Tag Archives: Dominion

Yorktown Units Allowed to Operate on Emergency Basis

Existing power lines crossing the James River. Photo credit: Daily Press

U.S. Secretary of Energy Rick Perry has issued an order allowing the coal-fired Yorktown Units 1 and 2 to operate on a limited basis for three months this summer to prevent uncontrolled power disruptions in the North Hampton Roads area of Virginia. Dominion Energy had planned to shut down the two units to meet Environmental Protection Agency clean-air regulations. But PJM Interconnection, the regional transmission organization serving Virginia, requested the exemption in March.

“I hereby determine that an emergency exists in the Commonwealth of Virginia due to a shortage of electric energy, a shortage of facilities for the generation of electric energy, and other causes, and that issuance of this Order will meet the emergency and serve the public interest,” stated Perry in an order dated June 16.

The units will operate only as needed to reduce the risk of power outages until Dominion Energy’s 500 kV Skiffes Creek transmission line is completed. The units also can be used during transmission construction when existing lines will need to be taken out of service.

A week ago the U.S. Army Corps of Engineers gave a conditional go-ahead to Dominion to build a transmission line across the James River, eliminating the major regulatory barrier to the project. But the utility still needs to obtain permits from the Virginia Marine Resources Commission, a water quality certification from the Department of Environmental Quality, and a permit from the James City County Board of Supervisors for a switching station, reports the Williamsburg Yorktown Daily.

Meanwhile, construction is expected to take a year and a half, leaving the Virginia Peninsula vulnerable to rolling blackouts on days of peak demand in order to avoid an uncontrolled, cascading blackout that could spread way beyond the region.

Dominion had cited the threat of blackouts as justification for hurrying the permitting process, which has dragged on for years. After shutting down the two polluting Yorktown units this spring, the utility instituted a Remedial Action Scheme (RAS) that would immediately drop load to 150,000 customers in the event that  an uncontrolled blackout took place.

“The order provides authority to PJM and Dominion to run the [Yorktown] units only when needed to avoid loss of electric power in the North Hampton Roads area when certain power demand levels are reached,” says PJM spokesman Ray E. Dotter.

Why Would Dominion Want a $19 Billion Nuclear Plant?

North Anna Power Station

The Nuclear Regulatory Commission has indicated it will issue a license within the next few days to build a third nuclear reactor at Dominion Energy’s North Anna power station, the Richmond Times-Dispatch reported earlier this week.

Dominion has spent $600 million so far on planning, engineering and developing the 1,450-megawatt facility, which has been widely reported to cost an estimated $19 billion. While acknowledging the huge up-front expense, Dominion has argued that it needs to keep open the option of a third nuclear unit in case federal and state regulators impose strict carbon controls on Virginia’s electric utilities.

Robert Zullo has done a fine job of covering Dominion for the Richmond Times-Dispatch, and I rely upon his reporting to keep up with the energy and environmental issues the company is embroiled in. But I would not frame the North Anna 3 issue as he did:

Given the massive cost of the controversial project, which has been opposed by both consumer and environmental groups and has yet to be approved by the State Corporation Commission, it remains unclear whether the utility will actually build the reactor.

True, consumer and environmental groups do oppose the project, and, true, it is unclear whether the utility will build the reactor. But the driver isn’t the cost, which is horrendous. The driver is what kind of regulatory regime federal and state governments enact to reduce carbon dioxide emissions from Virginia power plants. If regulators choose a “mass-based” approach that caps CO2 emissions on existing power plants and all new generation units built in the future, Dominion argues, the only way to meet electricity demand, maintain federally mandated reliability standards and stay within the CO2 limits is to construct a new nuclear unit, which emits zero carbon.

Dominion is not advocating construction of North Anna 3. It is not recommending construction of North Anna 3. There is no indication that it even wants to build North Anna 3. Rather it is preserving the option should political and regulatory developments leave it no alternative.

