56-585.2 - Sale of electricity from renewable sources through a renewable energy portfolio standard program.
§ 56-585.2. Sale of electricity from renewable sources through a renewableenergy portfolio standard program.
A. As used in this section:
"Renewable energy" shall have the same meaning ascribed to it in § 56-576,provided such renewable energy is (i) generated or purchased in theCommonwealth or in the interconnection region of the regional transmissionentity of which the participating utility is a member, as it may change fromtime to time; (ii) generated by a public utility providing electric servicein the Commonwealth from a facility in which the public utility owns at leasta 49 percent interest and that is located in a control area adjacent to suchinterconnection region; or (iii) represented by certificates issued by anaffiliate of such regional transmission entity, or any successor to suchaffiliate, and held or acquired by such utility, which validate thegeneration of renewable energy by eligible sources in such region."Renewable energy" shall not include electricity generated from pumpedstorage, but shall include run-of-river generation from a combinedpumped-storage and run-of-river facility.
"Total electric energy sold in the base year" means total electric energysold to Virginia jurisdictional retail customers by a participating utilityin calendar year 2007, excluding an amount equivalent to the average of theannual percentages of the electric energy that was supplied to such customersfrom nuclear generating plants for the calendar years 2004 through 2006.
B. Any investor-owned incumbent electric utility may apply to the Commissionfor approval to participate in a renewable energy portfolio standard program,as defined in this section. The Commission shall approve such application ifthe applicant demonstrates that it has a reasonable expectation of achieving12 percent of its base year electric energy sales from renewable energysources during calendar year 2022, and 15 percent of its base year electricenergy sales from renewable energy sources during calendar year 2025, asprovided in subsection D.
C. It is in the public interest for utilities to achieve the goals set forthin subsection D, such goals being referred to herein as "RPS Goals".Accordingly, the Commission, in addition to providing recovery of incrementalRPS program costs pursuant to subsection E, shall increase the fair combinedrate of return on common equity for each utility participating in suchprogram by a single Performance Incentive, as defined in subdivision A 2 of §56-585.1, of 50 basis points whenever the utility attains an RPS Goalestablished in subsection D. Such Performance Incentive shall first be usedin the calculation of a fair combined rate of return for the purposes of theimmediately succeeding biennial review conducted pursuant to § 56-585.1 afterany such RPS Goal is attained, and shall remain in effect if the utilitycontinues to meet the RPS Goals established in this section through andincluding the third succeeding biennial review conducted thereafter. Any suchPerformance Incentive, if implemented, shall be in lieu of any otherPerformance Incentive reducing or increasing such utility's fair combinedrate of return on common equity for the same time periods. However, if theutility receives any other Performance Incentive increasing its fair combinedrate of return on common equity by more than 50 basis points, the utilityshall be entitled to such other Performance Incentive in lieu of thisPerformance Incentive during the term of such other Performance Incentive. Autility shall receive double credit toward meeting the renewable energyportfolio standard for energy derived from sunlight or from onshore wind, andtriple credit toward meeting the renewable energy portfolio standard forenergy derived from offshore wind.
D. To qualify for the Performance Incentive established in subsection C, thetotal electric energy sold by a utility to meet the RPS Goals shall becomposed of the following amounts of electric energy from renewable energysources, as adjusted for any sales volumes lost through operation of thecustomer choice provisions of subdivision A 3 or A 4 of § 56-577:
RPS Goal I: In calendar year 2010, 4 percent of total electric energy sold inthe base year.
RPS Goal II: For calendar years 2011 through 2015, inclusive, an average of 4percent of total electric energy sold in the base year, and in calendar year2016, 7 percent of total electric energy sold in the base year.
RPS Goal III: For calendar years 2017 through 2021, inclusive, an average of7 percent of total electric energy sold in the base year, and in calendaryear 2022, 12 percent of total electric energy sold in the base year.
RPS Goal IV: For calendar years 2023 and 2024, inclusive, an average of 12percent of total electric energy sold in the base year, and in calendar year2025, 15 percent of total electric energy sold in the base year.
