Farrell Defends Dominion’s Environmental Record

Dominion CEO Tom Farrell

Under continual pressure from politicians, protesters and even shareholders to develop more renewable energy, Dominion Energy (which has changed its name from Dominion Resources) offered a vigorous defense of its environmental policies at its 108th annual meeting in downtown Richmond today.

Since 2000 the company has cut nitrogen-oxide emissions 81%, sulfur dioxide emissions 95% and mercury emissions by 96% — a performance exceeded by only one other electric utility in the country, CEO Thomas F. Farrell II told shareholders.

Dominion also has reduced the carbon intensity of its electricity by 43% between 2000 and 2015, Farrell said. Carbon intensity measures the pounds of carbon-dioxide (CO2) emissions per megawatt hour of electricity produced. Dominion’s performance compares to a 23% reduction for the electric utility industry as a whole.

Carbon intensity will fall another 25% as Dominion expands solar power generation to a projected total of 5,200 megawatts within 25 years. “Solar is growing very rapidly,” Farrell said. I know that a lot of folks would like all of our power to come from renewables. That’s not realistic. That’s not affordable.”

Of greater interest to most of the shareholders in attendance, Dominion reported an 11.8% increase in earnings in 2016 and an 8.1% increase in dividends. But numerous shareholders, some owning as few as one or two shares, lined up to take the microphone during a Q&A session. They pressed for changes to Dominion’s governance practices, urged more aggressive adoption of solar power, and chastised the company for construction of the Atlantic Coast Pipeline (ACP).

Several shareholders argued that Dominion should reduce its corporate exposure to environmental risks, especially those resulting from severe weather or drastic regulatory changes implemented in response to climate change. One formal shareholder proposal recommended the company nominate a director with environmental expertise; another asked Dominion to evaluate alternate technologies as a way to comply with Paris Agreement accords to cut CO2 emissions. All shareholder proposals were voted down.

Farrell unapologetically defended the company’s environmental record, citing its achievements to date and its plans for the future.

Dominion was one of only four electric utilities to file a brief in favor of the Obama administration’s controversial Clean Power Plan, Farrell said. The plan, the status of which is now up in the air under the Trump administration, mandates major cuts to electric-utilities’ CO2 emissions, although the amount would vary depending upon how each state implements the plan.

While some have suggested that the Trump administration will scuttle the Clean Power Plan, Farrell insisted that carbon regulation is here to stay. An EPA endangerment finding, upheld by the U.S. Supreme Court, declared that the EPA is required to regulate CO2. “I have no idea what that’s going to look like. Neither does anyone else,” Farrell said. But some form of regulation is unavoidable.

In the meantime, a McAuliffe administration task force has been looking at the CO2 issue and is expected to announce its recommendations for the General Assembly next month. “There’s going to be carbon regulation, and to suggest otherwise just isn’t true,” Farrell said.

The carbon-regulation issue is particularly sensitive to Dominion because critics have argued for a rollback of a rate freeze put into effect two years ago in response to the Clean Power Plan. Now that the plan is likely to be overturned, they contend, the justification for the rate freeze — to provide rate stability amidst regulatory uncertainty — no longer exists.

Farrell also defended the “urgent need” for the Atlantic Coast Pipeline, a 600-mile pipeline that would bolster natural gas supplies to “grossly under-served” communities in Virginia and North Carolina. The pipeline has inspired fierce resistance from property owners along the route, especially in the steep mountains of western Virginia where environmentalists have raised concerns that construction on steep slopes and narrow ridges will lead to erosion and disruption to water fragile water supplies.

Large chunks of eastern Virginia and North Carolina have reached the limits of existing natural gas pipeline capacity, Farrell said. Furthermore, much of North Carolina is served by only one natural gas pipeline, Transco, making the region vulnerable to supply disruptions. He cited a recent outage on Transco that interrupted the gas supply to the company’s Brunswick Power Station near the North Carolina border, forcing it to halt generation temporarily. The ACP would provide an alternate pipeline to serve Brunswick and the nearby Greensville Power Station, which will be the world’s largest combined-cycle natural gas plant when construction is complete, as well as to Duke Energy power plants in North Carolina.

