Reynolds Wins Customer Aggregation Petition

SCC headquarters

The State Corporation Commission has issued a decision expanding the right of large customers to bypass the monopoly franchises of Virginia’s electric utilities and purchase electricity from competitive suppliers.

While the General Assembly was embroiled in debate over grid modernization and the rollback of the electric rate freeze, the SCC approved the first ever “customer aggregation” petition. Reynolds Group Holdings Inc. now has permission to aggregate the demand of three of its subsidiaries at six locations in Virginia served by Dominion Electric Virginia for the purpose of purchasing electricity from someone other than Dominion.

Reynolds, based in Auckland, New Zealand, owns several packaging enterprises associated with the old Reynolds Metals, formerly headquartered in Richmond. According to the SCC ruling, the aggregated peak electric demand of Reynolds’ Virginia operations was 10.12 megawatts, representing approximately 0.06% of Dominion’s system peak of 17,000 megawatts. The impact on Dominion, which projects peak demand growth of 1.3% over the next 15 years, was de minimis.

It was not clear from the ruling whom Reynolds intends to buy its electricity from. However, Calpine Energy Solutions and Collegiate Clean Energy filed comments in support of the petition. California-based Calpine supplies natural gas, power and associated energy and risk management services to customers throughout the United States. Wilmington, Del.-based Collegiate supplies 100% clean energy solutions to universities and businesses.

Will Reisinger with the GreeneHurlocker law firm explains the significance of the ruling in a blog post:

[The] law allows large customers with annual demands over 5 MW to purchase generation from competitive suppliers. Importantly, the law also allows a group of customers to “aggregate” their demands in order to reach the 5 MW threshold. The statute treats large customers with multiple meter locations as different customers but allows them to aggregate to meet the 5 MW threshold. Once aggregated, the group will be treated as a “single, individual customer” under the law. Before allowing an aggregation, however, the Commission must find that the requested aggregation would be “consistent with the public interest.”

SCC Case No. PUR-2017-00109 was the first test of this statutory provision – that is, the first time a group of customers sought to combine their demands in order to reach the 5 MW threshold. In this case, Reynolds Group Holdings, Inc. (“Reynolds”), a metals and packaging manufacturer, petitioned the SCC for approval to aggregate six of its retail accounts in Dominion’s service territory.

Dominion and Appalachian Power Company (“APCo”) intervened in the case and opposed the petition. Dominion argued that allowing customers to aggregate their demand “would unreasonably expand the scope of retail access [and would] have the potential effect of eroding a significant portion of the utility’s jurisdictional customer base.” Dominion also suggested that the General Assembly – despite authorizing customer shopping and aggregation – intended to allow retail choice “only in limited circumstances.”

But the SCC, relying on the plain language of Va. Code § 56-577 A 4, rejected Dominion’s and APCo’s arguments and approved the petition. Dominion and APCo have until March 23, 2018, to appeal the decision to the Virginia Supreme Court.

No word yet from Reynolds, Calpine or Collegiate about what exactly they have planned.

Yet Another Path to Rural Broadband: Other Peoples’ Money

The Pamunkey Indian Tribe… soon delivering broadband Internet from a wireless tower near you.

Speaking of bringing broadband Internet to rural Virginia (see previous post)… PamunkeyNet, a business entity of the Pamunkey Indian Tribe, has received approval from the GO Virginia State Board to develop a plan to bring broadband to Gloucester, Mathews, Middlesex and other rural counties along the Chesapeake Bay.

The newly awarded federal designation of the Pumunkeys as an officially recognized Indian tribe is key to the venture. According to a GO-Virginia document, the project would unfold over three years. GO-Virginia, a state-funded economic development initiative, would provide backing for two years. The Pamunkey-owned project would:

  • Create a network of existing and new wireless towers throughout the Middle Peninsula and George Washington region that will have a high-performance backbone between towers and local access radios on each tower to provide affordable business, residential, and institutional broadband Internet service, and will provide Gigbit fiber services on the Pamunkey reservation.
  • Create a fiber-based Technology Corridor on Route 33 between Rappahannock Community College, the planned Telework Center, and the Middle Peninsula Regional Airport.
  • Design for linkage with Hampton Roads, specifically for VIMS and Rappahannock Community College, and anticipate the benefits of linkages to the south with transoceanic destinations from the MAREA landing point, as well as to the north at Ashburn.

