Bacon's Rebellion

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Strictest Clean Power Option Would Cost Customers $12.8 Billion, Dominion Says

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by

James A. Bacon
in ,

transmission_lineby James A. Bacon

Meeting the strictest compliance option of the Clean Power Plan would cost customers of Dominion Virginia Power an estimated $12.8 billion in higher electric rates over the next 30 years, the power company revealed in its 2016 Integrated Resource Plan, which it submitted to the State Corporation Commission (SCC) today.

Three lower-cost options would pack a punch as well, costing an additional $5.1 billion to $6.0 billion more than the least-cost plan, which the SCC requires Dominion to examine.

Implementing the strictest plan would increase residential electric bills (with 1,000 kilowatt hours per month usage) by 26.5% in 2022, with a declining impact through 2030.

“Our assumption is that some kind of carbon regulation is coming,” Katherine Bond, Dominion’s Dominion director of public policy said in a press briefing. However, she added that there is enormous uncertainty over what direction that regulation will take. The company examined options based on four broad approaches the Environmental Protection Agency allows states to pursue.

A legal challenge to the Clean Power Plan appears to be headed to the U.S. Supreme Court, which could derail the whole regulatory initiative. However, the McAuliffe administration, which backs the plan, has ordered the Department of Environmental Quality (DEQ) to determine which regulatory option would be best for Virginia if the Clean Power Plan clears the high court. No consensus has developed among the stakeholders who have been meeting for several months to advise the administration.

The Virginia Chapter of the Sierra Club and other environmental groups are backing a “mass-based emissions” approach, which would cap carbon-dioxide emissions on utilities’ existing and new generating facilities. A second mass-based approach would cap emissions from existing power plants only, while two other strategies would limit CO2 emissions using intensity-based goals that limit CO2 emissions per kilowatt hour of power produced. The intensity-based approach would provide more flexibility and give Virginia room to grow its economy, but it would allow greater CO2 emissions.

“We are pleased to see that Dominion is now considering one alternative plan in compliance with the Clean Power Plan, Plan E, that includes capping new and existing fossil fuel sources,” said Glen Besa, director of the Virginia Sierra Club in a statement responding to the IRP. “While Dominion claims that Plan E is the most expensive alternative, it is important to note that most of this cost is attributable to Dominion’s inclusion of a new $19 billion nuclear reactor at North Anna.” That reactor alone could raise customer rates by as much as 25%, found an analyst for the Attorney General’s office.

Also, Besa told Bacon’s Rebellion this afternoon, the IRP Dominion submitted last year recommended a plan that would increase CO2 emissions by 60%. He had not had a chance to examine the 2016 IRP, but he doubted the low-cost plan differed enough to change the percentage by much.

The low cost plan includes the following:

  • Three combined cycle gas units one one location: 3,183 megawatts
  • Two combined cycle gas units at a second location: 1,062 megawatts
  • Combustion turbine: 2,288 megawatts
  • Solar: 1,000 megawatts
  • Offshore wind: 12 megawatts

By contrast Dominion’s Plan E (the lowest carbon-emitting scenario) envisions the addition of the following capacity:

  • Two combined-cycle natural gas units: 3,186 megawatts
  • Combustion turbine: 1,373 megawatts
  • Solar: 8,000 megawatts
  • Nuclear: 1,452 megawatts
  • Offshore wind: 12 megawatts

Dominion cites two reasons for the high expense of the lowest carbon scenario. First, it relies heavily upon solar energy. Although the “fuel” — the sun — is free, its capacity rating, or the percentage of time a solar facility actually generates electricity is lower than for other fuel sources. Moreover, it is intermittent, which means Dominion cannot necessarily call upon it when needed, which means it must maintain backup capacity. Second, the low-carbon approach rules out coal and most new natural gas, leaving only one low-carbon alternative to provide base generation — nuclear. The lowest-carbon scenario is the only one in which Dominion envisions building the North Anna 3 unit.

Dominion did not recommend any of the alternatives it examined, but it did recommend against the mass-based programs because they offer the least flexibility in achieving compliance.

While electricity consumption has leveled off nationally, Dominion sees it continuing to grow in Virginia at an average 1.5% growth rate over the next 30 years, creating a large and growing capacity gap. Environmentalists contend that the growth rate could be reduced significantly if Dominion pursued energy efficiency strategies more aggressively. Dominion counters that Virginia’s population and economy are growing, driven by a significant degree by the growth of the energy-intensive data center industry in Northern Virginia.

