Category Archives: Environment

Pushing Forward Virginia’s Solar Future

Dominion solar facility in Buckingham County.

A couple of years ago, the rap against Dominion Energy Virginia was that it was hostile to solar power. That line of thought is harder to maintain now that Dominion is committed to build at least 5,200 megawatts of solar power — roughly a quarter of its generating capacity — by 2042. Dave Mayfield at the Virginian-Pilot has taken notice:

After many years as a laggard, Virginia has lately been emerging as a leader in the field.

Last year, it placed 10th among the states in new solar capacity installed, up from 17th the year before, according to a report compiled for the Solar Energy Industries Association. North Carolina ranked second, behind California.

The association projects that Virginia’s total solar generating capacity will more than triple over the next five years to roughly 2,000 megawatts – enough to power upwards of 200,000 homes.

Some industry officials and clean-energy advocates expect even-sharper growth during that time frame, and say the solar expansion almost certainly will accelerate across Virginia in the decades beyond.

I nearly fell out of my chair when I read this: “I think you’re going to see a lot more discussion about Virginia being a hot state for solar,” said Ivy Main, affiliated with the Sierra Club’s Virginia chapter who writes the “Power for the People VA” blog. Main has been relentlessly critical of Dominion’s approach to solar over the years.

So the rap against Dominion has changed. Now the criticism is that, yeah, 5,200 megawatts is pretty good, but 25 years takes too long to reach that goal. And, yeah, Dominion is building more solar, but it’s not opening up the grid fast enough enough to homeowners, small businesses and independent solar producers.

Regarding the first criticism: I expect Dominion’s enthusiasm for solar will increase in direct proportion to the falling cost of solar generation, smart grid technology, and battery storage. Just as the utility has gone from a minimal commitment to solar two years ago to a large-scale commitment today in response to changing economics and market forces — especially growing demand by data centers and large corporations for renewable energy — this “problem” will take care of itself. The main brake on solar adoption will be Dominion’s comfort level with integrating a huge solar fleet into its transmission and distribution systems while maintaining grid reliability during periods of peak demand.

The second criticism, opening up solar production to outside competition, is a thornier issue. Many companies would like a piece of Dominion’s electricity market (as well as that of Appalachian Power’s and that of the electric co-ops). These interlopers are nimble and innovative, and, given current price trends, they likely would be able to sell solar for less than the cost of generating electricity from coal, nuclear or even gas — if not now, then five years from now. If competition opened up as critics would like, Virginia’s incumbent utilities stand to lose significant market share.

But here’s the rub: Electric utilities are monopolies, and they are monopolies for a reason. They have the responsibility for maintaining the integrity and reliability of the electric grid. If the lights go out, the North American Electric Reliability Council, PJM Interconnection, the State Corporation Commission, and millions of customers will look to the likes of Dominion, Appalachian Power, and the electric co-ops to get them back on again. They won’t look to homeowners. They won’t look to the independent solar producers. They won’t look to the Sierra Club. The utilities are the ones with skin in the game.

Society and the utilities have struck a bargain: In exchange for ensuring the reliability of the system, society will grant them monopoly service territories and regulate them to provide an assured rate of return on their capital (absent incompetence on the utilities’ part). Reneging on that bargain and opening up the system to wide-open competition would undermine the utilities’ revenues and profits, exposing them to potentially massive write-offs. It should surprise no one that the utilities resist such an eventuality.

Ironically, Dominion led the charge for opening up the utility industry to competition some twenty years ago. The experience was widely judged to be a failure; little competition materialized. Then in recognition of that failure a decade ago, Dominion led the charge to re-regulate the industry in Virginia. We can debate the success or failure of the experience since then, but it does seem apparent that if the industry were deregulated in 2018, there would be plenty of competition on the power-generation side of the business — from merchant producers selling into the wholesale market, from entrepreneurs partnering with big corporations, from intermediaries buying wholesale electricity off the grid and re-selling it to retail customers, and from energy- and eco-conscious homeowners installing their own solar.

One approach to opening up the market for competition is to demonize the utilities. That’s a favorite trope of the Left, which is hostile to corporate power and profits to begin with. Another approach is to give thought to how to realign the incentives for Dominion, Apco and the electric co-ops to do the kinds of things society wants them to do — generate more renewables, allow more competition, invest in energy efficiency, etc. — and to realign them in such a way as to not trigger massive write-offs for power plants made obsolete by the changes. Virginia can choose an ideological route or it can choose a pragmatic path forward.