The company lays out its logic in its 2017 Integrated Resource Report, a planning document that provides a 15-year look into the future. There is so much political and regulatory uncertainty that Dominion examines eight different scenarios predicated on different schemes for restricting CO2 emissions. Building North Anna 3 appears in only one of the eight options, which the IRP refers to as “Plan H.” Here’s how Dominion describes that plan:

Plan H is a Mass-Based program that limits the total CO2 emissions from both the existing fleet of fossil fuel-fired generating units and all new generation units in the future, but also includes the construction and operation of North Anna 3 in 2030. This Alternative Plan was developed assuming that the Company achieves [Clean Power Plan] compliance through portfolio modifications with no market purchase of CO2 allowances. This Alternative Plan limits the generation of [the Mt. Storm coal-fired power station] to a 40% capacity factor.

Key assumptions include:

  • Retirement of up to four coal-fired units at the Mecklenburg and Clover power stations, totaling 577 megawatts, by 2025.
  • 3,360 megawatts of additional solar capacity;
  • 2,290 MW of additional natural-gas, Combustion Turbine capacity;
  • A 20-year extension of the four existing nuclear units at the North Anna and Surry power stations.
  • Addition of 1,452 of nuclear capacity at North Anna 3.

Dominion acknowledges that the compliance costs of Plan H would be extremely expensive — $14.79 billion over the IRP study period compared to $5.71 billion for the next most expensive alternative and $2.3 billion compared to the least expensive alternative.

The impact of Plan H on residential consumers would be considerable. Dominion estimates that average monthly electric rates for a typical residential customer using 1,000 kilowatt hours per month would increase 29.44% by 2030 and subside to 19.01% higher by 2042. That would be more than five times the increase of the next most costly plan in 2030.

Source: Dominion Energy

A key assumption embedded in Dominion’s projections is that electricity demand will increase by an average of 1.5% annually over the next 15 years. The IRP forecasts a compound annual growth rate of 2.04% for the Virginia economy, based upon data supplied by Moody’s Analytics. Thus, a 1.5% load increase implies continued energy-efficiency gains that reduce the energy intensity of each unit of economic growth.

Virginia’s success in attracting energy-intensive data centers plays into the utility’s Virginia forecast. “The Company has seen significant interest in data centers locating in Virginia because of its proximity to fiber optic networks as well as low-cost, reliable power sources,” the IRP says. (See yesterday’s post, “Building on Virginia’s Data Center Boom.”)

Some observers argue that Dominion’s forecast overstates demand growth. Most notably, PJM Interconnection, the regional transmission organization of which Dominion is a part, provides a significantly lower growth forecast for the Dominion transmission zone, as seen here:

Source: Dominion Energy

The IRP addresses this forecast discrepancy at length. Dominion says four factors account for the gap in projected demand growth. First, PJM eliminated new data center growth from its forecast. Second, PJM makes assumptions about Distributed Energy Resources (primarily solar) that overestimate how they would perform during critical system conditions. Third, PJM bases its forecast of appliance saturation and efficiencies on Southeast regional data, while Dominion uses historical data from its own service territory. And fourth, Dominion uses a different methodology to account for public sector energy growth, which accounts for 13% of company sales.

Another unknown is the likelihood that a Plan H scenario will materialize.

The Trump administration has expressed a desire to scrap the Clean Power Plan. Even if it succeeds in neutering the CO2 regulations, though, a future administration could reinstate them. Meanwhile, the Virginia environmental lobby is pushing hard for the CO2 caps contemplated in Plan H, and the McAuliffe administration will announce its own plan later this month to combat CO2. Furthermore, several environmental groups have gone on the record in opposition to extending the life of the existing Surry and North Anna nuclear plants. Should Dominion fail to renew those licenses, it would have to make up nearly 3,400 megawatts of capacity elsewhere. Unable to add fossil fuel capacity under a Plan H scenario, it would be limited to renewables or nuclear. An all-renewables approach could create an unstable grid with major reliability issues. That would leave North Anna 3 as the only alternative.

Many possibilities might obviate the necessity of building North Anna 3 under a Plan H scenario. The electricity load might increase at a slower pace than Dominion forecasts. The utility might succeed in extending the life of its existing nuclear units. Battery storage technology might advance to the point where it is feasible store massive amounts of sunlight-generated energy. There is no way to know at this time what will happen. But as the entity responsible for keeping the lights on, now and far into the future, Dominion is taking no chances. Despite the jaw-breaking cost, it is not taking the North Anna 3 option off the table.