Moreover, said Farrell, the ACP is required to accommodate the increased solar production that so many people desire. Gas will be needed to replace retired coal plants, and as Dominion brings more solar power online, it will need more gas capacity for backup power. Solar is prone to weather-caused fluctuations during the day. Fast-response combustion turbines are needed to offset the turbulence.

As for complaints by landowners and environmentalists, Farrell said, the pipeline was subject to what is “without a doubt the most studied environmental review by FERC (the Federal Energy Regulatory Commission) in history.”

While Dominion has cut the carbon intensity of its generation fleet, environmentalist critics have responded that the changes are not helping the cause of global warming. True, Dominion has cut CO2 emissions from its power plants, but the shift to natural gas means that more methane, a greenhouse gas even more potent than CO2, is leaking from pipelines and distribution lines. The net result is actually worse for the environment, they say.

Farrell touted a Dominion program to eliminate leaks from its gas transmission system. The company is spending millions of dollars to replace miles of aging pipe with stronger pipe that will both allow the transport of 2/3 more gas and reduce leaks. The company’s voluntary actions have prevented the release of 4.4 billion cubic feet cumulatively since 2010, he said. “We have the best record in the United States in capturing methane. … No other company comes close.”

In other initiatives, the Dominion CEO noted, the company is building the world’s largest, most efficient natural gas generating facility in Greensville. Using state-of-the-art turbines, Greensville will combust a higher percentage of gas and release less CO2 per megawatt into the atmosphere. Also, the company is investing $1 billion in solar facilities in Virginia and North Carolina for a total of 700 megawatts generating capacity, with another 500 megawatts under contract. To accommodate the forecast 5,200 megawatts of solar in the future, the company foresees investing heavily to modernize its transmission and distribution lines.

Further, Dominion is implementing a new rate plan to provide a 100% renewable energy option, predominantly solar, to customers who want it. Every kilowatt hour will be generated by “hard assets” nearby. Dominion won’t be counting Renewable Energy Credits, which are tax credits purchased from someone else’s solar project, Farrell said. “We think this is the first of its kind in the country.”

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10 responses to “Farrell Defends Dominion’s Environmental Record

  1. re: ” Every kilowatt hour will be generated by “hard assets” nearby. ”

    continuing on in the discussion from prior … and forgetting the fact that’s it’s dang hard to get solar at night…

    one gets the impression in the ongoing discussions that PJM is the one deciding where the power is coming from … and not the utility.. ergo the utility feeds the electricity into the grid per their agreement with PJM so how can they “deliver” … “local” solar ?

    I …. KNOW… as I sit him keying into the computer at 9:17pm that solar is not providing the electricity… no matter what the utility is telling me…so how does that REALLY WORK? Could Dominion actually be selling “solar” at night?

    • I just saw this. Re:. ” How can they deliver ‘local’ solar?”

      They can’t. All electricity on the grid is commingled before it gets to the consumer. You don’t put a label on an electron and ‘ship’ it to a destination. You throw it into the pot (‘generate it’) and the consumer takes some out of the pot.

      Those sales of “all renewables power” are purely contractual. When you buy “all renewables” there is someone, somewhere, operating a renewables generator who sold the right to claim his special output to you (through many middlemen). It can only be sold as renewable power once, of course. But it CAN be time shifted — i.e., a renewables energy credit (or REC) may be created by a solar generator but “used” (attributed to grid energy consumed) at night.

      Yes, PJM decides what generators run on its portion of the grid at a given moment. It’s true as a matter of physics that more of the locally generated electricity will end up going to local consumers simply because there is a small amount of electrical resistance to electrons traveling long distances through aluminum cables, so Farrell’s claim about selling “local” solar is not a lie, just grossly misleading. But all the utilities talk this way — because there is consumer demand for a renewables product and this is the only way to create it.

      • re: ” Farrell’s claim about selling “local” solar is not a lie, just grossly misleading. But all the utilities talk this way — because there is consumer demand for a renewables product and this is the only way to create it.”

        well.. it’s worse than a lie because it’s misrepresenting the whole deal about solar… from both sides – the pro solar/renewables and the skeptics…

        Mr. Elon Musk is now selling a product that PJM not DOminion will have a direct role in – and yet both of them will have to deal with the effects of it.

