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State Energy Efficiency Policy Database

Virginia

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Summary

Virginia has made legislative progress in energy efficiency, however the implementation process has been difficult and as a result the state still falls well below the national average on energy efficiency program spending and energy savings. In 2007, Virginia set a legislative goal (S 1416) of reducing electricity consumption by 10% (from 2006 levels) by 2022. In 2008, the legislature mandated that utilities submit integrated resource plans that lay out demand-side resources. The State Corporation Commission (SCC) approved five energy efficiency programs for Dominion Power in 2010, and additional programs in 2012.  

Repeated attempts to introduce energy efficiency goals and resource standards have not been successful. The governor vetoed an energy efficiency resource standard in 2009 (SB 1248). In 2008, legislators rejected an earlier goal of 19% savings by 2025 (SB 1296). SB 111, which would have introduced innovative rate structures, did not pass. Revenue recovery has also been questioned on the basis of consumer affordability (SB 150).    

The most recent budgets for energy efficiency programs and electricity and natural gas savings can be found in the State Spending and Savings Tables on the left.

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November 8, 2013


Customer Energy Efficiency Programs

HB 2506, enacted in, authorized investor-owned electric utilities to recover the costs of designing, implementing, and operating energy efficiency programs by adjusting their rates, if such programs are found to be in the public interest.  The Virginia State Corporation Commission may allow utilities to recover reductions in revenue related to energy efficiency programs, to the extent the revenue is not recovered through off-system sales. In 2010, legislators did not pass a bill that removed cost recovery as an option unless it was cost-effective for consumers (SB 150).

Dominion Power now offers a small set of programs for its residential and commercial customers, and several gas utilities offer rebates. The Tennessee Valley Authority also runs efficiency programs in Virginia. 

Certain large customers are exempt from paying for the costs of new energy efficiency programs. Dominion Power customers may qualify for their opt-out program by having average demands between 500kW;and 10MW; Customers over 10 MW do not participate in the state's energy efficiency programming by law.  Once customers opt-out, they cannot take advantage of existing programming nor be charged for it.  Customers must show that they have already made energy efficiency investments or plan to in the future.  Customers must submit measurement and verification reports yearly in support of their opting out of programs funded by a cost-recovery mechanism (CRM). 

The most recent budgets for energy efficiency programs and electricity and natural gas savings can be found in the State Spending and Savings Tables on the left.

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November 8, 2013


Energy Efficiency Resource Standards

In March 2007, the Virginia legislature passed a bill amending Virginia’s earlier electric industry restructuring law. The governor approved the bill conditionally, requiring the addition of a section on energy conservation, including a goal of 10% electricity savings by 2022 (calculated relative to 2006 sales). The legislature accepted this condition. Under this provision, the State Corporation Commission (SCC) was directed to conduct a proceeding to consider whether the 10% goal could be met cost-effectively, determine the mix of programs that should be implemented and their cost, and develop a plan for development and implementation of these programs, including who should deploy and administer these programs. The SCC completed a report verifying the energy efficiency goal of 10% by 2022 was achievable. However, no regulatory requirements have been put in place for energy efficiency programs, and so energy savings goals are considered voluntary.


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August 9, 2013


Alternative Business Models

Virginia allows natural gas utilities, but not electric utilities, to decouple their profits from their sales. In December 2008, Virginia Gas received approval to implement a three-year conservation and ratemaking efficiency plan. The plan has two main components: an Energy Conservation Plan (ECP) to promote conservation and efficiency and a Revenue Normalization Adjustment, Rider D ("RNA Rider" or "Rider"), which is a natural gas decoupling mechanism that provides for a sales adjustment to customers’ monthly bills. The ECP and RNA Rider became effective on January 1, 2009 (Docket No. PUE-2008-00060; December 23, 2008).

Virginia Code Section 56-585.1 provides for the recovery of revenue reductions related to energy efficiency programs. Dominion Virginia Power applied for recovery of lost revenues in a regular rate case as part of its application to continue its DSM riders. The Commission denied Dominion’s lost revenue recovery request because it determined that the company did not meet its “burden to establish that its proposed revenue reductions ‘occur[red] due to measured and verified decreased consumption of electricity caused by energy efficiency programs approved by the Commission…’” (emphasis in order). The Commission held that Dominion failed to provide “sufficient evidence for the Commission to measure and to verify that a specific amount of decreased consumption of electricity was directly caused by the CFL program.”

Revenue recovery is limited by any offsetting sales and subject to industry standard measurement and verification. (Case No. PUE-2010-00084)


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August 9, 2013


Reward Structures for Successful Energy Efficiency Programs

The 2007 legislation amending the state's earlier restructuring law called for the Virginia State Corporation Commission (SCC) to open a proceeding to initiate the development and implementation of efficiency programs with incentives and alternative means of compliance to achieve such goals. The legislation also states that an electric utility may recover projected and actual costs of energy efficiency programs, including a margin recoverable on operating expenses, which is equal to the general rate of return on common equity.  The SCC can only approve such recovery if it finds that the program is in the public interest (See Virginia Code Section 56-585.1). 

Virginia does not have incentives in place for natural gas.


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August 9, 2013


Energy Efficiency as a Resource

Since 2008, Virginia code has required electric utilities to file integrated resource plans (IRPs). The IRPs will forecast electric utilities' expected loads (projected over a 15-year period) and the utilities' plans to meet these obligations by using supply-side and demand-side resources. Utilities began filing IRPs in 2009.

For more information on energy efficiency as a resource, click here.


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August 8, 2013


Evaluation, Measurement & Verification
  • Cost-effectiveness test(s) used: RIM, TRC, UCT, PCT
  • Uses a deemed savings database: no

The evaluation of ratepayer-funded energy efficiency programs in Virginia relies on legislative mandates (VA Code Section 56-585.1 a5). Evaluations are mainly administered by the Virginia State Corporation Commission. Virginia has formal requirements for evaluation articulated in 20 20 VAC 5-304-10 . Evaluations for each of the utilities are conducted. Virginia uses four of the five classic benefit-cost tests identified in the California Standard Practice Manual. These are the Total Resource Cost (TRC), Utility/Programs Administrator (UCT), Participant (PCT), and Ratepayer Impact Measure (RIM). Virginia specifies the RIM to be its primary test for decision making. The benefit-cost tests are required for overall portfolio, total program, customer project, and individual measure level programs screening. The rules for benefit-cost tests are stated in 20 VAC 5-304-10 .


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August 21, 2013