Key to making this happen is Pamunkey access to federal funds — “the sole federally designated tribe in Virginia and a conduit to currently untapped federal resources.”

The project also would involve the Middle Peninsula Planning District Commission, the Rappahannock and Germanna community colleges, ten localities, and two electric co-ops.

Bacon’s bottom line: I’ve just finished reading Nassim Nicholas Taleb’s brilliant and confounding new book, “Skin in the Game: Hidden Asymmetries in Daily Life.” Taleb doesn’t have much use for movers, shakers, and pundits (which would include people like me) who don’t have “skin in the game,” that is, people who, if their analysis proves unfounded, walk away unscathed. One commonly encountered group of skinless gamers is people who play with taxpayers’ money.

If you had to make a prediction, which would you pick to have a greater chance of economic success (that is, recovering the funds invested): Gary Wood’s plan (described in the previous post) for the Central Virginia Electric Cooperative to deliver broadband to its 36,000 customers, or the Pamunkey plan to deliver broadband to a geographic area of comparable size?

I would lay my money on Wood. In a word, Wood has put his ass on the line, and he reports directly to a board of directors, whose members represent the interests of the customer-members of the co-op. If the venture fails, co-op members will take a bath, board members will catch endless flack from their friends and neighbors, and Wood’s career likely will be ruined. I would feel even better if he had some of his own money at stake, but there is a clear line of accountability, and the people involved have a lot to gain or lose. Without knowing Wood personally, I feel reasonably assured that he will do everything within his power to make the project a success.

Conversely, it doesn’t appear that anybody has skin in the game in the Pamunkey deal. There is no indication that the Pamunkeys are putting up any of their own money or that they’ll suffer any loss if the project bombs. Basically, a bunch of bureaucrats are playing with other peoples’ money, and if the project fizzles, there is no discernible impact on any of the participating organizations. Furthermore, participation is so broad and so diffused, there won’t be anyone to hold accountable. The Pamunkeys might tap enough state, federal, and local money to get the broadband service built. But would the project be economical, in the sense of earning back its cost of capital? Who cares? It’s other peoples’ money.

Another Path to Rural Broadband: Electric Co-ops

Service territories of Virginia electric utilities. The CVEC territory is shown in bright blue in the center of the state. (Click for larger image.)

The Central Virginia Electric Cooperative has been delivering electricity to the inhabitants of 14 Central Virginia localities for 80 years. Now it’s planning to provide high-bandwidth Internet connections. The company has announced a plan to invest $11o million to connect all 36,000 co-op members.

Co-op members will be able to purchase 100 megabits per second (mbps) access for $49.99 a month or 1 gigabit per second (gbps) for $79.99 a month, reports the Fluvanna Review.

Keeping the pricing reasonable was important to CVEC President Gary Wood. “I didn’t want this to become a premium service or a luxury service,” he says. Continues the Rivanna Review:

Wood said the project is anticipated to lose money for the first seven years and reach the break-even point in about 11. He admits that “give me $100 million and in seven years, I’ll start bringing you your profits,” hasn’t been the easiest argument to sell, but he believes it can be done with a combination of  loans, grants, state and federal funding and tax rebates.

CVEC is also asking for financial support from each of the counties in its service area.

For a for-profit business, eleven years would be a slow payback. But for an electric co-op, owned by its customers, that might seem like a reasonable proposition.

One objection, I would expect, would revolve around opportunity cost. By taking on a financial obligation of this size, the co-op might be limiting its ability to pursue other projects such as, say, grid modernization or solar energy. Another objection would be risk. What if rural residents aren’t willing to pay $50 to $80 per month for broadband access? Could disappointing revenues put the co-op in financial jeopardy?

But let’s face it, no one else is likely to want to deliver broadband to the rural residents of Central Virginia. This seems like a project that is custom-made for CVEC, and it could provide a model for other co-ops, who cover roughly a third of the geographic expanse of the state.

