Grid Pro Quo

Exhaust fumes blown into a sky.The EPA wants to restructure Virginia’s electric grid. Skeptics argue that slashing CO2 emissions will drive electric bills higher. Environmentalists disagree. Who’s right?

by James A. Bacon

President Barack Obama’s Clean Power Plan gives Virginia fifteen years to cut CO2 emissions by 38% from 2012 levels. Not only will the plan usher in a better world of cleaner air, bountiful “green” jobs and diminished global warming, supporters contend, Virginians will use less electricity and enjoy an 8% reduction in electric bills by 2030.

The State Corporation Commission (SCC) has nothing to say about global warming or green jobs, but the staff has commented upon the Clean Power Plan’s impact on electric bills:  Rates under the plan could be 20% to 22% higher for a typical Dominion Virginia Power customer than under a business-as-usual approach. That’s on top of the 14% that electric rates have increased since 2007, including rate adjustments for lower fuel prices that took effect this month, and it doesn’t include the impact on Appalachian Power or smaller utilities.

Who’s right? Will electric bills go up or down?

What we have here is a battle of dueling experts – Obama’s Environmental Protection Agency (EPA) and its allies in the environmentalist community on the one side, and the state regulatory commission and the electric power industry on the other. Whom do we believe?

It’s hard for citizens to know. The issues are anaesthetizingly complex, and few people have the patience to wade through both sides of the issues. For each assertion that one party makes, someone provides a counter. Peel away one layer of the debate, and there always seems to be another.

That’s why God created Bacon’s Rebellion. My goal in this article is to clearly delineate the main points of contention. You may not change your mind – who ever does? — but at least you will leave with a clearer idea of what the issues are.
Because this piece is so long, I have broken it into digestible chunks. Use these links to navigate the article.

The Clean Power Plan and how it works
McAuliffe administration asks EPA to modify Virginia targets
The SCC response
SELC sides with EPA
Nukes vs. Renewables
Wholesale electricity to the rescue
Energy efficiency to the rescue
How reliable is renewable power?

The Clean Power Plan and how it works

The purpose of the Clean Power Plan is straightforward: It is designed to radically curtail the CO2 emissions blamed for global warming by setting CO2 targets for each state. Nationally, the plan aims to cut CO2 emissions by 30%, but state targets vary widely. Under proposed regulations, Virginia would have to slash 2012-level emissions by 38% by 2030, with a majority of the cuts occurring by 2025.

While the EPA sets targets for each state, it theoretically allows states flexibility as to how they achieve those targets. The agency provides four broad strategies, which, it contends, should achieve the goals at a reasonable cost. States can mix and match as best fits their circumstances. The strategies include:

  • Make coal-fired power plants more efficient. By capturing more heat from coal combustion, coal-fired plants can generate the same amount of energy with fewer CO2 emissions. EPA says that an average “heat rate improvement” of 6% should be achievable.
  • Use more natural gas. Although it is a fossil fuel, natural gas releases less CO2 per unit of energy generated than coal. The EPA expects the biggest reductions to come from switching to this fuel.
  • Use more renewables and nuclear. Solar power, wind power and nuclear power release zero CO2. In the EPA’s estimation, this strategy is second only to natural gas in its potential to cut CO2 emissions.
  • Conserve energy. Investing in energy efficiency reduces the demand for electricity, which means less generating capacity is needed. The EPA says it should be possible to increase demand-side energy efficiency by 1.5% annually.

retail_rates2

EPA projections of Clean Power Plan impact on Virginia electric rates. Source: Southern Environmental Law Center. (Click for more legible image.)

While electric rates might go up marginally under the plan, the EPA contends, households actually would have lower electric bills because investments in energy efficiency would mean they consume less. Depending upon the approach taken, electric bills could be 8% lower by 2030.

Draft targets were announced in 2014. The EPA is scheduled to finalize the plan this July, and the states are required to submit their state-level plans by 2016.

McAuliffe administration asks EPA to modify Virginia targets

Virginia_CO2_emissions_trend

Virginia has cut carbon-dioxide emissions significantly since 2005 — more than most other states.

