Tag Archives: Dominion

Visual Impacts and Transmission Lines

Will the Surry-Skiffes Creek transmission line look like this….

Last week the U.S District Court for the District of Columbia rejected a last-ditch appeal by the National Parks Conservation Association and allied groups to block  construction of the controversial high-voltage transmission line across the James River near Jamestown. Dominion Energy Virginia had embarked upon preliminary construction in February after winning a U.S. Army Corps of Engineers permit, and the ruling clears the utility to complete the project by the summer of 2019.

Apparently, a favorable ruling was not a foregone conclusion. At the preliminary injunction phase, wrote Judge Royce C. Lamberth, the plaintiffs made “a powerful argument on the merits” that the Corps had issued the permit improperly. However, he added, “now that the Court has dug into the administrative record and relevant case law it is evident that the Corps made a “fully informed and well-considered decision.”

Lamberth made clear that he was not saying that the Corps made the correct decision; rather, it met all relevant standards and criteria for issuing the permit. 

… or like this?

For those interested in the controversy, the guts of the ruling shed new light into aspects of the seemingly interminable Corps decision-making process.

Perhaps the most contentious issue was the visual impact of the 500 kV Surry-Skiffes Creek transmission line upon a relatively pristine stretch of the James River associated with Jamestown and the English settlement of Virginia. Early in the controversy Dominion prepared visualizations showing the transmission-line towers as barely visible on the horizon when viewed from Jamestown Island. Power line foes disputed the accuracy of the renderings.

The Corps studied the visual impact in detail, creating a 400-page visual effects assessment, entitled the Cultural Resources Effects Assessment (CREA). Employing various vantage points and line-of-sight analyses, expert consultant Truescape created photo simulations demonstrating how the river crossing would appear to the human eye.

After the Corps made the document public, opposition groups criticized the Truescape methodology, noting that the analysis failed to analyze how the project would impact a visitor traveling on the river in close proximity to where the power line would cross the Captain John Smith Chesapeake National Historical Trail. “In other words,” summarized Lamberth, “while the CREA’s visual analysis captured what the electrical line would look like from historical vantage points on land, it would not capture the impact to a visitor traveling by boat on the river. He continued:

In response, the PhotoSimulation Overview was updated in June 2016 to include nearly 80 pages of additional reference photographs and visual simulations depicting views from the river. … Moreover, the PhotoSimulation Overview was updated again in August 2016 to include additional simulations based on a second round of photographs taken from the river.

Moreover, from a process perspective, the Corps held discussions with [the National Park Service] regarding its its methodological concerns and received an NPS guidance document on how to evaluate visual impact assessments. … The Corps forwarded the document to Dominion, asking them to address whether the methods used were comparable and what the plan would be going forward. … Dominion demonstrated that the methodology used followed NPS guidance and provide[d] reliable simulations of how the Project would look. Upon considering the methodological concerns raised by NPS and reviewing Dominion’s updated analysis, the Corps concluded:

“Dominion’s simulations provided enough accuracy to sufficiently analyze effects to both historic properties and a visitor’s experience. … While there are various methods for predicting visual impact it is not likely that employing further methods will result in substantively different views or information.”

In the ruling Lamberth also alluded to the involvement of Secretary of the Interior Ryan Zinke in the controversy.

NPS sent a detailed letter in January 2017, in which it pointed to “fundamental flaws” with the decision-making process that “remain unresolved.” NPS specifically noted the flawed visual analysis. Although the Corps was not required to accept NPS’s critique, Lamberth wrote, senior staff met with Interior Department officials to discuss the comments.

In March 2017, the new Secretary of the Interior Zinkie (sic), who ultimately presides over NPS, stated that the information that had been provided by the Corps reflected “thoughtful and thorough consideration of the issues raised by my predecessor. …”

Secretary Zinkie’s letter effectively withdrew the Department of Interior’s previous stance that an [Environmental Impact Statement] was required. “As we all know, elections have consequences” and the Interior Department’s shift in position demonstrates to the Court that there is no longer active disagreement between the Interior Department and the Corps.”

As it happened, Lamberth agreed with the Corps that the visual impact would not be significant. Boaters traveling the James, he wrote, already are exposed to views of de-commissioned Navy ships comprising the Ghost Fleet, the water tower at Fort Eustis, the Surry nuclear power station, several large, modern houses on the shoreline, barges and other commercial vessels, and recreational boaters and water skiers from Kingsmill Resort.

“The Corps did enough,” concluded Lamberth. “It engaged in reasoned analysis, consulted experts, responded to criticisms of both its methodologies and conclusions, took a hard look at the potential impacts, and concluded that the impact of the Project would be ‘moderate at most.'”