        I’m borderline skeptic on Mr. Musks solar roof and powerwall.. that pays for itself in 30 years.. or so.. will not be surprised if if ends up like cold fusion… did.. but I don’t doubt that what he is pursuing will some day be very real… and …

        then… at that point … what is the role of PJM and utilities like Dominion when new homes are routinely constructed with solar roofs and sides and powerwalls. and those things are built in to the mortgage and each one of those homes use of the grid is very different than today?

        Think about that in the context of what Dominion is doing right now.. what is their strategy?

        that’s beyond their craven behavior… which they donj’t need to be exhibiting as a corporate culture.. in my view.

        where should Dominion be pointing itself beyond the next 5-10 years?

        • re: ” Mr. Elon Musk is now selling a product that PJM not DOminion will have a direct role in – and yet both of them will have to deal with the effects of it.”

          whoops!

          Mr. Elon Musk is now selling a product that NEITHER PJM NOR DOminion will have a direct role in – and yet both of them will have to deal with the effects of it.

  2. Directionally I do like the idea of giving folks the option/opportunity to pay (presumably extra) for green energy, and I also like Farrel’s idea that this green energy plan should be actual green energy generated from new solar/wind facilities versus paper credits trading.

    • According to Acbar – there is no such thing as “local” solar – it’s a marketing concept.. that “green” Goobers… literally “buy”!

      what’s the truth? If Dominion or some 3rd party has a 1000 acres of solar – does it sit unhooked from the grid if PJM says it does not need it and it cannot be put into the grid?

      So every solar installation will have a utility/PJM controlled “on/off” switch?

      looks like we need a LOT MORE discussion here.. eh?

  3. I’m more concerned they reduce the payments to buying off the General Assembly (and others).

  4. The continuing classification of renewables as “clean” and “good for the environment”… and “what environmentalists want” confuses a more fundamental aspect which is simply adding a fuel (solar and wind) to the overall mix of other fuels – used to provide electricity – when those fuels (wind and solar) are available – simply as a matter of incorporating those fuels when it makes sense and is cost-effective.

    Why we continue to have this portrayed as some sort of struggle between “environmentalists” and Dominion rather than simply good business practices that should be adopted that ALSO are better for the environment is making controversy when there should be none.

    solar and wind are legitimate fuels – with limitations specific to them but really no different than limitations to other fuels – such as coal, nuclear and gas that are addressed in ways that take advantage of their strong points and compensate for their shortcomings.

    For instance, coal and nukes cannot meet peak load demands unless you run them as baseload that covers all demand but disconnect turbines while still burning fuel … that’s exactly what we’ve done for decades before natural gas pipelines were built and became available to be used a a fuel for gas turbines – “peaker” plants that then allowed coal/nuke plants to run at a lower level and gas would cover the peak demands – when it could depending on how many gas plants were built and “available”.

    Gas plants used to be far more expensive. In fact, it was said that peak hour power cost 7 times more than baseload power and actually was an impetus for installing “smart” meters that could be used to charge more for electricity when it was generated by gas. So gas had disadvantages that had to be compensated for also.

    before solar – it was a tradeoff between running coal plants at 100% output even when there was not demand for all of it – versus running gas that was 7 times more expensive to take care of the peak load so that the unnecessary burning of coal at peak – could be reduced.

    It was and remains a logistical and cost-effectiveness issue that is at the core of the mission of the utilities and it’s been optimized further with the creation of PJM.

    Adding solar/wind to the mix but suggesting that it has significant flaws that make it less useful …ergo .. we cannot rely on it for widespread use… which has been the mantra of Dominion for a while and only now is starting to change.

    Simply stated – you use solar and wind opportunistically when it makes sense economically – not because it’s an “environmentally friendly” fuel.

    You incorporate it into the grid in the ways it has to be such that when wind/solar are not available – other generation is – the very same way that gas was used to handle peaks above what coal/nuke baseload was available.

    Now… we should be using wind/solar, when available, so that we do not have to burn gas… it has almost nothing to do with the environmental per se – it just happens to be far less polluting that fossil fuels – a good thing – but an additional benefit over and above the basic economic argument.

    In fact, if you use wind/solar in that way – you might well be able to power the Peninsula that way and shut down the Yorktown plants… without having to mar the historic Jamestown viewshed.

