Virginia: Expectations vary for governor’s energy plan, which will address EPA power plant rule

Source: Rod Kuckro, E&E reporter • Posted: Tuesday, September 30, 2014

Sometime Wednesday, Virginia Gov. Terry McAuliffe’s vision for the state’s energy future will be posted to a website and delivered to the General Assembly.

The update of the 2010 energy plan will be an inclusive prescription that will maintain Virginia’s current electric power mix dominated by nuclear (36 percent), natural gas (30 percent) and coal (29 percent), with an eye toward increased deployment of solar power, a serious push to foster offshore wind farms and having the state government lead a robust effort to adopt energy efficiency, according to a senior adviser to the governor.

And for the first time — at the direction of the General Assembly earlier this year — the quadrennial exercise will include an analysis of the costs and benefits to Virginia of U.S. EPA’s proposed regulation of greenhouse gas emissions from existing fossil fuel-fired power plants, also known as the Clean Power Plan.

“His position is truly an all-of-the-above strategy. He feels as if at this point Virginia does have a good energy mix, but we have areas where we can improve. Increasing the diversity of our fuel mix is a big economic development driver, a big driver for the economy generally,” the adviser said.

McAuliffe, a Democrat elected in 2013, presides over a purple state where the federal government for decades has been the largest driver of the economy with its extensive military presence in Hampton Roads and thousands of federal workers populating the Northern Virginia suburbs.

So far, he has had a difficult time getting his priorities enacted by the General Assembly, a part-time Legislature where Republicans control the House of Delegates and the Senate.

While some of the recommendations in the plans will be able to be accomplished administratively — “especially in terms of the public sector leading by example,” the adviser said — on most, “we need to and we would like to work with the Legislature to move the commonwealth forward on energy policy,” he said.

On Oct. 14, McAuliffe will host a forum at the Science Museum of Virginia in Richmond at which he will outline his “rationale behind some of the recommendations,” the adviser said.

Among those expected to be in attendance are members of the Virginia Energy Council, a group chaired by Secretary of Commerce Maurice Jones, whom McAuliffe named in June to help steer development of the plan. The 24 members are diverse and include representation from the state’s coal, oil, railroad and electric utility industries, but also wind energy developers and clean energy advocates.

The council met in July and August and also hosted five “listening sessions” throughout the state to collect public opinion.

The group discussed a wide range of topics, including whether to make the state’s renewables target mandatory and what type of support the state should give to renewable energy projects such as solar and electric vehicles, said Jack Reasor, president and CEO of Old Dominion Electric Cooperative (ODEC) and a member of the council.

Also discussed was Virginia’s support of its coal industry, including having the state working with the industry to support exporting coal to other countries, he said.

And the council members from the electric industry spent a lot of time explaining to the others how the industry works and how certain decisions affect consumers, Reasor said.

“As an electric cooperative, that’s probably our greatest concern,” said Reasor. Most of ODEC’s service territory is in rural Virginia, and many of its customers are below the poverty level, he said.

What role will renewables play?

“Gov. McAuliffe ran on trumpeting clean energy. He wanted a mandatory renewable portfolio standard and talked about the need to increase development of clean energy,” said Dawone Robinson, Virginia policy director for the Chesapeake Climate Action Network (CCAN).

“We’re hoping to see very, very strong renewable energy policies within the plan and concrete recommendation about how we’re going to grow our renewable energy development in Virginia, because we are lacking severely behind neighboring states and many other states in the nation when it comes to the investment in-state of wind and solar,” Robinson said.

A late July draft of recommendations called for “setting a more ambitious legally binding target that encourages the construction of new clean energy projects in the Commonwealth, and setting solar and wind carve-out goals to establish a stronger in-state market, and track Virginia’s progress toward the goal to generate 10 percent of electricity from renewable sources by October 1, 2017.” The state’s current, voluntary renewable goal calls for 15 percent by 2025.

“I would be surprised” to see a mandatory renewable portfolio standard in the final recommendations, said Terry Rephann, regional economist with the Richmond-based Weldon Cooper Center for Public Service.

“That didn’t even make it into the [then-Gov. Tim] Kaine plan” in 2007, Rephann said, adding that “things are moving in that direction now anyway with the voluntary program, with incentives rather than the mandatory standard.”

Rephann thinks McAuliffe’s energy plan, the draft of which is 300 pages, will be “fairly well-balanced” between energy production and conservation, reflecting “a realization that he’s working with a General Assembly dominated by Republicans.”

The plan to be unveiled Wednesday may reflect that McAuliffe is “in a compromising mood,” Rephann said, citing the governor’s decision in early September to bless a 550-mile natural gas pipeline that will run from West Virginia to North Carolina even as it “angered his environmental constituency.”

Response to proposed EPA rule will not address compliance

Any spirit of compromise could be broken quickly if the General Assembly reads the plan’s chapter on the costs and benefits of complying with EPA’s proposed greenhouse gas rule as advocating an approach not to lawmakers’ liking.

The analysis of the EPA rule “is not intended to be and it will not be a path to compliance,” said the senior adviser. Instead, it will weigh the costs and benefits “of what implementation under a certain set of scenarios might look like for Virginia,” he said.

Later this year, the McAuliffe administration will offer EPA “suggestions on how to modify [the proposed rule] and improve it,” he said, such as “getting credit for our nuclear generation. We feel like we do nuclear very well. It is a zero-emitting source, and frankly, the EPA is not giving us full credit for using a zero-emitting source. And that is something we would like EPA to take a harder look at as they consider the final rule.”

Chelsea Harnish, policy manager for the Virginia Conservation Network and an energy council member, expects more. She points out that this will be McAuliffe’s “first opinion” on the Clean Power Plan. “It’s going to be important to get it right,” she said.

CCAN’s Robinson thinks the energy plan could give Virginia “an incredible opportunity to take climate change seriously, because the impacts are getting worse.” Specifically, he thinks Virginia “should try to find a way to join [the Regional Greenhouse Gas Initiative] because it is a proven mechanism” to reduce carbon dioxide emissions and has the added benefit of raising revenue for the state. RGGI is a market-based cap-and-trade program used by nine Eastern states to reduce CO2 emissions.

While the term “cap and trade” often is equated to an “energy tax” by critics, it has been used before in Virginia, said University of Virginia professor Vivian Thomson, an eight-year veteran of Virginia’s Air Pollution Control Board and a former EPA staffer.

“In 2006, the General Assembly commanded that the Department of Environmental Quality and the board use a cap-and-trade approach for mercury under the section of the Clean Air Act that EPA is employing for the Clean Power Plan,” Thomson said.

Thomson also noted that Dominion, the state’s largest electric utility, “supported emissions trading as its preferred approach for any federal climate change legislation that Congress enacted.”

“I would hope McAuliffe will give strong direction to DEQ and the state Air Pollution Control Board to use every regulatory tool at their disposal to meet the mandates of the Clean Power Plan,” she said.

She is also an advocate for Virginia joining RGGI. “Why don’t we jump on this bandwagon and reap the benefits of selling allowances?” she said. “And those revenues, in turn, could be used to help soften any impacts that might be felt in southwest Virginia,” where idled coal mines have been a drag on the local economy.

ODEC’s Reasor said he thinks it is important “to understand the difference between programs for consumers versus mandates on utilities” in any energy plan.

“While some of these ideas and thoughts are good ones, you just have to be careful of what the impact of some of those items will be on electric reliability and, more importantly, cost to the customer,” he said.