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32 responses to “Strictest Clean Power Option Would Cost Customers $12.8 Billion, Dominion Says”

  1. TBill Avatar
    TBill

    Look…all of the options Dominion are talking about greatly reduce the carbon footprint of the average Virginian. The overall direction we are clearly heading, is replacing coal with natural gas.

    If the new natural gas power plants are arbitrarily located in Virginia, versus older coal plants now located in West Virginia, there will be a superficial “on-paper” increase in Virginia CO2 emissions. But per person, for the average Virginian, the amount of CO2 generated is going way down.

    That “per capita” CO2 reduction is what EPA really wants in their proposed CPP plan, and that’s what we are actually doing already. EPA has no apparent issue with Virginia’s current direction. However, some Virginia environmental groups do strongly object to Dominion’s direction (due to increased use of natural gas. etc).

    That’s where we are at.

    1. TBill Avatar
      TBill

      P.S.- Regarding the lower cost, non-nuclear CPP options still costing as much as $5-6 Billion, that’s what I was saying in my August_2015 Bacon’s Rebellion blog article, the CPP is not slam-dunk easy for Virginia, as some have portrayed.

  2. LarrytheG Avatar
    LarrytheG

    I’d be curious to see what the UVA folks who did a recent analysis of the SCC CPP report – might say about this report.

    Does Dominion take into account what people will do to reduce their costs if electricity goes up? If you look at the price of electricity right now – in the US and the world – the higher the price -the more conservation is practiced and lower use.

    If you take one thing – the advent of LED light bulbs – there is going to be change.

    If the price of solar panels, natural gas/propane backup generators, and on-demand water heaters continues to drop -people are going to have them installed in newly-built homes – in addition to higher R insulation and higher SEER heat pumps.

    I would like to see an independent analysis of Dominion’s report before I take it as anything close to gospel… I think demand is likely going to drop.

  3. LarrytheG Avatar
    LarrytheG

    The Nuke idea in a world with wind/solar inputs – i.e. a grid that varying inputs affected by sun and wind as well as demand variability – seems odd.

    Nukes are baseload and cannot quickly ramp up or down in response to changing conditions – you still need gas to do that.

    one more reason to have a credible 3rd party look at their plan.

    these folks:
    William Shobe, Ph.D.
    Weldon Cooper Center for Public Service
    and
    Frank Batten School of Leadership and Public Policy
    University of Virginia

    the folks who did this:
    Report on Appendix A-1 of the Virginia Energy Plan:
    Impacts of Proposed Regulations under
    Section 111(d) of the Clean Air Act
    Charlottesville, VA

    http://www.coopercenter.org/sites/default/files/econ/Reports/CEPS_Report_15-01.pdf

    1. TooManyTaxes Avatar
      TooManyTaxes

      I like to see reports that challenge other reports.

  4. Acbar Avatar
    Acbar

    LarryG, I agree, the more the merrier should pile on this important document. I hope the UVa folks will not only submit public written comments but be represented in the public hearings that are held this summer to review this Dominion filing.

    Dominion’s future as an electricity company is at a crossroads here, as I see it. For decades Virginia has looked to the local electric utilities simply to take care of electricity supply “in an efficient and reliable manner at the lowest reasonable cost” without much public attention, and they have done so, remarkably well if Dominion’s low rates are any guide. Now we have not one but three major areas of uncertainty clouding the future: first, uncertainty re carbon emissions (the CPP, possible carbon tax?, need for more non-fossil-fueled baseload generation?); second, uncertainty re renewable-resource generation (how much lower will solar costs go? how much utility-scale solar and wind power will be cost-effective? how much cycling generation [to carry the night-time/cloudy-day load] should be built as opposed to baseload [to carry 24 hour loads]?); third, uncertainty re future electric loads (at last, energy efficiency? distributed generation at homes and businesses? will customers sign up for more curtailable-load programs? what about better battery technology? will electric vehicles finally become common enough to impact electric loads as has been predicted for years?). In addition there are huge short-term uncertainties, including: when will the litigation cease and CPP rules actually apply? which CPP option should Virginia pursue? when will the Middle East cartel stop its price war and drive international oil and gas prices back up? where to build – will domestic gas pipelines be reconfigured or should we be building more transmission lines? Ironically, many of the customer initiatives like solar rooftop panels and other distributed-generation are made less attractive in Virginia than in other States precisely because of Dominion’s past success at keeping electric rates low. It’s all enough to make some folks want to invest in other lines of business!