Why Offshore Drilling Is Good for Virginia

By Mark Greene

According to a recent study, safely tapping Virginia’s offshore natural gas and oil reserves could provide nearly $1.8 billion of private investment annually in the Commonwealth. While many are quick to judge this initiative, all of the facts should first be considered.

For example, federal revenue sharing could help transform the state economy by sending billions in royalties, rentals and fees to our state coffers. By putting revenue-sharing programs in place -– like those already working for the states of Alabama, Louisiana, Mississippi and Texas -–Virginia could benefit from offshore energy development to the tune of $235 million per year, according to the study. And that’s in addition to industry spending and high-paying jobs created that would help boost our economy.

“So, what’s trying to stop a reasonable exploration of what job creating resources might be available off our coast?,” asks former delegate Chris Saxman in a Roanoke Times editorial. “Fear. Fear accelerates order to disorder and hinders economic growth that will pay for the promises we have made.” He goes on: “Done properly, offshore exploration can create thousands of jobs that pay an average over $100,000 a year while providing tax revenue to also pay our hard working public employees like teachers, police, fire, and rescue personnel or we can dedicate that revenue to fixing interstates like I-81.”

To elaborate on Saxman’s point about the kinds of economic benefits offshore access could bring – here’s the picture of the Virginia projections if we were to develop oil and natural gas off of our coast, recently released by API:


  • $2.1 billion in federal revenue sharing over the forecast, reaching $236 million per year at the end of the forecast.
  • $19 billion in industry spending over the forecast, reaching $1.8 billion by the end of the forecast.
  • $22.3 billion added to state GDP over the forecast.
  • 24,664 jobs gained by the end of the forecast.

Numbers likes these illustrate big economic opportunity for the whole state if we are included in a new federal offshore leasing plan now under development. Despite any kneejerk reactions that may have taken place initially, economic benefits of this size should compel policymakers to consider the needs of entire states when discussing offshore development.

At a House hearing last fall, former U.S. Sen. Mary Landrieu of Louisiana said natural gas and oil industry employment long has benefited her state. “We have men and women graduating from high school that are going to work in the oilfield and they don’t make minimum wage,” Landrieu said. ”They can make $80, $90, $100,000 a year. And that means a lot to their families, and it sends a lot of kids to college from south Louisiana.”

Offshore energy would be privately financed – reflected in the industry spending numbers above. That’s spending throughout state economies by natural gas and oil companies and their employees. It’s a boost to economic growth for portions of our state, like Southwest Virginia, that haven’t seen much growth for years.

Offshore energy is compatible with other ocean uses, including the military. It is safer than it has ever been and is always improving, thanks to technology, industry standards, safety management systems and employee training. No human enterprise is without risk, but industry’s premium on technology and safety – to protect its workers and the environment – properly manages this risk while producing energy and national security benefits for today and decades into the future.

“Interior’s offshore proposal is a critical first step to advancing a strong energy future for Virginia,” said Miles Morin of the Virginia Petroleum Council. “Not only can offshore energy exploration and development help provide reliable and affordable energy for Virginia’s consumers, but it can also be the cornerstone for economic growth and investments in our state.”

This is American energy that should be safely harnessed to benefit all Virginians – both on the coast and all across the Commonwealth.

Mark Green is editor of Energy Tomorrow, a publication of the American Petroleum Institute.

Heads I Win, Tails You Lose

This will be one of those blog posts where many readers will ignore the substance of my arguments and go straight for the jugular — Dominion Energy Virginia sponsors this blog, I’m a shill for Dominion, and, therefore, anything and everything I say can be discounted without further thought. If you’re one of those people, I know I won’t persuade you. But please, if you object to my conclusion, don’t settle for the cheap ad hominem shot. Explain to me why I’m wrong.

This post was triggered by a Washington Post op-ed by Del. Mark Keam, D-Fairfax, titled, “Why I’m Breaking Up with Dominion.” Keam wrote:

In 2017, President Trump made it clear there would be no Clean Power Plan, which put Dominion in a bind. Dominion couldn’t justify continuing the rate freeze when the reason it cited no longer existed and it held nearly a billion dollars of potential customer refunds.