Building on Virginia’s Data-Center Boom

Data centers are the hottest trend in Virginia economic development these days. But the state is only beginning to think through the implications.

Loudoun County, home to 75 facilities, has developed the largest cluster of data centers in the country (and perhaps the world), and next-door-neighbor Prince William County is rising fast. Rural Mecklenburg County has attracted nearly $2 billion in investment as the location of Microsoft’s East Coast hub for online services. QTS has retrofitted an old microchip factory in Henrico County to open a data center, while DP Facilities, Inc., opened a $65 project center in Wise County. Soon, Virginia Beach will enter the data-center sweepstakes when construction is complete on a 4,000-mile transatlantic cable connecting Virginia to Europe.

According to Paula Squires writing in Virginia Business magazine, Virginia boasts more than 650 data processing, hosting and related establishments that employ more than 13,900 people. Since 2006, the industry has announced more than $11.8 million in new investment and 6,600 jobs. The jobs, while relatively few in number, pay well (more than $100,000 a year in Northern Virginia), and generate a gusher of local taxes.

Billions of dollars are flowing into the sector as the global economy embraces cloud computing to handle the massive surge in data collection and storage. A Markets and Markets research report estimates that the cloud storage market will grow from $23.76 billion in 2016 to $74.94 billion by 2021 — a compounded annual growth rate of 25.8%.

Loudoun County was one of the first localities anywhere to see the economic development potential. The county had a built-in advantage — a massive network of fiber-optic cable built by AOL and WorldCom during the heyday of the 1990s Internet bubble. WorldCom went bust and AOL has a much-diminished presence, but the cable infrastructure remained — and high-capacity connectivity is an essential prerequisite for a data center. Loudoun claims that 70% of the world’s Internet traffic passes through the county. The concentration of data centers is so pronounced that economic developers refers to a six-mile radius around Waxpool Road and Loudoun County Parkway as “data center alley.”

The county has built on its infrastructure advantage by learning how to expedite zoning, permitting and construction. CyrusOne completed construction of a 220,000-square-foot data center in Sterling in 180 days — reputedly the shortest construction time fever for a center that size, reports Squires.

To incentivize investment, the state exempts computer equipment bought or leased for a data center from the retail sales and use tax. Henrico County has dropped its business property tax rate on computers and related equipment from $3.50 to $.40 per $100 of assessed value.

Also, Dominion Energy has emerged as a significant partner. The endless racks of servers inside data centers consume electricity and generate heat, which must be cooled by massive HVAC systems. Dominion charges 5.2 cents per kilowatt hour for large facilities, and a slightly higher rate for small ones. “We’re very competitive,” says Stan Blackwell, director of customer service and strategic partnerships for Dominion. “We have some of the lowest data-center rates in the nation.”

Bacon’s bottom line: The rise of the data-center industry raises two pointed sets of public policy questions.

First, how can Virginia optimize this opportunity? What are the critical drivers? Obviously, the existence of high-capacity fiber networks is one consideration. It appears from the map atop this post that Virginia has one of the densest clusters of long-haul fiber capacity in the country. How crucial is that advantage? Does Virginia’s proximity to a relatively fiber-poor Southeastern U.S. give data centers serving that market an edge? Is the competitive advantage bequeathed by fiber-optic infrastructure such that Virginia should consider encouraging investment in more? Conversely, does it do any good for Virginia to invest in its own fiber infrastructure if connections to neighboring states are lacking? Many, many questions.

Electricity is one of the largest costs associated with operating a data center, accounting for roughly 10% of the total cost of ownership — and it is one of the largest costs that vary by location. Dominion’s electric rates confer a significant competitive edge for locations within its service territory.

Graph credit: Dominion Energy

One of the biggest challenges for Dominion — and the further expansion of the data-center industry — is delivering electricity to these data centers. In one particularly controversial case, the utility wants to build a 230 kV transmission line and substation from Gainesville to Haymarket to serve an Amazon data center. Locals have organized in opposition, claiming that the 100-foot-tall towers will disrupt views and harm property values to benefit a single industrial customer. They insist that Dominion bury the line at considerable expense. If Virginia wants to develop the data-center industry more fully, it may need to find ways to resolve the inevitable utility-landowner disputes fairly expeditiously. No company wants to wait years to find out whether a project will get the electric power it needs.