    Jim supplies a link to Dominion’s actual IRP document; it is 164 pages of dense, jargon/acronym-laden prose with dozens of charts and graphs, followed by an Appendix with 130 pages of longer charts and graphs; yet I have to say parts of it read fairly easily. It lays out Dominion’s priorities for spending billions of dollars, in the form of a series of recommendations along a spectrum (dependant upon key variables) that it asks the SCC to choose. Yes, the single biggest wild card is whether to build North Anna 3 — but how can we criticize that option until we look at the enormous alternative costs? There is a huge amount of background information about Virginia’s and the Mid-Atlantic’s economy here, and about Dominion’s best estimates of how they think key factors will play out.

    I hope that readers of this blog, who evidently care about such things, will at least glance through Dominion’s IRP for themselves. There’s a lot more uncertainty about what the SCC and the GA should do in this Dominion filing than I’ve ever seen before. BTW, the SCC’s responding report to the GA is due December 1.

    1. TBill Avatar
      TBill

      The additional uncertainty for me is what our neighbors to the South do. Georgia and South Carolina are building four large new nuclear reactors, and North Carolina is also contemplating a big move in that direction. Seems to me that possibly introduces excess power. We are close to the one region where more nuclear capacity is being seriously considered. Maryland seems happy to import power, so I am not worried about them.

  5. LarrytheG Avatar
    LarrytheG

    the thing about that document is that you can search for keywords.

    so do it for residential energy conservation or consumer solar , etc.

    and see what you get…

    my point is that Dominion spends time talking about “educating” people about conservation but not about the realm of technologies that will become available to consumers to adopt – in the near and mid-term future – and how that might affect per capita demand of electricity – especially if it becomes more expensive.

    In the US and around the world – when the price of electricity increases – people find ways to use less – by adopting technologies and strategies to reduce their consumption.

    that’s not a theory -it’s a proven behavior – that Dominion does not address in their many-page “plan”.

    They make the claim that demand will increase – when many other studies say the opposite… this is why the plan seems to be a Dominion perspective of what they’d like to see happen rather than a hard-look at likely outcomes involving – for instance – consumer adoption of higher efficiency technology that is advancing as we speak.

    I just don’t trust Dominion nor the SCC any more especially after the last totally bogus VPI “study” done for the SCC – as well as Dominion’s behavior on things like coal ash, pipelines and powerlines.

    I think they’ve both demonstrated that they have their own agenda’s that do not take realistic looks at the future but instead put focus on regulation – while ignoring what the marketplace is going to do – no matter regulation.

    Until I see at least one independent analysis – I’m not buying what Dominion is selling.

    1. Rowinguy Avatar
      Rowinguy

      The VPI study you conclude was “bogus” was not produced by or for the SCC. I believe the DMME contracted that work.

  6. LarrytheG Avatar
    LarrytheG

    you know – the front page says “public version” – who knows what that means but clearly there is little effort to make this document reasonably understandable to ordinary people and by that I mean even folks like legislators and those who have an interest but are not regulators or industry experts and professionals.

    For instance, a simple map of where the existing electric generation units are located and their capacity and fuel type and future maps showing where the coal plants are shut down and other plants planned and contemplated.

    https://www.energy.vt.edu/vept/electric/coal_nuclear.jpg

    It would take only a few pages to put in simple terms the basics with footnotes to the pages where the heavy duty stuff is.

    So it’s pretty clear that neither Dominion nor the SCC has any interest in truly engaging the public on this “plan”.

    It’s purposeful mumbo-jumbo that I suspect even many inside of Dominion and the SCC with the exception of just a few – truly understand.

    This is not how you engage and educate the public on the issue – the good, bad and ugly of it so that average folks can have some appreciation and more importantly – be able to form some modicum of an informed opinion.

    it takes arrogance and condescension to produce a document that purports to lay out a plan – that will affect all Virginians and rate payers that looks like this. It’s a sarcastic statement that illustrates VDP’s and the SCCs attitude towards the public which they both purport to serve.

