Commission on Energy and Environment

October 6, 2009

The Virginia Commission on Energy and Environment met at the Institute of Advanced Learning and Research in Danville.

Subcommittee Reports

Senator Petersen reported that the Subcommittee on Energy Efficiency and Conservation met on September 16 and:

• Reviewed energy efficiency legislation that came before the General Assembly in the 2009 Session and focused on dynamic rate policies as an opportunity for encouraging conservation by users.
• Received presentations from utilities on their implementation of demand-side management programs.
• Received an update in the pending matter before the State Corporation Commission on the regulation of achievable, cost-effective energy conservation and demand response targets.

Public comments included the experience of the natural gas industry in decoupling and the opportunities created through inclining block rates, which set electricity prices in a positive relationship to quantity consumed. The subcommittee will meet again prior to the last full meeting of the Commission.

Delegate Poindexter advised that the Subcommittee on Renewable Energy would meet on October 22 and hear presentations on “Green Jobs,” distributed generation and biomass, the innovation at Piedmont Bio Products, and green building in a rural environment.

Possible Legislation for Upcoming Session

Senator Whipple began a review and discussion of possible legislation for the upcoming session of the General Assembly. She stressed that this was an initial discussion for the members to explore policies for further investigation and eliminate those ideas with less promise.

Explore capacity of state to issue RFP and enter into long-term power purchase agreement with offshore wind developer and/or provide rate adjustments to ensure a competitive price for electricity produced from offshore wind energy resources.

It was noted that this suggestion arose during the previous meeting that focused on offshore wind energy generation and that the State of Delaware has entered into such an agreement with one of the private developers that presented to the Commission. A member noted his support for having the state step in and be a willing buyer to assist in market creation but hoped the Commission would broaden the policy to include other renewable energies. Another member agreed and stated his concern that the government is not suited for selecting technology standards in such quickly evolving fields.

Support for fuel-efficient driving practices; opportunities with DMV to encourage driver education.

Senator Whipple discussed the importance of driving practices to maximize fuel efficiencies. It was recalled for the Commission that speed limits were decreased during the 1970s to reduce consumption of gasoline during the oil embargo. The Commission agreed that driver education was preferable to changes in the speed limits. It was noted that the Department of Environmental Quality worked with the Department of Education to include environmental education related to driving and automobile maintenance for high school students.

Make recommendations in "Title 67: Virginia Energy Plan" regarding the policy of the Commonwealth for nuclear, wind, and/or solar resources.

Staff reviewed the role of Title 67 of the Code of Virginia. Current policy statements in Title 67 include the Commonwealth's support of clean coal and offshore resources. A member asked about hydropower support and Senator Whipple wanted to ensure that support for biofuels was clearly stated. Another member hoped that the Commission would consider the implications of a policy endorsement as it would apply statewide.

Identify continued funding sources for the Virginia Coastal Energy Research Consortium.

Senator Whipple stated the sense of the Commission that the Virginia Coastal Energy Research Consortium has helped Virginia develop technology and compete amongst other states. It was noted that some proposals were outstanding for federal funds, but state assistance may still be needed. Most importantly, the federal and private grant funds that might become available would require matching funds. Senator Whipple stated that the members would speak to the Senate Finance Committee and the House Appropriations Committee on the issue.

Require that the Climate Change Action Plan is continued and updated.

Senator Whipple expressed her hope that the report of the Governor's Commission on Climate Change would continue and be updated. It was clarified that the Governor's Commission was annual and had terminated its work. Senator Whipple suggested that the enabling legislation for this Commission, the Virginia Commission on Energy and Environment, could be expanded to include the responsibility of updating the Climate Change Action Plan. This Commission could request assistance from other agencies as needed.

Expand personal tax credit for Energy Star products to those eligible for WaterSense certification.

Add a four-day tax holiday in the spring, similar to the existing four-day tax holiday in the fall, for Energy Star and WaterSense eligible products.

A member spoke to the importance of conservation and energy-efficient products. He would like to look at the policy supporting the tax holidays and, if the policy is worthwhile, provide the tax incentive or credit all year instead of only on several days, and then sunset the tax credit after several years. The benefit to the retailers of sale events was mentioned but a member cautioned of the dim revenue picture faced by the Commonwealth. Another member agreed and expressed his hope that whatever savings were granted to consumers would be spread throughout the year instead of only certain days. It was noted that the sales tax avoided during the four-day Columbus Day weekend was projected to be $185,000.

Support the second resolution and ballot bill for the constitutional amendment that would allow the General Assembly to pass enabling legislation for localities to provide an exemption or partial exemption on personal and real property taxes for equipment, facilities, or devices constructed or designed to conserve energy and natural resources. The change would encourage the installation of energy and natural resource efficient devices.

It was explained that the constitutional amendment had passed in its first resolution and was up for a second resolution. Amendments must pass in two subsequent years of the General Assembly and then they are placed on the ballot for referendum.

Codify provisions contained in Executive Order 82 requiring certain public buildings to adhere to be built to either the Green Globes Green Building Initiative green building rating standard or the United States Green Building Council Leadership in Energy and Environment Design (LEED) green building rating standard.

It was suggested that the Commission support the policy that is currently embodied in Executive Order 82 and in legislation introduced last year to build public buildings to LEED standards. The question was asked if the legislation would cover local buildings and schools in addition to state buildings. It was explained that there were different versions of the legislation as it passed through committee that exempted buildings based on size and other factors. Concern was expressed that local governments might construe the requirement as an unfunded mandate. Senator Whipple expressed that the Department of General Services should report on whether, and to what extent, the cost increases when building new construction to LEED standards.

