Dominion’s Clever Legerdemain

Dominion's Chesterfield coal-fired plant is Virginia's largest air polluter

Dominion’s Chesterfield coal-fired plant is Virginia’s largest air polluter

By Peter Galuszka

You may have read thousands of words on this blog arguing about the proposed federal Clean Power Plan, its impact on Dominion Virginia Power and a new law passed by the 2015 General Assembly that freezes the utility’s base rates and exempts it from rate reviews for five years.

All of this makes some basic and dangerous assumptions about the future of Dominion’s coal-fired generating plants.

It has somehow gotten into the common mindset that the Environmental Protection Agency will automatically force Dominion to close most of its six coal-fired stations.

Is this really so? And, if it is not, doesn’t that make much of this, including Dominion’s arguments for its five-year holiday from rate reviews by the State Corporation Commission, moot?

In June 2014, the EPA unveiled the Clean Power Plan and asked for comments by this upcoming summer. The idea is to have Virginia cut its carbon emissions by 38 percent by 2025. Coal plants are the largest contributors to carbon emissions by 2025.

A few points:

Dominion announced in 2011 that it would phase out its 638-megawatt coal-fired Chesapeake Energy Center that was built between 1950 and 1958.

In 2011, it also announced plans to phase out coal at its three-unit, 1,141 megawatt Yorktown power plant by shutting one coal-fired unit and converting a second one to natural gas. The units at the station were built in 1957, 1958 and 1974.

Mind you, these announcements came about three years before the EPA asked for comments about its new carbon reduction plan. But somehow, a lack of precision in the debate makes it sound as if the new EPA carbon rules are directly responsible for their closure. But how can that be if Dominion announced the closings in 2011 and the EPA rules were made public in June, 2014? Where’s the link between the events?

When the Chesapeake and Yorktown changes were announced, Dominion Chairman and CEO Thomas F. Farrell II, said: “This is the most cost-effective course to meet expected environmental regulations and maintain reliability for our customers.” Now Dominion is raising the specter of huge bills and unreliable grid.

Dominion has other big coal-fired plants. The largest is the 1,600 megawatt Chesterfield Power Station that provides about 12 per cent of Dominion’s power. Four of its six units—built from 1952 to 1969 — burn coal. Two others built in 1990 and 1992 are combined cycle units that use natural gas and distillate oil.

Dominion has upgraded scrubbers at the units, but the Chesterfield station is the single largest air polluter in the state and one of the largest in the nation.

Another big coal-fired plant is Dominion’s 865-megawatt Clover Power Station. It is more recent, having gone online in 1995 and 1996. It is the second largest carbon emitter in the state.

Then there’s the 600 megawatt Virginia City Hybrid plant that burns both coal and biomass in Wise County. It went into service in 2012.

Dominion had a small coal-fired plant at Bremo Bluffs but has converted it to natural gas.

So, if you add it all up, which coal-fired plants are really in jeopardy of closure by the EPA’s new rules? Chesterfield, Clover or Virginia City?

It’s hard to get a straight answer. In a blog post by Jim Bacon today, he quotes Thomas Wohlfarth, a Dominion senior vice president, as saying “It’s not a foregone conclusion that [the four coal-fired power plants] will be shut down. It’s a very real risk, but not a foregone conclusion.” Another problem is that I count three possible coal-fired plants, and don’t know what the fourth one is.

In a story about the Chesterfield power plant, another spokesman from Dominion told the Chesterfield Observer that Dominion “has no timeline no to close power stations” but it might have to consider some closings if the Clean Power Plan goes ahead as currently drafted.

Environmental groups have said that because of Dominion’s already-announced coal-plant shutdowns and conversion, the state is already 80 percent on its way to meet the proposed Clean Power Plan’s carbon cuts. When I asked a State Corporation Commission spokesman about this last fall, I got no answer.

What seems to be happening is that Dominion is raising the specter of closings without providing specific details of what exactly might be closed and why.

Its previously announced coal-plant shutdowns have suddenly and mysteriously been put back on the table and everyone, including Jim Bacon, the General Assembly and the SCC, seems to be buying into it.

Although there have been significant improvements in cutting pollution, coal-fired plants still are said to be responsible for deaths and illnesses, not to mention climate change. This remains unaddressed. Why is it deemed so essential that coal-fired units built 40, 50 or 60 years ago be kept in operation? It’s like insisting on driving a Studebaker because getting rid of it might cost someone his job that actually vanished years ago.