    1. Acbar Avatar
      Acbar

      Re: “the front page says “public version” – who knows what that means but clearly there is little effort to make this document reasonably understandable to ordinary people.” A document like this has to serve a formal purpose prescribed by law and regulation, and at the same time persuade a bunch of technocrats. That does not automatically make it a public relations document, although for a limited number of folks who follow this stuff, it is going to get read closely. Perhaps it should have a public relations intro; in fact I think it ought to have one, but the “executive summary” supplied here is sadly lacking in public relations virtues; in fact it seems mainly to be a formal statement of scope and a set of disclaimers, not a “summary.”

      That said, I think you are too harsh expecting this also to be a public relations document. Having been on the front lines myself for a large corporation, I know the primary goal of this report is to focus on addressing the problem at hand, which is persuading the SCC and ultimately the GA that what the corporation needs to do is thus-and-so. It takes a massive effort internally to pull all that together into one document. And as you well know, to be a good writer means cutting, cutting and cutting until you have captured the essence of what you want to say, and they probably didn’t have the time to do that here. Plus, their principal message is, we don’t know which set of options to embrace, the uncertainties are too great — that is important! The SCC is the body that’s going to prepare the final set of recommendations to the GA (as well as to Dominion) based on this report.

      That’s why I think it’s so important that we read it — in spite of its complexity and jargon. This document looks to me like Dominion throwing up its hands and saying “Here are the risks for the public if we listen to this group, or if we listen to that group — we’re damned if we do and damned if we don’t; what do you want us to do?”

      Which leads me to comment, I think what’s lacking here is a sense of Dominion’s leadership on what direction to take. Yes, there are uncertainties here, but the SCC is not (and cannot replace) the Dominion Board. I don’t agree with your characterizations of “arrogance” and “condescension” and “sarcastic”; indeed it strikes me that this document is at the other end of the scale: too equivocal, too docile, too tame, for what it ought to be: a declaration of how Dominion wants to move forward with its vision of the electric business.

      Maybe that is the message here: Dominion doesn’t have a clear vision of the future of its electric business. To me, that is scary!

      1. TBill Avatar
        TBill

        We cannot really blame Dominion for this though. The EPA Clean Power Plan, if approved, takes the planning control away from the utilities and gives it to the State. I feel like Dominion has given quite clear direction of their preference, wanting to go to more natural gas and reducing power imports. Nuclear option has uncertainty, but they’d probably love to do that since large profit is guaranteed in the Virginia regulatory scenario. Dominion is not really an independent utility they depend largely on what Virginia’s leadership wants to do.

        1. Acbar Avatar
          Acbar

          I agree with all your points. As for how “independent,” they are as independent as any electric utility with a large part of their investment and revenue tied up in State-regulated retail electric service. Some utilities tried to become generation sales leaders from “merchant” (non-rate-based, non-regulated) generation into the wholesale marketplace, but the trend is for them to re-embrace regulated activities (transmission, distribution, retail sales) because of the revenue stability and (relatively) high returns on equity. Case-in-point: Exelon’s purchase of Pepco Holdings and its operating subsidiaries the other day (Pepco sold nearly all its generation long ago, but transmits and sells at retail in DC, MD, NJ and DE).

          As for the CPP taking away planning control, that’s hardly a new position for Dominion to be in; but Dominion must feel it’s especially important to get SCC guidance on which way to go with North Anna 3, given investments to date to keep that option alive.

      2. Rowinguy Avatar
        Rowinguy

        I agree with you, AC, that this is not a public relations document. It is a technical filing, required by statute, much of whose content is required by regulation or by prior Commission order. The SCC will review this document and has only to decide if it is reasonable; no action by either Dominion or the Commission necessarily follows such a finding. This is, reduced to its essentials, a forecast of what the utility believes its load will be in 15 years and how it plans to serve that load. As you appreciate, this is a difficult undertaking at any point in time, made more so with the environmental and operational contingencies of pending regulation(s) and the changing characteristics of both the demand and supply sides of the industry.

        I do understand Larry’s point that a “plain language” version would be more widely read, but those inclined to disagree and disbelieve any and everything DVP says will probably still disagree and disbelieve the simpler version, too.

    2. Rowinguy Avatar
      Rowinguy

      The “public version” of a document filed at the SCC is just that; the version of the document that is available to the public for viewing, as opposed to the “confidential version,” which contains information deemed confidential by the filing party.