Under any scenario, building and maintaining the electric transmission and distribution remains a “natural monopoly” and would be subject to continued regulation. But deciding how to restructure electricity generation will be really complicated. In an ideal world, all power generators would sell into PJM’s wholesale market and the winners would be bidders who offer the best combination of price and sustainability. But if the incumbent utilities lose market share and revenues, who pays for cleaning up the coal ash ponds of coal-burning power plants? Who eats the cost of write-offs from obsolete generating units? Who pays to keep aging coal- or nuclear-power plants in reserve for back-up power? What are the implications of Virginia joining the Global Greenhouse Gas Initiative?

We haven’t begun to answer these questions. Indeed, only a handful of people are even asking them. After the exhaustive debate over the Grid Transformation and Security Act this year, there may be little appetite for any such conversations. But allowing for an appropriate respite from the recently concluded General Assembly session, perhaps we should begin the discussion.

The Biggest Corporate Purchase of Solar Power in the U.S… Ever

Microsoft Corp. plans to buy about 60% of the energy production from a massive solar power project in Spotsylvania County to power its data centers in Virginia. The proposed 500-megawatt solar development, called Pleinmont, would include more than 750,000 solar panels on a 3,500-acre site, which, when completed, would be the fifth-largest solar site in the country.

“This is really important to Microsoft, and we think it is really important to Virginia for several reasons,” said Michelle Patron, director of sustainability for Microsoft. “This is going to be the largest corporate purchase of solar power ever in the United States. … We think this puts Virginia on the map for clean energy.”

The Pleinmont solar farm is being planned by Sustainable Power Group LLC, or sPower, which is a joint venture of Arlington-based AES Corp. and Canada-based investment fund AIMCo, according to the Richmond Times-Dispatch.

The project still requires approval by the State Corporation Commission. The commission has scheduled a public hearing in May and is soliciting public comments.

Microsoft has said that it has met its target to power at least 50% of its data centers with clean energy by 2018, and the company wants to achieve 60% clean energy by early 2020, says the Times-Dispatch. In 2016 the company had agreed to buy power from a 20-megawatt solar farm in Fauquier County.

Bacon’s bottom line: In all the excitement over grid modernization and the rollback of the electric rate freeze in recent months, I totally missed this story. But if Virginia is on track to build the fifth-largest solar facility in the country, and if the deal represents the biggest corporate purchase of solar power ever in the U.S., that’s a big deal!

Previous reporting by the Times-Dispatch noted that Pleinmont would sell its electricity into the PJM interstate wholesale power market to companies that want to offset their electricity consumption with power produced by renewable sources of energy.

Does this deal cut Dominion Energy Virginia out of the picture as an electric power generator? Does this represent a new strategic direction for Microsoft and other data-center companies, which are driving the growth in electricity demand in Virginia? In other words, is Dominion’s electric power-generating monopoly being eroded? Five hundred megawatts is a lot of electricity — roughly half the capacity of a new, state-of-the-art natural gas-fired power plant.

Or will Dominion swoop in later, as it has in several other solar deals, acquire the Pleinmont property, and count it towards its commitment to build 5,000 megawatts of solar power, as codified in the recently passed Grid Modernization and Security Act?

One more question: What does this mean for natural gas demand in Virginia?Data centers consume electricity 24/7, but solar power generates power only 12 hours per day (with output varying by the time of year). Where will the electricity come from in off hours? Do deals like this bolster or obviate the need to build any new gas-fired plants?

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

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

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

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

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

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

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

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

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

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

Amazing Vines

If I have good karma and come back as an elevated life form, I hope to return as an evolutionary biologist. Upon ascending to something close to Buddhahood, I would like to be E.O. Wilson (whose most recent book I mentioned in my previous post). As it is, I am who I am, and I’m endowed with far more curiosity than knowledge.

That curiosity was sparked two days ago by my visit to Barton’s Cave in Belize, a cave used by the ancient Maya for ceremonial religious purposes including human sacrifice. Steep limestone cliffs flank the entrance, and from those cliffs hang remarkable vines related to the ficus family.