Virginia’s Date with RGGI

RGGI states: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont

There’s a good chance that Virginia will participate in the Regional Greenhouse Gas Initiative (RGGI) to cut utility CO2 emissions. The impact of the cap-and-trade system would be mostly symbolic.

Barring litigation, Virginia could start participating later this year in the Regional Greenhouse Gas Initiative (RGGI, pronounced Reggie), a cap-and-trade program designed to reduce CO2 emissions of electric utilities and large industrial customers by 30% over a 10-year period. All it will take is for the State Air Pollution Control Board to approve regulations, now undergoing public comment, that have been drafted by the Department of Environmental Quality (DEQ).

Cap-and-trade programs have proven highly cost effective at bringing down emissions in sulfur dioxide and nitrous oxide, and proponents say that a similar approach could work just as well for carbon-dioxide, widely held to be the primary driver of global warming. Cap-and-trade, they say, avoids the inefficiencies of bureaucratic command-and-control regulations. Instead, the auction arrangement steers power output to entities that can reduce CO2 emissions the most cost effectively. Not only will RGGI cut emissions, they contend, it will flatten electric rate increases, lower electric bills, and stimulate economic growth.

There’s just one problem. Virginia’s largest electric utility, Dominion Energy Virginia, doesn’t believe it. In fact, in its 2018 Integrated Resource Plan, the utility fired a broadside against the regulatory initiative. The company maintains the following:

  • The program could impose $530 million in additional costs on Virginia customers between 2020 and 2030.
  • In effect, Virginia will subsidize other RGGI states through lower compliance costs to the tune of $876 million over the decade.
  • Virginia’s linkage to RGGI will not reduce CO2 emissions. To the contrary, the auctions will increase CO2 output by 5.7% more than it would have been otherwise.

PJM service territory

A big reason RGGI proponent’s optimistic forecasts won’t pan out, Dominion says, is that there is a geographic mismatch between the RGGI states and PJM Interconnection, the wholesale market of which Virginia is a part. The nine RGGI states are concentrated in the Northeast; the 14 states of PJM are located in the Mid-Atlantic and the Midwest. The only overlap between the two are Virginia, Maryland, and Delaware. Because Dominion, Appalachian Power Co., and other electricity producers don’t control which power sources are dispatched to meet electric demand — PJM does — generators in Virginia would suffer a cost disadvantage compared to competitors in neighboring states not subject to RGGI, such as North Carolina and West Virginia.

“The effect of RGGI-equivalent reduction requirements in Virginia is likely to limit the dispatch of highly-efficient and lower-emitting [natural gas combined-cycle] facilities in Virginia and to encourage the dispatch of higher-emitting resources and increased emissions in neighboring states outside of the RGGI region,” states the IRP.

But environmentalists insist the cap-and-trade program will be beneficial. “Carbon pollution is a big contributor to climate change. Cap-and-trade is a market-based way of dealing with that environmental problem,” says Will Cleveland, an attorney with the Southern Environmental Law Center.

“We think this is a really good opportunity,” says Harry Godfrey, Virginia director of Advanced Energy Economy. “To the extent that there are still older, coal-fired plants online, we foresee … less utilization of those assets in the future. But we see less utilization anyway. All of our analysis shows a coal-to-gas shift. … Our analysis shows that you can limit cost impacts, and even reduce rates in the process.”

How RGGI works

In 2009 ten Northeastern and Mid-Atlantic states accounting for one-eighth of the U.S. population and one-seventh of its economic activity created the Regional Greenhouse Gas Initiative as an interstate cap-and-trade program. Broadening the geographic scope of the trading system beyond the boundaries of a single state, it was thought, would create a bigger pool of CO2-cutting opportunities.

Under RGGI’s “direct” auction trading system, RGGI sets a regional limit on the total amount of CO2 that power plants in member states are allowed to emit. Owners of fossil fuel power plants with capacity greater than 25 megawatts are assigned an allowance to release a certain amount of CO2. Then they are required to purchase pollution permits at quarterly auctions sufficient to meet that output. The plan is for RGGI to ratchet the CO2 allowances by 3% each year over a decade. Utilities and big industrial producers who can’t find ways internally to cut their CO2 emissions can go to the auctions to buy extra allowances. Power generators who can find ways to cut emissions economically can sell their excess allowances to those who need them.

In the first auctions between 2009 and 2011, RGGI sold 395 million tons worth of CO2 allowances. The cap was a generous one, so the auction price for allowances was low — ranging between $1.86 and $3.35 per ton — according to the Center for Climate and Energy Solutions. As the CO2 allowances tightened, prices increased, reaching a high of $7.50 per ton in 2015. Prices fell after the Trump administration nixed the Clean Power Plan but the next round of CO2 emissions cuts — 30% by 2030 — likely will push the price back up. Continue reading

The Logperch Veto

The Roanoke logperch

Virginia has its very own snail darter — the Roanoke logperch, a threatened species of fish, the existence of which could delay or even obstruct a multibillion-dollar infrastructure project.

