Bacon's Rebellion

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Who Saw This Coming? Matex Proposes Gas-Fired Power Station in Chesapeake

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James A. Bacon
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imtt_chesapeake
Aerial view of IMTT’s Chesapeake facility.

by James A. Bacon

Matex Virginia Power LLC has filed for permits with the City of Chesapeake to build a natural gas-fired power plant near Dominion Virginia Power’s defunct Chesapeake Energy Center, reports the Virginian-Pilot.

The combined-cycle facility, which would use gas to fire three combustion turbines and waste heat to power a steam turbine, would generate about 1,400 megawatts — about the same amount as the three-on-one power station Dominion opened earlier this  year in Brunswick County.

Matex said in its application that the power plant would create 400 temporary construction jobs, 26 permanent jobs, and up to $90 million in annual  revenue. Demand for local goods and services could reach $50 million. The plant would be built on land owned by International-Matex Tank Terminals, a unit of New York-based Macquarie Infrastructure Corporation.

The Pilot quotes Macquarie CEO James Hooke in a conference call last month as saying that the Chesapeake region was a good opportunity because “we’ve got a relatively unique real estate footprint” with appropriate zoning, access to gas pipelines and electricity transmission cables already in place.

The story poses many questions. First and foremost is where Matex plans to obtain the natural gas. Gas supplies in the region are too tight to add a customer the size of a full-scale gas-fired power station. While the proposed Atlantic Coast Pipeline will bolster gas supplies to Hampton Roads, Matex has not subscribed to any of its capacity, according to an ACP spokesman.

Nor is it clear where Matex plans to sell its electricity. One option would be to sell into PJM Interconnection’s wholesale electricity market. A big question is what that would mean for Dominion, which, according to its Integrated Resource Plan, anticipates the need to build a new combined-cycle gas facility in Greensville County in 2019 and another combined-cycle power station in an unidentified location in 2022. If Matex sells wholesale electricity directly into Dominion’s transmission grid, would the utility be able to justify construction of a nearly identical plant in 2022?

A Dominion spokesman told the Pilot that the company was aware of the Matex project but not directly involved.

I don’t know the answers but I will dig into them. The Matex proposal poses an interesting twist on the economics of electric power in Virginia.

Update: Based upon the Pilot account, the original version of this post stated that Matex would purchase its gas from the proposed Atlantic Coast Pipeline. An ACP spokesman said that information was inaccurate, that Matex had not subscribed any of ACP’s pipeline capacity. It could potentially contract with ACP but it has not done so yet. Significant portions of the post have been re-written to reflect that information.

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47 responses to “Who Saw This Coming? Matex Proposes Gas-Fired Power Station in Chesapeake”

  1. Peter Galuszka Avatar
    Peter Galuszka

    Brother James,
    I don’t know about you but I think we’ve all been had here. So blue ridge homeowners are supposed to sacrifice their rights for this maverick gas project. Use eminent domain for a proposal that has been shrouded in secrecy?

    1. James A. Bacon Avatar
      James A. Bacon

      Peter, I haven’t been “had” because I’m not advocating a position here.

      For what it’s worth, go back and re-read the post. I had to re-write it after being informed that the Pilot reported inaccurately that ACP would supply the natural gas. It is not clear where the gas will come from.

  2. TomH Avatar
    TomH

    I wrote something about this a little while ago. Suggesting that the 155,000 Dth/d that is reserved from the ACP by AGL/Virginia Natural Gas was far too large for commercial development or other traditional uses of natural gas. Although, my guess was that Dominion would develop a new unit at the site of the old Chesapeake Energy Center.

    The 155,ooo Dth/d is not enough for a 1400 MW plant. The 1500-1600 MW plants at Brunswick and Greensville will consume about 250,000 Dth/d. But the ACP is only about 92% reserved and it is intended to expand to 2.0 Bcf/d shortly after it is constructed with the addition of two more compressor stations.

    There is no need for this plant and the 1600 MW unit Dominion has planned for 2022. The major disruption of natural gas generation economics should begin about that time, certainly by 2025. The combination of higher natural gas prices, significant declines in demand due to energy efficiency and much lower costs for renewables will turn present day conditions on their head. Only the shareholders for this IPP will suffer for this unit. But the Virginia ratepayers will pay a heavy price for Dominion’s continued aggressive moves in this direction.