While supporting the intent of the Clean Power Plan to address global warming, the McAuliffe administration objected that the EPA methodology for allocating cuts gives insufficient credit to Virginia for past progress in reducing carbon intensity – Virginia cut CO2 emissions 39% between 2005 and 2012, mainly by replacing coal-fired capacity with gas — and requires the state to achieve more stringent standards than neighboring states. When compared on a metric of pounds of CO2 emitted per megawatt-hour of electricity generated, Virginia must reduce its emissions to half the levels of Kentucky and West Virginia.

“The disparity in state goals leaves Virginia at a competitive disadvantage to its neighbors and numerous other states because they will be able to comply with the Proposed Emission Guidelines more cost-effectively,” wrote Michael G. Dowd, director of the state Department of Environmental Quality’s air division, last year.

Tight deadlines are another problem. “EPA should expect that some states will be late in submitting plans and reports, or submit deficient plans and reports due to no fault of their own,” the DEQ observed.

While it is theoretically possible that the EPA will modify Virginia’s CO2 targets in response to the comments of the McAuliffe administration and others, no one I interviewed for this story was willing to speculate about the likelihood of that happening. Says DEQ spokesman Bill Hayden: “We’ve let EPA know what we think should happen. We have not had any response yet.”

“The cost of compliance is still a moving target,” says Michael Kelly, director of communications for the Attorney General’s office, one of whose missions is to represent the interests of Virginia rate payers. “There will be a lot of different paths to compliance.”

Speaking earlier this month at the Virginia Energy and Sustainability Conference, Governor Terry McAuliffe said that he had taken up the issue directly with EPA Director Gina McCarthy. “I am confident this message has been received loud and clear,” he said, “and I expect that the final rule will address these concerns.”

The SCC response

In October, the State Corporation Commission submitted a comprehensive response to the EPA’s draft rules. The staff argued that it would be exceedingly difficult under the Clean Power Plan for Virginia to meet the EPA’s emission targets and maintain the reliability of the electric system. Furthermore, the cost to ratepayers would run into the billions of dollars.

The SCC staff estimated that the plan would cost ratepayers between $5.5 billion and $6 billion just for Dominion to comply. To get to that number, the staff calculated the cost by which adopting the “fuel diversity” scenario described in Dominion’s 2014 Integrated Resource Plan, a strategic planning document, exceeded Dominion’s low-cost “base” option. Then, because emissions under the “fuel diversity” plan still exceeded the EPA’s proposed standards, SCC staff modified that plan to include an additional 69 megawatts of onshore renewable wind generation.

Although the Clean Power Plan doesn’t specify that Dominion must shut down any of its four coal-fired power plants, the SCC argues that the only practical way to achieve the CO2 targets is to eliminate generation from three of them. Ironically, Dominion had spent hundreds of millions of dollars retrofitting those plants to meet a previous round of EPA mandates cracking down on toxic emissions. Dominion would be hit with as much as $2 billion in stranded costs, if the plants were shut down immediately, and $1.6 billion if the shutdowns could be delayed for five years, as the plants depreciated. Ordinarily, those so-called “impairment” costs would be passed on to customers, but Dominion agreed in a deal enacted by the General Assembly this year to absorb the risk of write-downs occurring prior to 2021. After that date, exposure would shift back to ratepayers.

Ratepayers would take another hit from higher wholesale prices purchased by Virginia utilities and passed on to Virginia retail customers, the SCC argued. As for the EPA’s claim that electric rates would go up but bills would go down, the SCC found it “extremely unlikely that either electric rates or bills in Virginia will go down as a result of the Proposed Regulation.”

Such an outcome would be possible only if the cost of achieving energy savings was less than that of generating the same amount of electricity or purchasing it on the wholesale market. The SCC is dubious that such savings can be found on a large scale. States the letter: “The Virginia SCC Staff is unaware of any electric energy efficiency resource deployable in Virginia that both: 1) has a cost less than its associated avoided variable operating costs, and 2) is scalable to a level that would meet the Proposed Regulation.”

SELC sides with EPA

The Southern Environmental Law Center (SELC) has taken the lead among Virginia environmental groups in backing the Clean Power Plan. When asked about the nitty gritty details, other local environmental groups defer to SELC, which has invested more heavily than others in studying the issue. The Charlottesville-based group hired the ICF International engineering firm to compile data for an SELC report, “Clean Power Plan Impact Analysis Support,” quantifying the impact of the Clean Power Plan on Virginia.