The snail darter became a cause celebre for endangered species in 1973 when concerns arose that the habitat of the endangered fish would be obliterated by construction of the Tellico Dam on the Little Tennessee River. Although the dam ultimately was built, the controversy over the snail darter’s fate held up the project through years of legal appeals and eventually required a literal act of Congress to override a U.S. Supreme Court ruling.

The Roanoke logperch is one of six endangered or threatened species whose habitat will be crossed by the Atlantic Coast Pipeline (ACP), according to the Richmond Times-Dispatch. The ACP won’t obliterate the habitats of the logperch, the Indiana bat, the Northern long-eared bat, the Madison Cave isopod, the rusty patched bumblebee, or the clubshell mussel in the way that the Tellico Dam did the homeland of the snail darter. But the pipeline will cross these species’ habitats, subjecting them to additional stress, and perhaps killing some individuals. A federal appeals court ruled that the U.S. Fish and Wildlife Service had set unacceptably vague criteria for monitoring and complying with the Endangered Species Act. Pipeline foes regard the threat to the species as sufficient grounds to shut down construction.

A question unasked by the media in coverage of the ruling is just how threatened are these species? What impact might pipeline construction have on their habitat? Could the pipeline precipitate their extinction or will the effect be marginal? But alert reader D.J. Rippert raised the issue in a comment to an earlier article on the topic. According to the International Union for Conservation of Nature (IUCM) Red List, he wrote, “the Roanoke Logperch is one notch above endangered. The key question is whether the pipeline would push it from vulnerable to endangered.”

Good point, Don. Let’s see what IUCM has to say about the six species in question. But first some nomenclature: A “vulnerable” species is one that is likely to become endangered unless the circumstances threatening its survival and reproduction improve. The next steps up the ladder towards extinction are a “endangered” and then “critically endangered.” The term “threatened” applies to any species “likely to become an endangered species within the foreseeable future throughout all or a significant portion of its range.”

Roanoke logperch. Precina Rex is listed as “vulnerable.” Its range extends through the upper Roanoke, upper Dan, and upper Chowan river systems. Eight populations are separated by wide river gaps or dams. The fish resides in riffles, runs, and pools with sandy to boulder-strewn bottoms. Despite the ongoing threats of urbanization, industrial development, flood control projects, and agricultural runoff, the population is believed to be increasing. However, siltation from agricultural “and other human activities” remains a concern.

Indiana bat. Myotis soldalis is listed as “near threatened.” The bat has an extensive range across the eastern United States but the range and population have shrunk in recent years.  The most significant threats to the species are habitat loss, forest fragmentation, winter disturbance and environmental contaminants. Half the bats are believed to hibernate in Indiana (hence the name); other major population centers are located in Kentucky and Missouri. Virginia is a minor and peripheral part of the bat’s range.

Madison cave isopod. Antrolana lira is classified as “vulnerable.” This tiny critter is an eyeless, unpigmented freshwater crustacean that lives in flooded limestone caves in the northern Shenandoah Valley, with documented population centers around Staunton and Harrisonburg. The ICUN database contains little information about the isopod. Contamination of underground water is the major threat to the creature’s habitat — definitely an issue in the karst terrain in Virginia mountain terrain.

Rusty patched bumble bee. IUCM does not have this species of bumble bee in its database. But Fish & Wildlife does refer to it as “endangered.” “Rusty patched bumble bees once occupied grasslands and tall grass prairies of the Upper Midwest and Northeast, but most grasslands and prairies have been lost, degraded, or fragmented by conversion to other uses,” states the endangered species website. The range has constricted to 13 states, of which Virginia is one, plus one Canadian province. The biggest threat comes from intensive farming and the use of pesticides.

Clubshell mussel. Also not included in the IUCM database, the clubshell mussel is described by Fish & Wildlife as an “endangered” species. The bivalve, which lives in small to medium rivers and streams, once was found from Michigan to Alabama, Illinois to West Virginia — Virginia does not warrant mention as part of its range — and now is relegated to “portions of only 13 streams.” The major threats listed are pollution from agricultural run-off, industrial wastes, and extensive impoundments for navigation, all compounded by competition with the Zebra mussel.

Northern long-eared bat. The Northern long-eared bat does not appear in the IUCN’s red list but it is listed as “threatened” by Fish & Wildlife. The bat’s range extends throughout most of the Eastern U.S. and parts of Canada. Its population decline has been caused by the “white-nosed syndrome,” a fungal disease. The disease has spread to bats in Virginia.

Bacon’s bottom line: This is a superficial survey, and I welcome the input of anyone who has more detailed and authoritative knowledge. But it seems reasonable to draw several conclusions.

