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20 responses to “Virginia’s Newest Power Producer: Amazon.com”

1. 

   larryg

   June 10, 2015

   Utilities Wage War Against Solar Power

   http://ivn.us/2015/03/27/utilities-wage-war-solar-power/

   there’s lot more articles but what it boils down to is that the Utilities are not going to allow competitors to generate electricity and fee it into “Dominions” grid.

   and it’s odd that we talk about the “advantages” of Nuclear Power without talking about massive govt subsidies – required – especially to indemnify against a catastrophic failure.

   If someone can fly a drone into the White House or a gyro-copter onto the lawn at Congress – how hard would it be to fly one into a nuke plant?

   and it’s “okay” to build a 3rd plant at North Anna because the recent earthquake only moved some spent casks a few inches?

   I’m not opposed to Nukes per se – but I’m also not opposed to SOLAR but I am very much opposed to the idea that Dominion is a govt-granted monopoly that can lobby for govt tax breaks for Nukes while arguing that similar tax breaks for solar – are unwarranted – and ..oh by the way – Dominion can financially penalize those who adopt solar power.

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2. 

   larryg

   June 10, 2015

   Here’s a utility industry study warning about SOLAR:

   Disruptive Challenges: Financial Implications and Strategic
   Responses to a Changing Retail Electric Business

   http://www.eei.org/ourissues/finance/Documents/disruptivechallenges.pdf

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3. 

   DonR

   June 10, 2015

   Beware what you read in corporate press releases. Here is Greenpeace’s take on AWS, their power usage in Virginia and the transparency of their disclosures regarding energy use in general and in Virginia specifically.

   To wit:

   “As expected, by far the largest of the AWS Availability Zones is US East, which is supported by data center infrastructure in Northern Virginia. Despite its significant existing size, US East also appears to be growing at a staggering rate. AWS has noted publicly that US East has more than 10 data centers. Based on the permits we reviewed, the total number of AWS data centers operating or under construction in Virginia currently stands at 23.

   Most AWS data centers in US East are clustered together in mini-campuses of two to three data centers each, and we have grouped them accordingly in our report published today. This clustering of data centers appears to allow AWS to maximize its backup generator deployment, allowing it to deploy one set of redundant backup generators (the backups to the backups) to serve each data center cluster.

   Despite previous estimates already placing well over half of the AWS servers in US East, and the absence of renewable electricity supply from the dominant utility Dominion Virginia Power, Amazon significantly expanded its data center infrastructure in Northern Virginia in 2014. Based on Greenpeace’s analysis of emergency data center permits applied for in 2014 by Amazon subsidiary Vadata, AWS expanded the capacity of US East by over 200 MW, as much as the total amount of capacity in the rest of the US Availability Zones combined, bringing the total energy demand capacity of AWS facilities in Northern Virginia to 500 MW.”

   http://greenpeaceblogs.org/2015/05/11/greenpeace-investigation-aws/

   So, in 2014 AWS increased the capacity of its data-centers in Virginia by 200MW in a state where the monopoly electrical provider has nearly no renewable energy. In response, AWS will add 80MW of solar power by 2016.

   As an interesting side note, AWS claims that 80MW is sufficient to power 15,000 homes. Greenpeace says AWS has 500MW worth of data centers in Virginia. Combining the data, AWS’ data centers in Virginia alone consume the same amount of electricity as 93,750 homes.

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4. 

   TooManyTaxes

   June 11, 2015

   I’m not a big fan of Dominion. The Company does a poor of a job at network maintenance as any power company in America. But in all fairness, when the Commonwealth decided retail electric competition was a flop( and it was), the legislation reregulating retail power required Dominion to serve all customers in its territory in exchange for a retail monopoly. The two have to go together or we’ll see cream-skimming where the most profitable and easiest to serve customers are picked off by “competitors,” with the rest to face higher and higher electric rates.

   I don’t have a problem with a customer, big or small, providing itself its own electricity through its own power grid. But in the event it has back up access to the Dominion grid, the independent customer needs to pay for fixed and variable costs necessary to activate back up power. Anything else screws Dominion’s monopoly customers.

