RD22 - Appalachian Power’s 2018 Report on Renewable Energy Issues – November 1, 2018

Executive Summary:

The 2018 General Assembly approved important legislation to strengthen the distribution grid operated by investor-owned utilities in the Commonwealth. The Grid Transformation and Security Act (GTSA) signified the importance in grid modernization to support delivering more efficient and reliable energy to the consumer and to incorporate the use of more clean energy. Included in the legislation were a number of enactment clauses requiring reports on various topics. This report addresses the requirements in Enactment Clause 17, which directs Appalachian Power Company and other investor-owned utilities to submit a report by November 1, 2018, addressing issues relating to the advancement of renewable energy in the Commonwealth. The legislation requires:

“That each Phase I Utility and each Phase II Utility, as such terms are defined in subdivision A 1 of § 56-585.1 of the Code of Virginia, shall investigate potential improvements to the net energy metering programs as provided under § 56-594 of the Code of Virginia, potential improvements to the pilot programs for community solar development as provided under § 56-585.1:3 of the Code of Virginia, expansion of options for customers with corporate clean energy procurement targets, and impediments to the siting of new renewable energy projects. Each such utility shall include interested stakeholders in the investigation of such issues and the development of proposed legislation and shall issue a report of its findings to the Governor, the State Corporation Commission, and the Chairmen of the House and Senate Committees on Commerce and Labor by November 1, 2018."

In preparation of this report, Appalachian Power joined Dominion Energy in conducting a comprehensive stakeholder process conducted by the Meridian Institute. The process included two large public forums and 13 smaller meetings with stakeholders that included all classes of energy consumers, renewable energy advocates and members of environmental organizations. Stakeholders were also given the opportunity to provided written comments through Meridian’s on-line survey. Meridian’s final report is included at the end of this document.

Appalachian Power has a remarkably long history in renewable power. The Company, which currently serves more than 1 million customers, began investing in renewable power in 1912 when the Buck and Byllesby hydroelectric facilities began producing electricity on the New River in Southwest Virginia. Since that initial investment, Appalachian Power has grown its hydro generating portfolio to six facilities in Virginia, including the Smith Mountain pump storage project, and three facilities in West Virginia totaling 787.6MWs of capacity. The Company also entered into a power purchase agreement for an additional 80MW of hydro capacity from the Summersville project located in Summersville, WV. See Table 1 on page 3 of the report.

Appalachian Power continued to expand its renewable portfolio in 2008 by entering into a power purchase agreement for 75MWs of wind capacity from the Camp Grove project located in Marshall County, IL. The Company has subsequently entered into six PPAs for wind generation totaling 497MWs of wind capacity. See Table 2 on page 4 of the report.

Currently, Appalachian Power’s total renewable generating capacity is approximately 1,365MWs.

Appalachian Power has made considerable progress in carbon reductions over the past decade and expects to continue its transition to clean energy sources over the coming decades. Within Virginia, Appalachian Power recently retired three coal units, Glen Lyn Units 5 & 6 and Clinch River Unit 3. Additionally, the Company converted the remaining Clinch River Units 1 and 2 to run on natural gas, which results in approximately 40% less CO2 per megawatt hour than prior operation on coal.

Appalachian Power’s other generating and capacity resources located in Virginia are a mix of hydroelectric and pumped storage, which generate electricity with zero carbon emissions. As such, the Company’s Virginia carbon footprint is only a small fraction of what it was just a few years ago. In 2017, Appalachian Power’s Virginia-domiciled CO2 emissions were approximately 3% of 2005 levels. To put the Company’s current emissions in appropriate context, that reduction is equivalent to removing from the road nearly 1.2 million of 7.5 million vehicles registered in the Commonwealth of Virginia.