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Prospects are dimming for an offsite solar innovation promoted as a bright and affordable renewable energy option for Virginia apartment dwellers when legislation was greenlighted two years ago.
Now the fate of the new multifamily shared solar program is in the hands of utility regulators.
Solar advocates have pleaded with the State Corporation Commission to reject “program-killing” double-digit monthly fees that Dominion Energy would be allowed to charge solar subscribers.
Dominion has proposed an $87.68 fee, while commission staffers have suggested one as high as $57.26 a month. Figures are based on enrollees with a 1,000-kilowatt subscription.
Charlie Coggeshall, who directs policy and regulatory affairs for the Coalition for Community Solar Access, said Dominion arrived at its fee by lifting a page from its docket related to a similar, but separate, shared solar program for homeowners.
“The utility basically cut and pasted the charges it had proposed on a parallel docket,” Coggeshall said.
In late March testimony to commissioners, Coggeshall’s coalition asked regulators to also dismiss a $16.78 fee option floated by regulators.
Instead, his coalition of solar developers joined the Mid-Atlantic-based Chesapeake Solar & Storage Association in calling for commissioners to approve an interim administrative charge floated by Virginia environmental advocates.
That charge would amount to 1% of the bill credit value per month until Dominion “demonstrates a reasonable administrative charge.” The law calls for enrollees to be credited for their share of electricity the off-site panels generate.
“It is critical that the Commission send a clear message … that Dominion will not be allowed to use the administrative charge as a vehicle to block customer access to the benefits of solar or prevent investment in Virginia’s clean energy transition by non-utility shared solar developers,” attorneys for the two trade groups testified.
Commissioners could reach a ruling this spring.
Long slog for shared solar
Multifamily shared solar was just one piece of the wide-reaching Solar Freedom laws spearheaded by state Del. Mark Keam, D-Fairfax, in 2020.
The measure was designed to allow people living in apartments, condominiums and duplexes in Dominion territory the ability to buy solar energy via subscriptions to local arrays instead of having to install panels on their own rooftops. In most cases, shared off-site power facilities are built and owned by third-party entities, not utilities.
Ideally, subscribers earn credits in the form of savings on their monthly electric bills while also helping to pay down the developers’ cost of the array.
Such flexibility is attractive to low-income customers who can’t afford the upfront cost of rooftop panels, those with shaded southern exposure, people subject to homeowner association restrictions, and apartment renters and condominium owners without control of their rooftops.
Keam’s multifamily measure is separate from a different shared solar program, Senate Bill 629, designed mostly for homeowners and shepherded through the General Assembly by state Sen. Scott Surovell, a Democrat who also represents a district near Washington, D.C.
Both were signed into law by former Gov. Ralph Northam, a Democrat.
All along, Surovell’s law was set to launch in Dominion territory next year. Any day now, utility regulators will be announcing how much the utility is allowed to charge subscribers for minimum fees and administrative fees in that program.
Solar advocates challenged those charges at recent commission hearings, claiming they could put the kibosh on the whole program if they’re out of reach for market participants.
Surovell’s measure builds in a component that offers cost breaks to low-income subscribers. For instance, those enrollees are exempt from paying minimum and administrative fees.
Initially, that program is capped at 150 megawatts of solar. However, it can be boosted to 200 MW if it reaches an incentive requiring at least 30% of enrollees to meet pre-established low-income standards.
How is the administrative fee defined?
Keam’s original multifamily program could have been up and running in early 2021 if it hadn’t become mired in legislative and regulatory twists and turns.
For instance, regulators began writing rules based on a final version of the law that allows “the investor-owned utilities to recover reasonable costs of administering the program.” How that phrase is being interpreted is at the heart of the dispute. Dominion assumed it had broad leeway to set administrative charges. Solar advocates accuse Dominion of piling on costs in an effort to hamstring a program that should hardly make a dent in the utility’s budget.
Multifamily participants would be on the hook for those administrative fees because the measure doesn’t have a low-income exemption.
Robert J. Trexler, Dominion’s director of regulation, argues that because solar is intermittent, subscribers will continue to rely on the utility’s transmission and distribution systems.
An administrative charge is “a reasonable means to ensure that participating customers pay for the costs of services they will be utilizing,” he said, adding that “it is the only safeguard to minimize cost-shifting to non-participating customers.”
The administrative charge would vary based on subscription level.
However, solar advocates counter that Dominion’s proposed $87.68 fee or the $57.26 option presented by the commission staff make the program inaccessible because those charges are higher than customers’ regular electric bills.
“It is concerning that the utility is trying to use this administrative fee to preemptively charge for cost-shifting for which Dominion presents no evidence,” said Laura Gonzalez, energy policy manager for the Charlottesville-based nonprofit Clean Virginia.
Gonzalez emphasized that all three proposals before the commission should be rejected because regulations defined the fee as the reasonable incremental cost Dominion would incur to administer multifamily shared solar, not costs already incurred that are neither incremental nor related.
Acceptable administrative charges, she said, are new expenditures Dominion would need to make to operate the shared solar or handle billing. Examples include upgrading infrastructure or hiring employees.
She added that Dominion should recognize that enrollees are contributing to the big climate change picture by boosting electric grid resiliency and reducing emissions of heat-trapping gases.
“These programs have lots of benefits,” Gonzalez said. “The commission should rule based on the facts.”
Will Cleveland, a senior attorney with the Southern Environmental Law Center, said Dominion’s “extremely high” monthly charge “would result in an unworkable program.”
He added that the utility is seeking to recover lost revenue from program enrollees under the guise of an administrative fee.
“Dominion undermines both the plain language and spirit of the multifamily statute and rules by recycling its minimum bill proposal from a separate shared solar proceeding and renaming it an ‘administrative charge,’” Cleveland wrote in a March 24 document filed with regulators. “Moreover, Dominion has failed to demonstrate … that any of the costs of its proposed administrative charge are needed, just or reasonable.”
Affordability guardrails would widen appeal
Many of the third-party developers who would build and own the off-site power facilities in Virginia are reluctant to speak on the record about shared solar because they don’t want to rock established relationships with utilities.
Nor, evidently, has there been a hue and cry for multifamily shared solar from trade organizations such as the Virginia Apartment Management Association.
The concept would be more appealing to affordable housing builders if it included carveouts aimed at attracting low- and middle-income residents.
For instance, Sunshine Mathon, executive director of the Charlottesville nonprofit Piedmont Housing Alliance, supports multifamily shared solar in theory but he’s far less intrigued by a program lacking affordability guardrails.
“The bottom line is that we’re going to advocate for something that makes financial sense for our residents,” he said. “They’re already struggling with enough cost challenges around every corner.”
Mathon is no stranger to solar energy. He’s currently overseeing the transformation of a public housing complex built in the late 1970s from an energy sieve into a community of energy-efficient homes. Part of that includes navigating the intricacies of installing rooftop solar panels that won’t empty residents’ wallets.
What should be appealing about solar is allowing customers the peace of mind of locking into fixed, long-term costs.
That predictability is nonexistent in the multifamily solar program wending its way through the regulatory process, he noted.
“I won’t say we would reject it, but I would look at any potential installation with a level of healthy skepticism as to whether it’s a good deal or not,” Mathon said. “I wouldn’t know that until I saw the details.”