A second big public policy question centers on the implications of the data-center boom for electricity demand in Virginia. According to Virginia Business, data centers represent Dominion’s fastest-growing customer segment: About 7% of the company’s retail portfolio consists of data centers.

This feeds into the debate over Dominion’s future electric generating mix. Dominion’s 2017 Integrated Resource Plan (IRP) assumes that electric load will increase at a compounded rate of 1.5% over the next 15 years — considerably higher than PJM Interconnection’s forecast for the Dominion service territory. Dominion argues that PJM has not taken into account the phenomenal growth of demand by Virginia-based data centers. These projections matter because they influence how much new generating capacity — including nuclear, as I will explore in a forthcoming post — Dominion adds in the years ahead, with tremendous implications for rate payer and the environment.

The data center surge could prove to be an economic development boon for Virginia. But the industry’s growth impacts local zoning and land-use practices, tax policy, fiber-optic infrastructure development, and energy policy. The McAuliffe administration would be well advised to pull together a conclave to determine how to sort through these issues.

Anyone Remember the Coal Ash De-watering Controversy?

Bremo Power Station de-watering test results. Click for legible image.

Environmental controversies are flying so fast and furious in Virginia these days that it’s hard to keep track of them all. As for last year’s disputations, they are quickly forgotten. Remember, for instance, the wrangling over Dominion Energy’s plans for de-watering coal ash ponds at its Bremo and Possum Point power stations?

After intense negotiations, riverkeeper groups, the Southern Environmental Law Center, Dominion, and the Department of Environmental Quality settled upon a protocol for treating and monitoring the quality of effluent before it entered the James River and Quantico Creek. How has the arrangement worked out? The absence of headlines this year is one clue. The water-testing results posted on Dominion’s website provide another.

The tests, which cover pH, suspended solids, oil & grease, hardness and 15 heavy metals and other compounds, show that the water treatment process is cleaning the water to the point where the presence of most pollutants is impossible to detect.

At the Bremo station, only arsenic and chloride appeared in measurable quantities among the three samples taken in early May, and the concentration of both chemicals is less than one-tenth of the Environmental Protection Agency’s permit levels.

Possum Point power station de-watering test results. (Click for larger image.)

At Possum Point, five chemicals appear in large enough quantities to be detectable, but all are safely within prescribed bounds. One chemical, thallium, nudges up close to the permit limit but does not go over.

I don’t purport to have any expertise in these matters, but it looks as if the arrangement is working as it should. If you want to browse through a year’s worth of test results, click here.

This is far from the end of the story, of course. Dominion still must obtain permits for de-watering its Chesapeake and Chesterfield facilities. The results at Bremo and Possum Point suggest that Dominion has the de-watering process firmly under control.

However, the company has yet to receive solid-waste permits for disposing of the coal ash after it has been de-watered. Dominion wants to pursue a cap-in-place approach while environmental groups want the utility to bury the material in landfills. That issue will take longer to resolve. Among the uncertainties is determining the extent to which underground water picks up contaminants while migrating through the coal ash pits. Getting answers will require a different testing protocol than the one used for the de-watering process.

Dominion Urges Citizens to Report Suspicious Activity

PG&E’s Metcalf substation, where a sniper attack knocked out 17 transformers. Photo credit: Wall Street Journal

Dominion Energy issued an unusual press release a couple of days ago, urging customers to “report suspicious activity.”

“Suspicious activity includes anything from someone recording or monitoring Dominion Energy facilities to someone who doesn’t seem like they belong in a certain area or is behaving strangely,” said Marc Gaudette, Director of Corporate Security, Safety and Health. “What may seem like a small piece of information could be the missing piece of the puzzle that law enforcement needs to prevent an unexpected event.”

Bacon’s bottom line: Dominion, like other electric utilities, finds itself in a difficult situation. On the one hand, it is rightfully concerned about the threats to the integrity of the electric grid at the hands of terrorists or other saboteurs. The electric power industry has been on hyper alert ever since a 2014 sniper attack on Pacific Gas & Electric’s Metcalf Transmission Substation, which severely damaged 17 transformers and forced the utility to reroute electric power in order to avoid blackouts. The situation is all the more urgent for Dominion, which has shut down two of three of its Yorktown Power Stations, leaving the Virginia Peninsula more vulnerable than usual to blackouts should an accident knock out a transmission line on a hot-weather day with elevated electricity demand.

