Senate subcommittee advances geothermal carve-out, interconnection cost-sharing and APCO securitization; other energy and insurance bills move forward

The Senate subcommittee on energy advanced several bills during a long Feb. 3 hearing, adopting substitutes and voting to report measures on geothermal renewable energy credits, interconnection cost sharing for small solar projects, a securitization proposal for Appalachian Power Company (APCO), and other energy and insurance items.

A substitute expanding how geothermal renewable energy certificates are treated in the state Renewable Portfolio Standard (RPS) won committee approval and was carried forward. Senator Servile, the bill’s patron, told the panel the substitute creates a small, phased 1% carve-out for geothermal in the RPS beginning in 2028 and gives the State Corporation Commission (SCC) authority to develop a conversion formula for geothermal energy savings. “It creates a small 1% carve out for geothermal and the RPS as of 2028,” Servile said. The substitute also removes a requirement that utilities pay deficiency payments if geothermal RECs (REXs) do not exist; instead, utilities are excused from deficiency payments when no geothermal REXs are available. Greg Habib of Gentilock, representing the Geothermal Exchange Organization, said the substitute addresses a practical problem: because geothermal RECs are not currently tracked in the same way as other RECs, the substitute directs utilities to run quarterly RFPs and accept geothermal bids where available, and protects ratepayers by removing deficiency payments if no bids are available.

The committee also advanced a bill from Senator Evan to spread certain substation and interconnection upgrade costs among qualifying small solar projects rather than charging the full cost to an individual project. Evan described instances in Alexandria where schools faced unexpected interconnection costs — $1,370,000 for a fiber connection at one high-school project and $104,500 and extended delay at an elementary school — that threatened project timelines and budgets. The substitute would require the SCC to establish separate cost-sharing programs for jurisdictional and non-jurisdictional public customers and to spread costs among participating projects (50 kW–2 MW) on a per-kilowatt-hour basis. Mike Zazinski of the SCC said staff has issued a rulemaking report (the “69” docket) that addressed engineering and interconnection technical rules but did not resolve allocation of upgrade costs; the bill is intended to address that remaining gap. Supporters including Alexandria City Public Schools and conservation groups urged passage; utilities and the SCC said they want to continue negotiating technical details.

Senator Peake’s securitization bill for Appalachian Power (APCO) — aimed at refinancing assets to reduce rates in APCO’s territory — was reported out of committee. Peake said the introduced securitization would allow APCO to refinance roughly $60 million per year of assets and storm costs (including Helene and recent ice storm expenses) and that customers would see an immediate reduction in rates while the financings are amortized over 15–20 years. Ron Jefferson of Appalachian Power said the company had no formal position on the introduced securitization but looks forward to working with the patron. Peake repeatedly described the measure as a start to reduce APCO customer bills and said he will continue negotiations with House sponsors and other senators on a broader package.

Other measures taken by the subcommittee included: a bill to allow K–12 school solar projects to qualify as a fallback compliance source when low-income small-project RECs are not available; a bill to permit a limited birthday open-enrollment window for Medigap (Medicare supplement) policies with a substitute that restricts changes to lateral moves; and a behavioral-health reimbursement bill that the committee sent proactively to the State Corporation Commission (HURC/HERC) for study (the committee voted to pass by indefinitely with a request that HERC examine the issue). Several bills prompted extended debate about cost allocation, ratepayer protection, and long-term effects on utility planning.

Votes at a glance

- Substitute adding a phased 1% geothermal carve-out to the RPS (patron: Sen. Servile): substitute adopted and bill reported; committee discussion emphasized quarterly RFPs, SCC rulemaking discretion for conversion formulas, and an exception to deficiency payments when geothermal REXs are unavailable. (See provenance below.)

- Interconnection cost-sharing substitute (patron: Sen. Evan, bill referenced as the substitute for the interconnection fix): substitute adopted and bill reported; directs SCC to adopt cost-sharing for qualifying projects 50 kW–2 MW and to treat jurisdictional and non-jurisdictional public customers separately. Committee record shows support from Alexandria City Public Schools and conservation groups; SCC staff said its pending rulemaking does not fully resolve these cost-allocation questions. (See provenance below.)

- APCO securitization bill, original securitization-only version (patron: Sen. Peake): motion to report carried; committee discussion described refinancing about $60 million per year, securitization over 15–20 years and immediate customer bill reductions when proceeds are applied. APCO staff said the company has no formal position on the introduced bill but will work with the patron. (See provenance below.)

- Virginia Clean Economy Act (VCEA) repeal/modify substitute (patron: Sen. Peake): the committee considered and voted on a substitute that narrowed the scope to focus on the VCEA’s long-term mandates; the substitute was advanced to the next procedural step (committee recorded votes and a motion to report to PBI). The substitute removes some earlier provisions (coal ash cleanup language) and focuses on removing or modifying VCEA timelines and carbon mandates; supporters said it would lower compliance costs, opponents warned it would shift costs to ratepayers and make new generation harder to build. (See provenance below.)

- K–12 school RECs fallback bill (patron: Sen. Dean): bill reported 15–0; the substitute clarifies that if low-income qualifying small projects are not available, utilities may count school projects to meet part of the small-project carve-out. Dominion Energy told the committee the bill does not change the overall RPS requirement but provides an additional compliance option. (See provenance below.)

- Medigap (birthday-rule) substitute (patron: Sen. Deeds): after an initial tie-like result and a motion to reconsider, the committee ultimately reported the substitute. The substitute increases the open-enrollment window to 60 days and limits changes to lateral moves to avoid medical underwriting when a person returns to coverage of similar scope. Supporters included consumer and senior advocates; industry witnesses warned of potential pool disruption and higher premiums. (See provenance below.)

- Behavioral-health reimbursement parity bill (patron: Sen. Deeds): the committee voted to pass by indefinitely with a letter to HERC for further study (committee voted to send the substitute for study to the Health Utilities and Regulatory Commission). Supporters argued lower reimbursement disincentivizes providers and reduces access; insurers and medical societies said the proposal is broad and would require technical work to implement. (See provenance below.)

Why this matters

The package of bills touches questions at the center of Virginia energy policy: how to value and integrate distributed technologies (geothermal, rooftop solar), who should pay for grid upgrades, whether and how to reduce rate impacts in territories with high bills (APCO securitization), and the extent to which the state enforces long-term clean-energy mandates. Several items also intersect with public services (school budgets, timelines) and consumer protections (Medigap, behavioral health reimbursement). Committee actions keep these bills alive for further floor or cross-chamber consideration and flag issues the SCC and utilities must work through in rulemakings and technical proceedings.

What’s next

Substitutes and bills reported from this committee will move to additional floor or caucus steps and, where noted, to administrative agencies (SCC/HERC) for rulemaking or study. The committee record shows multiple requests to continue negotiating technical details with the SCC and utilities; lawmakers repeatedly said they expect further amendments as bills cross to the House or as agencies complete pending dockets.

Ending note

Committee debate demonstrated continuing tension between rapid deployment of distributed clean energy, protection of ratepayers from near-term cost shocks, and utility engineering concerns about safe, timely interconnection. Several stakeholders told the panel they want to continue negotiating language outside the committee to resolve open technical and cost-allocation questions.