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McDonnell outlines energy agenda

Gov. Bob McDonnell unveiled today a series of recommendations for the 2012 General Assembly session that will advance Virginia’s role as the energy capital of the East Coast.

“Virginia is blessed with a bounty of natural resources that can aid in our nation’s growing need for affordable and reliable energy sources,” McDonnell said. “From the sustained winds off our Atlantic coast to the rich coalfields of southwestern Virginia, the Commonwealth has the resources to provide a significant portion of our energy needs and to provide affordable energy resources to other states. To be the Energy Capital of the East Coast we must work together to empower the private sector to invest in the projects necessary to develop these resources. In addition to ensuring access to affordable and reliable energy for our families and businesses, energy development also creates good-paying jobs for our citizens and brings much-needed economic expansion to regions where the projects are located.”

Working to make Virginia the energy capital of the East Coast, McDonnell has pursued an “all of the above” strategy for advancing development of Virginia’s energy resources, through the passage of legislation, updating Virginia’s Energy Plan, and working with industry and stakeholder groups. The governor is leading in the push to develop offshore energy, supporting expansion of renewables, and advocating on behalf of traditional fuels including coal, natural gas, oil and nuclear energy in order to secure an adequate supply of affordable, reliable energy for Virginia’s future.

Since the beginning of his administration, McDonnell has been a strong advocate of offshore oil and gas development, and supported moving to alternative fuel vehicles, including compressed natural gas, in an effort to reduce the Commonwealth’s dependence on foreign oil. With his leadership, Virginia continues to aggressively fight back against federal limitations of offshore oil and gas development and oppressive new anti-competitive federal regulatory activity that is creating obstacles to developing our domestic energy resources, leaving private capital that could be invested in expanding our domestic energy resources on the sidelines at a time when private investment in business expansion and job creation is so urgently needed to heal our ailing economy.

“As a part of our overall economic development strategy, we have established an aggressive goal of making Virginia the East Coast’s energy leader,” Lt. Gov. Bill Bolling said. “While we have made great progress in our effort to achieve this goal over the past two years, there is more that we need to do. Working with our friends in the legislature and the private sector, these proposals will enable us to take another step forward in our effort to accomplish this aggressive goal. By continuing to support our energy infrastructure, and encouraging alternative energy development, we will send a message that Virginia is committed to doing everything it can to support traditional forms of energy like coal, nuclear and natural gas; while pursuing efforts to develop offshore energy resources, making advancements in alternative forms of energy like wind, solar and biomass; and supporting responsible energy conservation measures.”

“Virginia has a robust and plentiful reserve of natural resources that can be a significant asset to our nation and the world economy,” said State Sen. John Watkins. “Through the targeted development of all of our energy sources, Virginia will become a leader in East Coast energy production, and can be home to thousands of new energy industry jobs. Virginia can be a leader in a national push to reduce our dependence upon foreign energy sources and meeting the current and future needs of our nation, and our state government can lead by example through prudent investment in energy efficiency, economic development and alternative fuel utilization.”

The following seven legislative proposals will support energy infrastructure expansion and access to traditional energy sources, promote conservation and efficiency, and support the development of alternative and renewable options.

Natural Gas Infrastructure Expansion for Economic Development (Delegate D. Marshall and Senator Wagner)

· Allows natural gas utilities to expand infrastructure as necessary to provide natural gas to economic development projects where it is not already available and when a project developer commits to at least a five-year contract for natural gas use. At present, a gas utility is not permitted to invest in infrastructure construction costs above the amount that will be paid for gas use. The proposal will also increase the potential for expanded natural gas use in areas of the Commonwealth, spur economic growth and job creation in those areas, and expand the markets for Virginia natural gas resources.

Improved Regulatory Approval Process for Electric Transmission (Delegate Merricks and Senator Stanley)

· Authorizes a utility to seek approval for a 138kv transmission line from either the State Corporation Commission or the locality or localities in which the transmission line will be located. These transmission lines are frequently used for economic development projects. Currently, the utility must go to the State Corporation Commission for approval, and the lengthy approval process can sometimes be a barrier to the success of projects. This option will allow faster approval and increase the opportunity for job creation and economic development.