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5. 

   larryg

   June 11, 2015

   Everyone should be concerned as solar get cheaper and Dominion continues to penalize the folks adopting it by nailing them when they need grid power.

   and No, I do not buy the rah-rah press releases about Google or Amazon or anyone else..

   but I think it is undeniable that solar is going to get more and more cost-effective and that Dominion’s current strategy is not only harmful to those who want to adopt solar, but ultimately harmful to the other ratepayers and Dominion’s investors.

   They’re making the classic Kodak/blockbuster video mistake.

   they think they’re going to be able to fence off their business model by getting the general assembly to help them with the fence or the Feds to help them with Nukes.

   Dominion should be embracing solar – they should be using the advancing technology as an opportunity to essentially offer services – much the same way as IBM and HP have transitioned from making computers to providing computer services..

   It’s not just SOLAR – it’s other efficiencies like LED lights and even higher efficiency heating and cooling systems.

   Any business model that stakes it’s future on selling more electricity is at risk.

   Rather than trying to stop SOLAR – they should be offering solar with natural gas backup units – that still connect to the grid – and could feed back into the grid at high demand periods and more..

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   1. 

      TooManyTaxes

      June 11, 2015

      I think customers with standby power need to pay all the costs associated with access to backup power. Why should the rest of us pay for it?

      At the same time, I suspect Dominion will ride their existing power plants until they are full depreciated and then further if they can. They should get pushback from consumers and VSCC staff to move the most reliable and lowest cost power generation.

      I agree more pressure should be put on energy conserving appliances and devices. Prices for LEDs should be falling. I would not be surprised to find there is price fixing going on. Herring should open an investigation.

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      1. 

         larryg

         June 11, 2015

         TMT – you’d charge someone MORE for the SAME amount of electricity just because they are using LESS?

         I don’t believe in “pressure” to use energy efficient – I think it will come automatically. I have no trouble buying LED right now – because it’s cost effective in terms of how long it lasts.. it just has bigger up-front – but lower overall. It’s basically the same as solar. you pay up-front then benefit downstream.

         what Dominion does – and does not do – affects you and I . they should not be charging more for power because someone is using less… unless they want to charge everyone – including you an I an “availability” fee. I’d support that with caveats.

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         1. 

            TooManyTaxes

            June 11, 2015

            We who get power from Dominion pay fixed costs, variable costs, depreciation/amortization, corporate taxes and capital costs. Some of those costs relate the lines and cables that connect our homes to generating plants; account maintenance, and generation and transport capacity. Some of these costs are availability costs. If we moved and got power from another company, we’d likely pay similar costs in our bills. This is reasonable to me.

            If someone lives totally off the grid like they do on some of the Alaska reality shows, they shouldn’t pay these costs. If their generator blows up, they are SOL until they can fix or replace it. But if a power company has to stand ready to deliver commercial power to those folks when their generator or solar panels fails, it is wrong for other gird customers to pay the standby or availability costs. Why should the people in Fairbanks pay so others can have backup power. The same applies to Dominion. If Amazon or Peter generate their own power, but keep a connection to the Dominion just in case, Amazon and Peter need to pay the costs for providing and maintaining the “just in case connection.”

            I think LEDs are capturing the value of the longer term cost savings, but only (IMO) because there is at least a tacit conspiracy to maintain that pricing. LEDs are defying the market. New, innovative technology is very expensive when it is new, but tends to drop quickly as costs fall and demand increases. Look at Garmin, desktop computers, calculators, cell phones, tablets, etc. But the high margins seem to remain with LEDs and before that CFLs. The margins are maintained because of price fixing – probably an unstated agreement not to discount prices deeply. Breaking up the price fixing, which, in turn, would lower the prices of LEDs, etc. significantly would likely have a major impact on energy conservation. Sue the bastards!

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            1. 

               larryg

               June 11, 2015

               so you LIKE Dominion but you HATE the LED folks?

               😉

               I think I already agreed with you on “availability” . They’ve already broken up the capital/distribution costs and generation costs – right? My bill shows that. Yours too?