Dominion cannot survey every substation or every mile of transmission line 24/7, and it makes sense to call upon the public if someone sees something suspicious. As the press release states: “”Think security and safety… If you spot something suspicious, speak up. … Act as our eyes and ears and report any suspicious activity near a Dominion Energy facility by calling 1-800-684-8486. Of course, in an emergency you should always call 911.”

Dominion’s problem is that it can’t get too specific about what to look out for. For one, the utility doesn’t want to generate unnecessary public alarm by exaggerating the threat. Even more important, the company doesn’t want to tip the hand of any potential bad guys by getting too specific about what to look for, thus revealing potential vulnerabilities.

The result of these conflicting imperatives leaves people unclear about what exactly they should be looking for. But a half-informed citizenry is preferable to a totally uninformed citizenry. And, given the stakes involved, false alarms are preferable to no alarms. I live near an electric transmission line and substation, which I routinely ignore. Now, I’ll be keeping an eye out for… whatever…. I’m not quite sure. But better safe than sorry.

McAuliffe Moves to Cap Utility Carbon Emissions

Governor Terry McAuliffe. Photo credit: Associated Press

Big news yesterday: Governor Terry McAuliffe issued an executive order to cap greenhouse gas emissions from Virginia power plants. Unfortunately, I’m out of town on personal business today, so I don’t have time for anything more than a cursory analysis.

Said McAuliffe in a press release: ““The threat of climate change is real, and we have a shared responsibility to confront it. Once approved, this regulation will reduce carbon dioxide emissions from the Commonwealth’s power plants and give rise to the next generation of energy jobs. As the federal government abdicates its role on this important issue, it is critical for states to fill the void. Beginning today, Virginia will lead the way to cut carbon and lean in on the clean energy future.”

McAuliffe’s press release cited the job-creation benefits that would come from a shift from fossil fuels to solar energy. Last year, as solar production took off in Virginia, the solar industry employed 3,236 workers — twice the number supported by coal. McAuliffe said also invoked sea level rise to justify his move:

Virginia is already experiencing the effects of climate change in its coastal regions due to rising sea levels. The threat from frequent storm surges and flooding could cost the Commonwealth close to $100 billion dollars for residential property alone. The impacts extend far beyond our coast, as half of Virginia’s counties face increased risk of water shortages by 2050 resulting from climate-related weather shifts.

The action now moves to the Department of Environmental Quality, which the governor ordered to write the regulations.

Bacon’s bottom line: McAuliffe’s move will generate headlines and plenty of political heat — Republicans have already announced their opposition to what they call the governor’s executive overreach — but it’s far from clear what practical impact the move will have. Acknowledging that the cost of solar energy has plummeted, Dominion Energy and Appalachian Power already have forecast that they will move heavily toward renewable energy sources over the next 25 years.

The press release spoke of a “cap” on greenhouse gases and new regulations that will “reduce” carbon emissions — not merely reduce carbon intensity (carbon dioxide emitted per kilowatt of energy produced). It is possible to reduce the carbon intensity of the electric generating fleet while allowing total carbon emissions to increase, albeit it at a much slower rate, as the economy grows. If Virginia caps carbon emissions, Dominion and Apco might be required to close additional coal-fired power stations, and it is unlikely that Dominion would build a planned gas-fired power plant in the early 2020s. Cancellation of that facility could undermine the economics of the proposed Atlantic Coast Pipeline, construction of which McAuliffe has said he supports.

Expect trench warfare between utilities, environmentalists and consumer advocates in the DEQ hearings discussing how to implement the carbon caps. Also expect General Assembly Republicans to challenge McAuliffe’s legal authority to implement a cap.

Update: Apco spokesman John Shepelwich submits the following correction: “Appalachian Power no longer operates any coal-fueled power generation in Virginia and has not since 2015. Two of the three units of our Clinch River Plant in Russell County were converted from coal to natural gas; that plant is scheduled to be retired in 2026.”

