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United States

Case study - Dominion Virginia Power prepares to launch green tariff

Customer demand prompted Dominion Virginia Power (DVP) to set up a trial green energy tariff for large energy customers. Just one of several utilities working on these new tariffs, DVP proposed its voluntary renewables tariff to regulators last December, and a final decision by Virginia State Corporation Commission is expected in September.

Green growth… Under the new tariff, green electricity will come from projects with PPAs such as Casselman in Pennsylvania (pic:Iberdrola Renewables)
Green growth… Under the new tariff, green electricity will come from projects with PPAs such as Casselman in Pennsylvania (pic:Iberdrola Renewables)

If approved, DVP expects to launch the pilot tariff this year, says customer solutions manager Dianne Corsello.

The impetus for Schedule RG (renewable generation), came from customers. "They wanted more renewable energy, but they wanted to stay (as DVP customers)," says Corsello. Those expressing interest include manufacturers and a data centre, for whom the advantage over buying wind power on the spot market will be the ability to lock in long-term pricing, according to experts.

Optimism

Commissioners raised no major objections at the hearing in May, and Corsello is optimistic that the pilot will be approved. In the short term, smaller customers may have reduced access to renewable energy but, she says: "We hope this programme will help renewable energy develop in Virginia." DVP has already met the Mid-Atlantic state's modest renewable portfolio standard of 4% renewables by 2013.

Under Schedule RG, customers would specify a type of green electricity and then negotiate a contract with DVP, which would sign a power purchase agreement (PPA) with the operator of the renewables project. The customer's purchase would be "self-funding"; any costs associated with delivering the renewable energy would be passed on to them, says Jim Norvelle, a media relations director for generation with Dominion, DVP's parent. That includes a monthly administrative fee of $500 per participating electricity buyer.

A renewables customer might pay 7-10% more under the special tariff, suggests Corsello, although she says the price will depend upon market conditions. Could a wind buyer lock in a price lower than DVP's usual PPA rates? Norvelle will only say that a contract must be negotiated and the agreed price is part of that. According to Dominion's website, "renewables are still more expensive to generate than traditional fuels".

Customers will have to buy 1-24 terawatt hours of electricity yearly. The pilot programme cap would be 240TWh - the equivalent of 94MW of installed wind or 100 customers, whichever is reached first. Corsello believes there are more likely to be seven to ten larger customers, with ten years being the target contract length.

Customers must enrol within three years of the pilot's launch, while the electricity must be generated by one of the numerous wind or other renewables suppliers with a PPA and in the territory of regional transmission organisation PJM Interconnection.

Progress elsewhere

Several other utilities have questioned DVP about the pilot, says Norvelle. Of Duke's much-vaunted proposal, in neighbouring North Carolina, he says: "I think they got the idea from us." A Duke spokeswoman says it will file its proposal with state regulators this month. In the meantime, the utility is saying little publicly.

In mid-western Michigan, two major utilities are researching special green tariffs. Meanwhile, in Nebraska, the Nebraska Public Power District (NPPD) utility is negotiating with a major global company, which would buy wind power from NextEra's proposed 75MW Steele Flats project, via NPPD, says utility spokesman Mark Becker. While a PPA has been inked between NPPD and NextEra, no contract has yet been signed by the potential customer, despite six months of negotiations.

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