First, none of these species are “critically endangered.” Only two are listed as “endangered.” The other four are classified as “threatened” or “vulnerable.” Continue reading

Pipeline Runs Afoul of Endangered Species

Atlantic Coast Pipeline foes won a significant legal victory yesterday when the Richmond-based U.S. Circuit Court of Appeals invalidated a Fish and Wildlife Service Review of pipeline construction. Limits set by the federal agency for the protection of endangered species were “so indeterminate” that they rendered enforcement of the Endangered Species Act meaningless.

“This puts a stop to any work that could threaten rare and endangered species and that’s much of the pipeline route,” the Richmond Times-Dispatch quoted D.J. Gerken, the Southern Environmental Law Center attorney who argued the case, as saying.

Dominion officials said they would push ahead with the project. “We will fully comply as required while we continue to construct the project,” said company spokesperson Jen Kostyniuk. “Although we disagree with the outcome of the court’s decisions, an are evaluating our options, we are committed to working with the agency to address the concerns raised by the court’s order.”

According to Gerken, the Fish and Wildlife Service’s review allowed for a “small percent” of endangered species to be killed during construction, but did not define what constituted a small percent. “A small percent would never get triggered because nobody knows what it is,” he said.

The project will cross the habitats of eight endangered or threatened species, including the Roanoke logperch, the Indiana and long-eared bats, the Madison Cave isopod, the rusty patched bumblebee, and the clubshell mussel.

Bacon’s bottom line: The ruling gives a moral victory to pipeline foes but I doubt it will be a significant blow to the project. Dominion Energy, the ACP’s managing partner, will argue with pipeline foes over how to define what constitutes a “small percent” of loss to the endangered species and what kind of protections are needed. The Fish and Wildlife Service will develop more specific criteria. Unless Dominion appeals the case, it will buckle under and spend whatever money it takes to comply. The company is so deeply committed to the project that it cannot afford to back out.

Update: Dominion issued a statement this morning: “”We remain confident in the project approvals and the Atlantic Coast Pipeline will continue to move forward with construction as scheduled. This decision only impacts activities directly covered by the Incidental Take Statement in certain defined areas along the route. We will fully comply as required while we continue to construct the project. Although we disagree with the outcome of the court’s decision, and are evaluating our options, we are committed to working with the agency to address the concerns raised by the court’s order.”

How Fast Will Electricity Demand Grow?

Source: Dominion Energy Virginia 2018 Integrated Resource Plan

Dominion projects that demand for electricity will increase 1.4% a year over the next 15 years. How accurate is that forecast? Billions of dollars ride on the answer.

The single-most important forecast Dominion Energy Virginia had to make when compiling its 2018 Integrated Resource Plan (IRP), released earlier this week, was to project electricity consumption in its service territory over the next 15 years. All of the company’s calculations regarding the need for new generating capacity spring from that forecast.

Dominion projected that overall electricity demand will increase 0.8% annually on average and that peak demand will increase 1.4%. Based on that forecast, the authors of the plan had to figure out how to increase the peak supply by more than 20%. However, if Dominion is over-estimating load growth and builds a power portfolio to match, it could spend billions of rate payers’ dollars on unneeded capacity.

The company explains its forecast methodology in considerable detail in the IRP. It uses two econometric models, one being a “customer class-level sales model,” and the other a “system-level hourly load model.” These models have been “developed, enhanced, and re-estimated annually for over 20 years,” the IRP says.

The models used this year have been tweaked to represent the findings of the most recent customer appliance survey, which observed a significant increase in the penetration of light-emitting diode (LED) lighting among residential customers. To reflect this trend, Dominion modified its models to reduce forecasts of residential lighting load. Accordingly, residential lighting usage is expected to fall by roughly half between 2018 and 2033.

Another key assumption is the rate of economic growth. Dominion observed that the Virginia economy continue to grow despite federal budget sequestration between 2013 and 2017 by about 1% per year on average (adjusted for inflation).  But Virginia has a favorable business climate, in Dominion’s estimate, and growth should pick up. Looking ahead, Moody’s Analytics projects that Virginia’s Gross State Product will expand at a compounded annual growth rate of 1.99%.

(Moody’s growth forecast is extremely close to that of the Congressional Budget Office, which projects a 1.9% compounded annual growth rate nationally over the next 10 years.)

Also, notes the IRP, Virginia should continue attracting more data centers, drawn by access to fiber optic networks as well as “low-cost, reliable power sources.” Data centers are far more energy-intensive than typical commercial or industrial operations.

The Dominion-PJM gap

Dominion acknowledges that its DOM zone forecast is higher than that of PJM Interconnection, the organization that operates wholesale electricity markets in a 14-state region. PJM has no axe to grind either ideologically or in terms of self-interest when it prepares its forecasts, so its estimates are widely regarded as credible. Dominion critics make frequent note of the discrepancy.