SELC argued that the societal “co-benefits” from reducing CO2 as well as other chemicals generated by coal combustion – sulfur dioxide, ozone, NOx, Hg and HCL – would amount to thousands of dollars per ton. Indeed, according to the SELC analysis, benefits to the environment and public health would swamp any costs associated with implementing the program.

However, the SELC report conceded that the environmental benefits would be global in nature, and that it was difficult to estimate the environmental and health benefits to Virginians specifically. Although the EPA had cranked out benefit-per-ton estimates for several multi-state regions, the SELC report stated, “The regional benefit-per-ton estimates do not reflect the state-level variability….” Also, the report acknowledged, “Potential co-benefits associated with carbon policies diminish rapidly as these policies become more stringent – the benefit-cost ratio decreases as lower cost controls are exhausted.”

Using data collected from EPA’s modeling analysis of the impact of the Clean Power Plan, SELC compared compliance costs of a base case scenario and two Clean Power Plan scenarios, with the difference between them representing the cost impact. As for the implications for rate payers, SELC agreed with EPA that the increase in electric rates would be modest – in the range of 2% to 3% by 2030 – and that actual electric bills would be roughly 8% lower when the savings from energy efficiency are taken into account.

How did SELC get such a different number from the SCC for the impact on electric rates? Angela Navarro, staff attorney and leader of SELC’s energy efficiency program, explains: The SCC based its analysis on the Integrated Resource Plan (IRP) that Dominion filed in 2014. The $5.5 billion estimate is based upon the “fuel diversity” scenario, which comes close to meeting the EPA targets. That scenario assumes construction of the North Anna Three nuclear unit. A new nuclear unit is probably the most expensive resource the utility can build,” Navarro says. “That’s the fundamental difference.” SELC’s report assumes that renewables and energy efficiency will be built instead of nukes.

But that’s not all. The SCC also failed to consider a regional approach to compliance– purchasing renewable energy certificates or credits from the PJM multistate electricity marketplace, from third party owners or from other utilities. In some instances, she says, Dominion could purchase electricity from other power producers for less than it would cost to build and generate that electricity itself.

This year, Dominion and Appalachian Power will file updated IRPs, which will include a Clean Power Plan option. Those plans will be filed in July, and the SCC will hold a hearing next year, Navarro says. “I hope we’ll hear the commission staff change their tune regarding the cost of the Clean Power Plan. There are other ways for Virginia to comply.”

Nukes vs. Renewables

One of the biggest disagreements is over the role of nuclear power in driving down CO2 emissions. Although the Clean Power Plan envisions nuclear as part of the solution nationally, Navarro contends that nuclear power is extraordinarily expensive and that the impact of the Clean Power Plan can be largely mitigated by investing in energy efficiency, wind and solar rather than Dominion’s planned third nuclear unit at the North Anna complex. The fixed contract prices for solar and wind are beating even low-cost natural gas, and these resources are only becoming more cost-competitive, she says. Additionally, solar, wind and energy efficiency are flexible resources that can be easily scaled up or down, which is important in a changing regulatory climate.

Dominion disputes SELC’s assessment of nuclear power. Indeed, Dominion draws a diametrically opposite conclusion: Substituting renewable fuels for nuclear power would significantly increase the cost of Clean Power Plan compliance. The up-front capital cost of building a nuclear facility is higher than that of solar, concedes Katharine Bond, director of public policy for Dominion, but steady output, low operating costs and long life make it an important part of the fuel mix. Nuclear units run 95% of the time with zero carbon emissions. Compare that to wind and solar, which are intermittent power sources that operate on average about 20% of the time, are not always available when needed and require construction of expensive back-up capacity. Also figure that nuclear facilities are designed to last 60 to 70 years compared to a solar facility that lasts 20 to 30 years. Finally, factor in the cost of land. Nuclear power has a much smaller geographic footprint than solar. Says Bond: “If you have a solar facility generating at its peak on a sunny day, it would need 5,000 acres to equal to just one unit of North Anna.”

Solar and wind have a place in a utility system, says Bond, particularly if they can be placed in locations in the grid where the variability can be tempered. But it doesn’t match up well against peak demand. Solar production peaks in the early afternoon several hours before demand peaks in the early evening when it’s still warm outside and people get home and crank up their appliances. Solar won’t be of much help either when night-time temperatures drop below freezing during winter.