    Having worked in electric and gas utilities, I know how their worldview evolved. But from 2025-2050 our nation’s energy system will be transformed. Someone has to begin to discuss these issues in Virginia or we will travel a tortuous path.

    This unit, or any new use for natural gas in the Chesapeake area would be able to access as much gas from the 1.3 Bcf/d expansion to the Columbia Gas pipeline that is already connected to the Chesapeake area (via VNG) at a far lower price than it would cost to transport the gas via the ACP. But this will be one more business champion cajoling the GA and FERC to promote the approval of the ACP, at hundreds of millions of extra cost to Virginia ratepayers.

    1. James A. Bacon Avatar
      James A. Bacon

      Same note as to Peter: Turns out that Matex has NOT contracted with ACP for the capacity. Who knows, maybe it plans to work with Columbia Gas Pipeline?

  3. Peter Galuszka Avatar
    Peter Galuszka

    Who says the Pilot story is inaccurate? Please walk be through it.

    1. James A. Bacon Avatar
      James A. Bacon

      The Pilot stated without attribution that Matex would get its gas from the Atlantic Coast Pipeline. An ACP spokesman who saw the post called to say flat-out that the information was inaccurate, that Matex had not subscribed to any of ACP’s capacity.

  4. Peter Galuszka Avatar
    Peter Galuszka

    Reread. Do not buy Pilot is wrong. You are basing this on a corporate flak’s statement. Jeez, Jim ypur Dominion sponsorship is getting embarrassing

    1. James A. Bacon Avatar
      James A. Bacon

      Which do you think is the case? The ACP spokesman is…

      (1) Deliberately lying?
      (2) Making shit up as he goes along?
      (3) Simply misinformed?

  5. Acbar Avatar
    Acbar

    This Matex unit will have to be explained to, and approved by, the SCC, even though it’s an independent owner and not going into any utility’s rate base. You’ll get answers to many of these questions when that filing is made.

    As for why Chesapeake: for one thing, the former DVP plants there mean that there’s electrical interconnection capability down there that’s unused. That means the builder of the new plant doesn’t have to pay for transmission upgrades because they aren’t needed, and that savings may be a big chunk of change. For another thing, as we’ve discussed here before, there’s a shortage of electric generation across the River in Yorktown and Newport News, and while a new unit in Chesapeake won’t fix that, the presence of more generation in the Hampton Roads area will help with the overall operating stability of the electric system there.

    I don’t want to get into the gas pipeline debate, but Matex will have to disclose its proposed fuel sources to the SCC when that time comes.

    As for where will the unit’s output be sold? Of course it will sell to PJM’s wholesale marketplace. That’s where Dominion sells most of its generated power also — and then buys it back, commingled with everyone else’s power, from the marketplace, for its customers. Jim, the old days of a utility generating for its own consumption within the vertically-integrated utility structure of yore are — gone!

    1. Acbar Avatar
      Acbar

      One other point: the mere fact that Matex proposes to build this unit in Dominion’s service territory does not alter anything in Dominion’s IRP. It will simply provide all buyers in PJM with yet another source of electrical energy in PJM’s wholesale energy market. In addition, each year, Dominion must provide the SCC and PJM a roster of supplies of capacity, owned or under contract, equal to its forecast annual peak demand plus a reserve factor (to cover outages) of around 15%. Whether the generating units on that list are in Chesapeake, VA or in Akron, OH is immaterial, as long as their output is deemed deliverable to Dominion’s customers. Matex may be planning to sell the capacity from this unit out of state, not to any utility in Virginia; or it may have no certain buyers but be building “on spec.” Again, this should be revealed in its SCC filing.

  6. Peter Galuszka Avatar
    Peter Galuszka

    (1) no
    (2) maybe
    (3) maybe

  7. Peter Galuszka Avatar
    Peter Galuszka

    And we shall wait for the scc filing and see who benefits, i.e. Bacons rebellion

  8. LarrytheG Avatar
    LarrytheG

    Why does Matex have to get SCC approval if they are selling power to PJM?