The first thing to note, says the IRP, is that the gap difference the two forecasts has shrunk in the past year. Here I’ve laid the forecast for “energy” (total annual electricity consumption) and “peak” (peak one-day consumption) side by side:

Energy forecast
Dominion — 0.8% annual increase
PJM — 0.9% annual increase

Peak forecast
Dominion — 1.4%
PJM — 0.8%

Thus, if I’m reading the IRP correctly, Dominion’s energy forecast is slightly more conservative than PJM’s — a fact that I’m surprised Dominion didn’t highlight in its IRP.

A big gap still remains between the Dominion and PJM peak forecast. PJM’s forecast, issued Dec. 28, 2017, was rendered out of date almost immediately by 12 consecutive days of bitter cold weather across the northeastern quadrant of the United States in December and January. PJM’s 90/10 projection of peak demand for the DOM zone was 19,512 megawatts. Actual demand exceeded  PJM’s forecast by 1,400 megawatts on five different occasions, says the IRP. (To be fair, PJM’s 90/10 projection did allow for a one in ten chance that the actual peak might exceed the forecast.)

States the IRP: “The Company understands that PJM has recognized this issue in its load forecasting and is in the process of revising their load forecasting methods.” Continue reading

Dominion’s Track Record on Carbon Reduction

Carbon intensity of 100 largest electric power producers. Source: Ceres

This is the first of a series of posts based on Dominion Energy Virginia’s 2018 Integrated Resource Plan.

Regardless of what happens to federal CO2 regulations under President Trump, Dominion Energy Virginia is conducting its long-range strategic planning on the assumption that carbon regulation of power station emissions is “virtually assured in the future.”

The utility’s 2018 Integrated Resource Plan lays out its path over the next 15 years toward a lower-carbon future that includes a major commitment to solar power, tentative steps to develop offshore wind power, the phase-out of old coal-, oil- and gas-fired capacity, and the construction of several new combustion-turbine (CT) gas-fired units capable of responding quickly to fluctuations in solar power output.

By way of background, the company boasts a bit about its track record in reducing carbon emissions over the past seventeen years. “From 2000 to 2017, the carbon intensity — measured by the annual amount of CO2 emissions emitted per megawatt-hour (“MWh”) of net generation — of the Company’s units serving Virginia jurisdictional customers has declined by 35%. At the same time, power production by these units has increased by 14%.

Based on a study by Ceres, a nonprofit organization pursuing sustainable solutions, in 2015 Dominion ranked 74th out of the nation’s largest electric utilities for carbon intensity (CO2 emissions per MWh of power). The flip side of that data is that Dominion had the 27th lowest CO2 emissions per unit of power generated.

Dominion attributes its CO2 reductions to several initiatives:

  • The addition of 56 MW of solar generation through the addition of the Scott, Whitehouse, and Woodland solar projects.
  • Reduction of the coal-powered portion of its fleet serving Virginia customers.
  • Construction of high-efficiency combined-cycle natural gas power units. Natural gas combustion releases roughly half as much CO2 per unit of heating value as coal combustion.
  • The continued operation at high levels of efficiency of the company’s four nuclear units.

The utility says it will continue to press forward with CO2 cuts:

  • Moving 1,200 MW of fossil-fueled capacity into cold reserve, effectively taking the aging units out of daily operation but keeping them in reserve for reactivation within six months if market conditions dictate.
  • Continued expansion of solar power.
  • Development of offshore wind.
  • Evaluating the feasibility of building a hydroelectric pumped storage facility in Southwest Virginia to supplement variable production by solar and wind.

In Dominion’s commentary on carbon regulation, there is one glaring absence: any discussion of energy efficiency. In a press release issued today, the Southern Environmental Law Center (SELC) asserts that Dominion ranks 50th among the 51 largest electric utilities in the U.S. in energy efficiency.

Dominion relies upon outdated modeling practices to predict future electricity demand, said the SELC, “and it doubles down on this error by proposing to satisfy that in a non-economic fashion. This approach marginalizes lower-cost options like energy efficiency and solar in favor of expensive, company-owned, customer-financed natural gas infrastructure.”

“New natural gas infrastructure won’t grow Virginia’s economy; it will only grow Dominion’s dividends,” said SELC attorney Will Cleveland.

However, as SELC acknowledges, that the Grid Transformation and Security Act of 2018 “requires” Dominion to add $870 million of energy efficiency programs over the next 10 years. Further, it should be noted that Dominion is not planning to build new combined-cycle plants like the $1 billion Brunswick and Greensville plants, which are used mainly for base load generation, but smaller, highly flexible combustion turbines that can be ramped up and down in response to fluctuations in solar and wind energy.