Also unaddressed is why Virginia can’t get into some kind of carbon tax or market-based caps on carbon pollution that have seen success with cutting acid rain and fluorocarbons.

It’s as if the state’s collective brain is somehow blocking the very idea of exploring a carbon tax and automatically defaults to the idea that if the EPA and the Obama Administration get their way, Virginia ratepayers will be stuck with $6 billion in extra bills and an unreliable electricity grid.

Could it be that this is exactly the mental legerdemain that Dominion very cleverly is foisting on us? Could be. Meanwhile, they continue to get exactly the kind of legislation from the General Assembly they want.

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22 responses to “Dominion’s Clever Legerdemain

  1. Peter has got it and Jim needs to get with it!

    Dominion is not providing much info about all about which plants are closing and why – what EPA rule?

    then rather than actually identify which ADDITIONAL plants might need to close in response to the CPP (which is a proposal asking for comment which can be alternative proposals) – Dominion gets the SCC to function as a political attack dog with Bill Howell urging them on.

    This is the very same EPA that is proposing the Chesapeake Bay Cleanup, storm water regs, operates superfund sites in Virginia, issues regulations for sewage treatment plants and combined sewer overflows, etc, etc, etc.

    so Dominion, the SCC and the GA have hopped on the “demonize” the EPA bandwagon throwing their support to the close-down EPA pitchfork and torch wing-nut crowd.

    Dominion OWES Virginia citizens, taxpayers and ratepayers a cogent analysis and plan for the future for the grid in Va rather than it’s current behavior which is essentially to treat Virginia’s as serfs who will be “informed” once decisions have been made – for them.

    the proposed James River crossing and the pipeline are two examples of pieces of a larger Dominion Plan for which Virginians remain largely clueless about and the SCC and GA are just fine with that behavior.

    Jim blogs long and unrelenting about the evils of bad govt … and the joys of the unfettered free market with some spurious grammatical grumbling from time to time about corporate cronyism and rent seeking – but we depend on
    Peter here to bring the balance to BR that is sorely needed at times!

    let’ see.. that ought evoke a spray of coffee from the mouth from Bacon this morning.

    Jim Bacon – where is your game face for the Mother of all Crony Capitalism in Virginia – Dominion Resources?

  2. What happened to the Jim Bacon article that was here earlier today?

  3. “It has somehow gotten into the common mindset that the Environmental Protection Agency will automatically force Dominion to close most of its six coal-fired stations.”

    This is a legitimate point. I address it to some degree in the article that I temporarily took down. Toward the bottom, I concluded:

    “In exchange, Dominion takes on the liability for the possible shutdown of four coal plants — a figure that, if it occurs within the next five years, would exceed $1.6 billion. There are tremendous uncertainties. Will EPA modify its methodology for calculating Virginia’s CO2 emission targets? What are the odds that a lawsuit filed by 13 states will overturn the EPA regulations? What are the prospects of the next president reversing the Obama administration’s interpretation of the Clean Air Act that led to the CO2 regulations? Any reduction or abolition of EPA emission targets could wipe out some or all of Dominion’s liability.”

    These are highly significant questions that have been totally overlooked in the journalistic coverage of the issue. Dominion could get clobbered with losses — or it could get off scott-free. It bears looking into.

    • re: what might happen –

      but you ought to make clear the EPA process which is essentially the taking of comments and negotiation of the rule and changes.. and always has been.

      it was the SCOTUS that said CO2 could be regulated.

      and why does it seem that virtually everything these days is a lawsuit and wait until Obama is gone?

      the CPP is not just about CO2 anyhow so why do we make this all about the EPA and all about CO2 when it’s not?

      these are dirty coal plants that cause confirmed health damage to people.

      virtually every water-body in Virginia is contaminated with mercury that has known health issues for consumption of the aquatic life. It’s going to be
      nothing short of spectacular if it comes to be that crabs and oysters are no
      longer safe to eat -either.

      • It wasn’t SCOTUS that said CO2 should be regulated. It was Congress that said air pollution should be regulated, the OBAMA EPA that said CO2 is an air pollutant, and then SCOTUS said that the law gave the EPA that discretion. An oversimplification, but I think that’s about it. Heck, it might have been the Bush EPA that said CO2 was air pollution.

        • Okay, Larry — it was Congress that said air pollution should be regulated, the Bush EPA refused to recognize CO2 as a pollutant, the SCOTUS then ruled that is was. But the ultimate responsibility still lies with Congress and the Clean Air Act.