    Why – if Columbia can deliver gas to that region the ACP is “needed”?

    and same question as Peter – it does seem ODD that folks from ACP are “advising” Mr Bacon as to what the facts are or are not… and apparently “someone” from that end does not see Matex as even a “potential” customer. Why say they are not any more than they would for any “potential” customer of ACP gas at some point in the future? Here we have a top guy for VNG “reporting” that the ACP gas is “needed” but refuses to say what for… because such industry data is “proprietary” … and then ACP saying “no , not THAT “need”… peculiar .. then Tom H saying that there may not be enough gas to power the Matex plant… why in the would would Matex even make such an announcement and have the ACP folks come right behind them and say “not us”?

    curiouser and curiouser…

    1. Rowinguy Avatar
      Rowinguy

      Why does Matex have to get SCC approval if they are selling power to PJM?

      It’s the law in Virginia (and nearly every other state) that construction of utility facilities (yes, under Virginia law, this is a utility facility) requires regulatory approval. The relevant Code section is 56-580. The SCC may deny the application only if the proposed construction would adversely affect the reliability of the certificated utility’s service. The only facilities exempted from this statute are the small wind and solar facilities that can receive a permit from DEQ.

  9. Peter Galuszka Avatar
    Peter Galuszka

    Stinks to high heavens

  10. LarrytheG Avatar
    LarrytheG

    Chesapeake generated about 700 mw and Yorktown about 1100.

    it was never clear to me what Dominion’s plan was if both of these close because Surry is baseload and Hampton has, in addition to the loss of Yorktown (another baseload plant) – a peak load problem.

    I don’t see how Surry was going to handle peak load for Hampton anyhow and why an additional natural gas pipeline crossing like HRX could not be added – to serve a natural gas plant that would handle peak loads.. when needed.

    Folks may never had hear of Matex – but it’s owner Macquarie is a large multi-national company with as many employees as Dominion and 122 billion in assets… not exactly a rinky dink startup outfit.. There appearance signifies something significant in my view… not just some casual interest.. they have the money to put up that plant and then some…

    something is going on … and it’s probably not a “partnership” with DVP.

    😉

  11. Acbar Avatar
    Acbar

    No, it’s not a partnership with DVP, but the well-considered (by this private developer) economic opportunity to build independent generation (1) at a cheap site with infrastructure already in place and a fuel supply under development (Columbia? ACP?), where (2) they can profitably take advantage of PJM’s projected wholesale market prices for energy and capacity over the life of this merchant plant, notwithstanding folks who don’t agree there’s an opportunity but think any gas-fired plant will become redundant in just a few years.

    1. LarrytheG Avatar
      LarrytheG

      Acbar – if your business plan was to use shale gas to fuel a gas plant to feed power to PJM – why would you build it in a place where there is no existing supply of gas and even if there might be – the folks who are trying to build the pipeline to bring it – disavow any plans to provide that gas to you?

      To put this in a more succinct way – if your goal was to use shale gas to produce power for PJM – why not locate that plant where that shale gas is available and in closer proximity to PJM’s service area rather than on the fringe?

      http://www.montereyllc.com/images/pjm-territory-map-white.png

      1. Acbar Avatar
        Acbar

        Bingo! Do you smell a hidden agenda here? We completely agree, fuel ought to be cheaper at the source.

        But, there are other factors. As I said earlier, the transmission interconnection upgrade costs (and timing) can be a big deal too, and this location offers interconnection facilities that are already built. It’s also a site that has no NIMBY issues, is already zoned for generation, etc. Also, bear in mind there is a component in PJM’s energy market pricing that reflects transmission losses and transmission congestion in the price that’s offered — that is, if the generator delivers its power closer to where the power will be consumed, then PJM will pay a little more for it. Given how competitive the wholesale electricity markets are these days, that boost in the electricity price paid by PJM to a generator locating in Hampton Roads might be enough to offset, or at least sufficiently defray, the extra cost to transport the gas. Just guessing, but don’t you think it’s likely that Macquarie went to Dominion and said, hey there, we’d be happy to help you build up your customer profile for this proposed pipeline of yours if you’d just help us out by giving us a really cheap long-term gas transportation contract and selling us those electric interconnection facilities cheap while you’re at it?

  12. LarrytheG Avatar
    LarrytheG

    well the “partnership” comment was a bit of sarcastic irony.

