements of a standard diploma and include a concentration in career and technical education.

The VDOE has initiated the process for amending its regulations governing accrediting standards for graduation requirements in order to address the technical diploma and advanced technical diploma. As part of this process, the VDOE conducted a forum on July 24, 2007, at which numerous organizations provided comments on the requirements for the technical diplomas. Comments from the forum included the need for students to have the skills to be trainable employees; the need for a good assessment-based credential that provides a uniform measure of key workplace skills; the need for promotion of technical diplomas to students, parents, and potential employers; and the fostering of partnerships between the VDOE, local school divisions, institutions of higher education, and the business community.

The VDOE will hold a second forum in September to receive additional comments and seek feedback on the establishment of technical diplomas and advanced technical diplomas. Ms. Vucci solicited questions and discussion from the members on the following topics:

• What skill set is most needed in the workplace today?
• In addition to soft skills, what hard skills are in greatest demand?
• Does demand vary by region?
• What partnerships between business and education currently exist that could enhance student training and education opportunities?
• How could these partnerships be used to promote technical diplomas?

A draft set of requirements is anticipated to be available for public comment in late fall. Chairman Wagner committed to working with Delegate Hamilton, the patron of House Bill 2039, to notify other members of the General Assembly of the opportunity to provide comments on the elements of technical diplomas.

ENERGY CONSERVATION PROCEEDING
David R. Eichenlaub, Assistant Director of the SCC’s Division of Economics and Finance, updated members of the Commission on the status of the State Corporation Commission's (SCC) energy conservation proceeding. The proceeding was established in June pursuant to Senate Bill 1416 and House Bill 3068 from the 2007 Session. While the primary purpose of that legislation was to re-regulate elements of Virginia's electric utility industry, the measures include a clause that establishes a statewide goal of reducing the consumption of electric energy by retail customers through the implementation of fair and effective demand side management, conservation, energy efficiency, and load management programs, including consumer education, by the year 2022 by an amount equal to 10 percent of the amount of electric energy consumed by retail customers in 2006. The SCC is directed to conduct a proceeding to:

• Determine whether the 10 percent electric energy consumption reduction goal can be achieved cost-effectively, and if not, to determine the appropriate goal for the year 2022 relative to base year of 2006.
• Identify the mix of programs that should be implemented in the Commonwealth to cost-effectively achieve the defined electric energy consumption reduction goal by 2022.
• Develop a plan for the development and implementation of recommended programs, with incentives and alternative means of compliance to achieve such goals.
• Determine the entity or entities that could most efficiently deploy and administer various elements of the plan.
• Estimate the cost of attaining the energy consumption reduction goal.

An SCC workgroup was formed to gather data and report on these directives with subgroups to focus on areas such as reducing demand peaks, consumption reduction goals, financial considerations, and education.

NEXT MEETING
Additional information and the date of the Commission’s next meeting will be posted on its DLS sponsored website as soon as available.

Chairman:
The Hon. Frank W. Wagner

For information, contact:
Frank Munyan, DLS Staff

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

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