“I hate to give out directions without knowing what the cost is going to be. There’s far too much of that in government.”
That was Senator Frank Wagner of Virginia Beach expressing his deep reservations about various proposals to deal with the 27 million cubic yards of coal ash that Dominion Energy Virginia has collected over decades near its major power plants. Wagner, who chairs the Senate Commerce and Labor Committee, was part of a joint subcommittee of that committee and its House counterpart that heard testimony Monday but took no actions.
Legislation is coming. Coal ash disposal in 2019 might turn into a replay of grid transformation in 2018, an omnibus electric utility regulation bill that takes on epic and expensive proportions as it moves through the legislative process. It will also be a textbook example of what happens when legislators jump in to make billion-dollar decisions that could be made a better way.
The General Assembly doesn’t need to do this and could leave it to the State Corporation Commission and environmental regulators. No legislation is required for the utility to comply with environmental regulations, and the SCC will allow full recovery of regulatory costs if the work is done right. Legislation is only required if the utility is being ordered to do something beyond the EPA mandates, or if the SCC is being ordered to approve something unreasonable or imprudent.
Here is a short list of some of the issues facing the General Assembly which should be sorted out at the commission, with interrogatories, cross examination and testimony under oath and without the intervention of lobbyists all around.
Cost. The first phase of costs destined for home and business electric bills was outlined in an application Dominion filed with the State Corporation Commission on Friday. As reported by the Richmond Times-Dispatch, the company is spending $302.4 million at three of its coal-fired plants, one of them in West Virginia. Most of the money will build a new lined and capped landfill for coal ash at a Chesterfield County plant, plus a new roadway and bridge to ease the process of filling it.
The utility proposes to pay for the work with a special monthly rate adjustment charge (RAC) on customer bills, Rider E, which will last for at least twenty years. Initially it will add a couple of bucks to a residential bill, more for a larger user. But that’s just the start.
Dominion also has spent about $300 million bringing coal ash storage up to Environmental Protection Agency standards at four additional plants, money that will not be recovered through a rate adjustment clause. Dominion Vice President for Generation Mark Mitchell told legislators Monday that those costs will be recovered through current base rate revenue.
Those costs will be reviewed for approval by the SCC the next time it examines Dominion’s books, set for 2021. Unlike the new RAC, those costs will not increase customer bills, but using the dollars that way means they also will not be available to return to customers as credits. Pay now, or pay later.
Dominion says it can comply with EPA regulations by improving its existing on-site storage at a total cost of about $700 million (not including financing costs or profit margin, if any). Based on the comments today, much of that has already been spent or will be covered by the requested Rider E.
Cost Allocation. This issue was not discussed Monday, and everybody assumes that 100 percent of the cost of whatever is done will be passed on to Dominion ratepayers. As some point the question must arise if that is fair. This issue represents deferred costs from a time when Virginia enjoyed low-cost electricity produced in an environmentally dirty way. Did only ratepayers benefit from that? Did not utility shareholders also benefit from that? The entire economy? Why should future customers foot the entire bill?
On-Site Storage vs. Off-Site Disposal. Dominion is building stronger storage facilities for the ash near the plants, a method being used by other utilities with EPA blessing. Two members of the Virginia Senate who represent neighborhoods near some of those plants or downstream continued Monday to advocate for more aggressive plans to excavate the existing storage ponds and move the ash, either to recycling uses or to secure landfills away from water bodies (and their constituents.)
Senators Amanda Chase of Chesterfield and Scott Surovell of Fairfax both have had legislation in previous sessions, and Surovell already has a draft bill ready for 2019. Environmental activists also complain the on-site storage won’t be safe in the long run.
In response to an earlier legislative directive to seek options for moving the ash somewhere else, with as much recycling of ash as possible, Dominion estimated that cost at between $2.35 and $5.64 billion, much of it for a massive transportation effort by truck or rail. Advocates, including Surovell, pointed out that it might be the lower cost in the estimate and not the higher, and others who spoke Monday said it isn’t costing that much in other states where the decision has been to excavate and relocate the ash.
Moving 27 million cubic yards over long distances will take hundreds of thousands of truck trips, often through areas where the residents will be upset, potentially over many years. Storing the material on-site leaves it close to the rivers where the plants were intentionally located. That’s a tough dilemma to decide and legislators might consider not deciding it, leaving it to the environmental regulators.
Recycling. Many of the same advocates claim there is a growing market for the coal ash as an ingredient in other products, such as concrete and other building materials. In response to earlier legislation, Dominion put out a request for proposals during 2018 and claims that perhaps half of its coal ash stash could find such a market. But there are also costs in getting the material ready for such uses. The competing claims on what is feasible and makes economic sense are hard to sort through.
Hazards. The two sides disagree on just how hazardous the material is, despite its official designation as solid waste but not hazardous waste. They also squabbled in front of the committee Monday about what testing has shown about the spread of heavy metals into nearby rivers or groundwater. Test wells on the Dominion property at Chesterfield have shown heavy metal concentrations above what’s considered safe. Just how dangerous that really is, however, remains contentious.
At the General Assembly, that question and the others will be decided by politics, not science.
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