These vines originally took root in the nooks and crannies of the rock formation, extracting whatever water and nutrients they could from their barren perch. Nothing terribly unusual about that. All manner of scrubby plants find precarious rocky footholds. But these vines do something more — they grow a vine-like root that, over the process of years — our guide said decades — descends twenty-five to thirty feet until they reach the water below. Just think about that — for years those useless appendages dangle to little effect. But eventually they reach the water, and there they become transformed.

The vines sprout roots in the water. And over time, the roots trap sediment from the current, creating their own ball of nutrient-bearing soil. Over time, the vines grow thicker and stronger, yet they descend no deeper than a than a few inches. They have what they need, and they go no farther. I have seen tropical vines in other locales drop from trees and implant roots into the ground, but never have I spotted such a thing as this. I find it astonishing.

If Charles Darwin and E.O. Wilson were the godheads in the great chain of being, I would rank somewhere between a fruit fly and an anopheles mosquito. I have traveled relatively little, and what I have seen I have viewed through an ignorant eye. But I do look at the world of nature with a sense of wonder, and that is its own reward.

I Love this Goal: 10 Billion More Oysters

Oyster reef. Photo credit: Jay Fleming Photography.

I love this goal: Adding 10 billion oysters to the Chesapeake Bay by 2025.

A partnership of more than 20 organizations, businesses, non-profits, and educational institutions announced that objective earlier today. The 10 billion oysters will come from a combination of expanded restoration activities, fishery repletion activities, and the continued growth of the Bay’s oyster aquaculture industry.

“Oysters are so much more than the tasty bivalves that many know them to be. They are a crucial part of our ocean planet,” said John Racanelli, National Aquarium chief executive officer. “They help keep our waterways clean by removing harmful pollutants and they provide a hospitable place for other animals to live—from the backwaters of the Chesapeake Bay to the vast Atlantic Ocean.”

The partnership has established as its top three priorities ensuring robust funding for oyster restoration, establishing sound science-based management that ensures sustainable harvest of the Bay’s oyster population, and expanding the oyster aquaculture industries in Maryland and Virginia.

While I am a skeptic of global-warming alarmism, I consider myself an environmentalist. I happen to think that there are more productive ways to spend scarce public dollars than re-engineering the industrial economy of the globe to adjust CO2 levels in the atmosphere. Locally, we can accomplish far more good by investing funds in restoring the health and adaptability of the Chesapeake Bay. Oysters are a keystone species. If we can restore their numbers, we can make a huge, visible difference.

More Facts, Less Alarmism, Please, Regarding Offshore Drilling

Coal Oil Point in California

I don’t know much about offshore drilling for oil and gas. But, then, I’m not sure that many vociferous opponents of drilling off the Virginia coast know much about it either.

A case in point is a quote, reported in today’s Richmond Times-Dispatch, by Rep. A. Donald McEachin, D-4th:

As we learned from the Deepwater Horizon catastrophe, accidents can be unimaginably destructive, devastating the marine environment, wrecking entire industries and potentially affecting the health of local residents.

McEachin said he would resist offshore drilling “every step of the way.”

Yes, Deepwater Horizon was an environmental disaster. But is that catastrophe a useful comparison for offshore drilling in Virginia? Deepwater Horizon was drilling a deep exploratory well at a depth of about 5,100 feet. The drilling took place in conditions of massive water pressure that would be absent on the continental shelf of the Virginia coast where the average water depth is about 200 feet.

An appropriate comparison would be with offshore drilling operations taking place on the continental shelf in the Gulf of Mexico. According to LiveScience, 1.3 million gallons of petroleum are spilled into U.S. waters from vessels and pipelines in a typical year. Between 1971 and 2000, U.S. Outer Continental Shelf offshore facilities and pipelines accounted for only 2 percent of the volume of oil spilled in U.S. waters.

Compare that to the volume of oil that naturally seeps from the seafloor. A single seep, Coal Oil Point on the California coast, releases about 10,000 gallons per day — about 3.6 million barrels yearly — according to the Stop Oil Seeps California website. Has that turned the coastline into an ecological disaster zone?

