5 Virginia Electricity Choice Myths – And the Truth Behind Them

The road to electricity restructuring in Virginia has been long and winding. Active opposition by the two major utilities in the state made it almost impossible for customers to choose their power provider for nearly two decades. The Virginia market is now partially open. However, consumers face a challenge as they try to make sense of recent changes, from the utilities’ actions at the State Corporation Commission and appeals to the State Supreme Court, to legislative efforts to improve market dynamics.

Electricity restructuring empowers businesses to control their power-buying strategy by selecting their supplier, but there is still quite a bit of misinformation about the topic. To set the record straight, we’re fact-checking five of the most popular myths about the Virginia electric market.

Since 1999, Virginia’s General Assembly has gone back and forth on opening the state’s electricity market to competition. Despite the legislature’s best intentions to fully restructure by 2004, the market was mostly re-structured through utility-inspired legislation in 2009, and it wasn’t until 2019 that retail suppliers like Direct Energy Business began enrolling customers.

Because of all of these changes, many Virginia facilities managers may not realize that the option to choose their supplier is now possible. However, the current statute does have some limitations that you should be aware of.

1. Large consumers with a peak load greater than five megawatts (equivalent to an annual load of roughly 25,000 megawatts with a 60 percent load factor) can purchase system power (nonrenewable) or renewable electricity from licensed independent suppliers, called Competitive Service Providers in Virginia. The catch? Consumers that choose system power may be required to give their utility supplier a five-year advanced notice, should they desire to return to default utility supply in the future. These customers do have options to return much sooner to utility tariff or market-based service.
   
   
2. Customers with a smaller peak load (under five megawatts) can enroll in an aggregated purchasing plan for buying system power from suppliers. However, aggregation of smaller accounts to meet or exceed the five-megawatt threshold requires approval from the State Corporation Commission. The application requires a list of accounts and proof that the customer’s load both meets the threshold and is less than one percent of the utility’s peak demand. The State Corporate Commission then determines whether switching may harm remaining customers. It takes three to six months and costs up to $20,000 in legal fees to enroll in an aggregated plan… and even then, customers are subject to the same five-year advance notice conditions. Aggregation efforts are effectively on-hold until the legislature makes it more advantageous to pursue. 

Virginia customers were first allowed to purchase 100 percent renewable electricity from an independent supplier in 2007. However, the law included a provision that required suppliers to stop selling renewables if the utility secured approval for their own 100 percent renewable product. This utility-friendly loophole created uncertainty in the market, as suppliers were reticent to offer renewable options when access to new customers could be so quickly shut down.

Neither APCo or Dominion submitted applications for their own 100 percent renewable offering until competitive supplier, Direct Energy Business, expressed interest in entering Virginia’s renewables market. APCo recently received approval of its 100 percent renewable product for consumers with peak loads under five megawatts, leaving the door open for consumers over that threshold to purchase system or renewable power from suppliers. Dominion also recently filed for their own 100 percent renewable option for consumers under five megawatts, but the approval process is expected to take approximately a year.  

Customers who decide to secure a 100 percent renewable option from a retail supplier can continue to receive it in the future, even after the utility receives State Corporate Commission approval for its own renewable tariff.

You may be thinking that a five-year advance notice seems a bit high – and you’d be right. It’s currently the longest advance notice of any energy market in the United States. In comparison, Virginia’s neighbors in Pennsylvania, Delaware and Maryland only require a three-day notice. Ohio requires 30 days, and the District of Columbia and New Jersey require 60 days. It’s possibly the largest perceived barrier to consumer participation in Virginia’s open electricity market. 

Fortunately, despite opposition from Dominion and APCo, and thanks to advocacy efforts by Direct Energy, this hurdle has been removed. Consumers buying 100 percent renewable power are not subject to the five-year notice, allowing Virginia facility managers to take full advantage of the state’s renewable energy efforts.

Buying electricity from a trustworthy competitive supplier is just as reliable as buying it from your local utility. Competitive electricity suppliers and your utility are buying from the same marketplace, but retail suppliers often have the benefit of being more selective about when and where to buy electricity, which facilitates lower prices and greener options for their customers.

Changing your electricity supplier also doesn’t change the way you receive your power supply. You will retain the existing level of service reliability that you have today. Your utility, either Dominion or APCo, is still responsible for the electricity system infrastructure and delivery of power to your business. There is no preferential service reliability or restoration of outages available to utility customers versus those who purchase from a competitive supplier.

Some Virginia customers had to learn the hard way that a discount is not always a discount. For example, you may have heard from your Dominion key account representative that Dominion is offering some customers with peak loads over 500 kilowatts a “two percent discount” by signing a three-year agreement to not buy from a competitive supplier. However, after locking in with Dominion, customers learned that the discount applied to only four out of approximately 22 line items on their bill. Consequently, the discount was only a fraction of the advertised two percent, resulting in a price greater than those of competing suppliers. To add insult to injury, Dominion is subsidizing the discounts by increasing the rates paid by non-participating customers.

Such advertised discounts add to a general mistrust of competitive electricity suppliers in Virginia. However, it’s worth noting that competitive suppliers are held to regulatory standards that are equal to or greater than utilities, and have an incentive to provide the best service to secure retail customers. As the market evolves, many customers in Virginia are seeing significant savings (of 25 percent or greater) after switching to Direct Energy Business.

Shopping for power in Virginia is the best way to make sure that your business has a strategy that won’t break your budget.