Ken Schrad, SCC communications director, says it is too early to speculate whether nuclear or renewable power would be more cost effective in a Virginia context. “The question of whether North Anna 3 should be built will depend on a number of factors including on-going changes in construction cost estimates, the final form of the EPA’s regulations and Virginia’s implementation plan, changes in coal and natural gas costs, and further developments in renewable generation and energy efficiency. In short, it would be very premature to reach any definitive conclusion regarding North Anna 3 at this time.”

Map of PJM territory.

PJM transmission system. Dominion Power territory shown in gray, Appalachian Power in light blue.

Wholesale electricity to the rescue

SELC also argues that the SCC underplayed the ability of Dominion and Appalachian Power to meet their CO2 targets by purchasing electric power on the wholesale market. Dominion and Appalachian both are part of the PJM, a regional transmission organization that coordinates the movement of wholesale electricity in all or parts of 13 states and the District of Columbia. Because the supply and demand for electricity varies by season, time of day, weather conditions and local economic considerations, power companies find it advantageous to buy and sell electricity from one another.

A flaw in the SCC impact analysis, says Navarro, is that staff assumed that compliance with the new CO2 targets would have to come within the state of Virginia. But, in fact, Dominion and Appalachian Power may have the option to purchase renewable energy credits from the PJM marketplace, from other utilities or from independent power producers. That option is likely to be cheaper than building new capacity. PJM’s own analysis suggests that a regional approach to curtailing CO2 emissions would be more cost-effective than a state-by-state approach.

The SCC’s Schrad says it’s not that simple. First, the PJM analysis did not consider the cost of replacing coal-fired capacity with renewables and energy efficiency. Indeed, the study explicitly states: “PJM did not examine the additional costs related to capital expenditure on renewable resources, energy efficiency or new combined-cycle gas resources. Consequently, the wholesale energy market impacts … do not account for these capital costs, which may appear in retail electricity rates as determined by state commissions.”

Second, while true that Dominion Virginia Power will be able to purchase market-priced electricity through PJM, he says, “you need to remember that [Dominion] is a member of PJM and as such, has responsibility to provide adequate capacity of its own to PJM. Dominion’s coal-fired plants form a substantial part of the capacity the company is obligated to supply to the PJM market and enable the transmission grid to function properly. “[Dominion] cannot simply be a buyer in this market, but has supplier responsibilities as well.”

Dominion won’t be the only power company within the PJM system shutting down coal-fired capacity. Power companies across the grid will be substituting renewables and gas across the PJM region. To a greater or lesser degree, other states will be facing the same challenge as Virginia. There is no assurance that significant additions of renewable power and energy efficiency will be added at no additional cost to Virginia, Schrad says. And even if it is, there is no assurance that Dominion will be able to build the added capacity in the form of high-voltage electric lines to transmit a higher-than-planned volume of purchased electricity.

Finally, Schrad explains, the SCC did not look at a “regional” strategy for obtaining compliance because such an approach would require public policy decisions the SCC cannot make. Given the fact that Virginia has the lowest emissions target in the PJM system, staff also presumed that the Old Dominion would make an unattractive ally in compliance efforts. What state would willingly share Virginia’s outsized burden?

Energy efficiency to the rescue

SELC’s Navarro backs EPA’s assertion that more aggressive energy conservation can reduce the need to build expensive new capacity. There are many different approaches to investing in energy efficiency, from weatherizing homes, to installing building automation systems in commercial and industrial buildings, to exploiting smart-grid technology to reduce voltage waste in the electric distribution system. For instance, Navigant Research recently predicted that Conservation Voltage Reduction (CVR), which dynamically optimizes voltage levels to continuously reduce energy consumption during periods of peak demand, “can unleash unprecedented smart grid benefits.”

“Utilities can invest and customers can invest,” says Navarro. “What you’ll see from both sides of the equation is that it’s cheaper to reduce load than to build new generation to meet load. If you can reduce the large quantities of energy that Virginians waste, that’s a whole lot of generation you don’t have to build.”