    It appears that the perceived ability of VDP to influence would-be 3rd party electricity generation within their “territory” is not as “influential” as perhaps initially thought although they apparently have more success discouraging solar than gas – if one presumes that Macquarie knows what it is doing .

    It also might put some focus on the idea that gas pipelines justified as using eminent domain ostensibly because they serve a public need may not be able to refuse service to public-need projects even if not their own.

    or perhaps everything said above is pure speculation and hokum….

    😉

    but to this point in time -prior beliefs and perceptions about what VDP could do or not versus other potential generators in “their territory” may need some re-thinking.

    It appears that there is a fair amount of ability and latitude for others to build generation and sell to PJM (or they think so) and that in choosing where to site the plants – that they would be – in practical terms -putting new generation in DVP’s territory that will provide power to that area or else one might presume that they would have sited their prospective plant – geographically somewhere else. There has to be some kind of strategic thinking going on as to the geography…beyond just plopping a billion dollar plant down where there is an available interconnection but DVP has already stated it’s own plans to server that geography with their own projects.

    So if Macquarie could do this with a gas plant what keeps other players from also “playing” including others would generate with solar and wind and sell to PJM?

    What it sounds like – and again – I admit to being largely clueless as to how these things work – just observing ongoing events – that DVP’s “monopoly” is not as “protected” as some might have thought if other players want to play entrepreneurial “chicken” with DVP – i.e. believe they can be more nimbler and quicker is bringing generation online and at a price as cheap or cheaper than DVP could in selling to PJM.

    1. Acbar Avatar
      Acbar

      Again: Bingo. You say, “So if Macquarie could do this with a gas plant what keeps other players from also “playing” including others would generate with solar and wind and sell to PJM?” The answer is, nothing. The basic economics of the generation deal don’t involve DVP. Now, of course, in this instance DVP owns the fuel transportation sources and the electrical facilities already on this site and probably the site itself, so there is ample opportunity for a very complicated multi-part deal to be struck here, but DVP’s involvement is with the facilities, not what happens to the electricity generated. DVP certainly has no monopoly right to exclude Macquarie or anyone else from building generation in DVP’s territory, or to cause them to get a deal from PJM any different than DVP itself gets.

  13. Peter Galuszka Avatar
    Peter Galuszka

    We are being whipsawed by corporate interests, led by Dominion.

    After all the controversy over pipelines such as the ACP, suddenly a non-Virginia company wants to build a natural gas power plant in Chesapeake.It may or may not take gas from the $5 billion ACP, which would shoot a trunk line over from the main drag that runs from West Virginia, through Virginia’s mountains and plains and on into North Carolina. It may sell its electricity to the PJM grid centered hundreds of miles to the north.

    But wait, here’s Bacons Rebellion in July complaining how there isn’t enough natural gas in Hampton Roads! We must build the ACP to keep the Tidewater economy alive:

    “Hampton Roads has many advantages in competing for economic development, such as a skilled workforce and the deepest shipping channels on the East Coast, noted DeSteph in the March letter. But inadequate access to natural gas constitutes a “significant, and at times crippling disadvantage.””

    Let’s try to follow the logic here. The business elite of Hampton Roads says there’s a big, potentially crippling shortage of natural gas. Therefore, WE NEED MORE PIPELINES!.

    Now we have a company that wants to locate in gas-starved Hampton Road and build a gas-fired power plant that will gobble up lots of product that otherwise might have gone to gas-starved Tidewater industries. Will it tap into the ACP? We don’t know. Jim Bacon and the firm mince words. Maybe. Maybe not. It could tap into the Columbia Gas pipeline some distance to the west.

    But, dear readers, doesn’t that beg a question. Is there a gas shortage or not in Hampton Roads? Is this a setup for the ACP? Do you see any logical issues here?

    Or is it just me?

    1. James A. Bacon Avatar
      James A. Bacon

      If Matex gets its gas from the ACP, then it represents an economic development coup for Chesapeake, creating 400 temporary construction jobs, 26 permanent jobs, and millions in local tax revenue — exactly what local leaders were looking for.