Here’s what the Coal Oil Point Reserve website has to say about the wildlife there:

One of the best remaining examples of a coastal-strand environment in Southern California, the Coal Oil Point Natural Reserve protects a wide variety of coastal and estuarine habitats. Largely undisturbed coastal dunes support a rich assemblage of dune vegetation and rare wildlife, including the dune spider, the globose dune beetle and the threatened Western Snowy Plover. …

Thousands of migratory birds visit throughout the year. Coal Oil Point Reserve is part of Audubon’s Important Bird Area (IBA) and it is visited daily by birders. …

Vernal pools host a number of rare and endemic species.  At low tide, the intertidal and subtidal zones at the reserve provide an opportunity to observe the rich assemblage of invertebrates and algae living on the rock formations.

Not exactly a toxic hellhole.

The conditions in Virginia are not the same as in California; they aren’t the same as in the Gulf of Mexico. Maybe a sober-minded analysis would show that offshore drilling would pose a genuine threat to Virginia’s precious coastal environment. I await that study. In the meantime, I’m not paying much heed to politician’s heated rhetoric regarding topics about which they know nothing.

A View from the Trenches: Ending the Freeze

by Chris Saxman

Statesmen should remember that they have been elected to persuade and to lead, and not just to accept as fixed the momentary moods and pernicious prejudices of the public.
     — Stanley Hoffman

Professor Hoffman might have been quite pleased watching yesterday’s Senate Commerce and Labor Committee as the compromise legislation on electric utility regulation, grid modernization, and energy efficiency was debated and sent to the Senate floor.

Here is Governor Ralph Northam’s press release on the legislation.

The bill – SB 966 – is being carried by Commerce and Labor Chairman Frank Wagner, R-Virginia Beach, along with Senator Dick Saslaw, R-Fairfax), who was carrying a similar bill, SB967. Saslaw’s bill was incorporated or “rolled” into SB966 at the start of the debate.

After that motion came internal committee debate and questioning of Wagner and Saslaw which helped explain the compromise bill brokered by Governor Ralph Northam and House Speaker Kirk Cox. Just hours before the committee meeting, the Governor announced that a deal, in fact, been struck.

Almost all of the committee members spoke at one point and in doing so exposed the extraordinary changes occurring in the political landscape – both in Virginia and in the U.S. Remember, that Virginia is a battleground, bellwether coming off a dramatic statewide election just three months ago. More on that later….

During the 2017 election, the issues being debated yesterday played a prominent but not decisive role.

Senator Mark Obenshain, R-Rockingham, opened the dialogue as he expressed concerns about the economic value of the significant solar investment required in the bill. The 5,000 megawatts of solar power to be added in Virginia by 2028, he thought, would be too heavy a cost to be paid by ratepayers, suggesting that this was more “social judgement’ than economic good. Obenshain expressed that perhaps the State Corporation Commission is in better position to make such decisions rather than having the General Assembly do it “on the fly.”

Saslaw explained that 5,000 megawatts equated to 1.25 million homes that would be powered by solar generation and that “nothing is free.” Saslaw said that “both” economic and social judgments were being addressed in SB966.

Senator Steve Newman, R-Campbell County, acknowledged his gratitude that the bill was “much improved in just a week” but that he, too, had economic concerns for ratepayers about the solar portions of the bill as a “giveaway too high and too great” for his support.

Senator Lionell Spruill, D-Chesapeake, questioned if the real winners of the compromise were the stockholders of Dominion or Appalachian Power while Senator Rosalyn Dance of Petersburg asked, “Who spoke for the consumers?”

Dana Wiggins of the Virginia Poverty Law Center, which had been very vocal publicly in decrying the current law written in 2015 in response to the Clean Power Plan, stated that while her organization had been part of the working group, it “still had concerns about double charging.” Later Wiggins would testify that the VPLC was neither for nor against the bill, which shocked many observers because the Center’s pre-session commentary had been so negative. Now it was neutral.

Southside Senator Bill Stanley, R-Moneta, did explore, along with Northern Neck Senator Richard Stuart, R-Westmoreland,concerns about “double charging” and “giving people their money back” as they questioned Dominion lobbyists Jack Rust and Bill Murray. Continue reading

Compromise Bill Ending the Rate Freeze Advances In Senate

Lightning show

How good is the electric-regulation compromise worked out between the governor’s office, electric utilities, consumers, and other interest groups? It’s so good, Sen. Frank Wagner, R-Virginia Beach, said today that the average homeowner will see electric rates locked in at 2009 levels “for a long time,” even as Virginia invests heavily in solar power, wind energy, energy-efficiency, and grid modernization.