Tomorrow I’ll discuss Dominion’s demand forecasts, the single-most important component of the utility’s strategic plan.

Dominion Long-Range Plan: More Solar, More Gas

Dominion’s 15-year plan affirms more solar in Virginia’s energy future.

Dominion Virginia Energy filed this afternoon its 2018 Integrated Resource Plan (IRP), an updated 15-year strategic plan. The IRP reiterates the utility’s commitment to more natural gas and more solar power as a path to a lower carbon future. There’s a lot to cover here, so I will just hit the highlights today, and I’ll dig deeper into the report tomorrow.

The key assumption behind the plan is that “carbon emissions regulation is virtually assured in the future, either through new federal initiatives or through measures adopted at the state level.”

A proposed regulation from the Department of Environmental Quality, if adopted by the State Air Pollution Control Board, would make Virginia a participant in the Regional Greenhouse Gas Initiative, which would ratchet down carbon dioxide emissions by 30% over 10 years. “Compliance with carbon regulation could, unless mitigated by other public policies, lead to an increase of between $2.23 and $5.81 in 2018 dollars in the typical residential customer’s monthly electric bills by 2030,” stated the company in a press release.

The IRP also incorporates legislation enacted by the General Assembly this year, the Grid Transformation and Security Act of 2018,” under which earnings above the allowed return on investment would be plowed back into investments in renewable energy, energy efficiency, and smart grid upgrades. The plan contemplates construction of the 12-megawatt Coastal Virginia Offshore Wind project to demonstrate the viability of wind turbines off the Virginia coast, license renewal for the Surry and North Anna nuclear units, the roll-out of new energy-efficiency programs, and the possible retirement of older, less-efficient coal, oil and gas power plants.

Dominion’s press release highlighted the growing role for solar energy. Depending on Virginia’s regulatory path, the company could add 4,720 megawatts of solar capacity over the next 15 years — enough to power 1.18 million homes at peak sunlight, and a nearly 50% increase over last year’s 3,200 forecast.

To back up the solar farms when the sun isn’t shining, Dominion forecasts the need to build eight new gas-fired combustion-turbine (CT) units capable of producing up to 3,664 megawatts of electricity, enough to supply the needs of more than 900,000 homes. Unlike combined-cycle gas plants, which ramp output up and down slowly, the CT units provide surge capacity that can nimbly adjust to fluctuating solar and wind output.

The exact details vary with five scenarios reflecting different federal and state regulatory approaches. The scenarios include:

  • No CO2 tax — no new regulations, the least-cost baseline.
  • RGGI participation — compliance achieved by importing “more carbon intensive out-of-state energy and generating capacity;” $1.5 billion more expensive than the baseline plan.
  • RGGI (unlimited imports) — Virginia becomes a full RGGI member, CO2 allowances cost more; costs $3.71 billion more than the base-line plan.
  • RGGI (limited imports) — Virginia becomes full RGGI member, but builds low-carbon capacity rather than imports it; costs $4.04 billion more than the base-line plan.
  • Federal CO2 program — assumes federal CO2 legislation beginning in 2026; costs $3.09 billion more than the base-line plan.

Predictable flashpoints. Inevitably, there will be pushback in the environmental community to Dominion’s plan. First, skeptics likely will dispute the utility’s forecast for increases in peak electricity demand and the need for more generating capacity; Virginia, they will say, needs to deploy energy-efficiency measures more aggressively. Second, they will argue that the re-licensing of the four nuclear units is unneeded. Third, they might contend that battery storage will be more cost effective than gas-fired CT units in offsetting fluctuations in solar production. Fourth, they will say that Dominion is exaggerating the cost of CO2 regulation; indeed, they will argue that the RGGI carbon trading regime will have little impact on costs to rate-payers, and might even reduce their monthly bills.

I’ll dig into each of these issues in the days and weeks ahead.

Emerging Lines of Conflict in Virginia Energy Policy

The General Assembly may have ushered Virginia’s energy sector into a new era with its passage of the Grid Transformation and Security Act of 2018, but the battle over energy policy is far from finished. It’s just entering a new phase under new ground rules.

New battlefronts are emerging over energy efficiency and onshore wind power, and the potential exists for controversy to erupt over the necessity (or non-necessity) of preserving coal and nuclear generating capacity.

The grid-modernization legislation declared it a matter of public benefit to promote clean solar and wind power, to invest in energy efficiency, and to upgrade the electric grid so it will be more secure and better able to handle intermittent power sources like wind and solar. To pay for these priorities, the General Assembly agreed to let Dominion Energy and Appalachian Power Co., reinvest earnings over and above allowable rates of return instead of returning the money to rate payers.