    What I hold Dominion accountable for is their antagonistic behavior towards those who want them to do things smarter and have less impact . ..Dominion portrays those folks as naive green weenies and NIMBYs .. and justification for Dominion to go forward with their own ideas… and portray their use of solar as a “favor” to show their good intentions towards the environment , i.e. they will sell you “green” power…

    which is a totally bogus concept – pure PR – to appeal to those who think that if they’re willing to buy “green” that Dominion will install it … whereas in my view – Dominion should be installing wind/solar as a matter of course – a good business practice to further optimize and diversify the grid and minimize adverse impacts to only those that are unavoidably necessary and that brings into question the powerlines over the James as well as the ACP pipeline.

    Are those things absolutely mandatory or harm will come to Virginia taxpayers and ratepayers? They argue as if it is true.

    But the facts argue otherwise.

    there is more than adequate gas pipeline capacity for powerplants without the ACP – Dominion now argues it’s was “grossly underserved communities” which in a normal world would be a pure free market supply and demand issue – not one that requires the use of eminent domain and cutting rights of way through rugged and sensitive mountain lands.

    there is no justification for this other than Dominion’s insistence that it needs to be done – and it needs to be done on their terms – and yet Mr. Farrell whines that they are “trying” to be “good” environmental stewards.

    Good environmental stewards do not put pipelines in that are pure for-profit ventures with significant impacts to the environment – and argue
    that there is “no choice”.

    Same thing with powerilnes over the James at Jamestown. There other alternatives including using gas plants with solar on the peninsula…and then arguing disingenuously that PJM “wants it” when, in fact, what PJM signed off on was Dominion’s plan on how they wanted to do it – as if it was the ONLY way and what PJM signed off on was simply that the approach chosen would meet the requirement – NOT that is was the ONLY OPTION to do it.

    that brings into question , in my view, Dominion’s motives… and their willingness to avoid impacts.. their willingness to actually present viable alternatives to those impacts – even if they are not Dominion’s preferred approach – as opposed to Dominion presenting the issue as having only one solution and no others will work. that’s just not honest – and it calls into question in my mind Dominion’s claim that they are good environmental stewards… Good environmental stewards talk about the tradeoffs – the benefits and the impacts… even if some alternatives have more “costs” financially but less impacts… environmentally.

    That’s a more conscientious approach… in my view… i.e. don’t start off portraying any approach other than the preferred one as “not acceptable” – that decision actually lies with the public – not Dominion and it REQUIRES that other options be presented as alternatives – even if Dominion doesn’t like them because of additional cost.

    THis is the way other projects with impacts are presented – even by VDOT and other govt entities. This is the way that US 460 was done.. Alternatives were presented – VDOT was NOT allowed too say that the ONLY PATH was their preferred path… and no others were acceptable.

    So when Dominion and Mr. Farrell whine about being good environmental stewards – methinks there are a flood of crocodile tears , more PR than real substance.

    Dominion needs to alter it’s behavior and stop playing victim PR games and get real on dealing honestly with the pubic over projects that do have impacts and do have more alternatives that just what Dominion wants.

    • “Dominion was one of only four electric utilities to file a brief in favor of the Obama administration’s controversial Clean Power Plan, Farrell said. The plan, the status of which is now up in the air under the Trump administration, mandates major cuts to electric-utilities’ CO2 emissions, although the amount would vary depending upon how each state implements the plan.”

      This was huge at the time, and it’s still huge. There’s a deeper game here. Dominion really does want some simple decisions on the rules for carbon emissions and as much clarity as possible as they go forward. And, they want their competitors in the energy markets to play by the same rules; that’s the central issue. Pro-environmental rules are not the problem, as long as they apply across the board to all utilities, all independent generators.

      • The “rules” look like they might be beginning to take shape. One of the things that most of the various players in the FERC technical conference agreed on was consideration of a price on carbon in the ISO auctions.

        A good part of this was in reaction to the huge subsidies for nuclear that NY and Illinois had just announced that many considered to be huge distortions to the market process. But they all seemed to want some sort of certainty about how carbon would be dealt with in the absence of the CPP. I also think the industry wanted to preempt the politicians and create a system they could live with before states or the feds did something that confused everyone’s planning scenarios.

        Only carbon was discussed, so it favors natural gas and does not actually deal with climate change, but it does give the industry a price standard that it can plan against.

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