While some legislators in the Senate Commerce and Labor Committee worried that the compromise legislation to end the 2015 rate freeze would allow Dominion Energy Virginia and Appalachian Power Co. to “double dip” on earnings invested in grid modernization, Wagner and Senate Minority Leader Richard L. Saslaw, D-Springfield, insisted that they would not.

“There is not an avenue for double charging,” said Wagner. The “reinvestment” model, first advanced by Dominion and subsequently backed by Apco, would plow back over-earnings into grid-modernization projects, enabling the utilities to spend “in the neighborhood of” $200 million a year without increasing rates. Customers will receive more than $1 billion in give-backs and other benefits.

Governor Ralph Northam endorsed the controversial package after a Senate subcommittee made extensive changes to the legislation earlier today. Then Commerce and Labor voted 10 to 4 in favor of the package, advancing the legislation to the full Senate. Opponents of the compromise — strange bedfellows ranging from leftist environmental and activist organizations to a large industrial user group — registered their opposition.

“The goal of that legislation should be simple,” said Northam in a press release: “Give Virginians as much of their money back as possible, restore oversight to ensure that utility companies do not overcharge ratepayers for power, and make Virginia a leader in clean energy and electrical grid modernization.”

The compromise would repeal the 2015 rate freeze, provide immediate relief to rate payers, and restore State Corporation Commission oversight of electric utilities. Dominion would issue $200 million in rate credits to consumers who were over-charged during the rate freeze, and Apco $10 million. Dominion would pass along savings from recently enacted federal tax cuts to rate payers in the form of $125 million a year in lower rates, while Apco would give back $50 million. The SCC would review electric rates every three years, which Saslaw characterized as giving the Commission, utilities and other parties a respite from biennial reviews.

The legislative package would require utilities to invest in $1 billion energy-efficiency projects over the next 10 years, while declaring it to be in the public interest for Dominion to install 5,000 megawatts of solar and wind power, and for Apco to install 200 megawatts of solar. Other favored projects include a battery-storage pilot project, a pumped-storage facility in Southwest Virginia, and extensive upgrades to the electric grid to make it more accommodating to intermittent renewable energy sources, safer from cyber attack, and more resilient in the face of severe weather.

The greatest source of concern was the mechanism by which Dominion and Apco would reinvest excess earnings — no surprise, considering how complex and difficult to understand it is. Under current law, the utilities are allowed to earn 9% return on investment on their assets, with provisions for keeping an extra 30% over over-earnings as an incentive to invest in productivity and efficiency. The SCC reviews the books every two years, and requires utilities to return excess revenues to rate payers. Under the new law, instead of returning 70% over-earnings to rate payers, the utilities would have to reinvest 100% (including the 30% they would normally be allowed to keep) into renewables and grid modernization. None of those reinvestments could be used to trigger a rate increase during the life of the legislation.

“The technology is here,” said Wagner. “The question is, is Virginia going to embrace it?”

For some legislators, claims that the legislation would encourage billions of dollars in new investment while guaranteeing that that rates would not increase seemed too good to be true.

“This is a lot to digest real quickly,” said Sen. Mark Obenshain, R-Harrisonburg. If solar is so economical, why does the General Assembly need to declare it to be in the public interest — why not just let utilities make their own best decisions? “If we’re making a social judgment, let’s not dress it up” as a great deal for rate payers, he said.

“When I look at this bill, it appears that any costs that you have with any of these new facilities with solar or wind, or grid transformation, could still be charged back a second time,” said Sen. Bill Stanley, R-Moneta. “There will be an ability to double charge for these projects.”

One charge would be incurred when rate payers are denied a rebate for over-earnings. Utilities would reinvest the over-earnings in grid modernization projects, adding the capital to the rate base upon which the utilities are entitled to earn a profit. Earning a rate of return on that investment constitutes a second charge to rate payers. But the utilities counter that were they not allowed to invest the over-earnings, they would recoup the investment through a “rider,” or rate adjustment clause. In the end, they say, it all equals out.