      If Matex gets its gas from Columbia, that raises a whole host of questions. Is the Surry-Skiffe’s electric transmission line across the James River really necessary — could Matex supply power to the Peninsula? Does Dominion have as much control over the electricity-production marketplace in Virginia as everyone thinks it does?

      But in answer to your last question, there is a gas shortage (in the sense that there’s not enough capacity to take on a major user) at the present time. Alleviating that shortage will require bringing in added capacity from somewhere, whether ACP or Columbia. Whether Columbia is in a position to move quickly enough to be a factor is not something I cannot answer. A good question for journalistic follow-up.

      Oh, here’s another question. What happens if Virginia adopts the so-called “Plan E” scenario for the Clean Power Plan (hard CO2 caps on all existing and new power stations)? What impact would that have on the Matex proposal? Would independent power producers gain an edge over incumbent utilities in such a scenario, or would they be penalized equally?

      1. TBill Avatar
        TBill

        The EPA’s Clean Power Plan is of course on hold, and we have no way to know if the final plan will look like the proposed plan. The proposed CPP gave Virginia many options, with environmental groups advocating for Va. to adopt essentially a phase-out of fossil fuel power plants. This development suggests that extreme approach would not be feasible, but if an extreme low CO2 target was adopted by Va., then this proposed plant could bump future planned nat gas power plants by Dominion out of the future plans.

        Currently PA and WV export excess electricity, while VA, MD and most of the Northeast states import power, in essence from PA and WV (in NY and north getting hydro from Canada). Dominion and Virginia appear heading in a direction of less importing of power (more in-state generation). On the whole this just means less coal burning in WV, but those opposed to fossil fuels within Virginia’s boundary lines will be upset.

        1. LarrytheG Avatar
          LarrytheG

          yes.. discussions have occurred that assume the DVP IRP is guided by whatever happens with the CPP – the assumption that DVP will pick what plants, what kind of plants… etc.. that those were primarily the purview of DVP or folks that would partner with them.

          First the Amazon projects, then a couple others and now this one sort of contradict the idea that DVP and the SCC is controlling what, when, where, etc… …

          so is the SCC the agency that will approve or deny this plant or are their other agencies and the SCC role is not the ultimate “decider”?

          I think Jim has been giving the view from DVP and perhaps that’s not the entire accurate worldview… just theirs….

          and it continues to demonstrate just how little the public – even those who think they have researched the issue – actually know…. “conventional wisdom” is become an oxymoron, eh?

      2. TomH Avatar
        TomH

        The WB XPress project is adding 1.3 Bcf/d (the ACP is 1.5 Bcf/d) to the Columbia Gas pipeline system that serves West Virginia, Virginia and points north. It will require just 3 miles of new pipeline and 26 miles of replacement pipeline, plus compressor station improvements to provide this added capacity.

        It is scheduled for operation in 2018, at least a year ahead of the ACP.

        As I understand it, the CPP limits for Plan E limits total emissions from the existing fossil-fired units and all new generation units in the future to 27,830,174 tons CO2 by 2030. The only edge IPP’s would have is if they got in under the cap before the incumbent utilities. Whoever, came next would have to determine what to build that meets the cap requirements. Dominion seems to be going for the intensity-based programs though.

  14. Peter Galuszka Avatar
    Peter Galuszka

    More logical problems.

    Let’s see. If Matex uses ACP, then Chesapeake gets 400 temporary jobs, 26 permanent ones and lots of tax money.

    If Matex gets its gas from Columbia, there a host of questions. But if it does, doesn’t that mean that the gas plant would supply what you claim are strong economic benefits? Do you see where the logic drops. Also, 26 permanent jobs isn’t exactly a lot.

    In sum: ACP-Matex: good
    Columbia-Matex:bad

    1. James A. Bacon Avatar
      James A. Bacon

      I have no dog in this fight. I’m totally agnostic on what the best solution is for Hampton Roads. Your supposition that I judge the ACP/Matex scenario to be good and Columbia/Matex bad to be is an extrapolation based on your own bizarre thinking of what you think my logic is, not an extrapolation that I’m making.

      Insofar as the Matex proposal scrambles the equation of what everyone thought was possible economically, it’s actually pretty interesting — a good story from a journalistic point of view.

