By Steve Haner
In a recent debate at the Virginia General Assembly over the growing consumer cost of the Virginia Clean Economy Act, a senior Democratic delegate dismissed concerns over the renewable energy requirement as only involving perhaps $2 per month on a residential customer.
The actual amount is $4.69, or about $56 per year, if that customer averages 1,000 kilowatt hours per month. Dominion Energy Virginia has an application pending at the State Corporation Commission to raise the cost for purchased renewable energy certificates up 65% to $7.68 per 1,000 kwh, or $92.16 per year on that residential customer.
It wants to collect $609 million from customers between September 1 of 2025 and August 31 of 2026, the next “rate year.” About $250 million of that is “true up” payment for previous years to cover costs not picked up by earlier versions of the charge, known as Rider RPS.
That is money Dominion Energy Virginia will use to buy the renewable energy certificates (RECs) it needs because it is failing to hit the green energy targets of the Virginia Clean Economy Act (VCEA). There is an entirely separate charge to customers to cover all the construction or lease costs of solar and battery assets which Dominion is acquiring to comply with VCEA (Rider CE), and yet a third segregated charge to pay for the construction of its offshore wind facility (Rider OSW).
According to a chart included in another Dominion regulatory filing, reproduced with this post, the combined cost of compliance with VCEA’s renewable portfolio standard is $17.89 per 1,000 kwh in 2025, or $215 per year. Dominion projects that will be $282 annually by 2030 and $626 annually by 2035. That is using Dominion’s preferred projection method.
Under another projection using assumptions the SCC believes more accurate it will be $314 annually by 2030 and $826 annually by 2035. The numbers rise in the out years, but frankly, what the energy world will look like beyond the 2030s is just a wild guess.
For that money, if it includes what it seems to, the customer will get a bunch of solar farms producing electricity less than 25% of the time, a wind farm producing electricity perhaps 40% of the time, and a pile of renewable energy certificates that include no actual energy production. RECs merely subsidize somebody else’s wind or solar or hydro energy.
The delegate who claimed minimal cost (Del. Alfonso Lopez of Arlington if you must know) could have found these numbers easily. Some data was actually in a legal notice published in the Richmond newspaper last week. Lopez might still claim that about $5 per month currently for Rider RPS and $8 per month later this year is reasonable and no big deal. He might even say the same about the current $18 per month for multiple VCEA mandates.
Even poor people need to pay up to pretend to save the world.
According to the recent filing to increase the Rider RPS amount, the cost of buying RECs to subsidize somebody else’s wind or solar or hydro power for that rate period starting September 1 will be $356 million. But as noted above, that will be supplemented by payments for previous years of buying RECs and reach an impressive $609 million. That’s quite a bit of money for zero energy.
For two weeks, starting with testimony January 13 from Department of Energy Director Glenn Davis, Republicans have been claiming Dominion faces $450 million in possible RPS “deficiency payments” for failing to comply with the VCEA. Nothing in the SCC records examined supports that. There is discussion of possible deficiency payments as early as this year in the record, but no dollar amounts described.
Focusing only on the deficiency payment risk distracts from a more useful point. It really doesn’t matter to the consumer whether the utility purchases outside RECs (unbundled, meaning without actual energy) or pays that statutory deficiency payment. They are two sides of the same coin. One or the other is required because the utility has failed to meet the green energy requirements of the VCEA with its own generation assets. Both are in effect a penalty. Both are money paid for zero energy provided to their home or business, money for nothing.
Both prove the VCEA is already an abject failure, because Dominion is already admitting it will never meet the VCEA goals with renewable assets of its own. What Virginia needs is legislation to eliminate both the mandate to buy outside RECs and the deficiency payment.
The better number for future debates is that ratepayers are about to be asked to pay $609 million. That will be the Rider RPS price tag in force on Election Day. Not $450 million but $609 million, which mainly is for RECs purchased in a secondary market but might include a deficiency payment.
Defenders of the deficiency payment have argued it is really a protection for ratepayers, because if the utility has a choice between the $45 per megawatt penalty or a purchased REC that costs $60, paying the penalty is the less expensive choice. If the utility truly has that choice, then the point is valid. Yet it is money for nothing either way.
Another interesting thing turned up in the debates this week. What is called a “deficiency payment” in the VCEA is usually called an “alternative compliance payment” in other states. Same concept, different name. Why didn’t the VCEA authors use that designation? Because the acronym ACP also calls to mind the abandoned Atlantic Coast Pipeline. Democrats hate natural gas that much.
That pipeline would have been a very useful piece of infrastructure this past week as American utilities set demand records and met that demand mainly with natural gas. Instead our power bills will be bumped up to pay for the kinds of intermittent, unreliable generation that proved to be of no value at 8 degrees Fahrenheit at 5 a.m., or to buy RECs subsidizing similar plants owned by others that were not running on that bitter cold morning.