While the bill advances goals for which environmentalists and activists have been fighting for years — more solar; more wind; more energy-efficiency; a smart, distributed grid; more rooftop solar — several groups opposed the legislation. The Virginia Chapter of the Sierra Club, Appalachian Voices, and the Chesapeake Climate Action Network cited concern about the double-dipping issue as reason for their opposition. Ironically, the Virginia Poverty Law Center, representing poor energy consumers, declared itself neutral on the bill.

But the line-up of speakers in favor of the bill was considerably longer. Environmental groups supporting the compromise included the Natural Resources Defense Council and the Virginia League of Conservation Voters. Alternative energy groups such as Apex Energy, the Alliance for Industrial Efficiency, Virginians for Clean Energy, and the Virginia Offshore Development Authority registered their approval. Prominent business groups such as the Virginia Chamber of Commerce and the Virginia Manufacturers Association, signed on as well.

The Great Grid Grab

Who gets what from a Dominion-backed legislative package overhauling Virginia’s electric grid? At this point, there are more questions than answers.

Last week lawmakers friendly to Dominion Energy Virginia introduced sweeping legislation, The Grid Transformation and Security Act of 2018, which would increase investment in Virginia’s electric grid with the goals of increasing renewable energy, reducing power outages, and guarding against cyber-sabotage. Backers say the three-bill package also would restore rate-setting oversight by the State Corporation Commission after three years of a rate freeze, and return a cumulative $1 billion in refunds and rate reductions to customers over eight years.

The response from some of Dominion’s traditional foes was negative. Critics suggested that the legislation would neuter the SCC’s oversight powers even while nominally restoring them, thus allowing the utility to keep hundreds of millions of dollars due the rate payers.

“This bill is bad policy and dangerous, giving Dominion even more power over our lives and our future,” responded Tom Cormons, executive director of Appalachian Voices, a group that has helped lead the fight against Dominion’s Atlantic Coast Pipeline project, in a press release. “For far too long, the legislature has gone along with the monopoly’s plans, and it’s high time for our elected representatives to finally say ‘no’ to Dominion.”

In a Washington Post op-ed, Stephen D. Haner, a lobbyist representing the Virginia Poverty Law Center (and a frequent contributor to this blog), described the proposals as a “preemptive attack” on the SCC’s independence. “The outcome Virginia consumers should be hoping for is a return to full SCC authority and an almost immediate rate case to review the earnings during the recent regulatory holiday.”

However, environmental groups such as the Virginia Chapter of the Sierra Club, the Southern Environmental Law Center, and the Chesapeake Climate Action Network, which have combated Dominion over the pipeline, solar power, and coal ash disposal, have refrained so far from blasting the bill — at least in official statements. By packing environmental desiderata such as renewable power, energy conservation, electric vehicles, energy storage systems and microgrids into the bill, Dominion may have disarmed some of its critics.

The most comprehensive description of the package comes from Dominion. The summary that follows comes from an “overview” prepared by the company’s communications team.

Refunds and rate reductions. Refunds and rate reductions for rate payers  totaling more than $1 billion over the next eight years include:

  • $133 million in one-time credits.
  • $740 million in rate reductions achieved through elimination of the biomass rider and other riders.
  • $100 million annually from lower taxes resulting from the recently enacted federal tax reform.

State Corporation Commission oversight. The legislation restores SCC review of Dominion base rates but reviews base rates every three years instead of every two years, as it did before the freeze. The bill also adds SCC reviews before and after grid transformation investments are undertaken.

The legislation will reduce future riders (also called RACs, or Rate Adjustment Clauses), which are surcharges for new projects. States the Dominion summary: Before future riders can be added for new investments, the SCC will determine if there were overearnings. If there are overearnings, SCC will use them to offset the cost of future riders.

Grid transformation investments

The package allows for investments to build a more sustainable and resilient grid. These investments, summarizes the Dominion outline, aim to “reduce outages or restoration times, secure energy assets, enhance tools available to customers, and increase investments in renewable generation.” The investments can be grouped as follows:

Reliability investments

  • Automatically reporting of outages when they occur.
  • Prediction of certain outages before they occur so crews can be dispatched to equipment nearing failure.
  • Isolation of outages so fewer customers are impacted.
  • Reduction of voltage fluctuations to improve power quality for industrial and other customers.
  • Dispatch of crews more precisely to restore power more quickly.
  • Automated routing and restoration of service.
  • Better integration of renewable generation.
  • Installation of energy storage systems and microgrids
  • Strategic undergrounding of outage-prone lines.

