December 2022 – Virginia Policy Update

BPA tracks the latest policy updates and legislative issues in many states across the nation. See the latest policy information for Virginia as of December 2022.

Disclaimer: Inclusion of any bills/regulations in this state policy update does not equate to BPA’s endorsement.

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In November, the Virginia State Corporation Commission (SCC) announced that it is seeking public input to plan for opportunities to use federal funding from the Infrastructure Investment and Jobs Act (IIJA) to invest in Virginia’s energy infrastructure (more details below).

Also in November, SCC Commissioner Judith Jagdmann announced that she will be resigning at the end of the year, after serving since 2006. The announcement results in two open seats at the three-member SCC after the Virginia Legislature failed to appoint a new Commissioner to fill the seat of former Commissioner Navarro who stepped down in January. Lawmakers are anticipated to hold negotiations for appointments to the SCC during the 2023 regular session which begins in January. Governor Youngkin has authority to make a temporary appointment until the General Assembly reconvenes.

Meanwhile, the Virginia PACE Authority announced the launch of the statewide Commercial Property Assessed Clean Energy (C-PACE) Financing Program providing long-term, low-cost loans to property owners who want to upgrade their commercial buildings with energy efficiency, renewable energy, and water management systems. C-PACE eligible properties include office, retail, and industrial buildings among others.

Regulatory Monitor:

• SCC is accepting initial comments from interested stakeholders on the implementation of energy programs funded by IIJA before February 2 with an opportunity to file reply comments by February 23.The federal funding opportunities include over $10 million to Virginia through the Energy Efficiency Revolving Loan Fund Capitalization Grant Program to establish revolving loan fund grant programs for energy audits and upgrades in homes and buildings, the Smart Grid Investments Grant Program providing $3 billion in competitive grants nationwide to support investments in energy infrastructure including integration of residential smart meters and appliances, and $9.5 million in IIJA funding for the State Energy Program to Virginia to implement energy efficiency programs including incentives for residential retrofits and upgrade.
• The Virginia Department of Environmental Quality (DEQ) has closed public comments on a Notice of Intended Regulatory Action (NOIRA) to develop regulations repealing the state’s participation in the Regional Greenhouse Gas Initiative (RGGI). The NOIRA is only the first step in the repeal process – DEQ is anticipated to review responses and publish the full text of proposed regulations by early 2023. To date, Virginia has generated over $225 million in revenue for low-income energy efficiency programs, which provide funding for HVAC and other energy saving measures in low-income homes.
• Virginia Energy released the 2022 Virginia Energy Plan on October 3 which is required every four years to help the state meet clean energy and energy efficiency goals including annual energy savings of at least 2 percent by 2025 for all statewide utilities, as set by the Virginia Clean Economy Act (VCEA) in 2020. In a departure from the policies and energy efficiency targets set by the VCEA of 2020, the 2022 Energy Plan fails to address the key role of energy efficiency in any all-of-the-above strategy to ensure affordable, reliable, clean energy. The release of the plan comes after Virginia Energy held a public webinar in August and accepted written comments and responses to a stakeholder survey on the development of the 2022 Virginia Energy Plan during September.
• In August, the SCC approved additional funding for a set of new energy efficiency and demand-side management programs through electric utility, Dominion Energy, to reduce energy use in homes and buildings and meet energy savings goals under the VCEA (as detailed above). The order released by SCC on August 10 approves a total of $90 million through ratepayer funding, for the implementation of seven new programs and extension of two existing programs to reduce energy use across all building sectors. Dominion Energy anticipates the launch of new programs in early 2023.
• On March 31, the SCC received Dominion Energy’s implementation report on the Grid Transformation Plan, ordered by SCC earlier this year to ensure the statewide utility was on track to meet goals set by the Virginia Clean Economy Act, including 100% carbon free electricity by 2045 and annual energy savings of at least 2% by 2025. The plan announces that Dominion will invest $200 million in ratepayer-approved funds to deploy 1.1 million smart meters across the state by 2024 and $203.9 million to develop a customer information platform (CIP) that will enable customers to retrieve, own, and share their energy usage data with third-party service providers. In addition to tracking energy performance through the CIP, customers will also be eligible to participate in time-of-use rates, enabling coordination with smart devices such as HVAC systems and smart thermostats to shift energy use to off-peak hours. Dominion has set a goal of launching a CIP by spring 2023 and reaching full deployment of smart meters for its residential customers by 2024.