Require the development of policies supporting combined heat and power.

Support was expressed for cogeneration and it was explained that the generation of electricity often produces waste heat that should be utilized and not just burned off into the atmosphere.

Direct the State Corporation Commission (SCC) to develop progressive or inclining block rate structures for residential customers.

The Commission was reminded that this was an issue that the Subcommittee on Energy Efficiency and Conservation has under review. The SCC is looking at this issue closely and reporting back to the subcommittee. A member expressed his belief that a pricing model that encouraged conservation would be perhaps the most significant approach the Commission could take towards its goals. Another member added that the SCC is willing to assist the Commission. The subcommittee will report back to the full Commission at the next meeting.

Encourage adoption of the 2009 International Energy Conservation Code.

Senator Whipple explained that the Department of Housing and Community Development takes the lead on the adoption of regulations and that this issue is under review. Senator Whipple reminded the Commission that there had been discussion as to whether the building code would require a 15% or 30% improvement in energy efficiency. Due to lags in technology and other reasons, the building code will reflect an increase of 15% in 2009 and another 15% in 2012. Senator Whipple hoped that the members would support the efforts to incorporate ambitious energy savings in the Uniform Statewide Building Code through the regulatory process.

Support legislation requiring the adoption of an energy efficiency standard.

The Commission discussed the need to adopt an energy efficiency portfolio standard. Senator Petersen offered to look at this issue during his subcommittee meeting. Legislation from the 2009 Session allowed for cost recovery for the utilities to implement energy efficiency programs, but did not require that utilities strive for certain of energy efficiency reduction targets.

Increase voluntary Renewable Portfolio Standard to 15% by 2025.

It was clarified for the Commission that legislation from the 2009 Session already included the goal to have a Renewable Portfolio Standard that strived for 15% by 2025. A member suggested that the Commission might consider changing the voluntary program to a mandatory program and evaluate the costs and benefits of each approach. Senator Whipple agreed that the renewable energy industry cannot accept a voluntary program for the purpose of project development and that the long-term financing required to secure such projects demands further assurances. Another member stated that the Commission owes it to itself to thoroughly review this issue. It was noted that the developers who presented to the Commission at the last full meeting expressed concern that the voluntary standard was simply not sufficient. Mr. Wallmeyer hoped to have testimony on this issue at the Commission's last meeting.

Ensure net metering parity.

A member noted that customer-generators should be paid fairly for the electricity sold back to the grid. The Commission noted that there might be both interconnection and rate issues outstanding for legislative attention. SB 1339 from the 2009 Session passed with a reenactment clause. That bill required that rates paid by utilities to customer-generators shall be based on avoided generation costs and the average market value for renewable electricity.

Expand the solar photovoltaic manufacturing grant to other non-emitting technologies.

The current program found in § 45.1-392 of the Code of Virginia has never been utilized by a manufacturer. Senator Whipple noted her concern that funding may not be available for the existing program. Another member added that no manufacturer currently qualifies. Senator Whipple asked that the Subcommittee on Renewable Energy look into this issue.

Facilitate the permitting of individual energy-generating devices in residential and agricultural applications.

Senator Whipple also asked that the Subcommittee on Renewable Energy look into this issue.

Provide personal property or sales tax credits for consumer purchased electric or other alternative-fuel vehicles, specifically Extended-Range Electric Vehicles.

Expand and extend HOV lane access for electric or other alternative-fuel vehicles.

Require government fleet purchasers to consider Extended-Range Electric Vehicles.

Promote installation of workplace and public charging stations.

Encourage free or preferred parking for Extended-Range Electric Vehicles.

Ease building and other codes to allow for 240V home charging in the garage.

The Commission considered these proposals together as incentives for the purchase and use of electric vehicles. Concern was expressed about the distinctions among alternative fuel vehicles and with providing HOV lane access. Another member agreed and commented that, while there is potential benefit to switching gasoline fuels for electricity, the market should still be a strong determinant in standard selection. Senator Whipple also stated that it would be within the proper scope of government action to encourage public charging stations until the users become more numerous. Another member added that the Commission should look at the whole picture of the benefits and drawbacks of different alternative vehicles.

Other Business

The Commission discussed biofuel legislation. Senator Whipple suggested that the full Commission or the Subcommittee on Renewable Energy review the issue for possible legislative approaches. The Commission members also discussed opportunities posed by hydropower capacity, natural gas conversion of existing vehicles, and since nuclear power is a generation resource whether its exploitation should be pursued.

Public Comment

Mr. Dell from the Advanced Vehicle Research Center, which has recently opened its headquarters in Danville, spoke to the Commission about options for hybrid conversions and electric cars. Mr. Dell offered to speak with the Commission at a later date regarding alternative vehicles and the importance of recognizing the broad scope of technologies that are or may be available.

Another member of the public commented on the importance of pursuing avenues with waste products that are useful and questioned the availability of grant funds for nuclear power. Senator Whipple was unaware of such funds or programs. Another member of the public asked about smart meters and questioned the wisdom of nuclear power when less harmful renewable technologies are available. Senator Petersen clarified the use of smart meters and inclining block rates.
Mr. Marshall Ecker, with the Pittsylvania County Board of Supervisors, stated his agreement with a member’s concern that green building requirements would be unfunded mandates to the localities that are already struggling with reduced budgets. Mr. Ecker further stated that incentives for biofuels should accompany incentives for the vehicles that use those biofuels.

Next Meeting

The next meeting date will be posted on the Commission’s website and the General Assembly calendar as soon as information is available.

Chairman:
The Hon. Mary Margaret Whipple

For information, contact:
Ellen Porter, Patrick Cushing, DLS Staff