Shareholders Pressure Dominion on Climate Policy

At Dominion Energy’s annual meeting earlier this month, shareholders submitted numerous shareholder proposals requiring the energy giant to adopt more environmentally friendly measures. I took note of some of them in my story about the event but never bothered to inquire about the vote results. I’ve attended plenty of annual meetings in my time, and I’d never seen a shareholder proposal opposed by management approved, or even come close to being approved. I didn’t expect any differently this time.

My bad. As it turns out, 48% of participating shares voted in favor of a resolution that would require Dominion to publish an annual statement on the financial risks that climate change poses to the company, according to the Virginian-Pilot. That total was up from the 23.5% of the vote for a comparable resolution at the 2015 annual meeting.

It wasn’t just gadfly nuns and hippies owning a few shares who voted for the resolution. That many votes required heavy support from pension funds and other institutional shareholders. It’s entirely possible that a similar proposal could pass a year from now. The proposal must be taken seriously, for its sponsors surely will be back next year.

Backers of the proposal cast the issue in terms of what is best for Dominion, not environmentalists, the environment or Mother Gaia: Climate change caused by CO2 emissions is unleashing more frequent and more damaging storms, which can expose Dominion’s infrastructure to storm damage, and will engender tighter anti-carbon regulations that could endanger its multi-billion bet on natural gas electric plants and pipelines.

“The three costliest storms in Dominion’s 100-year operating history, Hurricane Isabel, Hurricane Irene and the June 2012 Derecho, have occurred in the last decade,” states the shareholder proposal in the 2016 proxy statement. “The consensus among climate scientists is that without significant reduction of greenhouse gas emissions, climate change will continue to result in more severe and frequent storms, among other effects.”

Dominion’s restoration costs were $128 million for Hurricane Isabel in 2003, $59 million after Hurricane Irene in 2011, and $42 million after the derecho. “Additionally, between 2011 and 2012, weather events, earthquakes, and environmental regulations imposed more than $450 million in costs on the company, adversely affecting its earnings.”

Also, argued a memorandum in support of the proposal, the company does not seem to be taking into account federal or state legislation that could “either mandate greater deployment of renewable energy or assess financial penalties for the continued use of fossil fuels.” Dominion could be “betting the company” that changing laws, regulation and consumer tastes won’t leave the company with billions in stranded, uneconomic assets.

“Dominion faces serious financial challenges with regard to climate change risks that are not being addressed,” says the memorandum. “Dominion should be required to provide adequate climate risk assessments, including clearly defined actions the Board intends to take to address these risks.”

Dominion responds. Dominion management advised shareholders to vote against the proposal. Committed to being a good environmental steward, Dominion is pursuing an integrated strategy to reduce greenhouse emissions based on a diverse fuel mix, including gas, nuclear, hydro, wind and solar, the company stated. Between 2000 and 2015, the company has reduced the carbon intensity of its generating fleet by 43%, and it has forecast that carbon intensity will fall another 25% as it expands solar production to 5,200 megawatts over the next 25 years.

Dominion says it is one of the lowest carbon-intensity electricity producers in the U.S. Producers at the lowest end of the scale are pure-play renewable companies.

Also, the company responded in the proxy statement, it already reports on financial risks relating to climate change in its 10-Q forms and in its Citizenship & Sustainability Report. Three years ago, it published the “2014 Dominion Greenhouse Gas Report.”

As for the charge that Dominion isn’t taking into account the potential for tighter carbon emissions, in remarks made during the shareholders meeting, CEO Tom Farrell said that carbon regulation is coming. While some politicians have suggested that the Trump administration will roll back the Obama administration’s Clean Power Plan, Farrell said that the EPA is legally required to regulate CO2 emissions, and that a McAuliffe administration study group will come out with state-level recommendations in June.

Bacon’s bottom line: One can argue with the premises of the shareholder proposal, but it really doesn’t matter if the authors are right or wrong in their particulars. What matters is whether shareholders owning a majority of shares believe they are right. If a few more shareholders agree, joining those in the 48%, they could push through their proposal a year from now.

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. Continue reading

The Failed Mountain “Decapitation” Narrative

Schematic filed with West Virginia regulators of a two-mile stretch of the proposed Atlantic Coast Pipeline near the Virginia state line.