               I think what you are saying is that everyone owns equal share of Dominion’s fixed/stranded costs – no matter how badly or wrongly Dominion operates …. that we’re still all on the hook – like we are with bad govt costs.. right?
            2. 

               larryg

               June 12, 2015

               TMT – the way this is playing out was alluded to by DonR – who asked what’s the difference between using more energy efficient equipment and solar – and what’s going to happen if Dominion won’t buy the excess solar – is storage technologies are going to advance to the point where it won’t matter what Dominion does – and more and more people will use less and less power – effectively shifting the capital and stranded costs to those who have not gone to solar with storage and backup …

               what this illustrates is that Dominion cannot wall itself off from change – no more than Kodak or Blockbuster Video or other failures in the past and second, it illustrates that any company that does try to wall itself off – will end up harming the interests of investors and in this case existing ratepayers.

               So you’re betting on the wrong horse here. Dominion is likely headed to a financial cropper and they’re going to take ratepayers with them.

               and when it happens – it’s liable to be a breathtakingly fast change – as someone announces a major storage technology breakthrough and investors abandon Dominion in droves and it will be up to the General Assembly to try to figure out how to keep Dominion solvent and no way real way to pin costs on anyone other than current ratepayers – which will then encourage them to leave.

               The only real question is going to be when. Obviously Dominion thinks it’s far downstream.. and still has time to adjust.

               Not at all sure – Dominion is betting on the right horse but who knows – they do this for a living and critics have more mouth than anything else!
      2. 

         DonR

         June 11, 2015

         Doesn’t everybody have standby power? When I turn on my light I draw power. When I turn it off I no longer draw power. I pay for the power I use. If I create my own power on sunny days how is that different than turning off the electrical appliances in my house?

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         1. 

            larryg

            June 11, 2015

            it’s not – but TMT thinks you should still pay your equal share of Dominon’s fixed and stranded costs no matter how much power you don’t use!

            He wants you to continue to pay because if you don’t Dominion will increase his costs to assume your share…

            have I got that right TMT?

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         2. 

            TooManyTaxes

            June 12, 2015

            Don, there is a line to your house that connects it to electricity. If you use it by consuming electricity (even the small amounts when your house is vacant), you get charged a monthly fee that includes the costs for maintaining that line. Right?

            If you are off the grid and use no Dominion generated electricity, but maintain the connection and ability to flip a switch and use Dominion electricity, you need to pay the costs of having the ability to get power quickly from Dominion. If you don’t have that ability, you don’t need to pay the connection costs. But you sit in the dark if your own power source fails. In other words, if you want to avoid paying the cost of having access to backup power and also amortization of sunk costs, cut the wires and leave them cut. It’s all or nothing.

            As far as sunk costs are concerned, a utility generally has the right to recover them from ratepayers often through amortization. SCOTUS has held not every investment made by a utility is necessarily recoverable if it is not used and useful. But this creates a higher business risk, which, in turn, creates a higher cost of equity. That of course means higher electric rates.

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            1. 

               larryg

               June 12, 2015

               re: ” SCOTUS has held not every investment made by a utility is necessarily recoverable if it is not used and useful. But this creates a higher business risk, which, in turn, creates a higher cost of equity. That of course means higher electric rates.”

               so ratepayers and not investors have to bear the cost of bad business decisions?

               come on TMT – surely you don’t support that….
            2. 

               TooManyTaxes

               June 12, 2015

               “so ratepayers and not investors have to bear the cost of bad business decisions? come on TMT – surely you don’t support that….”

               It’s what the U.S. Supreme Court has ruled. It doesn’t matter what I think. If there is a significant risk that a utility’s investment will not be found to be used and useful (therefore, subject inclusion in the utility’s revenue requirement), the utility’s business risk is higher. A higher business risk necessitates a higher cost of capital and, bottom line, utility rates. If, on the other hand, the regulatory agency permits the utility to amortize investments made but not placed into the rate base/revenue requirement, the utility’s cost of capital is lower. It’s a balloon. Push one side, the other expands.
            3. 

               larryg

               June 12, 2015

               the SCOTUS says that ratepayers have to bear the costs of bad business decisions and not the investors?

               first time I ever heard that.. is this for all businesses or just utilities?

               can you provide a link?
6. 

   larryg

   June 12, 2015

   what this sorta sounds a little like is, that a utility that is a govt-approved monopoly can take higher risks and offload consequences – to the ratepayers.