  4. Everybody who follows this knew back in 2011 that extensive EPA rules on CO2 were possible in the future. The environmentalists who were calling the shots for the Obama administration certainly favored them. It was obvious then it would be wise to prepare well in advance for additional restrictions. Lawsuits were still percolating and elections were to be held, but if CO2 was going to be treated as a pollutant, than more CO2 regulations were on the way. After the 2012 election, the 2014 announcement surprised no one.

    I would also submit that a company as smart as Dominion has had its basic plan for compliance in place for a very long time, including several options on which plants will close, which will switch to different fuel, etc. The one major variable, in my opinion, remains the decision on whether to build North Anna 3. Perhaps they have decided internally, perhaps not. They certainly led the General Assembly to believe in 2013 that North Anna was coming, and persuaded the legislators to make ratepayers start to cover that cost.

    So yes, it may be fair to say that Dominion has been complaining a bit too loudly about uncertainty. I do think the first draft we saw last summer from the EPA will be amended, and I think Virginia’s targets and deadlines may change. But those changes will lessen the impact on Virginia ratepayers and may leave some legislators wondering what was the big rush.

    • I agree with most but do not concur with the description of EPA staff as “environmentalists”.

      This path has been in place for quite some time

      ” Why is the EPA regulating greenhouse-gas emissions from power plants?

      Under President George W. Bush, the agency argued that Congress never intended to regulate carbon dioxide and other greenhouse gases under the Clean Air Act, so it lacked authority to do so. In 2007, the Supreme Court disagreed, ruling in Massachusetts v. EPA that the law was “unambiguous” and that emissions came under its broad definition of “air pollutant.” It ordered the agency to determine whether greenhouse-gas emissions endanger public health or the environment. The EPA issued an “endangerment finding” in December 2009 that laid the groundwork for the power-plant rule it proposed Monday.”

      so I object to this being depicted as “Obama Environmentalists”.

      it’s clearly not.

      and saying that just pollutes the discussion .. in my view.

      the EPA rule is a DRAFT PROPOSAL and is intended to be a dialogue and a negotiation and the utilities are fully able to make strong cases about reliability as well as costs to ratepayers.

      I do not doubt for a minute that Dominion has a plan – but it’s not one that they have shared with the public and if you go look at one of the charts that Jim posted it shows DOminion increasing it’s reliance on PJM and natural gas in the future. There’s a plan behind that but no one is the wiser and perhaps that would be fine if Dominion were not joining in the demonization of the EPA and spreading fear and loathing among the public on reliability “concerns”.

      they are accountable to the public for their plans.

      if their plan is to strategically position natural gas plants to replace closed coal plants and to buy power from PJM it makes sense but I still ask
      who in the PJM has excess power in this era of CPP?

      North Anna 3 – that’s billions in taxpayer subsidies.. right? How come we
      can do billions in subsidies for Nukes but not wind/solar and grid modernization?

      • Well, I will set aside the subsidy argument, but the nice thing about nuclear is you don’t need a sunny or windy day to make power.

        • well the nice thing about wind/solar is you do not have nuclear waste to deal with nor worry about being a target of terrorists… AND it is distributed!

          I LIKE nukes but I also think we need to be honest about their overall costs – insurance and waste and the fact they are purely base load.

          As far as North Anna is concerned, given the earthquake that occurred there recently which totally fractured a couple of schools as well as topple chimmey’s …I wonder how smart it is to consider that site even acceptable for an existing plant.

          As far as the Congress under Bush and it’s actions as well as the SCOTUS – why are we revisiting those decisions as if they were wrong and need to be undone?

          what’s changed between back when the decisions were justified and made and now?

  5. We need some kind of interpretive report showing how EPA’s CPP may impact Virginia, starting with EPA’s base plan (30% CO2 reduction from 2005 to 2030). The report should show where VA was in 2005 (Base Year), where we are now (2015) and where we have to go.

    Note that the CPP law is not final yet so, the report would wait until after Summer_2015 when we hear final plans. I am not asking for Dominion to prepare the report, rather a third party who might present to the public several impartial, non-partisan scenarios of how Dominion/VA might progress.

    In the lack of a detailed report like that, we can blog it like this to see if we can shake out some facts and scenarios.

    If EPA’s CPP had asked for 30% per capita CO2 reduction from 2005, that *might* have been a doable target. Instead EPA asked for 30% total reduction of CO2 from 2005 to 2030. Considering population growth this requires an enormous per capita CO2 reduction. I don’t really like the EPA proposed targets because I feel it forces VA to build nuke plants and other things I don’t have in my personal power plan (PPP) for VA.

