The EPA Clean Power Plan: Virginia State Corporation Commission Gets it Wrong. Virginia Is on Track to Meet Its Goals.

October 27, 2014
Rachel Cleetus
Policy Director

In recent comments to the EPA, the Virginia State Corporation Commission (SCC) took an extremely pessimistic and inaccurate view of the state’s ability to join a 21st century clean energy economy, claiming it could only do so at a high cost to electricity consumers. In fact, the Commonwealth is well on track to meet its goals under the Clean Power Plan (CPP), affordably and reliably. A majority of its electricity already comes from lower-carbon energy sources like nuclear, natural gas, and renewable energy.

The Virginia SCC’s arguments are seriously flawed

There are numerous reasons the Virginia SCC’s comments are not an accurate reflection of the state’s ability to comply with the CPP:

  1. Coal plants already announced for retirement in Virginia are approximately equivalent to 38% of the amount of coal generation that is assumed to be displaced by natural gas according to the EPA’s calculation of the state’s target. These plants are retiring primarily because they are increasingly uncompetitive with cleaner forms of electricity, including because of low natural gas prices, increased competition from renewable energy resources, and the need to meet health-based pollution standards. The Clean Power Plan is simply incorporating this market reality and building on it. Much of our nation’s aging coal fleet is inefficient, expensive and polluting. Replacing the most polluting plants with cleaner resources like renewable energy and natural gas is good for the Commonwealth’s consumers’ pocketbooks and their health. However, it will also be important to invest in transition assistance for miners and others disproportionately affected by this shift away from coal, including through measures like the bipartisan HELP Act recently introduced by Congressmen David McKinley (R-WV) and Peter Welch (D-VT).
  2. Ramping up renewable energy to meet the EPA’s targets would require just 4% of Virginia’s electricity to come from renewable energy in 2020 and 8% in 2030, whereas its current voluntary renewable electricity standard (RES) is set at 15% by 2025. Contrary to the SCC’s claims, this level of renewable energy penetration, especially given the years of time to meet it, is very unlikely to pose reliability concerns. A grid reliability study for PJM shows that much higher levels, up to 30% penetration rates, are achievable without threatening reliability. Our own analysis shows that strengthening the Clean Power Plan by doubling the amount of renewable energy achieved by the state targets is cost-effective. Under our approach, Virginia’s target would be 14% renewable energy by 2030, still well within any reliability constraints.
  3. Virginia is getting credit for its zero-carbon nuclear fleet. The SCC seems to have failed to understand the methodology EPA uses to credit nuclear plants. In fact, Virginia receives credit for 6% of its nuclear fleet (a nationwide average for nuclear plants considered at risk for  retirement) under the EPA’s formula for calculating emissions reduction targets. This amounts to 1,645 GWh, making it easier for the state to meet its emissions reduction target, not harder.
  4.  The SCC’s claims of outrageously high electricity costs from complying with the Clean Power Plan are simply not credible, and arise almost entirely from their dubious assumption that a new nuclear plant would be required for compliance. In fact, this is not necessary for the Commonwealth to meet its goals under the CPP and would be a much more expensive option than utilizing existing cleaner energy resources and ramping up cost-effective renewable energy and energy efficiency. Virginia also has significant offshore wind potential.

Virginia’s clean energy future

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This post is part of a series on the EPA Clean Power Plan.

In contrast with the SCC’s dim outlook, Governor McAuliffe’s recently announced State Energy Plan charts a bright future for Virginia’s clean energy economy that includes a prominent role for wind and solar energy and energy efficiency. To get there will require strong policies, including strengthening and making mandatory the state’s voluntary RES, and making mandatory its energy efficiency standard.

If the current voluntary RES is met, non-hydro renewables are projected to grow to at least 10,275 GWh by 2025, according to projections from the Lawrence Berkeley National Laboratory. In calculating Virginia’s emissions reduction goal, the EPA estimated that the state would need to achieve slightly more, 11,192 GWh of renewable electricity, by 2030 – which is entirely reasonable. Similarly if the state’s voluntary energy efficiency goal of a savings of 10% by 2022 was met, the state would achieve the level of energy efficiency proposed by the EPA in setting the state’s emissions target. The Governor’s plan recommends reaching that goal two years earlier, in 2020. Thus complying with the Clean Power Plan goals is simply not a stretch for the Commonwealth, and very much in line with policies it has already chosen to adopt.

A recent federal government study, relying primarily on data from utilities and state regulators, found that between 2010 and 2012 the cost of complying with RESs in 25 states ranged from a net savings of 0.2 percent of retail rates to a net cost of 3.8 percent, with a weighted average cost of 0.9 percent. Numerous studies have shown that ramping up energy efficiency can help reduce consumer electricity bills, including a recent analysis of the CPP in Virginia. Our analysis of strengthened renewable energy targets shows that doubling the amount of renewable energy from the CPP would have a minimal impact on the average consumer bill nationally – on the order of 18 cents per month, with some regional variation.

Sea level rise in Virginia

Virginia is on the front lines of sea level rise, with cities like Norfolk already experiencing chronic, damaging flooding during routine high tides. Billions of dollars are being spent  to help protect local communities. Governor McAuliffe recently convened a Climate Change and Resiliency Commission to help prepare coastal residents from growing risks. The Hampton Roads Planning District Commission and the City of Virginia Beach just released a comprehensive report on developing an adaptation plan for the city, which makes clear the vulnerability of the city to flooding and the need to plan for a future of even higher sea levels and greater risks.

The Clean Power Plan is a down payment on climate action

Cutting emissions is a key part of protecting communities by slowing the pace of future sea level rise, especially in the latter part of this century. The Clean Power Plan is a first step toward getting those deep emissions reductions from the power sector – especially if it strengthened.

The SCC’s report is short-sighted and flawed, and completely misses the significant benefits to the Commonwealth from a transition to a low-carbon economy.