News & Events

Contracting for Renewable Energy in Virginia introduces several new considerations for Commercial and Multi-Family property owners and managers.  For those familiar with energy contracting in Maryland or the District of Columbia, Virginia offers a somewhat different set of contracting parameters and risks.  As with all energy contracting, reading and understanding the provisions of competitive energy supply contracts is essential for gaining an understanding of the risks to which you will be exposed and the price you will ultimately pay for energy supply services.

 

  • Does the offered supply conform to statutory requirements for 100% renewable energy contracts?
  • How will Supplier compliance with 100% Renewable Energy Contract requirements be verified?
  • How will you be treated by Dominion Energy if your contract is terminated and you seek to return to utility service?

 

Basic Energy Contracting Considerations

Competitive electricity supply contract provisions can and do vary among suppliers. Each supplier prefers to use their own contract language. Supplier contracts are generally written to protect suppliers, not buyers.  The specifics of a supplier’s contract can, and often do, significantly impact:

  • The effective Contract Price
  • The Contract Term
  • Allowed Cost Pass-throughs
  • Contract Terms and Conditions
  • Buyers Rights and Responsibilities
  • Your ability to budget energy purchase costs

 

Be Aware of Contract Provisions that:

  • Allow the Supplier to exit the contract at any time for its convenience;
  • Provide for the pass-through of cost increases, but NOT cost savings;
  • Hold the Buyer responsible for the purchase of at least a specified Contract Quantity each month.

Contract Pricing Considerations

 

  • What components of your contract price, if any, are Fixed?
  • Which price components are subject to change during the contract term?
  • Under what conditions can the effective Contract Price change?
  • How are distribution line losses accounted for in the suppliers billing of energy supply services?
  • Do the Contract Terms expose you to additional charges if actual usage deviates from established contract quantities?
  • Do contract quantities for future periods reflect known or anticipated changes in building energy requirements relating to energy efficiency measures or tenancy changes?
  • Are you penalized for not using the full contract quantity?
  • What documentation will be provided for determination of deviations from the Contract Quantity?

 

AOBA Alliance held a briefing for commercial and multi-family Virginia properties on November 20, 2019 regarding recent clarifications in Virginia, which provides AOBA members the opportunity to purchase electric energy from a competitive service provider that is 100% renewable energy, if Dominion Energy does not offer a 100% renewable tariff, which it currently does not.

 

If you believe that there are savings for your properties and you understand the competitive supplier contract and market risks, now is the time to act on a renewable energy contract in Virginia.

 

If you have any questions, please call Frann Francis, Senior Vice President and General Counsel or Kevin Carey, Director of Operations at 202 296-3390.

The Settlement agreement provides for an increase in the Company’s annual distribution base rate revenue of $27.0 million, or approximately 8.0%. This $27 million increase includes approximately $3.0 million of costs that are currently collected under the STRIDE plan that will now be included in base rates. New rates will be effective after the PSC issues a final order in this proceeding, i.e. October/November 2019.

In its initial filing on April 22, 2019, Washington Gas had requested a $35.9 million increase in the Company's annual base rate revenues, which was updated during the proceedings to an increase of $40.1 million. Further, Washington Gas had proposed a new rate adjustment mechanism for its recovery of Safety Response costs (i.e., “Rider SRT”) which would have provided for annual adjustments to base rates. With the Company’s rapidly increasing number of leaks, these annual adjustments were expected to be significant. AOBA, OPC, and the PSC Staff all submitted testimony urging the rejection of the proposed SRT. These efforts were successful, and the Settlement agreement did not include the requested safety response surcharge.

 

On January 18, 2019, Mayor Muriel Bowser signed  the “CleanEnergy DC Omnibus Amendment Act of 2018” into law.  The goal of this legislation is to:

  • · Reduce GHG emissions in the District by 50% by 2032 and 100% by 2050
  • · Achieve 100% renewable electricity in the District by 2032
  • · Develop Building Energy Performance Standard (BEPS) for buildings in the District
  • · Adopt Net Zero Energy (NZE) for new construction, starting in 2026

 

The legislation established a Building Energy Performance Standard Program (BEPS) to set benchmarks for energy performance for buildings in the District.   The standards will be established by the DC Department of Energy and Environment (DOEE) and will initially apply to all private buildings with 50,000 square feet or greater and all District-owned buildings 10,000 square feet or greater.  These initial standards will go into effect on January 1, 2021.

In addition, private buildings 25,000 square feet or greater will have to comply with the BEPS standards by January 1, 2023. Private buildings greater than 10,000 square feet must comply by January 1, 2026.

The legislation also decreed that buildings which fail to meet a median or higher Energy Star rating will need to adopt and implement measures that either: (i) increase their rating to meet or exceed the median rating or (ii) achieve a 20% improvement in the building’s energy efficiency.  DOEE is still developing the standards and AOBA is actively participating in this process as are other AOBA members.

 

What you need to do now

  • Identify all buildings in your portfolio that are 50,000 square feet and above and ensure you are currently in compliance with DC Benchmarking Rules
  • Check the Energy Star rating for buildings, which are currently scheduled to be finalized in September 2019
  • Identify where the buildings in your portfolio rank in relation to the median scorea.
  • DOEE has provided guidance for the median Energy Star score for buildings in DC is 64 for commercial buildings and 66 for multifamily buildings.
  • Develop a plan for your path to compliance with the new standards