On the other hand, as Virginia’s most powerful political donor, Dominion couldn’t admit its mistake and simply return to pre-2015 status. So, Dominion launched an all-out lobbying campaign to push for a different result.

First some background: In June 2014, the Obama administration began implementing its Clean Power Plan. The State Corporation Commission (SCC) staff estimated that the plan would cost Dominion between $5.5 billion and $6 billion for Dominion to shut down coal plants and replace them with power from other fuel sources. Environmental groups suggested that the cost would be much less. But nobody knew for sure, and nobody possibly could know until the Commonwealth adopted a definitive methodology for calculating CO2 goals to be attained. When the General Assembly convened in January 2015, uncertainty reigned.

A deal was struck to freeze base electric rates through 2022 (while continuing to allow the SCC to adjust rates for fluctuations in the cost of fuel and pay for major capital projects). The purpose was to guarantee rate stability for electricity customers. Whatever the outcome for Dominion and Appalachian Power, customers wouldn’t be subjected to higher base rates. Dominion and Apco absorbed the risk. They might make higher profits if the costs were lower than feared, but they might make lower profits if worst-case cost scenarios panned out.

In November 2016 something happened that no one anticipated — Donald Trump won the presidential election, and he effectively spiked the Clean Power Plan.

But what if Hillary Clinton had won, as virtually all informed political opinion expected? It’s no stretch to think that the Environmental Protection Agency and the McAuliffe administration would have continued implementing the Clean Power Plan. We cannot know which of the regulatory options the administration would have chosen — setting CO2 emission targets based on mass-based limits (or total tons emitted) or rate-based limits (CO2 emitted per unit of electricity) — but we can safely assume that the new regulatory framework would have been more costly than doing nothing at all.

Continuing our counter-factual scenario, let’s say the Clean Power Plan framework adopted by Virginia would cost the $5.5 billion to $6 billion postulated by the SCC, and that Dominion had to eat a billion dollars or two in write-offs when it shut down its coal-fired power plants. Now let’s say Dominion came to the General Assembly, saying, sniff, sniff, poor us, these regulations are ruinous, could you please bail us out? What answer would Keam and others of like mind have given? They would have said, “Not a snowball’s chance in hell! You took yer chances and you lost. Now beat it!” And rightfully so.

Of course, that’s not the way things turned out. Dominion lucked out. Trump won the election and he canceled the Clean Power Plan. By January of 2018, Dominion was accumulating earnings way above its normally allowed rate of return (although a major weather event or a regulatory order to pay of billions of dollars to clean up coal ash ponds could have negated those profits).

Inevitably, a hew and cry was raised that Dominion was making out like a bandit by pocketing huge excess profits. Dominion was on track to make a lot of money, all right, but not like a bandit. More like a poker player. Dominion didn’t steal anything — but it did win the bet.

A lot of politicians and consumer advocates couldn’t see the difference. And, politicians being politicians, they ignored the risk that Dominion absorbed back in 2015 and clamored for a rollback of the freeze. The game they were playing can be described forthrightly as, “Heads I win, tails you lose.”

When it became clear in the November 2017 elections that voters largely agreed with the anti-Dominion politicians, nearly obliterating the Republicans’ hefty majority in the House of Delegates, Dominion saw the writing on the wall. The utility seized the initiative with its proposal to end the freeze on its own terms — by reinvesting over-earnings into a massive grid-modernization plan. Politically, the ploy was brilliant. Dominion cut a deal with the new Northam administration, environmental groups, independent solar producers, and other constituencies, leaving Keam and his buddies to eat dust. I understand why the delegate is so sore.

The resulting Grid Transformation and Security Act may or may not be a good piece of legislation. I haven’t delved deeply enough into the details to conclude whether it will be harmful or beneficial to rate payers. We can be reasonably assured that it will be beneficial to Dominion, or the company would not have gone along with it. But if I were a senior Dominion executive, I’d be very wary of cutting a deal like the 2015 rate freeze ever again. Getting sucked into a heads-you-win, tails-I-lose political proposition is no way to run a business.