The ink has hardly died on the governor’s signature on the legislation before new conflict points became painfully clear.

Energy efficiency. The new law commits Dominion to spend $870 million on regulated efficiency programs over the next 10 years and contribute $6 million annually to a state weatherization fund — and that doesn’t include money spent by Apco. Advocates of a low-carbon energy future envision funds flowing to programs that allow customers to buy smart thermostats, add insulation, and replace inefficient lighting and appliances.

“Unfortunately, all of that potential could easily slip away,” Chelsea Harnish, executive director of the Virginia Energy Efficiency Council, told Energy News Network. Likewise, Harrison Godfrey, executive director of Virginia Advanced Energy Economy, said he is “not convinced utilities will invest in technologies that are real game-changers.”

It seems to have dawned upon energy-efficiency advocates that the real obstacle is not the electric utilities but the State Corporation Commission, which takes a hard-nosed view on the value of energy-efficiency programs. Last month, SCC staff rejected a lighting program, appliance recycling program, and three other proposals submitted by Apco on the grounds that they did not pass cost-effectiveness tests.

“I think there is a concern that the SCC will continue to ov­­erly scrutinize these programs in a way that they’ll continuing being rejected,” Harnish said.

Energy efficiency advocates say the conservation programs will reduce electricity demand, thus delaying the need to add new generating capacity at great expense to rate payers. But the SCC likes to see solid evidence that the programs actually deliver the promised benefits at reasonable cost to rate payers. The big question: Now that the General Assembly has declared energy efficiency to be in the public interest, will the SCC modify its cost-benefit methodology and become more receptive to utility submissions?

Photo credit: Kent Mason

Onshore wind power. In an effort to create a lower-carbon electric generating portfolio, Apco announced plans last July to buy the Beach Ridge II Wind Facility in West Virginia and the Hardin Wind Facility in Ohio. The company proposed to finance the development of the two projects with an $84.6 million construction surcharge spread out over 10 years to ratepayers.

According to the Charleston Gazette-Mail, in early April the SCC denied Apco’s request to recover its costs from Virginia ratepayers. The commission said the company doesn’t need the additional power generation.

Apco argued that its electricity-demand forecast expects CO2/greenhouse gas regulation to be implemented by 2024. Indeed, Virginia appears to be poised to participate in the Regional Greenhouse Gas Initiative (RGGI), a regional cap-and-trade program that would shave Virginia utility CO2 emissions by 30% over 10 years. Final regulations are being drafted for approval by the State Air Pollution Control Board.

“The Companies would be justly faulted if, in their planning, they ignored likely and expected developments simply because they hadn’t yet occurred,” Apco said. “There are many influential elements in American society today that favor such regulation.”

Still, the SCC appears to be acting as a guardian of the rate payer’s interests, and it needs to be persuaded that the acquisition or construction of new power sources can be economically justified. Whether the Grid Transformation and Security Act changes the commission’s calculus remains to be seen. Continue reading

Gas Pipelines in Virginia’s Reconfigured Energy Future

The furor over construction of the Atlantic Coast Pipeline (ACP) and the Mountain Valley Pipeline (MVP) continues unabated this week. News reports have highlighted legislators in Richmond joining pipeline protesters outside the state Capitol and, more colorfully, the antics of a dissident known as “Red” who has ensconced herself in a tree to block clearance of the pipeline route. But the combatants and the media are overlooking the biggest story of all — how the pipelines fit into Virginia’s energy future defined by electric grid modernization and carbon cap-and-trade.

The immediate issue revolves around state regulation of pipeline crossings over mountain streams in the pipeline paths. Foes worry that construction on steep, erosion-prone mountain slopes in karst terrain marked by sinkholes and underground streams will cause sediment runoff to harm wells and other water supplies. State Sen. John Edwards, D-Roanoke, expressed the apocalyptic views of many when he said that the proposed 303-mile Mountain Valley Pipeline “could ruin our way of life.”

ACP spokesman Aaron Ruby reiterated the pipeline’s assertion that the 600-mile pipeline had received “the most thorough regulatory review of any infrastructure project in Virginia history.” In its 25-year history as an agency, confirmed a Department of Environmental Quality spokesperson earlier this month, DEQ has never conducted a project review on the scale of either pipeline.

But pipeline foes say that the regulatory views still aren’t rigorous enough and that DEQ should issue permits for hundreds of individual stream crossings to address the unique conditions at each site.

That line of argumentation led to what may be the best rhetorical flourish of the entire controversy (sympathize with him or not) by Dennis Martire, mid-Atlantic vice president of the Laborers International Union of North America. Martire termed the call for more intensive review of water crossings an attempt to “distort and politicize” the regulatory process. “No doubt,” he said, “the next thing they’ll demand is a pebble-by-pebble analysis.”