   In other words, they can try to wall themselves off from market dynamics and disruptive technologies and if that strategy fails then ratepayers pick up the costs.

   Dominion is more like the consumer version of Hotel California…

   https://youtu.be/lrfhf1Gv4Tw

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7. 

   larryg

   June 13, 2015

   Let me suggest that solar panels could fund our roads.

   Here’s how.

   the next time you’re driving on a major road – that has a significant median and right of way beyond the shoulders… and interchanges with stranded land .

   Drive an interstate and look at bridge abutments and places where there are guardrails, etc..

   imagine all of this (that points south) covered in panels that are feeding electricity into the grid…. even at a discounted price to Dominion…

   billions of dollars of highway funding could result basically by exploiting already-owned land and taking advantage of the price differential between solar and retail price of electricity – with the beneficiaries not individual solar panel owners at their homes but instead – VDOT ….and in term those who use roads …

   a recent WSJ article was relating how thermal solar was producing only 1/2 of it’s design capacity and that the original envisioned cost of 5 cents a KWH was now 10 cents. Even on that worst case basis – it ‘s cheaper than coal-generated electricity -BEFORE the kinks get worked out.

   now exactly what would Dominions argument against it be? That basically they don’t want to upgrade the grid to allow solar feeding into “their” grid?

   don’t think you could put solar panels along roads?

   take a look: here – take a look: https://goo.gl/HlOkwE

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   1. 

      TooManyTaxes

      June 14, 2015

      Now this is a creative idea. There may be some legal issues though under Virginia’s regulatory law.

      Here is another. I was talking with a VDOT engineer last week at the Tysons Open House. An intern suggested using geo-thermal energy from piping placed into the ground to heat bridge decks to avoid icing in winter. VDOT is looking at it.

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      1. 

         larryg

         June 14, 2015

         continuing in this vein…

         look at your cell phone bill and you’ll see this (or similar) :

         Government Taxes & Fees Rate Amount
         Communications Service Tax (Wireless): VA 5.00 $1.81
         E911 (Wireless): VA 0 $1.50
         P.U.C. Fee: VA 0.20 $0.07
         Total $3.38

         check the SCC site and see this;

         Phone Bill Charges

         Public Rights-of-Way Fee

         A law passed by the 1998 Virginia General Assembly authorizes this monthly charge (currently 97¢ per line) to appear on customer bills in some parts of the Commonwealth. The fee pays for telephone company access to the rights-of-way of public property. City and County governments and the Virginia Department of Transportation incur expenses when phone companies need to disturb streets and highways to install or repair lines.
         E911 Tax

         Authorized by the Virginia General Assembly, this 75¢-per-line tax is imposed by localities to pay for the cost of an emergency response communications system that identifies both the caller and the location of the call. The General Assembly also authorized a 75¢ per month charge on wireless telephone customers. This money will pay for highly sophisticated equipment that pinpoints, by satellite, the location of a wireless 911 caller.

         so we already pay for cell towers placed on public-right-of-ways…

         I think it’s a bit curious how this was done because basically it’s a business expense to pay for leases for cell sites – public and private but Virginia chose to explicitly make Virginians pay for leases on public right of way.

         at any rate – there are hundreds of thousands of places that are publicly owned that are essentially wasted for productive uses. Think about how much VDOT pays to cut grass on medians.. for instance..

         on bridges – another innovation is the use of wireless strain gauges that record the bridge movements creating a unique signature for that bridge that is then – essentially delivering daily bridge movement data each day to compare with previous collected data to observe differences which might indicate changes in the bridges structure..and weight-bearing components. That, in turn could impact which bridges get inspected first as well as which bridges get replaced first.

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