Report: VA's Roadmap to Lower Bills & Less Climate Change

Just in time for the new decade is good news for both Virginia’s pocketbooks and its environment: an energy efficiency policy Richmond lawmakers can immediately adopt as part of the Clean Economy Act, to lower both electric bills and the carbon pollution driving climate change.

We sorely need both.

Our state economy labors under electric bills that are just one slot away from being among the Top-5 highest in the continental U.S. (watch out, Tennessee, we’re unfortunately just 76 cents a month behind you). And if Dominion Energy follows through on the $29 per month bill increase by 2023, we’ll likely be uncontested to take the uncoveted Number One slot.

In addition to that bloat, our environment is equally burdened by Dominion’s overinvestment in fracked gas plants: despite the clear and present danger of the climate change that already drives Atlantic waters above our coastline, weirds our weather, and harms Virginians’ health in a variety of ways, including, as just one example, increased risk of Lyme disease from expanded deer-tick habitat. Despite the clear need to reduce our greenhouse gas emissions to alleviate these already-occurring and accelerating harms, Virginia’s carbon pollution is going in the same direction as our electric bills: up.

So, then, what’s this good new year's news?

Virginia can reverse both trends at once: extensive analysis from a just-released report from Optimal Energy shows that adopting just one, straightforward, and widely-used policy—an “Energy Efficiency Resource Standard”—will significantly lower both Virginia’s swelling electric bills and state air pollution, by the end of the about-to-begin decade.

The good news of this long-term strategy is a relief, but it’s hardly surprising: Texas deployed this same tool over a generation ago, and now enjoys—wait for it—both lower bills and lower rates than here in expensive Virginia. Indeed, most states in the nation already have their own Energy Efficiency Resource Standard (or “EERS” for short). In doing so, those states enjoy the same benefits as Texas, leaving Virginia behind to languish under high electric bills that steadily increase along with our climate-changing carbon pollution.

Optimal Energy’s newly-released analysis arms Virginia policymakers with a ready policy solution to tackle both problems, at once, with the Clean Economy Act.

An EERS Does Exactly What, Now?

Before we review the highlights of Optimal’s analysis, a brief explainer on how these widely-used Energy Efficiency Resource Standards work.

It’s simple: EERS’s power the economy by prioritizing the deployment of efficiency technology to meet the state’s energy needs, and hedge against the need for far costlier generation technology (i.e. power plants and the fossil fuels needed to run them). So, as part of the requirement that regulated electric monopolies serve its captive customers’ best interests, in exchange for a lack of any competition, an EERS simply requires that monopolies provide their captive customers with a minimum amount of energy efficiency technology each year. 

And why should electric monopolies provide efficiency technologies? Because they’re in the best position to do so! An electric monopoly is literally the only entity that provides electric service in their exclusive territory, so they are also in the very best position to widely deploy energy efficiency technology to all energy customers. In doing so, Dominion and APCo help decrease energy waste, and thereby deliver their ratepayers the lynchpin of excellent customer service: the same product at a lower cost.

These utility-delivered efficiency programs do so by ensuring the latest, most energy-sipping technologies replace obsolete, energy-guzzling technology all across the Commonwealth. Think, for example, of the leap from incandescent lightbulbs to CFLs a decade ago, to LED technology today. Because electric monopolies are already in our homes and businesses, that ongoing supplier-buyer relationship makes Dominion and APCo a prime conduit to ensure lighting upgrades and other efficiency technologies are readily available to all electricity consumers.

These efficiency programs range from the basic—a rebate coupon for LED lightbulbs tucked into your monthly electric bill—to the highly-tailored: a custom factory upgrade that slashes the energy-intensity of a manufacturing process. And there are many, many bill-lowering technology updates in-between: window, door, and attic insulation; HVAC heating and cooling tune-ups; LED upgrades for the streetlights and traffic signals that burn statewide most of the year; updated appliance supply-chains; new construction engineering updates; whole-building retrofits . . . and the list goes on. 

Add up all those tech updates across our state economy—in homes, apartments, office buildings, schools, 7-11’s, churches, big-box stores, warehouses, strip malls, restaurants, mom-and-pop shops, and beyond—and you get a smoothly humming, more resilient Virginia economy, with dollars freed up from monthly electric bills to be more-beneficially spent in our local economies.