Increased use of Energy Efficiency Programs (Delegates RL Ware/Cosgrove and Senators Watkins/Puckett)

· Supports the adoption and approval of energy efficiency programs, including customer engagement tools that result in measurable and verifiable energy savings and pass any three of the four cost-benefit tests applied by the State Corporation Commission. The proposal also authorizes the State Corporation Commission to approve energy efficiency programs that provide measurable and verifiable energy savings to low-income and/or elderly customers.

Enable Research and Development for Renewable Energy (Delegate J. Miller and Senator Norment)

· Encourages investment in renewable energy research and development by providing renewable energy certificates to utilities for investment in research projects to advance renewable energy technologies. The proposal will allow a utility to meet no more than 20 percent of its annual voluntary renewable energy goal with investments in such research and development projects. The awarded certificates will be based on the amount of the investment divided by the average price of a Tier 1 and Tier 2 renewable energy certificate in PJM, the regional transmission organization of which Virginia’s electric utilities are members, for the previous year.

Providing Renewable Energy Certificates for Renewable Thermal Energy (Delegate Cosgrove)

· Provides renewable energy certificates for the thermal energy produced in a combined heat and power facility fueled by a renewable energy resource such as biomass. This will make renewable energy cogeneration projects more feasible by permitting the sale of the renewable energy certificates to utilities that need to meet voluntary or mandatory renewable energy goals. This does not change the cap on the use of round wood for renewable portfolio standard purposes.

Create the Alternative Fuel Vehicle Conversion Fund (Delegate Poindexter and Senator McWaters)

· Creates the Alternative Fuel Vehicle Conversion Fund to support the implementation of a plan to convert the state’s fleet to alternative fuel vehicles. The plan was requested by the 2011 General Assembly in HB2282 and was advanced by Governor McDonnell’s Executive Order 36. The fund would receive a small portion of federal funds provided for congestion mitigation and air quality improvement and be used to pay the difference between the cost of traditional fuel vehicles and alternative fuel vehicles, or for vehicle conversions. Progress is already under way to use the PPEA process to develop a plan to move the Commonwealth’s vehicles to alternative fuels and thereby support the expansion of fueling infrastructure, and the markets for Virginia energy resources. The administration has narrowed the field to two potential vendors and will work with them and possible local government partners to negotiate a contract that will allow the conversion of state government vehicles in a practical and cost-effective manner.

Ensure Safety of Mining and Drilling Operations (Delegate O’Quinn and Senator Carrico)

· Requires mine operators to submit a map of planned mining to the Department of Mines, Minerals and Energy before beginning production and notification of any directional changes that would take mining outside of the original map. This will ensure safety for miners and natural gas drillers who may be working in close proximity to one another, because these important energy resources occur in close proximity to each other.

The governor also included the following two budget initiatives in his introduced budget.

$500,000 in FY13 for research and development to accelerate and assist private development of the Virginia Wind Energy Area

· This will allow the Commonwealth to continue its efforts to develop data and additional information concerning the resource available in the federally designated “wind energy area” off the coast of Virginia. The data will be available to reduce development costs and assist developers in the federal leasing process.

$300,000 in each year to support the Division of Gas and Oil for public safety oversight

· These funds provide the Department of Mines, Minerals, and Energy’s Division of Gas and Oil the ability to strengthen permitting processes and ensure efficient oversight of the increasing number of wells, pipelines, and associated facilities across the Commonwealth.

“We have worked to identify existing obstacles to the expansion of natural gas and electric services to locations across the Commonwealth that need these resources to attract new businesses and jobs,” said Maureen Matsen, the governor’s energy policy advisor. “If Virginia can streamline the burdensome and time-consuming approval processes and regulations in a responsible way, it will allow the expansion of services to locations that can attract new business to create jobs and expand our economy. It will also make Virginia more attractive to investment in the development of all of its abundant energy resources.”

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