Virtual power plant pilot program; each Phase II Utility shall petition SCC for approval to conduct.
HB2346 directs each Phase II electric utility in Virginia to petition the State Corporation Commission by December 1, 2025 for approval to run a virtual power plant pilot program. The pilots are intended to test ways to optimize electricity demand using distributed energy resources such as battery storage, smart thermostats, managed electric vehicle charging, and other non-emitting technologies, with a focus on peak shaving and other grid services during periods of high demand. The bill sets a framework for utilities to coordinate these resources either directly or through aggregators, and it requires utilities to evaluate federal funding opportunities, especially from the U.S. Department of Energy.
The bill also requires utilities to design customer participation and compensation structures, including incentives for residential battery storage, enhanced incentives for historically economically disadvantaged communities, and pay-for-performance tariffs for grid services. It specifically directs utilities to propose a broader electric school bus program by the end of 2027, while prohibiting utility ownership of the buses themselves and limiting use of the buses' storage batteries to times when schools do not need them for transportation. The pilot phase must end by July 1, 2028, after which the Commission must review the results and begin a proceeding to establish a permanent program with procurement targets and performance metrics.
HB2346 would affect Virginia utility regulation by adding a new pilot-program mandate for Phase II utilities and by expanding the role of distributed energy resources in retail electricity markets. It defines key terms such as aggregator, distributed energy resource, grid event, grid service, and virtual power plant, and it gives aggregators nondiscriminatory access to necessary customer and grid data. The bill also interacts with existing grid transformation and demand-response programs, and it expressly references implementation of Federal Energy Regulatory Commission Order No. 2222 in the PJM market.
The overall sentiment in the recorded votes was generally supportive but not unanimous. The bill passed the House and Senate with meaningful bipartisan support, though several committee and floor votes showed notable opposition, especially in the House. The final stages were more contentious: the House rejected the Governor's recommendation overwhelmingly, and a motion to pass the bill in enrolled form also failed, indicating disagreement over the final form of the legislation or the executive changes rather than over the basic concept of the pilot itself.
The main points of contention appear to be the scope of utility obligations, the role of aggregators and third-party resources, and the structure of the electric school bus and battery-storage provisions. Some lawmakers likely supported the bill as a way to modernize the grid and expand customer participation, while opponents may have been concerned about utility costs, regulatory complexity, data access, and the extent to which the bill requires utilities to create new programs and tariffs. The close Senate vote and the later House resistance suggest that the bill's policy direction was accepted, but its implementation details remained disputed.
The bill amends Virginia utility policy by requiring Phase II utilities to seek SCC approval for virtual power plant pilot programs and by establishing a statutory framework for distributed energy resource aggregation, customer enrollment, and compensation. It creates new obligations for utilities to propose tariffs, incentives, and school bus-related grid programs, and it directs the SCC to evaluate the pilots and potentially establish permanent programs with procurement targets and performance metrics. The measure affects utilities, customers with eligible technologies, aggregators, school systems participating in bus battery programs, and the SCC's oversight of grid modernization and demand-side resources.
The bill appears to have broad but not universal support for the concept of virtual power plants and grid modernization, as reflected in passage through both chambers with bipartisan votes. However, the margins narrowed in the Senate and several later votes were sharply divided, suggesting reservations about the bill's details. The final House votes rejecting the Governor's recommendation and refusing to pass the bill in enrolled form indicate significant disagreement over the final negotiated version or executive amendments.
The most notable disagreements centered on how far utilities should be required to go in building and funding the pilot programs, whether third-party aggregators should have broad access to customer and grid data, and how the electric school bus component should be structured. Supporters likely viewed the bill as a flexible, technology-neutral way to improve grid reliability and customer participation, while critics may have questioned costs, utility control, and the practicality of mandating multiple program elements on a fixed timeline. The close Senate vote and the later House rejection of the Governor's recommendation suggest that the bill's implementation details, rather than its overall goal, were the primary source of contention.