Schematic filed with West Virginia regulators of a two-mile stretch of the proposed Atlantic Coast Pipeline near the Virginia state line. (Click for larger image.)

Environmentalists say the Atlantic Coast Pipeline will “decapitate” pristine mountaintops in western Virginia. They have no evidence to back the claim.

Last week foes of the Atlantic Coast Pipeline (ACP) leveled their most rhetorically heated charges against the 600-mile pipeline project yet. Construction teams would have to excavate some 247,000 dump-truck loads of rock and soil as they blasted a path across steep mountains and ridge lines. Describing the “decapitation” of pristine mountains, opponents likened the process to highly destructive mountaintop removal by the coal industry.

There was just one problem. The environmentalists’ calculations were based on the assumption that the ACP would flatten a 125-foot-wide construction corridor through the mountains. That assumption was inaccurate, Aaron Ruby, a spokesman for Dominion Transmission, managing partner of the pipeline project, responded at the time. On ridge lines, the company would carve out just enough space to excavate the trench, which will be “significantly narrower” than 125 feet. Without the 125-foot assumption, the rest of the “decapitation” analysis falls apart.

Ruby’s comment seemingly constituted a devastating rebuke. But pipeline foes are sticking to their guns. Building on the “decapitation” theme, the Chesapeake Climate Action Network (CCAN) is planning a rally today in front of Governor Terry McAuliffe’s office to demand that the governor use his regulatory power to “halt Dominion’s proposed mountaintop removal plans.”

A CCAN briefing paper asserts that “the choice to build along ridgelines is part of Dominion’s preferred and deliberate design. Working on these ridgelines will require creating a wide and flat surface to allow Dominion’s earth-moving vehicles and deep-trenching machines to operate and maneuver. The federal government’s report on the environmental impacts of the pipeline declares that ‘narrow ridgetops’ [will] require widening and flattening in order to provide workspace in the temporary right-of-way.”

What proof does CCAN have to back up such claims? None at all.


ANALYSIS


In a follow-up email distributed to members of the media late last week, Rick Webb with the Dominion Pipeline Monitoring Coalition (DPMC), a CCAN ally, attached a document that included the schematic above, which Dominion had submitted in a West Virginia regulatory filing. The schematic shows an elevation profile and a top-down view of the pipeline route on a two-mile section of the proposed pipeline near the Virginia border. A report by RESPEC, a geoscience engineering consulting firm hired by Appalachian Mountain Advocates, another anti-pipeline ally, estimated that construction would remove 130,000 cubic yards of material in that one segment alone.

That report, “Atlantic Coast Pipeline and Supply Header Project Volumetric Analysis,” made several assumptions. Among them, the firm created “typical cross-sections” to facilitate the computation of the volume of excavated material. One of the four cross-sections — “Ridgeline – Steep” category (shown below) — was applied to topography located on a ridgeline with an overall slope of greater than 20%.

Source: “Atlantic Coast Pipeline and Supply Header Project
Volumetric Analysis.” (Click for larger image.)

The graphic clearly shows the assumption that the top of the ridge-line will be removed in its entirety.

But the assumption is invalid. As ACP spokesman Ruby elaborated in an email: “We will not need to grade the entire 125-foot-wide construction right of way on every ridgeline. We may need to clear the entire ROW so we have room for our equipment, but we will only grade enough space so we can safely excavate the trench and install the pipe.”

There is nothing in the Dominion schematic to contradict Ruby.

In an interview with Bacon’s Rebellion, Webb acknowledged that pipeline foes were making assumptions for the purposes of their analysis, and he shifted the burden of proof to Dominion to prove their analysis wrong.

“We’re taking the information we have and saying, ‘It can be this bad,'” said Webb. “If Dominion says this is an exaggeration, show us the details to prove otherwise. Informed decisions can’t be made,” he added, until more information is made available.

Dominion has yet to file detailed construction plans for the route, Webb said. “The only detailed plans in Virginia we’ve seen is a one-tenth of a mile section in Highland County using high-tensile steel mesh nailed into the ground with six-foot nails. We want to see what they’re planning to do with the rest of the pipeline. Dominion has presented a concept. … We want to see solutions now.”