Pony Up, D.C. Or Else!

Uh, oh, the Metro funding deal isn’t sealed yet. The Washington, D.C., city council could be the spoiler. While Mayor Muriel E. Bowser has asked council to back a $178.5 million annual increase in funding for the commuter rail system to go along with $154 million from Virginia and $150 from Maryland, a council faction by Chairman Phil Mendelson is balking.

Reports the Washington Post:

Mendelson (D) and five other council members sent Bowser a letter late Wednesday saying the city should give Metro only $167 million a year. The letter also says the District should contribute no more than Virginia and Maryland, contrary to the Virginia plan that stipulates each jurisdiction make a proportional contribution based on a funding formula that takes into account things such as ridership, population and number of Metro stations. …

Repeating arguments made by city officials in the past, Mendelson and the council members said that formula is unfair to the city, partly because the District has a smaller population than the Virginia and Maryland suburbs served by Metro.

But, as the Post points out, the District has 40 Metro stations, compared to 26 in Maryland and 25 in Virginia.

Furthermore, I’d add, the reason Metro finances are a wreck is that D.C. representatives on the Washington Metropolitan Area Transit Authority (WMATA) board have insisted on not increasing fares and have been supportive of labor agreements that have run up operating costs and built up massive unfunded retirement liabilities. Virginia needs to stick to its guns, and D.C. needs to pony up $178.5 million.

To Someone with No Skin in the Game, Virginia Beach Entertainment District Sounds Great!

Rendering of proposed new Virginia Beach pier. Image credit: Virginian-Pilot

The City of Virginia Beach is creating a special use entertainment district on the beachfront. There are three main components to the plan: a sports center, a redevelopment project, and a new pier. Developers are getting in on the action. One has submitted a proposal for a double-decker pier with retail and restaurants on one level and fishing on another. If the imaginative artist’s rendering is any indication, the project even could include a skywheel.

A  surf park also has been proposed for the project, which has won the backing from the powerful surf shop lobby. Seven surf shops from Wave Riding Vehicles to Pungo Board House and Whalebone Junction have banded together in a first-time-ever show of support for a development project.

But details have yet to be determined, and the city is soliciting input from citizens on what they’d like to see. Public parking? Fishing from the pier? Bicycle parking? Ride share pick-up/drop-off zone? How about a skywheel or a surfing museum? Fishing contests? Fireworks? Music concerts? Dog water station? (Dog water station? What’s that?)

The more the merrier, I say! As a periodic visitor to Virginia Beach, I’m all in favor of the idea. Virginia Beach is getting a little long in the tooth — nothing much new since the erection of the King Neptune statue — and it could use a big new tourist attraction. I’m tired of taking five-hour drives to Emerald Isle, N.C. My summer vacation dollars are definitely up for grabs.

Best of all from my perspective as a Henrico County resident with absolutely no skin in the game, it looks like Virginia Beach is undewriting the development in a big way, which means the citizens of Virginia Beach would be subsidizing my vacation. The city alludes to those subsidies only briefly in its questionnaire asking for citizen input:

The City is considering using Tourism Investment Program funds, made up mostly of tourism-related taxes and fees like hotel taxes, portions of the restaurant taxes and rental fees, to fund the development of two other projects and parking to support the district.

But WVEC Television lays bare the public commitment:

  • The sports center is set to cost $55 million in public funding
  • The old Dome site project is set to cost $37.5 million in public funding, potentially leveraging more than $200 million in private investment
  • Redeveloping the pier on 15th Street is set to cost $21.5 million in public funding, potentially leveraging more than $200 million in private investment
  • Public funds will also go toward parking facilities and improvements to 18th & 19th streets

I won’t be staying in a hotel — I’ll just bunk in at the family place in Sandbridge — so I don’t expect to pay any lodging taxes. As for restaurant taxes, well, I guess I’ll share those with the good citizens of Virginia Beach, who patronize Virginia Beach restaurants more than I ever will. It all sounds good to me!