  15. Peter Galuszka Avatar
    Peter Galuszka

    It’s the way you word stuff. Obviously, the new plant would supply the same jobs and taxes regardless of where it gets the gas from. Isn’t that right?

    1. James A. Bacon Avatar
      James A. Bacon

      Right.

  16. Peter Galuszka Avatar
    Peter Galuszka

    I am glad we cleared that up.

  17. LarrytheG Avatar
    LarrytheG

    this plant where it is being proposed – makes sense – geographically in that it is a replacement for coal plants closed and closing in the Hampton Roads area.

    If DVP had proposed the ACP and said that a primary purpose was to deliver replacement gas plants for Hampton Roads, it would have made perfect sense and bolstered the idea that Hampton “needed” the gas ….

    Instead they build plants in Southside Va – and say the gas is “needed” by unspecified “industry” in the Hampton area.

    None of this ever really made sense – and now with this proposal that the ACP disavows… the original ACP narrative makes even less sense.

    can’t wait to see what happens NEXT!! 😉

  18. Peter Galuszka Avatar
    Peter Galuszka

    Baconator!

    Need to waterboard you to get the truth. Here’s what the Pilot actually said:

    “Natural gas for the project would come from a new gas pipeline being developed by Dominion, the application says.”

    The Pilot also says an ACP spokesman claims that the firm hasn’t contacted therm yet.

    The Pilot did not run a correction. I think you are being misleading.

    1. James A. Bacon Avatar
      James A. Bacon

      I just talked to Aaron Ruby, a spokesman for Dominion Transmission and the ACP. He confirmed that the Pilot obtained its information from Matex’s filing. So that exonerates the Pilot from mis-reporting. (Technically, the filing did not identify the new gas pipeline being developed by Dominion as the Atlantic Coast Pipeline by name. But it’s hard to avoid any other conclusion.)

      However, Ruby insists no deal has been struck between Matex and ACP. He checked with the people within Dominion who would know, so he’s not blowing smoke. The pipeline is looking for new customers to fill its 10% uncommitted capacity, he said, and there’s nothing to rule out Matex as a potential customer. But no contract has been signed.

  19. Peter Galuszka Avatar
    Peter Galuszka

    Can you refresh us on where the other 90 percent capacity from ACP is going?

    1. James A. Bacon Avatar
      James A. Bacon

      Duke Power, Piedmont Natural Gas, Dominion Virginia Power, AGL Resources(owner of Virginia Natural Gas).

  20. LarrytheG Avatar
    LarrytheG

    If DVP wanted a gas power plant in Chesapeake – why didn’t they propose one as a logical part of the ACP?

  21. Peter Galuszka Avatar
    Peter Galuszka

    Excellent question, Larry.

    But then, I find that Dominion changes its stories. Example, they said there was no way they could remove water from coal ash ponds at Bremo Bluff and Possum Point and treat it offsite. If you reported anything about it, their phalanx of flaks would be on the phone with editors.

    Then they told me that that’s what they might do at their Chesapeake coal ash ponds.

    Go figure.

  22. Acbar Avatar
    Acbar

    Yes, that is an excellent question. Part of the answer suggested by Jim earlier is, it depends on which gas source is used: “If Matex gets its gas from Columbia, that raises a whole host of questions. Is the Surry-Skiffe’s electric transmission line across the James River really necessary — could Matex supply power to the Peninsula? Does Dominion have as much control over the electricity-production marketplace in Virginia as everyone thinks it does?”

    The first part of Jim’s suggestion is totally wrong. Whether Columbia or the ACP supplies gas to the Matex plant has NOTHING to do with whether the construction of another electric generator in Chesapeake will affect the need for the 500kV transmission link across the James River from Surrey to Skiffes Creek. As for whether there is a cause and effect between the Matex plant and the Skiffes Creek line, my understanding is that more generation in Hampton Roads will help stabilize Hampton Roads overall but make only a negligible difference in supplying the “load pocket” across the River, perhaps none, although PJM’s studies of the proposed Matex interconnection should have lots more information on that.