It’s one thing for pipeline foes to demand Dominion to make more information available to the public. It’s a very different thing to claim that the company intends to engage in mountaintop decapitation with devastating environmental consequences. Dominion insists that it won’t, and pipeline opponents have offered no tangible evidence to indicate otherwise. Perhaps proof will turn up in future filings to support their view. But it hasn’t yet, and pipeline foes undermine their credibility by trumpeting claims with no basis in demonstrated fact.

Dominion Sings New Tune, Embraces Solar

Dominion’s White House Solar farm in Louisa County

Dominion expects to install up to 5,200 megawatts of solar generating capacity by 2042 — about thirteen times its current commitment and enough to power 1.3 million homes — according to forecasts contained in its 2017 Integrated Resource Plan (IRP). That represents a dramatic shift from forecasts in previous versions of the long-range planning document, which is filed annually with the State Corporation Commission.

Natural gas emits half the carbon dioxide per unit of electricity than oil and coal, and solar produces no carbon emissions at all. Increasing reliance upon those two energy sources will shrink a typical Dominion Virginia Power customer’s carbon footprint (carbon dioxide emitted per customer) by 25% over the next eight years, the company stated in a press release.

“The ‘installed cost’ of large-scale solar facilities … has dropped 50 percent over the past four years,” said Paul D. Koonce, CEO of the Dominion Generation Group. “Our customers want more renewable energy, and changing economics make the transition to renewable resources easier.”

Dominion has been slow, compared to many other utilities, to embrace solar power. In past years, the company stressed that solar produced electricity only when the sun was shining, which made necessary extensive backup capacity, and that solar peak production in the mid-day did not match up well with peak demand for electricity on late summer afternoons or early winter mornings. Until now, the company had committed to building only 400 megawatts by 2020.

Environmental groups have been highly critical of the utility’s approach to renewable energy for years, and Dominion’s latest announcement changes little. The Sierra Club Virginia Chapter today attacked the utility’s continued reliance upon “dirty” “fracked” natural gas and criticized the proposed Atlantic Coast Pipeline.

“Dominion’s actions don’t match its words when it comes to promoting renewable energy,” said Kate Addleson, director of the Virginia Sierra Club, said. “Despite the fanfare, this does not appear to be a sharp change from what we have seen in the past.”

“Rather than deliver a clear energy plan, this document only serves to raise more questions about what Dominion really wants to do over the long-term and who really stands to benefit,” said Will Cleveland, Southern Environmental Law Center (SELC) attorney. “While Dominion is taking a good step toward expanding solar, they are simultaneously taking two steps back by doubling down on dirty fossil fuels.”

In related news, Appalachian Power Company also filed its IRP, forecasting the addition of 500 megawatts of universal solar by 2031, 1,350 megawatts of wind energy by 2031, and 10 megawatts of battery storage resources by 2025. “Universal” solar is the term for generating capacity that feeds into the broader system, not reserved for the use of a single customer or set of customers.

Dominion executives attributed the company’s rhetorical about-face to continued improvement in the economics of solar energy and a conviction that, despite the Trump administration’s antipathy toward the Clean Power Plan, some form of CO2 regulation will remain in place.

“We believe this balance … of solar, natural gas, and nuclear hits the sweet spot in terms of cost, environmental performance, and reliability for our customers,” Koonce said.

Dominion graphic shows the declining carbon footprint as the company’s four gas-fired power plants came online, replacing coal units and displacing out-of-state energy purchases.

Modernizing the grid. Aside from boosting the efficiency of solar panels, new technology enables utilities to better handle fluctuations of frequency and voltage on the electric grid caused by variable solar output.

“For the first time, our long-range plan discusses the need to modernize the energy grid in order to accommodate the changes in how power will be produced as well as to meet the needs and desires of our customers,” said Bob Blue, CEO of Dominion Virginia Power.

The existing transmission and distribution grids were built to facilitate a one-way flow of electricity from a handful of large power plants to millions of distributed customers. “The energy company produces a large amount of electricity at a relatively small number of locations,” Blue explained. “It then sends that power across big wires, then medium-sized wires, then small wires.”

Solar output will be more distributed. “When solar is connected, the distribution grid must become a two-way network so we can deliver energy seamlessly to everyone, including people with solar panels on their rooftops,” Blue said.

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