Legislative Monitor:

2022 Regular Session Dates: January 12 until March 12.

Bills that passed in 2022:

• SB 565 Amended Energy Efficiency Definition expands the definition of energy efficiency and conservation programs in Virginia. Specifically, the bill enables the SCC to consider appliance rebates as part of Virginia energy efficiency programs. It also approves utility rate designs that incentivize utilities to meet or exceed conservation and energy efficiency goals established under the Virginia Energy Plan to achieve a net zero carbon economy by 2045. SB 565 passed the General Assembly on March 11 and it was enacted by the Governor on April 27.
• HB 1325 Amend Commercial Property Assessed Clean Energy (C-PACE) modifies Virginia’s C-PACE financing program to give more authority to localities to administer the C-PACE program. Among other technical changes, the legislation enables localities to modify eligible improvements for C-PACE financing, delegate billing to third parties. HB 1325 was approved by the Governor on April 11.

Bills considered but not passed in 2022:

• SB 347 Utility Energy Savings requires Dominion Energy to create energy efficiency savings targets of at least 1% annually for low-income, elderly, disabled, and veteran status customers starting in 2024. The bill requires SCC to establish stakeholder proceedings to set these targets and any programs necessary to maximize energy savings and reduce energy cost burden for targeted customers. This bill passed in both chambers unanimously on March 9. The Governor vetoed SB 347 and the General Assembly failed to override the veto.
• SB 160 Update Energy Efficiency Programs expands energy efficiency programs in Virginia to include measures that electrify space heating, water heating, cooling, drying, cooking, industrial processes, and other building and industrial end uses that would otherwise be served by on-site combustion of fossil fuels provided that the electrification measures reduce total on-site energy consumption. This bill was voted down and left in the Senate Commerce and Labor committee on February 6.
• SB 452 / HB 379 Energy Benchmarking Program allows localities to establish a mandatory commercial energy benchmarking program, measuring, and aggregating energy data for buildings greater than 30,000 feet and with more than three utility energy accounts. This bill was voted down and left in both House and Senate Committees during the first week of February.
• HB 905 Stretch Codes allow localities to adopt energy-efficient “stretch” building codes that are more stringent than is required by the Uniform Statewide Building Code. These codes can be used as an alternative to comply with local building codes. This bill was voted down and left in the Senate Counties, Cities, and Towns Committee on February 10.
• HB 965 Water Heater Tax Deduction provides a 20% rebate (up to $500) to Virginians who purchase an Energy Star hot water heater. This bill was voted down and left in the House Finance Committee on January 31.
• SB 532 / HB 1301 Repeal of the Clean Energy and Community Flood Preparedness Act directs the Director of the Department of Environmental Quality to take all steps necessary to suspend the Commonwealth’s participation in the Regional Greenhouse Gas Initiative, thereby defunding the Housing Innovation Energy Efficiency (HIEE) fund at DHCD. SB 532 failed to report out of the Senate Agriculture, Conservation and Natural Resource (ACNR) Committee on February 8 while HB 1301, the House companion bill passed through the House on February 15 but was killed in the Senate ACNR by a vote of 8-7 on February 22.
• HB 118 Electric utilities; regulation, development of renewable energy facilities repeals provisions set by the VCEA, including to participate in RGGI or adopt carbon reduction regulations beyond 2030. Notably, this bill does not strike or repeal Virginia’s energy efficiency resource standard (which currently sets energy savings targets of .5% for 2022 increasing to 2% in 2025). However, the bill does reduce incentives for utilities to invest in future energy efficiency programs.
• SB 529 / HB 529 Budget Amendment directs the Department of Environmental Quality (DEQ) to begin terminating Virginia’s participation in RGGI and prohibits the expenditure of revenues generated from participation in RGGI without prior approval of the Governor. This amendment was not included in the Virginia legislature’s budget bill, released in May.