Localities, Get in Front of the Transportation Revolution

An Amazon delivery drone — requires no additional investment in roads and highways.

After the General Assembly hashed out a deal this weekend providing the Washington Metro system with an additional $154 million per year in state funding, local Prince William County leaders expressed discontent that more funding for Metro means less money for roads and highways.

Lawmakers had to divert roughly $80 million from regional transportation projects administered by the Northern Virginia Transportation Authority to hit that dollar amount, reports Inside NoVa, “perturbing officials in counties without Metro stations.”

“This is hugely problematic to us,” said Vice Chair Marty Nohe, R-Coles, who also serves as chairman of the Northern Virginia Transportation Alliance. “It’s going to be very difficult for us to fund the sort of megaprojects we’re known for if we lose this money.”

My reaction to the road-builder lobby is the same as it is to the mass transit lobby. The United States is in the early stages of a transportation revolution in which Mobility as a Service will challenge traditional transportation modes such as mass transit and single-rider, owner-occupied vehicles. It is entirely foreseeable that time- and route-flexible shared ridership services in cars, vans, and buses will take away market share from route-fixed and schedule-fixed mass transit enterprises. Likewise, Mobility as a Service will be cheaper than car ownership. While affluent households will always want to own their own car, many will find the Mobility-as-a-Service option to be preferable.

Inevitably, we will see changes in driving patterns — changes that we cannot accurately predict. But committing ourselves to spending billions of dollars on road and highway projects on the assumption that the driving patterns of the past 50 years will remain the same over the next 10 years is nothing short of insane.

Prince William County, like every other jurisdiction in Virginia, needs to get in front of the Uber revolution and ascertain what kind of public investments (hopefully modest) will encourage mobility entrepreneurs to introduce new super-flexible shared ridership services to their locality. As a next step, they might explore how to reduce the number of automobile trips by expediting Amazon-like home delivery services. The transportation policy of the future should focus not on building new highway capacity but on reducing the number of trips.

Approving Metro’s Bare-Bones Capital Budget

Over the weekend the General Assembly agreed to give the Washington Metro $154 million a year in permanent new funding on the condition that Maryland and Washington, D.C., make up the balance of $500 million in new funding, reports the Washington Post. Maryland has passed its own $150 million funding bill, and the District will likely approve at least $150 million more.

Let’s assume for a moment that all the details are worked out, that all three jurisdictions come up with $450 million to $500 million a year for Metro, and that Congress adds $150 million a year to what the federal government has been contributing. Does this latest injection of money get the troubled bus and commuter-rail system out of the woods?

Metro has identified $25 billion in capital “needs” over the next 10 years. The bulk of these needs entail SGR (state of good repair) investments of $15.5 billion to maintain existing capital assets necessary for system preservation. The $25 billion figure also includes $7 billion in “new” needs which “address remediation of hazards or crowding on the rail system in core areas,” plus “unallocated” needs that include regular repairs and maintenance and services.

The added $600 million a year from Uncle Sam, the District, and the states will suffice to cover the critical state-of-good-repair needs and nothing else. Here’s what taxpayers will get for their money:

  • Replacing the 1000-series rail cars, installing a new radio system and cellular infrastructure, and replacing track circuits and power cabling where necessary.
  • Replacing power cable insulators on deep tunnels of the Red Line and other lines particularly where water intrusion occurs, which can disrupt service or cause the need for more frequent and costly repairs.
  • Replacing worn components of track and tunnels on all lines, necessary for safety and service delivery.
  • Upgrading the signaling system, which controls the movement and speed of trains, necessary for safe operations and on-time service delivery.

Nothing fancy here. Hopefully, these investments will reverse the deteriorating quality of service that has caused so many riders to desert Metro. But many desired investments will not be made. I have seen no analysis of what that portends for the quality of service.

The proposed FY 2019 budget for Metro includes no fare increases or service reductions. The operating budget assumes that management can limit spending growth to $12 million, or less than one percent “despite cost growth for legacy commitments, mandates and inflation.”

