Republicans worry that ratepayers will ultimately have to pay for fees put onto utility companies due to provisions in the Virginia Clean Economy Act (VCEA) penalizing them if they fail to meet renewable energy benchmarks. To combat the possibility of price increases, House Republicans proposed legislation that would conditionally remove those penalties if they fall short.
According to the VCEA, utility companies like Dominion Energy have to produce a certain amount of renewable energy each year. If they miss the benchmark, they can purchase a Renewable Energy Certificate (REC) or make a deficiency payment.
Republicans want to make it easier for utility companies in Virginia to avoid those increased costs and prices for customers by tweaking the VCEA.
Glenn Davis, the Director of the Virginia Department of Energy, said that per his conversations with Dominion Energy and their State Corporation Commission filings, he is expecting the public utility to face more than $400 million in forced REC purchases and deficiency payments in 2026.
He provided numbers that he said were compiled and modeled by his office using Dominion’s SCC filings. The models predicted forced REC purchases for Dominion every year for the next 15 years. He said these costs would be passed onto the ratepayers.
“Policies like these make electricity unaffordable for Virginians,” Davis said during an interview.
The numbers are estimates, and Davis said that his office was made aware that Dominion budgeted for deficiency payments and forced REC purchases of more than $400 million in 2026.
No utility companies have had to pay a deficiency payment since the VCEA was enacted in 2020.
Legislation being pushed by Del. Terry Kilgore, R-Scott, would have amended the provision of the VCEA that requires deficiency payments by electric utility companies that are unable to meet the compliance obligation of the renewable portfolio standard (RPS).
While speaking to the press about the bill, Kilgore said it would give the SCC the power to determine if a utility company was unable to reasonably purchase a REC and then grant them a pass on deficiency payments if they were not.
“If these RECs are not available, if you can’t go out here and reasonably purchase these from folks who have these available, then you would get a pass on that, and it’s not passed on to consumers,” he said. “You could see $450 million passed on to the consumer just because of these deficiency payments.”
“If it is reasonably available and you don’t buy it, then you will be penalized,” he stated Thursday night when presenting the bill.
Democrats worry about removing the incentive to encourage utility companies to produce more renewable energy.
“Removing [deficiency payments] from the Clean Economy Act is exactly the wrong thing to do,” said Del. Rip Sullivan, D-Fairfax, the sponsor of the VCEA, in an interview with Radio IQ. “It is at least part of the incentive, a big part of the incentive for utilities to comply with the requirements of the RPS and the Clean Economy Act.”
The House Commerce and Labor subcommittee voted not to advance the bill Thursday night.
Republicans also filed multiple bills to allow for nuclear energy to make up a larger portion of the renewable energy portfolio, which were all voted down by Democrats.
House Minority Leader Todd Gilbert, R-Shenandoah, struggled with understanding why Democrats opposed the bill, pointing out that “ostensibly” the VCEA was developed to reduce carbon emissions, which would happen with more nuclear energy.
Sullivan, the chair of the committee, responded by saying that the VCEA allows nuclear energy already and that making it more prominent in the structure of the law would not increase production.
Prior to the votes Thursday night, Dominion said they were engaging with the legislators as the bills are working through the process.
“The legislation is evolving, and we are one of many stakeholders,” said Aaron Ruby, a spokesperson for Dominion. “We will continue engaging with policymakers and sharing our perspective as the bill works through the legislative process.”