The battle over the pipelines has become a stand-in for the larger fight over national energy policy, sucking in the emotional energy of the global warming controversy. Foes say that there is no public necessity for either pipeline. Instead of building infrastructure that transgresses landowner rights and cuts ugly swaths through pristine mountain vistas, Virginia should be pushing measures to improve energy efficiency and install more wind and solar.

Proponents stand by their assertion that natural gas, while not a zero-carbon source of electricity, is a low-carbon source of electricity, a complement to wind and solar power, and a necessary part of Virginia’s energy future. Opposition to the ACP pipeline, says spokesman Ruby, “will slow down our region’s transition from coal to cleaner energy sources, delaying improvements to our environment.”

The ACP and MVP were launched in 2014 under very different political, regulatory, and market conditions than today. The Obama administration, which took global warming very seriously, looked favorably upon natural gas as a lower-carbon alternative to coal and upon nuclear power as a zero-carbon energy source. At the time, it seemed eminently reasonable for electric utilities to plan to further shift their generating portfolios from coal to gas and to increase pipeline capacity to serve their service territories.

But the environmental movement leapfrogged ahead of the Obama administration. The leading edge of the green movement ceased regarding natural gas as a benign fuel, arguing that if one included methane leakage from gas wells and pipelines, not just the combustion of gas in power plants, the fuel contributed as much to global warming as coal. They contended that Virginia lagged other states in embracing energy-efficiency and that the potential existed to bend the demand curve much lower, obviating the need to add new gas-fired generating capacity. Some environmental groups, but not all, went so far as to advocate that Virginia phase out its nuclear units as well.

The ideas expounded by green progressives, which once seemed radical in the Old Dominion, have gone mainstream. Virginia is in the process now of adopting carbon cap-and-trade regulations designed to reduce utility CO2 emissions 30% by 2030. Meanwhile, the Grid Transformation and Security Act enacted this year has declared it to be in the public interest for Dominion Energy Virginia to build 5,200 megawatts of solar energy, or roughly one quarter of its electricity generating capacity, and to invest heavily in energy efficiency. These regulatory developments have been amplified by the increasingly competitive economics of wind and solar.

Both the ACP and the MVP have gone so far down the regulatory path that there’s almost no chance that the projects won’t be built, so the point may be moot now. But I think it would be a useful exercise to take a fresh look at the pipelines in the light of current regulatory realities to see how they might contribute to the optimal balance of cost to rate payers, environmental sustainability, and electric grid reliability.

The least discussed of this triad is reliability. But reliability, arguably, is the most important — cost and environmental considerations fast become secondary when the lights go out. The East Coast successfully rode out an extreme cold weather event this January, but the so-called bomb cyclone did put enormous stress upon PJM electric transmission system of which Virginia is a part. PJM handled the challenge just fine, but only by calling heavily upon the surge capacity of fossil fuels such as coal and gas, while continuing to rely on the steady input of nuclear. The problem in the future is that coal and nuclear plants in many parts of the country are shutting down.

I have seen no analysis that tells us what reliability looks like under Virginia’s new regulatory regime of 25% or more of intermittent wind and solar, 30% fewer carbon emissions and a commensurate reduction in coal and/or gas, bigger investments in energy efficiency with a resulting bending of the demand curve, and a possible phase-out, desired by some, of nuclear power. Will Virginia burn more natural gas or less in its energy future? And looking back in that light, will Virginians be happy or unhappy that the MVP and ACP were built?

Beats a Poke in the Eye with a Sharp Stick

Critics are furious that Dominion Energy Virginia and Appalachian Power Co. won’t be returning all of their excess profits to rate payers, but this year Virginians will enjoy modest rate reductions nonetheless.

First, the two power companies will return savings made possible by the federal 2017 Tax Cuts and Jobs Act tax reductions — $125 million from Dominion and $50 million from Apco, the State Corporation Commission (SCC) announced yesterday. The rate cut will be effective July 1.

Second, Dominion will issue a one-time $133 million refund to customers, also effective July 1, in accordance with the state’s Grid Transformation and Security Act of 2018. Dominion will issue a one-time, $67 million refund next year.

Although no authoritative accounting has been done, the refunds are likely to fall considerably short of what Dominion earned in excess of normally allowable earnings during the three years of the 2015 rate freeze. Instead, under the new law, Dominion will reinvest its over-earnings in renewable energy projects and upgrades to the electric grid.

Bacon’s bottom line: The Grid Transformation Act was highly controversial and hotly contested. I hope it’s somebody’s job to track the costs and benefits of the legislation. Here at a minimum is what the public needs to know: (1) What are the over-earnings each year, and how will Dominion invest them? (2) What is the expected payback of those projects, either in lower costs, greener energy, or improved reliability? and (3) what is the actual payback of those investments?