General Manager Paul Wiedefeld acknowledges that there are “substantial and ongoing risks” in the proposed 2019 budget. Foremost among these are ridership uncertainties in response to telework, gas prices, alternative transportation modes; collective bargaining; and unfunded pension and retiree healthcare liabilities.

Bacon’s bottom line: I continue to believe that the emerging Uber-like Mobility-as-a-Service transportation model poses an enormous threat to all existing transportation modes — both the own-it-yourself automobile model and fixed-route mass transit model. In an affluent society, there will always be some people who want to own their own automobiles allowing them to travel when they wish and with whom they wish, so privately owned automobiles will always be with us. But I’m not confident that there will always be people who prefer to ride in fixed-route, fixed-schedule buses and trains instead of flexible-route and flexible-schedule buses, vans, and cars.

I’m pretty sure that Metro, no matter how competently managed, will continue to loser riders, and that it will be coming back to taxpayers with tin cup in hand in another 10 years. If declining ridership doesn’t do the trick, unfunded retirement liabilities will.

No Real Pipeline Story Here, But Read on If You Must

The public relations battle over the Atlantic Coast Pipeline continues unabated even as managing partner Dominion Energy edges closer to beginning construction of the 600-mile project. The latest flap surfaced in the Richmond Times-Dispatch this morning after the State Corporation Commission agreed, over Dominion’s objections, to accept expert testimony by natural gas industry analyst Gregory Lander in a hearing on Dominion’s Integrated Resource Plan.

Lander, who was retained by environmental groups opposed to the ACP, concluded that the pipeline will cost Dominion ratepayers between $1.6 billion and $2.3 billion. That conflicts with Dominion’s estimate, based upon an earlier study by its own consultants, that the pipeline will save rate payers $377 million annually. Dominion’s estimate will be harder to maintain now that the Duke Energy, an ACP partner, has acknowledged that the cost of project has escalated from $5 billion to between $6 and $6.5 billion as the company adjusted its route and incorporated environmental protections to accommodate the demands of landowners and environmentalists. But that cost increase doesn’t come close to accounting for the discrepancy between the two estimates.

The Southern Environmental Law Center trumpeted the SCC decision to accept the Lander study as a big victory. “This is proof positive that Dominion’s pipeline will not cut costs to customers but instead increase our bills,” said SELC attorney Will Cleveland. “It’s further evidence that Dominion’s original promise – that the pipeline would save customers money and spur job growth in the Commonwealth – has disappeared.”

The Times-Dispatch made the Lander testimony the lead of its story. But I’m thinking that reporter Robert Zullo is reading too much into the SCC decision. Sure, Dominion tried to prevent the SCC from considering the Lander study, but SCC proceedings are full of filings and counter filings. It’s what utility lawyers and environmental lawyers are paid to do.

Moreover, it is silly to read into the SCC’s decision to accept expert testimony into the public record an implication that the SCC is prepared to accept that testimony’s main conclusions. As Zullo quoted SCC spokesman Ken Schrad as saying, “the order merely allows the testimony to be part of the record in proceedings on the plan, which the commission determined is ‘reasonable and in the public interest.”

“That’s not saying it’s right, wrong or indifferent,” Schrad said of Landers’ testimony.

As Zullo further reported: “Last year, pipeline opponents urged the SCC to issue an order requiring the Dominion entities to file an application for the approval of the [natural gas contract with the ACP]. The commission dismissed the petition, stating that if the deal creates unreasonable costs, the remedy is to deny the utility the ability to recover them from customers in a fuel proceeding.”

At some point, the ACP will be built and will start supplying gas to Dominion Energy Virginia. Dominion will petition the SCC for a fuel rate adjustment. That rate hearing will be where the rubber meets the road. Dominion will submit its evidence, environmentalist and consumer groups will submit their evidence, all sides will get an opportunity to critique one another, and the SCC judges will weigh the testimony and decide whether a rate adjustment is justified and, if so, how much.

Zullo knows this — indeed he alluded to it in his article. But he’s a reporter like any other, and he hyped the clash between the SELC and Dominion. Otherwise, it looks like, there wouldn’t have been much from the IRP hearing to report.