In its own issue brief, the National Resources Defense Council (NRDC) agreed that Virginia has considerable untapped potential to improve energy. “The state has an energy savings goal of 10 percent by 2022, but this goal is voluntary, with no requirement for utilities or the state to achieve this level of savings for customers. … Other states have been able to achieve significantly higher levels of low-cost efficiency, to accrue substantially more customer and energy benefits. Virginia can do the same – meeting the level of energy efficiency suggested in the Clean Power Plan (still well below Virginia’s potential) would reduce the average customer’s bill by 6 to 8 percent.”

While energy efficiency isn’t free, it is cheaper than generating energy by any method, the NRDC says. “Investments in cost effective energy efficiency could save Virginia businesses $531 million in 2020 alone.”

The SCC staff took energy conservation into account when calculating its $5.5-billion impact estimate on ratepayers, says Schrad. Dominion’s “fuel diversity” plan already includes a significant energy-conservation component. “It is possible to further reduce demand through demand-side activities. The question is would such activities be cost effective?”

Even if the programs work as billed, that creates a new problem. “Under Virginia law … a utility that institutes energy efficiency programs is entitled to request recovery of its ‘lost revenues’ through a rate adjustment charge,” says Schrad. “These adjustment charges are not subject to the recent law that ‘freezes’ a utility’s base rates.” It would make no sense for Dominion or another power company to invest money in energy-efficiency if the end result were lower revenue and lower profit. That law was put into place to encourage Virginia’s electric utilities to invest in energy conservation when it makes economic sense to do so.

How reliable is renewable power?

The Clean Power Plan relies heavily upon renewable energy sources to drive down CO2 emissions across the electric grid. The SCC and Dominion both say that renewable energy sources are fine up to a point but create a big problem for reliability beyond a certain level. Wind and solar power are inherently intermittent – they generate electricity only when the sun is shining and the wind is blowing. As a consequence, they require expensive backup capacity in the form of gas-fired power, which can kick up or dial back in response to the ups and downs of the renewables. Not only is the EPA’s lead time too short to add the volume of wind and/or solar that would be required, the pipeline capacity doesn’t exist to supply all the gas that would be needed.

The NRDC contends that more precise weather forecasts and the second generation of “smart grid” technologies can stabilize the grid. “Changes in wind and solar generation tend to be gradual and predictable,” says the NRDC white paper. “This means that wind and solar need less backup generation than fossil fuels or nuclear sources.”

Increasing renewable energy output sevenfold (35,000 MW) in the PJM power-sharing region, which includes Virginia, would increase the needed amount of fast-acting backup electricity by only 340 MW – about one percent of the added renewable energy capacity, says the NRDC. By comparison, the PJM region currently maintains 3,350 MW of backup power —enough to power 3.3 million homes—to keep the lights on if a large fossil-fuel or nuclear power plant unexpectedly breaks down.

But the SCC says that each state has a different geography, different infrastructures and different political considerations, and that generalizations made from other states don’t necessarily apply to Virginia. “EPA lumps eight States into an ‘East Central’ region and then uses state RPS requirements established by six states other than Virginia,” states the SCC letter. “There are many reasons, including geographic and economic, why States have approached renewable generation differently.”

A personal note

It is all but impossible for members of the public to sift through these conflicting considerations. One is tempted to split the difference: The impact on ratepayers probably will be less dire than the SCC estimates but less rosy than the EPA/SELC forecast. But we have no way of knowing for sure.

If you’re persuaded that catastrophic global warming threatens the planet, you’re probably not inclined to quibble with a little uncertainty. In the end, the global stakes are so high that a few billion dollars — assuming you believe the SCC’s rate scenario — is a small price to pay over the next 15 years to help avoid calamity. If you’re skeptical about the claims made about global warming, or if you suspect that sacrifices made by Virginians will have a too-small-to-measure influence on global temperatures, you likely put pocket-book issues first. In that case, you’ll probably heed those whose full-time job it is to ensure the reliability of the electric system, not those whose priority is saving the planet.

In my nearly four decades as a journalist, I have concluded that, unless presented with incontrovertible evidence to the contrary, people believe what they want to believe. If you care about the issues enough to have read this far, you’re probably deeply committed to your pre-existing point of view. But at least you should have a better handle on why you believe what you believe.

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27 responses to “Grid Pro Quo

  1. Jim- correction for VA it is 38% reduction from 2012 (proposed).

    Part of the problem with the proposed CPP, I feel, is EPA is down-playing the magnituide of the effort by saying it’s only 30% reduction from 2005. But the devils is in the details, when you account for population growth and so on, that 30% translates to onerous state targets.

