Column by Al Weed
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Virginia guarantees its utilities a “fair and reasonable” profit and for that we should require clean energy production that creates jobs and helps clean up the Bay. Twenty-eight other states already have such requirements.
Virginia today has a very modest request of its investor-owned utilities: please, pretty please, provide 4 percent of the electricity you sell from renewable sources. And, oh, by the way, if you do that you will be able to rack up substantial “performance incentives.”
These incentives, under Virginia’s “voluntary” Renewable Portfolio Standard (RPS) could generate as much as $2.4 billion in additional revenue for Virginia Electric Power alone. Of course, this money will come directly from the ratepayers, but not generate even one kilowatt of additional renewable energy.
These voluntary standards have done very little so far to increase the availability of renewable energy to Virginia customers and, in fact, other provisions of the RPS have perversely reduced consumer options to buy alternative energy. Also, the term “voluntary” only applies to the utilities’ need to meet renewable goals. Once a utility decides that the profit incentives are sufficient it will then be able to pass all costs on to the customers who will be “mandated” to pay.
Since the General Assembly has enacted, and the public generally supports, laws to increase the supply of renewable energy, let’s just get the job done. Virginia needs a renewable standard that will be affordable to consumers, that applies to all electricity providers, and will have a real impact on creating rural jobs. It is perfectly reasonable for the state, which through its regulatory authority guarantees a reasonable profit to utilities, to say what kind electricity we should be getting. Especially since renewable energy will create new jobs and help restore the Chesapeake Bay.
This approach is attractive: it does not involve new taxes, ensures consumer savings, and could be on line in less than two years (compared to nine or ten at best for off-shore drilling). Any day now Gov. McDonnell should announce his support for a mandatory Renewable Energy Standard (MRES).
If we just keep the existing goal of 4 percent from renewable sources through 2015 that would make roughly $121 million per year available for renewable energy from all sources. This would come at an additional cost of no more than $22 per year per household.
Where this revenue starts to matter, though, relates to how we generate the renewable energy. Virginia’s most abundant renewable resource is biomass – crops grown for fuel, woody byproducts and animal and crop residues. The technology to generate power from these sources has been proven and Virginia could see substantial biomass investment come on line in as soon as two years.
How does this play out? Each megawatt of electricity (enough power for roughly two hundred homes and businesses) generates 16 construction jobs and nine operating jobs thereafter. Annual income to rural communities is about $300,000 per megawatt.
Virginia’s 4 percent goal would be about 300 megawatts, of which three quarters should come from biomass. That’s 3,600 construction jobs, 2,205 operating jobs, $900 million in new investment, and $67.5 million in rural revenues. Not bad for a $22/year investment per household.
The bonus is that every acre planted to energy crops reduces pressure from agricultural run-off and pollutants on the Bay. Just 225 megawatts could generate one quarter of a million acres planted to perennial grasses.
Al Weed is the chairman of Public Policy Virginia, a Charlottesville-based nonpartisan advocacy group working to promote a Virginia biomass economy.
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