    As for the second part, LarryG already asked that question. IMHO DVP has no control whatsoever over independent generators choosing to locate in Virginia, or over their access to the PJM wholesale markets. And they don’t need “control” to be successful. DVP is a low cost generator of electricity, and a low cost retail provider, within the PJM markets area. But any generation competitor who chooses to locate in Virginia has already decided it can make money selling into the PJM markets, and will make its decision to build in Virginia based on local politics and zoning and support facilities, not the presence of DVP. Proximity to DVP is irrelevant.

    1. Rowinguy Avatar
      Rowinguy

      You are exactly right, Acbar. Neither DVP, nor any other incumbent provider, can keep a generation developer out of its service territory. Of course, these power plant developers are not in competition with DVP for making retail sales of electricity to DVP’s customers–that is where the incumbents’ “power” lies–no retail competition. Matex can sell all the power into PJM that clears in PJM’s wholesale market. Plus, DVP has to allow all plant developers access to its transmission grid, per FERC Open Access rules.

      What will be interesting regarding the Surry-Skiffe’s Creek transmission line is if a developer proposes to construct new generation on the Peninsula itself. DVP maintained it could not convert the Yorktown or Chesapeake generating units to run on gas, eliminating the need for the controversial transmission line, in part because “there is no gas.” Now, it appears that there soon will be.

  23. LarrytheG Avatar
    LarrytheG

    re: ” Proximity to DVP is irrelevant.”

    realistically – if someone puts 1400 mw into the DVP grid in Chesapeake – DVP is not going to “push” that through it’s distributio system up to PJM.

    Aren’t they more likely to use that power locally and ship 1400 mw to PJM from a generator they own – close to PJM?

    I don’t even see how they would push the Matex power to PJM without going around their elbow…they don’t have the transmission lines to do that directly across to Hampton and up the Peninsula… right? They’d have to push it west … south of the James to Richmond and then on some 500kv line north.

    so they probably are going to use that power in the locale where it was created and find a power source further north to push it to PJM?

    no?

    Did Chesapeake have power lines over the James to Hampton?

    1. Rowinguy Avatar
      Rowinguy

      No, that’s not how the transmission system operates. DVP doesn’t “push” power here and there; power flows where the laws of physics dictate. There is some ability to influence its movements, but it’s not like directing a garden hose. Undoubtedly, some of the power generated by this Matex plant, assuming it gets built, will physically “sink” in the surrounding area, but contractually the power will likely be purchased by someone out of state.

      Plus, “PJM” is not somewhere vaguely in the north. Virtually the entire state of Virginia is in PJM as is northeast North Carolina.

      1. LarrytheG Avatar
        LarrytheG

        thanks Rowinguy – not like a garden hose but more like a giant balloon with faucets… and inputs..

        we ought to get this better clarified.

        It IS POSSIBLE to send that power on a dedicated 500KV line from where it is generated to some terminal point (or points) where they would be fed back into the local grid … not unlike how Hydro-Quebec moves it’s hydro power from it’s reservoirs through Canada and to New York and the NorthEast.

        And that is sort of what I asked – how would Matco put it’s power into the grid and how would it get “delivered” to PJM.

        because unless it is going on a dedicated line – it’s not going to “flow” anywhere.. except into a virtual grid…

        which I think means that’s power that won’t have to be put into the grid from somewhere else if that power was not intended to go somewhere else.

        How it gets somewhere else – ? Who does that – and how?

        Doesn’t DVP figure out where to get that amount of power and feed it closer to where PJM is sending it or perhaps if it’s power DVP is buying from PJM – they can use the MATCO power as “from” PJM?

        What would have been a reason why DVP would have put a gas plant themselves at Chesapeake (which their website implies there WERE some gas turbines at Chesapeake along with the coal)?

        I’m still not convinced that Geography plays no role.

        I think there is power loss if you try to move power longer distances unless you use 500kv type lines so that implies to me the locally-generated power is not going very far before it gets used.

        1. TomH Avatar
          TomH

          Acbar can answer this better, but electricity flows on the path of least resistance. There is no flow in the modern grid where it starts at point A and flows to point B. It sounds like this IPP will use try and use the existing transmission that served the Chesapeake Energy Center. As soon as the generating source is connected to the grid, the energy is “in the grid”. Both the generation and transmission are under the control of PJM, not DVP.

