Politically, last November’s election left Virginians with divided government — a Republican governor, and Democratic General Assembly. Although bipartisan opportunities may be limited, energy choice is a home run regardless of political party. While market forces are driving Virginia’s environmentally responsible economic expansion, future growth is constrained by government rules forcing customers to buy their power from a monopoly utility. Fortunately, new legislation is moving forward to expand consumer choice for renewable energy.
The onset and revival of competitive reforms nationwide have been championed by large energy business customers, who declared that power generation is structurally competitive and should not be regulated as a natural monopoly. Virginia’s energy-intensive industry has grown precipitously in recent years, punctuated by the rise of Data Center Alley. Now, industry has formed a broad coalition of diverse business, environmental, and free-market groups to back Senate Bill 591 to expand energy competition.
Currently, Virginians have “choice” in name only for procuring renewable energy. Residential consumers in the commonwealth can purchase electricity from renewable sources on the open market if their local utility doesn’t offer this option. While this seems straightforward, there’s a catch. This choice is available only if the utility doesn’t offer a 100 percent renewable option. In fact, it wasn’t until a renewable energy provider started offering alternatives that Dominion suddenly decided to market its own product — almost like Dominion was acting to preserve market control rather than provide a superior product.
Commercial and industrial (C&I) customers face similar rules that prevent them from choosing renewable electricity providers. They must use five megawatts (MW) of electricity a year, and they are precluded from aggregating their usage over multiple sites. So, retailers like Walmart, which uses more than five MW annually in Virginia, wouldn’t meet the threshold as the individual stores don’t use five MW of power. Additionally, these C&I must provide a five-year notice to utilities if they are enrolled with a competitive supplier and want to return to the utility as a customer and file a petition for regulatory approval with the State Corporation Commission (SCC).
SB 591 reduces the aggregation threshold for C&I customers from 5 megawatts to 1 megawatt, eliminates the required SCC petition filing, and reduces the advanced notice requirement from five years to six months. This is closer to the 15-day average of many nearby jurisdictions such as Ohio, Pennsylvania, Delaware, New Jersey, and Washington, D.C. The bill will also allow residential customers to shop if they choose a 100 percent renewable plan from eligible sources.
Virginia is not alone in this pursuit to expand energy options for consumers. States are realizing that electric supply competition and consumer choice lower power costs and improve environmental performance. It also tends to boost grid reliability and reduce cronyism, according to recent R Street Institute research.
Governor Youngkin should answer the call of pro-business conservatives past and present. The legacy of competitive power is in fact a conservative one, dating back to a key priority of then-Governor George W. Bush. Today, Texas is the freest energy market nationwide and has become the national leader in clean energy, while its grid has reliably accommodated the nation’s biggest surge in demand growth.
It is important for Republicans to avoid conflating the monopoly utility position as being pro-business. Principled conservatives make clear that rewarding one inefficient business at the expense of all other businesses is lousy economic policy. The pro-business position is clear: competition and consumer choice drive economic vibrancy.
At his core, Governor Youngkin is a businessman. His previous life in private equity ensconced him in the wonders of competitive enterprise. Enterprising minds find nothing in common with monopoly utilities, whose lack of economic discipline is notorious. In fact, Virginia’s business community is especially motivated to pursue alternatives to Dominion Energy, whose plan is to saddle captive customers with expensive and risky investments that would not occur in a competitive market. SB 591 is a crucial relief valve to mitigate monopoly investments by introducing overdue competitive discipline.
The only shortcoming of SB 591 is that it does not go far enough. The best policy is to overhaul the system altogether, as Texas did. That is, the choice for all customers to buy any type of energy they choose. But beggars can’t be choosers, especially when it comes to overcoming the political clout of incumbent utilities.
How Virginia’s election affects its electrons remains to be seen. The substantive alignment of conservative principles and progressive values is there. Green liberty will prevail if political leadership supports unleashing Virginia’s enterprising economy in the face of resistance from monopoly utilities. Customers are hungry for competition, which will test political appetites. It’s time for an energy freedom feast in the Old Dominion.
Josiah Neeley is Resident Senior Fellow for Energy Policy. Robert Melvin is the Senior Manager of State Government Affairs for the Northeast Region.