R Street Testimony Before Virginia House Labor and Commerce Committee in Support of VA HB 2528, Retail Competition, and Consumer Energy Choice
Testimony from:
Robert Melvin, Northeast Region Director, R Street Institute
Testimony in Support of VA HB 2528, Retail Competition, and Consumer Energy Choice.
January 30, 2025
Virginia House Labor and Commerce Committee
Chairwoman Ward 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 House Bill 2528.
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 remaining third have adopted a hybrid approach, maintaining vertical integration but allowing competition in some areas.[1]
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 provides several avenues for certain customers to access competition.
HB 2528 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.
Currently, Virginia statute allows large commercial and industrial (C&I) customers to access competition. if they use over five megawatts (MW) of electricity. However, they must use five megawatts (MW) of electricity a year in order to utilize this option—a challenging threshold to reach for many commercial customers. Separate facilities must meet the five MW minimum individually, and companies that operate multiple facilities cannot aggregate to meet this threshold. Entities must also go through a petition process to receive regulatory approval from the State Corporation Commission (SCC).
In addition, businesses that choose to exercise this option 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 service for half a decade.
HB 2528 reduces the aggregation threshold for C&I customers from 5 megawatts to 1 megawatt, allows aggregation, eliminates the required SCC petition filing, and shortens the advanced notice requirement from five years to six months. This is closer to the 15-day average of many nearby jurisdictions such as Ohio, Pennsylvania, Delaware, New Jersey, and Washington, D.C.[2] With consumer energy demand anticipated to continue to increase, this bill is needed to ensure that consumers can obtain reliable, economical energy.
Over the next decade, reports indicate that Virginia’s energy demands will double, driven in large part by the need to power to data centers.[3] Additionally, Virginia imported more electricity than other any state, with 36 percent of it imported.[4] These will place more strain on our grid, and with existing utilities unable to meet the needs of existing consumers, Virginia needs to modernize its consumer energy market, by allowing C&I consumers to obtain power from competitive suppliers.
Virginia is not alone in this pursuit to expand energy options for consumers. States are realizing that electric supply competition and consumer choice lower power costs and improve environmental performance. It also tends to boost grid reliability and reduce cronyism, according to recent R Street Institute research.[5]
The legislation before you today would help ensure consumers can shop around for energy from competitive suppliers. It’s done by reducing the advance 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 C&I 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 2528.
Thank you,
Robert Melvin
Northeast Region State Government Affairs Director
R Street Institute
[1] Devin Hartman, and Michael Giberson, “Electric Paradigms: Competitive Structures Benefit Consumers,” R Street Institute, September 14, 2023: https://www.rstreet.org/research/electric-paradigms-competitive-structures-benefit-consumers/
[2] Devin Hartman, and Michael Giberson, “Expanding Energy Choice in Virginia,” R Street Institute, January 19, 2024: https://www.rstreet.org/commentary/expanding-energy-choice-in-virginia/
[3] Kate Seltzer, “Data Centers Could Double Virginia’s Energy Use in a Decade. Bills to Regulate Them are Getting Mixed Support,” The Virginian-Pilot, January 26, 2025: https://dailyprogress.com/news/state-regional/government-politics/data-center-joint-legislative-audit-and-review-commission-virginia/article_c0ed0599-4131-5498-9367-89a857478e93.html#:~:text=Virginia’s energy consumption is expected,that consumption are hitting roadblocks.
[4] U.S. Energy Information Administration, “Virginia was the top net electricity reipient of any state in 2023,” December 20, 2024: https://www.eia.gov/todayinenergy/detail.php?id=64104#:~:text=In 2023, utilities in Virginia,the state’s total electricity supply.
[5] Devin Hartman, and Michael Giberson, “Electric Paradigms: Competitive Structures Benefit Consumers,” R Street Institute, September 14, 2023: https://www.rstreet.org/research/electric-paradigms-competitive-structures-benefit-consumers/