Security investments Continue reading

Tarheel Coal Ash Data Could Inform Virginia Debate

Coal ash at the Chesterfield Power Station. Photo credit: Richmond Times-Dispatch

Last week I argued that Virginians need more information about the disposal costs and health risks associated with coal ash ponds before the General Assembly rushes ahead with a law requiring Virginia’s electric utilities to recycle and/or landfill their coal ash. Some of that data could come from the experience of Duke Energy in North Carolina as well as utilities in South Carolina, which are farther along in the process than Dominion Energy Virginia.

Travis Fain, a former Daily Press reporter who has moved on to WRAL.com, reported yesterday how Duke Energy has blasted its opponents in a regulatory filing, asserting that they leaned on “simplistic crutches,” false analysis, and a Pollyanna hindsight to argue against the company’s bid to raise electricity rates sufficient to cover its coal as clean-up costs. Duke Energy’s foes have some not-so-nice things to say about the utility, too. The bottom line for Virginia is that political and regulatory facets of the coal-ash controversy are further along in North Carolina than they are in the Old Dominion. Many of the same issues are likely to surface here, and economic data from the Tarheel State could illuminate our debate.

Writes Fain:

The company complied with existing laws and industry standards when it left wet ash in unlined pits for decades, they said. At one point “the lack of a liner was considered a feature, rather than a flaw” because soil would filter out contaminants, the company said. Impact on groundwater wasn’t initially a concern “because the ash basins were built more than a decade before the adoption of any federal or state regulation related to groundwater corrective action,” attorneys argued.

That same commission will decide now whether Duke Energy Progress shareholders or its customers will cover the majority of costs for a cleanup that has since been ordered by changes in state and federal law. Between Duke Energy Progress and its sister company, Duke Energy Carolinas, parent Duke Energy has asked for more than $1 billion a year in increases. …

“They fault the Company for not doing something that no one was doing, but at the same time washing their hands of any responsibility of paying for that which they – in 20/20 hindsight – wish the Company had done,” the utility’s brief states. …

The Attorney General’s Office referenced to a number safety reports, including an inspector who found “open cracks” and other problems in safety features at the H.F. Lee Plant in Goldsboro in 1999. That inspector returned in 2004 to note that “those same problems had not been repaired and still existed,” the Attorney General’s Office said.

If Duke had been proactive, cleanup costs “would have been far less than the costs are now and will be in the future,” the Attorney General’s Office said. …

The Public Staff also proposed that Duke Energy Progress split coal ash cleanup costs 50-50 with customers, something the company rejected.

Coal ash cleanup costs alone would add nearly $183 million a year to customer bills under Duke Energy Progress’ proposal.

Dominion has said it would cost roughly $4.5 billion to landfill all the coal ash at its Bremo, Possum Point, and Chesterfield plants. Dominion foes have charged that its estimates are inflated because the utility could reduce its costs by recycling coal ash into cement, bricks and pavers. Basically, we have a he-said, she-said situation. Although both Dominion and the Southern Environmental Law Center have hired consulting engineers, no non-aligned third party has weighed in with a judgment.

One obvious step, it seems to me, would be to compare Dominion’s situation to Duke Energy’s. Duke Energy says the cleanup will cost $183 million a year. It’s not clear how many years we’re talking about — likely 15 at least, maybe longer. If so, that implies a total cost of  between $3 billion to $4 billion. As I recall, Duke Energy has to remove more tonnage than Dominion, so its removal costs per ton are likely lower than Dominion’s estimates.

However, it is dangerous to make simplistic comparisons. Costs vary widely power station by power station, depending upon a number of factors, and direct comparisons may or may not be appropriate. Furthermore, the properties of coal ash vary, and Duke Energy’s material could be more, or less, suitable for recycling. Finally, Duke Energy has first-mover advantage in recycling its coal ash. Its coal ash will flood the Mid-Atlantic market, arguably depressing prices and making the recycling option less attractive to Dominion.

The article hardly answers all the questions one might have, but it seems clear that we are talking about disposal costs in the billions of dollars. Whether recycling/landfilling is an economical option in Virginia remains to be seen. Hopefully, the General Assembly won’t pass law in the absence of authoritative information.