  7. Acbar Avatar
    Acbar

    TBill, you mention more natural gas to reduce imports. Just to be clear, DVP and DNC both buy and sell in PJM’s wholesale markets. It’s within those markets that Dominion is (relatively) long on baseload and peaking generation and short on mid-range (cycling) generation, which is what most natural gas units are. If they could build some more efficient n.g. units anywhere in PJM they could become net sellers in all categories. Meanwhile, as you know, the CPP focuses on State-by-State measurements which are irrelevant to how the wholesale energy market actually works; but those CPP measurements may influence Dominion’s decision where physically to locate its new n.g. generation.

    1. TBill Avatar
      TBill

      OK yes I do not necessarily want to endorse Dominion approach either as some have characterized their approach as not exactly what PJM would want, and I am thinking maybe not what West Virginia or Pennsylvania (the main power exporters) would want. So there is of course a lot of complexity.

      On your prior comments re: the big utility merger in DC/MD, do you see Exelon changing the direction in MD to more utility-owned power plant construction?

      1. Acbar Avatar
        Acbar

        By “utility owned” you mean “rate-based” as in the case of DVP?

        Exelon probably made that investment in Pepco to achieve a higher percentage of Exelon’s overall revenue subject to the higher (regulated) rate of return and the steadier revenues that come from regulated rates. Also they already own Constellation and thus supply at retail across the former BG&E territory; this consolidates all of central Maryland under Exelon. A logical extension of that might seem to be, seek to build new Exelon-owned generation located within the State of Maryland as ratebased investment.

        But I doubt that will happen. You have to decide what you’re good at, what you can do most efficiently. Exelon has a large nuclear portfolio, and they have some big fossil fueled plants they are good at running. But building, running and maintaining a bunch of smaller generation at sites scattered around Maryland does not sound like something they’d choose to do over simply buying the output at wholesale from independent suppliers or from the PJM spot marketplace, even to obtain the slight financial advantage of ratebasing (if any), and it would be a big regulatory hassle to change from current practice.

        In Maryland, unlike in Virginia, both the PSC and the utilities are comfortable with having retail suppliers (load serving entities, or LSEs) that don’t own generation of their own, whether private or an REA co-op, whether part of a big holding company or independent. The dominant model in Maryland is to buy power under long-term contract from non-ratebased generation owned by others and located anywhere within PJM and have PJM deliver it. That would work in Virginia as well, but Dominion’s operating companies have preferred to retain ownership of most of their generation within the same utility corporate structure and to rate-base the investment in the traditional, vertically-integrated way; DVP already knows how to manage those plants and their workforce efficiently. Much of Exelon’s generation is nuclear and scattered all over the Mid-West. PJM, the system operator, doesn’t care who owns the generation as long as each LSE has enough of it, either owned or under contract and located within PJM, for each annual period.

        1. Rowinguy Avatar
          Rowinguy

          I disagree with one of your points regarding Maryland, AC. I don’t think the PSC is particularly comfortable at the moment. They implemented a scheme to induce the construction of new generation in the state that the US Supreme Court has just struck down as incompatible with the FERC’s jurisdiction over wholesale power. New Jersey, another “competitive” state had a similar program overturned. Ohio has just had its support scheme for in-state generation stopped in its tracks by FERC itself. Those are 3 prominent PJM deregulated states that are uneasy about the market failing to support new local generation, with the resultant higher power pricing from congested transmission lines and impacts on reliability.

          1. Acbar Avatar
            Acbar

            Point well taken — my emphasis was on the contrast between MD where the utility generally does not own/ratebase new (or most old) generation, and VA (i.e., the Dominion approach).

            Re the “scheme to induce the construction of new generation in the state”: that concerns distributed generation, not utility-scale generation. The legal debate over where to draw the line between retail and wholesale for purposes of regulatory jurisdiction strikes most people outside the utility business as arcane, but of course it has consequences. Is generation by a utility’s retail customer a retail activity (a negative retail sale so to speak) or a wholesale activity (a sale into the grid)? I happen to think the US Supreme Ct’s reasoning (the latter) was sound and predictable, but it was a blow to the State commissions who wanted to steer (control? dictate?) the evolution of the distributed generation industry. Yes, the subsidy inherent in forcing the utility to buy d.g. power at higher-than-wholesale-market rates would have expedited the spread of d.g., perhaps dramatically, but utilities believed that such a subsidy, mandated at the State level, would be impossible to roll back once its start-up-inducement function was done. Going forward, the only way to satisfy both camps is for the State , like the feds, to offer tax credits directly to homeowners to subsidize d.g. equipment purchases during a startup period — and any economist will tell you, subsidizing the capital expense rather than the ongoing product sales is a better approach anyway. That’s what NC has done, and that’s what I wish VA would do — although it’s not likely in VA with current political attitudes.