    • Thank you, and you can see what I am trying to say about how challenging the CPP is. Although I need to check the numbers, the chart shows Va. has already reduced CO2 39% between 2005 to 2012…which is at least directionally correct. Now EPA is proposing another 38% reduction between 2012 and 2030. Also the currrent EPA CPP proposal requires 80% of this shift by 2020 (which is nearly impossible). Presumably at least the interim 2020 target changes in the final rule.

  2. You did a commendable job that I know took a lot of time and you distilled it down to less complexity.

    I have comments – as usual.

    1. – building a 3rd Nuke on a known and active fault line is nothing short of ignorant..

    2. – the day that home batteries become a reality – Dominion is in much more trouble than EPA regs.

    3. – people and DOminion continue to assert that renewables are “intermittent” which is a false dichotomy because anywhere you put solar or wind – you can also put a tandem Nat Gas plant and run them as a self-balancing unit. That’s not theory. That’s a reality right now.

    4. coal plants run 24/7 no matter whether there is demand for the power. They run the plants with the turbines disconnected when demand falls – like at night. In other words, we’re burning coal and polluting the air – even when we’re not using electricity.

    That seems abjectly dumb when put in context with arguments that wind/solar are intermittent. You can do the same thing with coal that you can with renewables – i.e. use Nat Gas to load balance .

    Notice that Dominion makes no mention of how long it would take to modernize the grid so that it COULD dynamically load-balance…

    Finally – people should be concerned about NatGas. some folks say we have a 100 years worth. Others say we have 11 years of “proven” reserves. Dominion apparently wants to export it – at the same time claiming they cannot compensate for wind/solar.

    Natural Gas is a bridge fuel to the future .. we ought not squander it…

    again – an excellent well written article and much appreciated.

    • The nuke question is really interesting. I was left with the impression that the Dominion people truly and fervently believe that nuclear power is highly desirable. Interestingly, the EPA plan (in theory) leans heavily upon nukes as a clean power source nationally. However, local environmentalists don’t support Dominion’s construction of North Anna 3.

  3. Jim, I assume your subtitle to the PJM analysis “Wholesale electricity to the rescue” was with tongue firmly implanted in cheek.

    This is so complicated as to be mind-numbing (at least to me) when you attempt to comprehend the diversity of types loads, generation capacity, anticipated overall load growth, facility efficiency and anticipated future operating life, mix of types of generation from hydro to nuclear to fossil, climate, multi-state statutory considerations, climate, etc. within the PJM geography.

    It seems exponentially more complex as each state’s data are added into the mix. Add to this the EPA’s and the Congress’ history of game changing depending upon wind direction (read party in power) and one might as well buy a dart board.

    On balance I did read your very readable essay to the end and found it most thought provoking. Based on the clean power chart and the rest of the piece my initial vote would go with option one.

    • I was sort of tongue in cheek. The environmentalists think that PJM provides part of the solution for an economical transition to clean power. As I noted above in a reply to Larry’s comment, I tried reading the PJM report and gave up. I conversed with PJM spokesmen and asked them to make it clearer for me. Their explanations didn’t make sense. I had to quote others who may or may not know what they’re talking about but at least spoke in intelligible sentences.

  4. If I had a spare billion dollars I would put it into battery research. Today’s batteries will be laughed at sooner than we think.

    My second billion would go to investigating how to harness ocean currents to generate electricity.

  5. Battery research is immensely important. And there has been a tech breakthrough quite recently: a battery that holds more charge than lithium and recharges many more times, made from cheap materials, is bendable, non-toxic and non-flammable, recharges fast (seconds), and is scalable for everything from cell phones to auto or power-grid uses. Keep your eye on this development (although it’s a few years from making a commercial impact): http://www.eetimes.com/document.asp?doc_id=1326321; http://blogs.wsj.com/briefly/2015/04/07/the-aluminum-ion-battery-how-big-of-a-breakthrough-the-short-answer/

  6. PJM’s comments are far more muted than it’s geographic peers …. some of them sound more like Va. SCC.

    I still think the EPA is doing Dominion a favor in terms ridding itself of older plants –

    No one, in good conscience should support running base load coal plants in an idle mode – this is like leaving your car running while shopping or running your air conditioner or furnace when you are not home -just so it will be comfortable when you show up.

