Advocates for shared solar programs are telling state regulators that the benefits of solar power should reduce the cost of participating in such programs and open them up to more Virginians.
Under a shared solar program, an electric utility customer subscribes to solar energy production from a third-party solar company and gets credit for it on their utility bill. It’s a way for people to participate in using solar energy without having to own their own panels and potentially save money.
The subscriber also must pay a minimum monthly bill to their electric utility. That minimum is designed to ensure that shared solar subscribers pay their share of the costs associated with maintaining the electric grid.
For now, Dominion Energy is the only electric utility in Virginia with a shared solar program in operation. Solar advocates say Dominion’s minimum bill doesn’t accurately reflect the benefits that solar brings to the system, such as clean energy production, reduced wear and tear on transmission infrastructure and new jobs.
They also argue that it’s so expensive that shared solar is only financially viable for Dominion’s low-income customers, who are exempt from paying the minimum.
[Disclosure: Dominion is one of our donors, but donors have no say in news decisions; see our policy.]
Now, solar advocates and some lawmakers hope the State Corporation Commission, which regulates utilities in Virginia, will clearly define the benefits of solar power. Advocates hope that will ultimately lead to a lower minimum bill.
The SCC is in the process of amending Virginia’s shared solar rules to reflect recent legislation that expanded the size of Dominion Energy’s program, ordered the establishment of a small program in Appalachian Power territory and directed the commission to consider the benefits of solar when calculating the minimum bill.
“This is really a test of whether the commission is going to be on the path of getting to a workable minimum bill or whether we’re going to stick with what we have right now, which is a program that works for low-income customers that don’t have to pay the minimum bill in Dominion,” said Brandon Smithwood, vice president of policy for Dimension Energy.
Dimension Energy has seven operational shared solar projects in Virginia representing more than 28 megawatts of power, with another 20 megawatts under construction. All of its customers are low-income.
Shared solar is a relatively small slice of the solar pie in Virginia. Legislation in the last General Assembly session expanded the size of Dominion Energy’s shared solar program from 200 megawatts to 350 and ordered the creation of a 50-megawatt shared solar program in Appalachian Power territory.
For comparison, Dominion earlier this month filed proposals with state regulators for more than 1,000 megawatts of new solar projects in the commonwealth. If all are approved, the company would have more than 5,750 megawatts of solar operating or under development.
‘Financial roadblock’ or ‘fair share’?
Sen. David Suetterlein, R-Roanoke County, who was a patron of legislation supporting shared solar, called the current minimum bill a “financial roadblock that eliminates the ability of many Virginians to participate in the program and realize any savings.”
“The current cost-restrictive program does not give Virginians a choice and exacerbates unaffordability,” Suetterlein wrote in a letter last month to the State Corporation Commission.
Dominion has maintained that the minimum bill is necessary to ensure that shared solar subscribers pay their “fair share” and avoid shifting costs onto other utility customers.
“The purpose of a minimum bill is to avoid having all customers subsidize customers enrolled in shared solar. The minimum bill covers the costs of the grid, which all customers use, as well as access to 24-7 power, which solar does not provide,” said Dominion spokesperson Tim Eberly.
Two years ago, that minimum bill was commonly cited as being about $55.10. Today, a typical customer using 1,000 kilowatt-hours of electricity and subscribing to that much solar output would have a minimum bill of $83.59, Eberly said.
The minimum bill is not a fixed amount, Eberly said. It varies based on a customer’s usage and associated costs.
“The law directs the Virginia State Corporation Commission to establish a minimum bill inclusive of ‘the costs of all utility infrastructure and services used to provide electric service and administrative costs of the shared solar program,’” Eberly said. “Thus, the minimum bill changes each time there is a change to those cost components.”
Smithwood said that because of all of the positives that solar production brings to the electric grid, the math supports the minimum bill being only $1 per month.
“It’s just the cost of billing the customer,” he said.
Appalachian Power’s minimum bill remains to be determined
Because Appalachian Power’s program is still under development, its minimum bill has yet to be established. But some stakeholders have expressed concern that if it ends up being too high, Appalachian’s program won’t get off the ground.
Unlike Dominion’s program, Appalachian’s shared solar program will not exempt low-income customers from paying a minimum bill, although the relevant legislation does mandate that low-income customers see at least a 10% savings when using shared solar.
Del. Terry Kilgore, R-Scott County, voted against the shared solar legislation but nonetheless wrote a letter to the SCC last month saying that Appalachian Power’s future shared solar participants won’t see those mandated financial savings if the minimum bill is too high.
Kilgore urged the SCC to consider the benefits of shared solar “including, but not limited to, competition, avoided transmission costs, lower electric bills, new jobs, new forms of income for farmers, energy choice, and utilizing brownfields.”
Calculating the costs and benefits of solar
The current State Corporation Commission proceeding that sparked this conversation is not intended to work out the exact dollars and cents behind a new minimum bill.
Rather, it focuses on updating the state’s rules for shared solar programs to reflect the recently passed legislation. Some of those updates revolve around administrative matters such as figuring out who should bear the responsibility of keeping up with certain customer information.
But the legislation also says that the SCC must “calculate the benefits of shared solar to the electric grid and to the Commonwealth and deduct such benefits from other costs” when determining the minimum bill.
Shared solar proponents hope the SCC will use this proceeding to define just what those benefits are, so that their mathematical weight on the minimum bill can be calculated during a subsequent proceeding before July 2025, when Appalachian Power is required to file information with the SCC necessary to begin the program.
Besides Suetterlein and Kilgore, Senate Majority Leader Scott Surovell, D-Fairfax County, and Del. Rip Sullivan Jr., D-Fairfax County, wrote letters to the SCC urging it to define the costs and benefits of shared solar. Like Suetterlein, Surovell and Sullivan were patrons of shared solar legislation during the most recent General Assembly session.
“Identifying the cost and the benefit categories in the regulations will provide transparency to both the shared solar market and its participants to ensure that the shared solar program can continue to move forward in an equitable manner,” Surovell wrote.
Eberly, the Dominion spokesperson, noted that Dominion also supported the legislation that requires the SCC to consider the benefits of solar when recalculating the minimum bill.
For their part, State Corporation Commission staff members have acknowledged that stakeholders are concerned about the minimum bill but have yet to detail what costs and benefits might be considered.
In an Oct. 10 report, SCC staff members said that this and other issues “are fully within the Commission’s purview” and that they believe a “reasonable compromise exists for the issues raised.”