            Beyond tax credits, I know there are people who really, really want to see d.g. prosper and spread for philosophical reasons of their own — they don’t like big utilities, they fear the big-generator pollution, etc. They want ongoing subsidies mandated by the State Commission that treat d.g. electricity as ‘worth more.’ I respectfully disagree. Those few people who receive that on-going subsidy do so at the expense of all those other ratepayers who won’t or can’t (like apartment renters) take advantage of it. That’s simply unfair. All electricity on the grid is equal.

            As we’ve discussed before here, the grid is not obsolete — even with lots of d.g. it’s going to be needed for backup and efficiency. Much of the talk about “customer microgrids” to replace or bypass the big grid is fancy words for an accounting shell game, not anything real or physical (and the utility is usually the loser when it comes to regulator-imposed accounting shell games like net metering). What will happen IMHO is a shift to a larger percentage renewable generation on the grid, some of it d.g. and some utility-scale, and increasing pressure for energy efficiency particularly at the building construction stage, and those developments will drive a response in the nature of the cycling generation needed on the grid to back it up. This is happening now, and it’s happening because of consumer education, and because d.g. (especially solar) equipment costs are dropping, and because of the federal and State tax subsidies for renewable investment that do exist. So, I’m not losing any sleep over that Supreme Court decision.

  8. LarrytheG Avatar
    LarrytheG

    I still think – since this document is in the public realm and a significant issue involving the public – and politics – that the first few pages should be in fairly simple terms and concepts and include simple things like Dominion’s actual service area and the electric generating plants and especially those that are coal based and subject to be closed – as well as the ones that will stay open.

    https://www.energy.vt.edu/vept/electric/elect_map.jpg

    Dominion should be purposely engaging the public – in addition to fulfilling it’s regulatory requirements.

    The average person should be able to understand where we are now – and where we might be headed in the future – using simple words, concepts, maps and charts – all with footnotes for the deep-diving stuff.

    This is especially so given the fact that this whole area has become a divisive political issue.

    Dominion has an opportunity to blunt the radical folk and gain the trust of ordinary folks who want reliable power – but who also want to move away from coal and toward cleaner, less polluting fuels.

    This document is a statement – that Dominion is fulfilling it’s responsibility to the SCC but neither one of them are truly interested in engaging the public and clearly some at the SCC are more than willing to churn the politics.

    It’s time for BOTH of them to realize they have a responsibility to the ratepayers beyond producing an almost unintelligible jargon-bloated document that I doubt seriously many at Dominion and the SCC understand except for the folks who wrote it.

    that’s not the way to do a public process IMHO.

    and this is why other folks (left and right) get involved and come up with their own interpretations making it even more political rather than helping to forge a consensus …

    1. Acbar Avatar
      Acbar

      Re: “It’s time for BOTH of them [DVP and the SCC] to realize they have a responsibility to the ratepayers beyond producing an almost unintelligible jargon-bloated document that I doubt seriously many at Dominion and the SCC understand except for the folks who wrote it.” Of course you are entitled to your opinion, but I think you’re wrong to imagine that this was tossed off by a low-level team of technocrats. This report was written, however, not to persuade you, but to persuade the SCC, or at least, to put out there all the considerations and all the credible gory details DVP thinks the SCC should weigh. DVP obviously thinks the SCC wants to read all this; I imagine that every DVP executive and department dealing with planning and financing Dominion’s future generation construction and CPP compliance is intimately aware of what’s in this IRP report, has debated its tone and its bottom line, and for what it’s worth I imagine there are going to be many, many meetings within the SCC and its staff and its consultants to go over this document paragraph by paragraph, footnote by footnote, chart by chart, in great detail. There will be important subsidiary reviews by PJM and ODEC and other State Commissions and a bunch of well-funded intervenor groups as well. The SCC will have the task of writing a document summarizing its conclusions to persuade the General Assembly. The General Assembly must persuade the Governor. What the DVP ratepayers like you and me think is not particularly relevant here as the GA has taken this IRP process out of the public’s hands; but there will be public hearings at the SCC, and if you really want to have direct input, that is your best opportunity.