For Virginians, that long-term strategy of investing in efficiency technology, rather than further investment in costly, carbon-belching steel in the ground, will mean:

Lower bills, due to less energy waste and fuel consumption (fuel surcharges account for about $25 every month for the average Dominion customer);

Lower rates, due to less power plants costs (Dominion customers pay over $60 per month for the steady drumbeat of new power plants Dominion continues to build, in spite of the current glut of power plants);

Lower pollution, since every time we flip lights on or crank the heat or AC, more upstream exhaust—including carbon pollution—comes out of a power plant; efficiency technologies directly lowers that upstream pollution, 24 hours a day, 365 days a year.

With those benefits, it’s no wonder most states in the country, beginning with Texas over a generation ago, have an EERS. It’s also no wonder Optimal’s newly-released analysis shows big benefits for Virginians.

The Big Economic and Climate Benefits the New Report Details

First, an EERS in Virginia would significantly lower electric bills. Specifically, an EERS could deliver bill reductions of 20% by the end of the decade. For a typical Dominion customer today consuming 1,100 kwh a month, that could equate to saving nearly $30 dollars every month.

As is true for any investment, Optimal’s analysis shows a slight increase in rates in order to pay for the efficiency investments across the utilities’ territory. That’s expected: as our high electric bills attest, Virginia customers pay for all investments in our power system. Efficiency programs, however, are the one investment that lowers total bills beyond any slight increase in rates.

The significant bill reductions outlined in the Optimal report are urgently needed: even before the nearly $30 a month Dominion plans to add to customer bills in the next few years, Virginia’s bloated bills already shoulder low-income customers with an inequitable energy burden. With an equitable targeting of energy efficiency programs for low-income citizens, an EERS would provide much-needed relief to those Virginians that need it most.

In addition to the economic and equity benefits of a Virginia EERS, Optimal’s analysis also projects significant environmental and climate benefits.

An EERS would deliver a full 35% of Virginia’s required carbon pollution reductions by 2030. That significant progress—over a third of Virginia’s carbon target—attests to efficiency technology’s well-documented effectiveness at directly lowering upstream emissions at low cost.

While bill-lowering climate progress of that magnitude is a big deal for Virginia’s economy and environment, it’s also not a surprise. The 1 in 5 states already committed to making carbon reductions prioritize investment in efficiency technology, and each one also already has an EERS. As a result, the electric bills of every one of those carbon-reducing states are lower than Virginia’s. Additionally, their highly-efficient economies grew faster than the rest of the nation, even as they’ve slashed their carbon emissions.

The Optimal report makes it clear that these are the same economy-boosting and air-cleaning benefits a newly-efficient Commonwealth can look forward to, if it joins most of the nation by adopting a commonsense, pro-growth EERS.

Virginia Has Unique Efficiency Expansion Opportunities

Optimal’s report is extensive in its analysis, and one finding is especially worth highlighting here.

There are many reasons for Virginia’s excessively-high electric costs, and not just the excessive and uneconomic power plant investments and bill overcollections by Virginia’s largest electric monopoly.

Another cause is Virginia’s high rate of electric resistance home heating. “Resistance heating” is akin to turning on the oven and opening its door to heat a kitchen, and as such is the most obsolete, energy-guzzling, and carbon-intensive ways to heat a home.

Optimal reports that 33% of Virginia homes utilize resistance heat to warm homes. That built-in inefficiency represents a monumental opportunity to boost our state’s efficiency. Obsolete resistance technology across the state could eventually be replaced with today’s higher-efficiency heat pump technology. Optimal estimates that if just half the Virginia homes currently wasting energy and money using resistance heat eventually switched to heat pumps, that measure alone would reduce Virginia’s entire statewide household energy consumption a whopping 4%.

That is just one of many EERS opportunities Optimal’s extensive analysis details, and which Virginia policymakers must consider for the best possible EERS policy for Virginia’s economy.

A New Decade, and a New Look for Virginia’s Economy and Environment

As Virginia enters the Twenties, policymakers can begin the decade with confidence, by adopting a tried-and-tested Energy Efficiency Resource Standard for Virginia, as a central component of the landmark Clean Economy Act. In doing so, Virginia will not only join most American states in spurring a cleanly humming economy.

Virginia will also set its own course, to greater economic prosperity and cleaner air for all of us to breathe.

That alone is enough to make for a prosperous new decade here in the Commonwealth.

About the Authors

Walton Shepherd

Virginia Policy Director, Climate & Clean Energy Program

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