    To some extent I can forgive Dominion not yet committing to a detailed coal-burning-technology-elimination plan given the onerous proposed new law (Gov McAuliffe words) has not yet been finalized.

    • I’m actually FINE with Dominion doing that report. In fact, I think it is their responsibility if they have done an internal analysis and are challenging the
      EPA on the numbers. Make them public. Let the public and 3rd party groups
      chew on that data and cross-check it for consistency and contrast with other available data.

      re: stranded costs

      remember – that Dominion fought tooth and nail long before the CPP to keep those plants open … even when EPA was trying to get them to abandon them and not spend good money after bad.

      but this brings up another, more important point and that is if Dominion actually gets it’s way in Virginia , and they choose badly – they do end up with stranded costs and one might wonder why they seem to ignore what the WSJ alluded to in an earlier article about solar getting lower and lower in cost and people using it to use less power from the grid – not even counting selling excess back.

      When it’s not only the EPA saying this but also the PJM as well as the WSJ – I wonder the path that Dominion is taking – and who is going to pay if they are wrong.

  6. “Why is it deemed so essential that coal-fired units built 40, 50 or 60 years ago be kept in operation?”

    One reason is that Dominion spent hundreds of millions of dollars in recent years retrofitting some of the plants to reduce toxic emissions. The plants may be old but they are still functioning. Now those investments will have to be written off.

    But I have no problem with your larger point. Someone should ask Dominion to walk through, power plant by power plant, and explain which power plants will close and why.

    • Another reason, and I daresay a bigger reason, is that DOM needs to have SOME generation active near its loads at all times in order to maintain system stability, and if you take all that generation away in a given area then it MUST make remedial changes to its transmission system to maintain stability. Matching generation with load is not just a total system numbers game, it matters locally as well.

      That is, of course, exactly what the transmission link between Surrey and Skiffes Creek substation near Williamsburg was supposed to address, scheduled in-service by June 2015. Now that’s been delayed by the VSCC.

      • I guess my view is that we act like “of course” we have those toxic waste sites …so what – as if it’s not part of the “low cost” coal -generated electricity – compared to “more expensive” solar.

        cradle to grave is the proper valuation – not your isolated costs.

        we say that wind/solar should not be subsidized as if coal and nukes are not when in fact they are.

        this is the 1960’s mindset about pollution.. that’s an expected cost… and that was fine until we started holding solar/wind to a different, more strict standard of cost.

        but in terms of base load. there are two numbers. The first number is what is the basic base load demand.. in the state?

        and the second is how much baseload are we running but not putting power into the grid because it’s not needed – but we run that base load 24/7 so it’s there when demand ramps up.

        we are running base load coal plants at 2am in the morning that are not turning turbines.. they’re just burning coal.

        right?

  7. Peter, you asked which power plants Dominion says are in danger of being shut down under the EPA’s CO2 emission regs I just asked that question as a addendum to the issues I’m dealing with in my article:

    Chesterfield
    Mecklenburg
    Clover
    Mount Storm (in West Virginia)

    We were running out of time, so I did not delve deeper.

  8. Jim,
    That’s useful. Mecklenburg is pretty small — 210 mega watts.

    Mt. Storm is huge and older and is in West Virginia, so one wonders if it will be included in Virginia’s carbon plan or in West Virginia’s. These little details are actually very important given the full court PR press the utility has muscled.

  9. MOre news today:

    http://hamptonroads.com/2015/03/group-sues-dominion-over-chesapeake-coal-ash

    So, a Dominion power plant built in the 1950s and shut down leaves this alleged legacy?

    And people actually want to keep these things running?

    Also, I seem to recall that the EPA data for the Clean Power Plan dates to 2007 or something, which means it does not take into consideration some big changes such as the planned closings of Chesapeake and Yorktown. I may be wrong.

    • Anytime you close a coal-fired plant, there will be residue. How toxic it is, remains to be seen upon close study, usually after you remove the plant.

      Look at the toxic sites all over the eastern US from those old “manufactured gas” plants from the late 19th/early 20th cent. where they cooked coal to drive off gas for urban lighting purposes. Those plants were shut down when local gas companies started buying natural gas from TX etc. But they are still cleaning them up. At least it usually isn’t toxic liquids that soaked into the ground, but residue on the surface.

  10. Just so we don’t forget … no CO2 = no plants … no plants = no food … no food = no us

  11. You might want to look in Drudge today for an article by Dr. Patrick Moore cofounder of Greenpeace who says we are way LOW on CO2 compared to historic levels and that plants need more than they are getting.

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