  9. LarrytheG Avatar
    LarrytheG

    right – the process is throw a inscrutable report at the public and dare them to offer “input”.

    got it. been there. done that. still sucks.

    this is how opposition groups form.

    they will then issue claims that the report is biased and wrong and that it’s proof that DVP and SCC should not be trusted –
    as what has happened before.

    this leads not to consensus -but further upheaval.

  10. LarrytheG Avatar
    LarrytheG

    The purpose of the SCC is to protect and serve the needs of Va taxpayers and ratepayers – not play footsie with it’s best buddy DVP.

    that document is basically a communication between the two of them with no intention of helping the public at large to understand how electricity is provided and more importantly – how it is planned.

    Government forgets it’s role sometimes It’s not there to “help” DVP deal with the CPP. It’s there to insure that the monopoly that has been granted to DVP is used in a way that benefits ratepayers.

    Essentially telling ratepayers that it’s really none of their business that the SCC is taking care of business – in an era where big changes are in the offing is arrogant and condescending when that document is not written in a way that average people can understand the general issues – without themselves being a player in the industry.

    And this is just one half of it The other half is DEQ.

    When the public has to take such a document and go to a 3rd party to translate it into something they can understand – it basically means that government is not serving the needs of the people it is tasked with doing.

    I don’t accept at all – that it’s a take it or leave it proposition .

    If the folks at the SCC think it is – it’s time for change.

  11. Peter Galuszka Avatar
    Peter Galuszka

    I am confused.

    Why don’t the least cost and most carbon saving lists include the existing nukes at North Anna and Surry?

  12. James A. Bacon Avatar
    James A. Bacon

    The lists include only new capacity, not existing capacity.

  13. Peter Galuszka Avatar
    Peter Galuszka

    So, the most carbon reduction list includes the $19 or whatever billion for North Anna Three? I know Dominion does not like to discuss the cost of that nuke, but is this true? If so, why didn’t you note it more clearly?

    1. James A. Bacon Avatar
      James A. Bacon

      What’s unclear about this?

      The low-carbon approach rules out coal and most new natural gas, leaving only one low-carbon alternative to provide base generation — nuclear. The lowest-carbon scenario is the only one in which Dominion envisions building the North Anna 3 unit.

  14. Peter Galuszka Avatar
    Peter Galuszka

    Then why isn’t the $19 billion nuke cost factored in? You keep talking about how unreliable renewables are but dodge nuke’s high cost–exactly your sponsor’s line.

    1. James A. Bacon Avatar
      James A. Bacon

      The high nuke cost is factored in. That’s why the scenario is so extraordinarily expensive.

  15. Rowinguy Avatar
    Rowinguy

    Responding to Acbar’s comment from earlier today:

    “Re the “scheme to induce the construction of new generation in the state”: that concerns distributed generation, not utility-scale generation.”

    Actually, the scheme that the US Supreme Court struck down did concern utility-scale generation: http://powersource.post-gazette.com/powersource/policy-powersource/2016/04/20/High-court-strikes-down-Maryland-power-plant-subsidies-1/stories/201604200107

    New Jersey similarly wanted to incent baseload generation to construct in that state, while the Ohio program that FERC has axed sought to preserve existing baseload generating plants whose continued operation is imperiled by the PJM wholesale market prices being too low to support such operation. Wholesale prices for power in PJM are exceptionally low due to low nat gas pricing and it is apparently getting harder and harder to run either coal-fired or nuclear generation in the deregulated states.

    I believe your comments related to a separate Supreme Court decision upholding FERC’s right to permit demand response (that is, customers being paid NOT to buy power at times of high cost of production) in the PJM wholesale power markets.

  16. TomH Avatar
    TomH

    I have been out of touch and am coming to this discussion late. Sorry if I rehash some issues.

    I have just had a few moments to look at this year’s IRP, so I cannot comment on any specifics, but it seems that we have a monumental opportunity here. Dominion has clearly invested a great deal of effort in trying to find the way ahead. Utility planning is a continuous process, not just something that culminates in one annual report. It is difficult work, especially when project lead times are long, making reaction time slow, while world events, commodity prices, and political winds change at a much more rapid pace.

