Author: Iulia Gheorghiu            Published: 01/08/2020          Utility Dive

Dive Brief:

  • Virginia Delegates Mark Keam, D, and Lee Ware, R, announced a bill on Tuesday to establish electric retail competition in the state, rehashing prior attempts to end Dominion Energy’s monopoly on distribution.
  • The bill closely mirrors one introduced by Ware in December, according to the Virginia Energy Reform Coalition. It would institute a system for customer choice by mandating the decoupling of power generation activities from distribution and transmission.
  • Dominion, the largest investor-owned utility in the state, did not have access to a bill draft but opposes efforts to deregulate retail markets, citing costs. “When you look at what customers in deregulated states are paying, they are paying rates that are more than 40% higher on average … [while Dominion rates in Virginia] are low or below the national average,” spokesperson Rayhan Daudani​ told Utility Dive.

Dive Insight:

Various state efforts to decouple retail energy services are expected to continue this year, Frank Caliva, spokesperson with American Coalition of Competitive Energy Suppliers (ACCES), told Utility Dive.

Several state legislatures have considered bills in recent years to create customer choice, including Nebraska and Kansas. Colorado, which is motivated to decouple transmission and distribution in order to allow consumers to prioritize clean energy services, is expected to introduce another bill this year, Caliva said.

In 2020, ACCES expects Florida to continue decoupling efforts through a ballot initiative, similar to the one Nevada attempted in the 2018 election.

“It really depends on the politics and the dynamics of the state,” Caliva said. For instance, in Arizona, “regulators have the ability to make policy decisions more broadly than in other states.”

Arizona Corporation Commission Chair Bob Burns last August directed regulatory staff to draft a proposed rule for retail choice access in the state.

“This can be a challenge to [the utilities’] business model,” Caliva said, but other opportunities exist. “There is a compelling case to be made here for cooperation, but… oftentimes, there’s a political challenge in the short term that prevents that.”

Utilities, including Dominion, point to predatory behavior from energy retailers in Maryland and in Massachusetts.

“We’ve seen a number of states where [retail choice] has been tried,” Daudani said. “The states that I have seen … to the northeast especially, have not been successful in trying to use deregulation as a way that’s going to give customers either lower prices or better consumer protections.”

“Bad actors who engage in these kinds of [predatory] practices need to be identified and appropriate action needs to be taken,” Caliva said. “There’s a way to have a functioning competitive market while keeping consumers protected.”

One approach states have taken to counteract such practices is to try to provide more visibility into price comparisons through marketplaces.

“Pennsylvania and Texas, they’ve built, at a considerable expense,” online marketplaces for consumers to “shop for their energy products,” Caliva said. Such websites have “increased shopping numbers” and instilled consumers with more confidence in choosing their energy service providers.

That can still be exploited, Glen Andersen, energy program director for the National Conference of State Legislatures, told Utility Dive. In Texas, where an online marketplace of retail choice providers exists, website operators have had to change requirements as some participants made their rates appear cheaper, he said.

“Basically, there’s always going to be that incentive for those folks offering [to serve energy loads] to try to get a leg up on the competition, and that might include approaches that look good at first but may, over the long term, not be,” Andersen said.

However, while challenges exist with retail choice for residents, less debate occurs about benefits to the commercial and industrial (C&I) sector.

C&I “participants have a lot of knowledge and can really focus on energy procurement, [making] sure that they utilize the competition that is there in retail choice markets,” Andersen said.

Various corporations using large amounts of energy, from the tech sector to retail, have sought to exit Dominion’s service. Dominion has reached a number of green energy deals with companies and has pledged to continue helping its customers meet their clean energy goals in an effort to keep large energy users in its service.

The Virginia Energy Reform Act, being introduced in the Assembly by Keam and Ware, is the latest in a string of bills targeting retail choice in the state. Another proposal from Democrats in the Assembly, backed by Direct Energy, a competitive service provider, seeks to allow large companies to shop around for energy more easily.

The Assembly is back in session today.