By Steve Haner
Three recent announcements from Dominion Energy Virginia in rapid succession point a path forward for the utility that complies in part and utterly rejects in part the carbon-free energy pipe dream of the Virginia Clean Economy Act (VCEA).
All three of the announcements will result in major cost increases to the company’s 2.6 million ratepayers. Just how much the projects will all cost combined is still unknown, and frankly nobody is likely to press that issue until the utility is ready to show its cards. The utility’s next integrated resource plan, to be filed later this year, should shed some light.
The most recent announcement is the most surprising. Dominion has proposed to build a $550 million liquified natural gas plant and storage facility for the sole purpose of providing a fuel backup to its newest two natural gas generation plants. The facility will be fed by the Transco Pipeline and be attached to the Greensville and Brunswick generation plants. Combined they produce about 3 gigawatts of reliable electricity into Dominion’s territory or the surrounding PJM regional transmission organization.
The facility, likely to cost ratepayers closer to $1 billion when profit and financing costs are added in, may never be needed. It is insurance against a possible interruption of the flow in the Transco pipeline, which has not actually happened so far. The investment is even more questionable if Dominion truly intends to comply with the VCEA and close both Greensville and Brunswick in 20 years. (Hint: It doesn’t.)
Should the Transco Pipeline go offline, the stored LNG would keep the two plants running for four days, or one of the plants for eight days. That is quite a capital price tag for a four day energy cushion, and the cost-benefit debate over this idea will probably be just as fierce as the environmentalist fury. The case file is up at the State Corporation Commission website.
The two other announcements could be viewed as signs of compliance with the VCEA’s carbon-free vision. As expected, Dominion is going to take advantage of a new 2024 law and charge its ratepayers for the engineering and development of a new nuclear plant, even though it is making no promises to actually build anything at all. This abandons the traditional plant approval process.
The company’s news release is very clear there is “no commitment to build an SMR at North Anna.” SMR means small modular reaction, and the company’s plans to focus on its existing nuclear site is a blow to Southwest Virginia, which was fed a line of bull by politicians about a plant going out there instead. Appalachian Power which serves that area, however, still has not announced what location it might consider if it makes a similar move based on the 2024 legislation. It also can collect from ratepayers but ultimately build nothing.
Finally, as previously reported on Bacon’s Rebellion, Dominion is expanding its offshore wind empire into North Carolina waters, paying independent power developer Avangrid $160 million to take over the planned Kitty Hawk North production area. The federal government has already adopted a construction and operations plan for that area, but Dominion could amend it. The big impediment is local opposition to bringing the power lines ashore at Sandbridge Beach.
All three of these announcements were made without full cost estimates. Forget about an estimated combined cost being announced.
A capital cost figure ($550 million) was given for the LNG facility, but not a calculation of ratepayer cost. That will depend mainly on how many years of installments are demanded. There will also be major operational costs, since the storage tank will need to maintain the gas in its super cold state, steadily burning more energy even while the tank may never be used.
If Kitty Hawk North (now to be called Coastal Virginia Offshore Wind South) follows the pattern of other recent projects, the cost will be far greater than that for the first wave of CVOW off Virginia Beach. Dominion will be able to apply for the same favorable regulatory treatment of CVOW South that is received for the original CVOW. That is because the first wave used only about half of the mandated wind approvals in the VCEA.
But VCEA granted no favorable treatment of a possible expansion of nuclear power and the law will be the main weapon for opponents of the plan to build that Southside Virginia LNG processing and storage facility.
But even though the proposal clearly violates the spirit of the VCEA, Dominion’s application is quite blunt in arguing that the LNG proposal is mainly needed because of VCEA and the related national push to shut down most or all carbon-based thermal generation. Testimony from Dominion energy market consultant Katya Kuleshova focuses on that:
In 2023, the Company retired 1,935 MW of coal-fired and oil-fired generation, including Chesterfield units 5 and 6 and Yorktown unit 3, which decreased its firm (summer) capacity by approximately 1,800 MW. In 2021, the Company retired oil-fired Possum Point unit 5, which decreased its firm capacity by 622.5 MW. Against the backdrop of increasing demand, supported by the PJM load forecasts, the loss of this capacity has increased the importance of the remaining dispatchable generators in the Company’s fleet.
Furthermore, a series of recent Environmental Protection Agency (“EPA”) regulations applicable to existing coal units and steam generating units fueled by natural gas or oil constrain existing generators in the Company’s fleet and within the PJM footprint by either limiting their capacity factors or requiring additional capital investments…As a result, Brunswick and Greensville are becoming more important for reliability of electric service within the Company’s service territory and PJM.
So, she reports about 2,400 megawatts of reliable generation (10% of Dominion’s peak) has disappeared in recent years, and thousands more megawatts are under threat from EPA. The company’s answer is an LNG investment which will produce zero additional electricity, an SMR it might not actually build and an offshore wind project with perhaps 800 megawatts of output at best 40% of the time.
All three of these projects: The LNG “battery”, the North Carolina wind farm, and the potential SMR’s, likely would not be on the horizon without VCEA. How much is compliance with this law really costing ratepayers? Don’t hold your breath waiting for an answer.