A utility may apply renewable energy sales achieved or renewable energycertificates acquired during the periods covered by any such RPS Goal thatare in excess of the sales requirement for that RPS Goal to the salesrequirements for any future RPS Goal.
E. A utility participating in such program shall have the right to recoverall incremental costs incurred for the purpose of such participation in suchprogram, as accrued against income, through rate adjustment clauses asprovided in subdivisions A 5 and A 6 of § 56-585.1, including, but notlimited to, administrative costs, ancillary costs, capacity costs, costs ofenergy represented by certificates described in subsection A, and, in thecase of construction of renewable energy generation facilities, allowance forfunds used during construction until such time as an enhanced rate of return,as determined pursuant to subdivision A 6 of § 56-585.1, on construction workin progress is included in rates, projected construction work in progress,planning, development and construction costs, life-cycle costs, and costs ofinfrastructure associated therewith, plus an enhanced rate of return, asdetermined pursuant to subdivision A 6 of § 56-585.1. All incremental costsof the RPS program shall be allocated to and recovered from the utility'scustomer classes based on the demand created by the class and within theclass based on energy used by the individual customer in the class, exceptthat the incremental costs of the RPS program shall not be allocated to orrecovered from customers that are served within the large industrial rateclasses of the participating utilities and that are served at primary ortransmission voltage.
F. A utility participating in such program shall apply towards meeting itsRPS Goals any renewable energy from existing renewable energy sources ownedby the participating utility or purchased as allowed by contract at noadditional cost to customers to the extent feasible. A utility participatingin such program shall not apply towards meeting its RPS Goals renewableenergy certificates attributable to any renewable energy generated at arenewable energy generation source in operation as of July 1, 2007, that isoperated by a person that is served within a utility's large industrial rateclass and that is served at primary or transmission voltage. A participatingutility shall be required to fulfill any remaining deficit needed to fulfillits RPS Goals from new renewable energy supplies at reasonable cost and in aprudent manner to be determined by the Commission at the time of approval ofany application made pursuant to subsection B. A participating utility maysell renewable energy certificates produced at its own generation facilitieslocated in the Commonwealth or, if located outside the Commonwealth, owned bysuch utility and in operation as of January 1, 2010, or renewable energycertificates acquired as part of a purchase power agreement, to anotherentity and purchase lower cost renewable energy certificates and the netdifference in price between the renewable energy certificates shall becredited to customers. Utilities participating in such program shallcollectively, either through the installation of new generating facilities,through retrofit of existing facilities or through purchases of electricityfrom new facilities located in Virginia, use or cause to be used no more thana total of 1.5 million tons per year of green wood chips, bark, sawdust, atree or any portion of a tree which is used or can be used for lumber andpulp manufacturing by facilities located in Virginia, towards meeting RPSgoals, excluding such fuel used at electric generating facilities using woodas fuel prior to January 1, 2007. A utility with an approved applicationshall be allocated a portion of the 1.5 million tons per year in proportionto its share of the total electric energy sold in the base year, as definedin subsection A, for all utilities participating in the RPS program. Autility may use in meeting RPS goals, without limitation, the followingsustainable biomass and biomass based waste to energy resources: millresidue, except wood chips, sawdust and bark; pre-commercial soft woodthinning; slash; logging and construction debris; brush; yard waste; shippingcrates; dunnage; non-merchantable waste paper; landscape or right-of-way treetrimmings; agricultural and vineyard materials; grain; legumes; sugar; andgas produced from the anaerobic decomposition of animal waste.
G. The Commission shall promulgate such rules and regulations as may benecessary to implement the provisions of this section including a requirementthat participants verify whether the RPS goals are met in accordance withthis section.
H. Each investor-owned incumbent electric utility shall report to theCommission annually by November 1 on (i) its efforts, if any, to meet the RPSGoals, (ii) its overall generation of renewable energy, and (iii) advances inrenewable generation technology that affect activities described in clauses(i) and (ii).
(2007, cc. 888, 933; 2008, c. 651; 2009, c. 744; 2010, c. 850.)