    There are new technologies already available for purchase to save energy. One is called Nest – and it can be programmed to run according to schedule but it can also be controlled from your SmartPhone.

    LED lights are already in the market and already cheaper to use that even CFLs. LEDs will let you run all the lights in your house on what you used to use for one or two light bulbs.

    we’re going to see changes in energy use in the home similar to what we’ve seen in cars. Cars no longer get 20mpg.. if they don’t exceed 30mpg – a lot of people will pass on them

    so many people are doing this that the gas tax no longer brings in enough money for roads.

    I think even if the EPA would pull back – completely -that Dominion is in danger of holding stranded assets because of the rapid advance of technology.

    if people can find ways to cut their electric bills -they will and the technology that’s now available right now – can pay for itself in less than 5 years or less.

    I think Dominions behavior in the pipe line issue, the James River crossing issue and it’s obvious influence in the GA and SCC – belies an organization that perhaps thinks it has more control over things – than it really does.

    Conservatives make a big deal about govt’s inherent incompetence. I’d ask the question – are we sure that Dominion is making good decisions that protect the ratepayer or are they considering the ratepayer to bail them out if the put all their financial eggs in a basket that denies a rapid advance of technological changes?

    they’re arguing about a 2025 date? Does anyone reading these words expect 2025 to be like 2015 in terms of technology?

    here’s a headline: ” Tesla may unveil new home battery technology at April 30th event”

    Now, I do not doubt for a New York minute that this is going to be the epitome of “bleeding edge” – probably something that will cost 20K and run the entire house for 20 minutes or worse.

    but it’s here – and what kinds of changes will we see in 10 years when Dominion still wants to be running coalplants?

    Who would you bet on in the longer run – Dominion’s coal plant technology or Telsa’s technology?

    I think Dominon is probably more like the corporate guys at Kodak than Telsa.

    People are going to build their own home-based dynamic load balancing systems… screw Dominion.

    THe end game is going to be Dominion wanting to charge you a dollar a KWH for the few and infrequent times you actually need grid power and we may actually see that happening by 2025.

  7. “No one, in good conscience should support running base load coal plants in an idle mode …”

    So now we are technical experts on the costs/risks/time involved in bringing up/shutting down generation equipment. It isn’t that simple a process.

  8. I know it’s not – but it don’t keep folks from opinions and supporting or opposing – right?

    I am pointing out that one of the downsides of coal is one that hardly anyone admits to – and thats that they run 24/7 whether they’re feeding power into the grid or not yet at the same time we say that renewables are not reliable.

    that’s an interesting juxtaposition.

    coal is more reliable – as long as you burn it 24/7 .. but we can’t team up NatGas with solar/wind as less polluting and more reliable?

    it’s things like this that make me think that Dominion is just fine with dumbing down the issue to a near-demagogue ” electricity will cost more” sound bite.

    Dominion COULD make their case on the things you mention.

    They could have done that in that letter to the EPA…

    but they do not feel the need to do that.

    I think they should be more accountable to the public – on the issues and actually speak to the complexities you cite.

    They could then put a executive summary on the front – and truly claim it is informing on the issue.

    the fact that they go to the “electricity will cost more” card – from the beginning undermines their credibility in my view .

    they have an obvious conflict between serving their investors and serving citizens and ratepayers.

    I have much more confidence and respect for PJM… an agency that truly has a bigger picture orientation – and focused on electricity not coal.

  9. Maybe we’re not that far apart. Thanks.

  10. Jim,
    Excellent, first rate reporting and analysis, a true service.

    One comment (and not a criticism) — you write:

    “The SCC staff estimated that the plan would cost ratepayers between $5.5 billion and $6 billion just for Dominion to comply. To get at that number, the staff calculated the cost by which adopting the “fuel diversity” scenario described in Dominion’s Integrated Resource Plan, a strategic planning document, exceeded Dominion’s low-cost “base” option. Then, because emissions under the ‘fuel diversity’ plan still exceeded the EPA’s proposed standards, SCC staff modified that plan to include an additional 69 megawatts of onshore renewable wind generation.”

    A few problems here:

    (1) The SCC’s $6 billion or whatever figure is politically charged.