    Dominion’s presentation is forced to fit into the format prescribed for the IRP. It is a litany of options derived from the mindset of the last 100+ years of utility operation. Utilities take very seriously their responsibility to keep the lights on so they tend to overestimate load growth to be certain that they have enough capacity to meet demand. They also continue the habit of adding supply to meet demand rather than pursuing the more digital age response of adjusting demand to meet supply.

    The current regulatory structure pays a utility for what it builds, which requires a growing or at least steady demand. Because of that structure any options that reduce demand (energy efficiency) or otherwise erode revenues (such as third-party distributed generation) are a threat to a utility’s existence or at least solid financial health and are often vigorously resisted.

    I think it is telling that Dominion is open enough to say that using the best efforts of a fairly effective 20th century utility, none of the choices are terribly compelling and they need help in choosing the way ahead or to reduce their blame if some of the choices prove to be ill-advised.

    Evidence is building that replacing coal-fired generation with natural gas will have far less, if any, impact on climate goals. Although the CO2 component will be less, methane leaks from fracking, transmission and distribution of natural gas is contributing significant levels of a far more potent greenhouse gas. Coal’s days were numbered anyway with mercury and other toxic emissions regulations and growing awareness of its many external costs. The CPP becomes a convenient scapegoat for making the the investments that a utility wants to make anyway, replacing aging and inefficient coal plants that often can no longer be economically dispatched. Regulatory approvals are smoothed with the CPP as the driving force.

    This also bails out Wall Street investors who have committed billions for shale gas and oil drilling since the failure of the housing market. Rapid expansion of natural gas-fueled power production will raise the depressed commodity prices, devastated by the oversupply caused by cash strapped drillers.

    The future consequences of stranded costs when the pipelines and power plants are no longer needed at their intended capacity will get short shrift in the near term rush to support an apparent solution.

    Dominion’s options include building more of various types of generation and all at utility scale, even solar. Whether this is really in the interest of the state or the ratepayers is never truly addressed. It is all in the name of meeting some perceived “capacity gap” that can be more cheaply closed by reducing demand than by increasing supply.

    Dominion presents a so-called “low-carbon” option that includes North Anna 3. Nuclear plants are low carbon only in their operation, The huge amounts of concrete and steel required to build them result in a great deal of CO2 being produced, but this is not considered in most CPP discussions. The more troubling issue is the cost of a nuclear option. A plant that is estimated to cost $19 now is likely to cost at least 50% more by the time it is in operation, whenever that might be. The history of nuclear construction since the late 1960’s is one of schedule delays and colossal cost overruns. Virginian’s would be better served to let other state’s embark on that adventure. There is no evidence that the cost of nuclear is anywhere close to the cost of other alternatives. Granted it is base-load rather than intermediate & peaking as is solar. But the future need for generation will be of the more variable type and nuclear doesn’t fit that bill.

    The opportunity that we have before us is to create a true 21st century energy system in Virginia. Dominion is telling us that the old solutions don’t clearly answer all of our needs or they could easily select a preferred alternative. But Dominion and the other utilities can’t do it on their own. Creating a modern energy infrastructure requires political will as well as industry support. Virginia seems to be accustomed to Dominion taking the lead and saying how they want to do things. Utilities need help in transitioning to a system where they can charge higher rates in order to provide lower bills.

    This would require a good bit of creativity and a collaborative effort. The states that are already on this path were typically led by a governor or state legislature that saw the better future the changes would enable and were willing to spend the political capital to make the necessary regulatory alterations.

    Maybe it’s my selective hearing, but it sounds like Dominion might be willing to entertain a different way of doing business, as long as it keeps them financially healthy. Dominion Resources is betting big on natural gas with their acquisition of the Colorado gas distribution company, all of DTI’s investments in pipelines, LNG, etc. and their electric utilities’ increasing reliance on gas-fired power plants. There is only one direction the cost of natural gas will go in the foreseeable future and that is up. Dominion is positioning themselves to have most of their investments in the rate base or with future cost increases that are easily passed on to the rate payer. This is a prudent business decision that is not necessarily healthy for Virginia residents. We should make the most of this opportunity to finder a better way.

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