R Street Institute Testimony in Support of Virginia HB 2436, HB 2528, and HB 2547, Electric utilities return to service, retail competition, and customer energy choice.
Testimony from:
Robert Melvin, Northeast Region Director, R Street Institute
Testimony in Support of HB 2436, HB 2528, and HB 2547, Electric utilities return to service, retail competition, and customer energy choice.
January 23, 2025
House Labor and Commerce Committee, Subcommittee #3
Chairman Sullivan and members of the committee,
My name is Robert Melvin and I am the Northeast region director for the R Street Institute. R Street is a nonprofit, nonpartisan, public-policy research organization with a mission to engage in policy research and outreach to promote free markets and limited, effective government including in relation to electric utility regulations. This is why we have an interest in HB 2436, HB 2528, and HB 2547.
Currently states have adopted a variety of models for how to structure their electricity markets. Around a third of states allow for retail and wholesale competition in electricity; another third of states have maintained the vertically integrated monopoly utility system and do not participate in an organized wholesale electric market; the final third have adopted a hybrid approach, maintaining vertical integration but allowing competition in some areas.
Virginia is firmly in the hybrid camp. Virginia participates in the PJM Interconnection, an organized competitive wholesale market, and while the vast majority of customers are served by monopoly generation and retail services, Virginia law does provide for several avenues for certain customers to access competition.
The legislation before this committee today would not fundamentally change Virginia’s hybrid electric system. It would, however, make it easier for businesses to access competition in ways that are already provided for under Virginia law.
For example, current Virginia law allows large commercial and industrial customers (over five megawatts) to access competition. Businesses that choose to do so, however, are required to give five-year advance notice to utilities if they enroll with a competitive supplier and later seek to return to utility supply. This needlessly discourages businesses from entering competition, because if it doesn’t work out, they will be trapped outside the utility for half a decade. The five-year requirement is not necessary. Nearby states such as Maryland, Pennsylvania, Ohio, and the District of Columbia require only 15 days’ notice.
Similar issues exist for residential and commercial customers who would like access to renewable electricity. Current law provides a mechanism for customers to access competition to procure 100 percent renewable derived electricity. However, mass market customers, including residential, are only allowed to access competition if their utility does not have a renewable offering already. To foreclose this possibility, Virginia utilities have created their own 100 percent renewable products. While these plans offer inferior terms to what a customer could get on the open market, their existence is sufficient under current law to prevent customers from seeking a better option.
The legislation before you today would help resolve these problems by reducing the advanced notice from five years to six months, allowing for easier aggregation of demand to meet the minimum use requirement for larger commercial and industrial customers, and by allowing all customers to access competition for renewable electricity.
These changes will provide benefits to consumers and help Virginia’s electric markets to function in a more innovative and efficient manner. For these reasons, we urge you to give favorable consideration to HB 2436, HB 2528, and HB 2547.
Thank you,
Robert Melvin
Northeast Region State Government Affairs Director
R Street Institute