    (2) It seems based on a Dominion plan that hasn’t really been explained.

    (3) Why couldn’t the SCC do its own calculation of an integrated resources plan? Do they have to rely entirely on what Dominion tells them?

    (4) What the hell difference does 69 megawatts of onshore renewable wind generation mean? It’s little; it’s nothing; it’s forgettable. (Dominion is now telling us that offshore wind is just too dang expensive).

    (5) You say the EPA is flexible on how the states come up with the CO2 reductions. You mean there’s no give in Dominion’s “Integrated Resource Plan?” You state otherwise in your piece.

    Keep up the good work. If i were to do a follow story, this is what I would concentrate upon — where does SCC really come up with $6 billion extra in rates? Is this based solely on Dominion data?

    • Thanks, Peter, I appreciate it. It would definitely be worth digging deeper into the SCC’s methodology for coming up with the $5.5-$6 billion estimate. It is a derivative estimate based on Dominion’ IRP plan. The SELC is hopeful that Dominion will be singing a different tune when they file the new IRP this summer, and that the SCC will change their calculations accordingly. That’s possible, but I got a strong sense that the SCC is very skeptical of the Clean Power Plan in its current form.

  11. This is all meaningless until the regulations are published in their final form. And even then, there are so many moving parts to this that every player will be able to cherry pick data to prove whatever ideological point they want to make. This has become politics, and the engineering and economic analysis are just crowded out entirely. Those of us interested in reliable power for the lowest reasonable cost, well, nobody cares about that anymore.

    • I wouldn’t say “meaningless.” The unanswered question is how different the regs will look in their final form. We think Virginia is getting a raw deal, but if the EPA cuts us some slack, they have to stick it to someone else — and they’ll raise holy hell. The EPA might give Terry Mac some token concessions in order to appear responsive, but I would be astonished if they materially change anything. I hope I’m wrong.

  12. This too shall pass. As much as I hate to concede a point to Larry, as long as the EPA is imposing its will on a nationwide basis and sufficient time is granted (which is where I think the EPA will relent) this will not devastate economic activity. Rates will go up and people will adjust. The hysteria that developed last fall and culminated in the General Assembly this winter was, as I noted, mostly politics. We were promised if that bill passed our rates would never rise, as long as the grass grows and the rivers flow, right?

    • I wonder how much flexibility the EPA has. The Obama administration is committed to achieving major CO2 reductions in its treaty with China. What makes you think the EPA has the latitude to relent on time?

      • why would you think otherwise?

        here’s my view of PJM – they are looking at the region – at the existing mix of plants and fuel types.

        and they have years of experience in moving power form one geography to another – successfully – they’ve saved the bacon of the utilities many times and so EPA is essentially taking a PJM perspective whereas Dominion – a company with investors – is taking a Dominion perspective.

        I would not expect anything else but for anyone to think they are NOT taking an investor perspective – I think are naive. We should NOT treat Dominion as a neutral objective player who is going to be a straight shooter on information. They have a conflict – and they have a pattern of looking out for their investor interests.

        PJM does not have that conflict. It may be hard to understand PJM but they have no particular agenda not the least of which is worrying about investors with stranded assets.

        Asking Dominion to explain the issue is like asking VDOT to explain the pros and cons of a proposed road!

        Until I see partisan agendas coming from PJM – I consider them objective and credible in their views and recommendations and if PJM express concern about the price of electricity and reliability – it’s believable.

      • You mention a 15-year time frame but the draft regs are front loaded, with pretty aggressive targets in the earlier phase. So yes, EPA could relent on that part. Pushing the time table to the right a few years does delay the capital costs and reduce the potential rate impact. So let’s see.

  13. Not sure i would worry all that much about obama deal with china

  14. Great reporting. Thanks for the information!

  15. There is an interesting map on PJM’s site. It shows the number of various types of generation types.

    What especially surprised me was the number of wind sites which would appear to outnumber all others combined. Admittedly when passing the mouse over each them many are small capacity but the graphic seemed worth reviewing. There were a number of 1000 – 1500 MWs which is respectable. On the other hand there were lots of methanes with one at only .85 MW.

    One other somewhat encouraging thing was the number of solar given the PJM’s overall latitude. Most seemed small which probably reflects the cost of real estate in PJM’s area.

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