          Output from this plant might actually serve loads in this area but PJM’s accounting would calculate the locational marginal pricing for the Load Serving Entity (LSE) in Pennsylvania (for example) that might have contracted for the output of this plant. Trying to imagine some physical correspondence to the accounting entries only confuses things. PJM calculates the input from the seller (the generator) and the outputs purchased by the buyer(s) (the utility LSE’s) and charges for the distance between the points to account for transmission line costs and losses (locational marginal pricing). The actual electricity from the plant does not travel the path to the ultimate load. The accounting sorts out what is important.

          It would be an advantage for Dominion to have generation close to a load center or existing transmission lines and substations. That is why I thought they might be planning some sort of retrofit for the Chesapeake Energy Center, at least for some modern peaking units. They could still be planning to do this. They have identified the Chesapeake area as an optional delivery point for some of the gas they have reserved from the ACP. Or they could sell some of their allocation to this new plant. The ACP is only about 32% utilized in 2021. Each shipper has the option to sell their allotment of transport capacity to someone else for a short or long term. The ACP is not used to its initial design capacity until 2030. This is when three new combined cycle plants are scheduled to come on line in Virginia and North Carolina. All of these plants are identified in the last year of their IRP’s. This is usually a placeholder for plants the utility’s want to develop, but are not sure when they will really be needed. It depends how accurate their load forecasts turn out to be.

          Both Dominion and Duke have very optimistic load growth estimates, far higher than other utilities in the region.

          Power loss is reduced with higher voltages (500kv or 765kv are the largest lines now). High voltage DC is beginning to be used which further reduces losses.

          1. LarrytheG Avatar
            LarrytheG

            let’s put it another way – three 3rd party generators say they want to produce power near Hampton…

            all things equal.. they have the gas.. PJM wants the power. .etc..

            can they do that? what’s the limiting factor if they have the gas and PJM wants the power?

  24. Peter Galuszka Avatar
    Peter Galuszka

    And what about those blue ridge property holders under the gun of dominion’s and acp’s eminent domain?

  25. TomH Avatar
    TomH

    Larry,

    “all things equal.. they have the gas.. PJM wants the power. .etc.. ”

    I’m not sure it is accurate to say that there is enough gas for three 1400-1600 MW gas units in that area. The 20-inch diameter line proposed to run 83 miles from North Carolina by the ACP was sufficient to provide the 155,000 Dth/d reserved by AGL/Virginia Natural Gas. This is enough to fuel a 1000 MW combined cycle plant. A pipeline of that size could probably move more gas. More could also be provided by additional compression at the station in North Carolina. Dominion’s two Southside plants (in Brunswick and Greensville counties) have a combined capacity of about 3000 MW and together will use about 500,000 Dth/d. This is being delivered in a 24-inch diameter pipeline that has about 44% more volume than a 20-inch pipe.

    It would be unlikely that there would be enough pipeline capacity to fuel 3 new power plants in that area (700,000 – 750,000 Dth/d). The 42″ pipeline for the ACP is projected to provide 300,000 Dth/d for future Dominion use and 155,000 Dth/d to the Chesapeake area, plus 1,000,000 Dth/d to North Carolina..

    It would make more sense to develop 3 plants in dispersed locations around Virginia to make use of the capacity in existing pipelines and near transmission corridors. Squeezing 3 plants into a small corner of Virginia could create some transmission congestion.

    Other than that there are no constraints on Independent Power Producers (IPPs) from building plants in Dominion’s territory ( I don’t know if there has been a ruling about elsewhere in Virginia) and supplying power to PJM if they are accepted by the SCC.

    Dominion would probably prefer to get paid a rate of return on their investment in a new plant rather than purchase power from somewhere else. With higher gas prices and lower solar costs, it might be that combined cycle plants might not clear the auctions in PJM by 2025-2030. If Dominion could arrange for a 5-10 year power purchase contract with an IPP starting in 2021 or 2022 that would be a much safer bet for Virginia ratepayers and Dominion shareholders.

    From a risk management perspective, this would be a good move, if anyone would provide such a short-term deal (they might not get financing for such a short contract). That would give us time to see how fast the costs of storage and solar ramp down and how quickly gas prices escalate. If the current projections are slower to materialize, DVP could always extend the contract. If the projections prove true, ratepayers and shareholders would not be exposed to all of those stranded costs.

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