Grid Optimization: More Software, Less Hardware

power_line

by James A. Bacon

Dominion Voltage, Inc., a subsidiary of Dominion Resources, has announced the deployment of its electric grid optimization platform to the Duck River Electric Membership Corporation served by the Tennessee Valley Authority. Duck River expects to generate energy savings of 2% to 4% annually and says the technology will accelerate the deployment of Advanced Metering Infrastructure, which should enable even greater energy conservation.

Dominion Voltage’s EDGE platform “leverages the smart grid network for Volt/VAR optimization and voltage stabilization, which leads to a more efficient grid,” stated Executive Director Todd Headlee in a press release today.

The most concise explanation of “voltage optimization” that I’ve seen comes from Dick Munson, director of the Environmental Defense Fund’s Midwest Clean Energy initiative, writing a week ago for the EDF blog:

Many appliances, including incandescent lighting, work just as effectively, yet consume less energy, when the flow of electricity to them is reduced. Put another way, higher voltages generally make individuals and businesses needlessly use more energy, driving up electricity bills and air pollution. Therefore, if voltage was “right-sized,” residents would get enough power to run their appliances efficiently, but not so much that they use more electricity than needed.

According to Munson, recent study by Commonwealth Edison Company (ConEd)  concluded that voltage optimization could reduce the need for almost 20,000 gigawatt hours of electricity yearly across its system, enough to power 180,000 homes, at the incredibly low cost of 2 cents per kilowatt-hour.

Bacon’s bottom line: Grid optimization technologies are a sub-set of a larger cluster of technologies including microprocessor controls, sensors and software algorithms collectively referred to as “smart grid” technologies that hold out the potential to improve energy efficiency and integrate variable power sources like wind and solar into the grid.

Richmond-based Dominion Resources is investing in some of these technologies through unregulated subsidiaries like Dominion Voltage. That makes an interesting business story. What makes it a Virginia public policy story is whether Dominion is applying these same technologies in its regulated subsidiary, Dominion Virginia Power. If not, why not. What are the hold-ups? Or has the story simply gone unnoticed?

If there’s one thing that rate payers, environmentalists, electric utilities, the Commonwealth of Virginia and just about everyone else should be able to agree upon, it’s that reducing energy consumption at the cost of 2 cents per kilowatt hour is a win-win for everyone. I will pursue this line of questioning as I have time.

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83 responses to “Grid Optimization: More Software, Less Hardware

  1. That’s exactly what the EPA is asking with the CPP that then gets converted to a “war on coal” from agencies like the VSCC.

    The very same company that actively invests in efficiency technologies in other states but not so much in Virginia?

    and what we hear from the VSCC sounds like such investments can harm the ratepayers… that we must continue to use coal to keep electric prices low.

    I’m starting to think the SCC is just as obsolete as the COPN laws in Va.

    The SCC sounds like they have become bureaucratic obstacles to strategic investments in Va.

    or maybe I should ask why or how it seems to be less restrictive in other states.

    • I challenge you to find one statement issued anywhere by the VSCC that contains the phrase “war on coal.” You cannot. Nor evidence that it is a barrier to strategic investment in Virginia. You cannot.

      Your antipathy to the VSCC is unfounded. You really seem not to have any real notion of that agency’s mission or its authority.

      • ” (E) The Proposed Regulation uses generic and unsupported expectations of
        levels of renewable generation and energy efficiency that, when applied to
        Virginia, are extremely ambitious, almost certainly unachievable, and
        uneconomic under traditional standards.”

        “coal” is mentioned 47 times in this letter to the EPA on CPP:

        https://www.dom.com/library/domcom/pdfs/virginia-power/va-scc-clean-power-plan.pdf

        • “That Virginia’s Mandatory Goals Cannot Be Achieved Even if All
          Coal-Fired Generation Located in Virginia Is Replaced With the Best
          Available Natural Gas-Fired Generation Presents Obvious Reliability
          Concerns and Significant Compliance Costs. ”

          The phrase “energy conservation” does not appear in this document at all.

          ” (C)The Proposed Regulation fails to recognize significant and recent
          investments that have substantially reduced carbon dioxide and other
          emissions in Virginia, which, if stranded, will contribute to higher rates and higher bills for customers.”

          no they don’t use the phrase “war on coal” but in chapter and verse they speak of using coal.. having invested in coal and that not using coal will result in increased costs to ratepayers.

          • I figured you’d go to this document. Even this one does not talk about a “war on coal.” I agree we’ve had lots of public officials using that term, and using it badly, but it’s not in the SCC’s Staff’s comments. There is some strong language in that statement, but there are other passages, such as this:

            “The Virginia SCC Staff shares EPA’s concern that “state plans for emission reductions …must be consistent with a vibrant and growing economy and supply of reliable, affordable
            electricity to support that economy.”8

            For this important and necessary goal to be achievable in Virginia, however, any carbon emission rate limit imposed on Virginia
            must be higher than what has been proposed. A more rationally established compliance horizon and carbon emission rate for Virginia – recognizing, for example, the particular
            circumstances of Virginia and the limitations on the EPA’s authority – would provide flexibility for the Commonwealth to meet the EPA’s goals of reducing carbon output while imposing only reasonable costs on customers.”

            Where the barricades don’t seem to be mounted at all.

          • those words are pretty weak compared to the many, many stronger and oppositional words throughout the rest of the document.

            the document did not use the phrase but it teed it up to the political folks and the document itself, in fact, is near political in my view.

            the fact that that document was quoted by Howell before it had even appears on the SCC website … is not a good thing.

            that and the fact that they did not even acknowledge energy conservation and advancing technology nor what electricity generation would look like in 40-50 years or how Va would be working towards it.

            The SCC doc came across as a defense of the SCC’s complicit role in continuing to choose coal as the fuel of choice – as Dominion exploited loop-holes in the New Source Review rules – instead of putting those plants on a retirement path. They do that – then later – claim they can’t close the plants because they have “stranded” investments.

            they chose that path… and that’s my concern with their response to the CPP proposal.

            who is responsible for Dominion to look into grid technology efficiencies and energy conservation and such?

            why does Dominon and the SCC continue to claim that wind/solar are not reliable sources and will undermine grid reliability – when co-located hybrid gas/solar/wind plant combos are planned and coming online in other places?

            I think there were several ways the SCC could have responded to the CPP other than the way they did – which I feel was basically non-responsive.

            The EPA was and is looking for legitimate feedback upon which to shape the final rule and the SCC (in my view again) just chose to essentially do nothing but complain.

            I’m expecting both Dominion and the SCC to be looking to the future – strategically – at the point where coal plants are fewer and fewer and more and more people are going to be installing solar even if Dominion make it hard for people to do.

            Amazon just did an end run and I’m quite sure Maryland is doing whatever they can to convince Amazon that Maryland is ready, willing and able to accommodate their energy preferences and our SCC is doing little more than encouraging political surrogates to blather at the EPA for their “job killing war on coal”.

            Don’t get me wrong – wind and solar simply do not have the energy density of fossil fuels.. but on-site solar is going to give huge base-load coal plants a run for the money.. one big breakthrough in Solar or battery technology is going to make short work of Dominion’s “stranded” investments.

        • If that is factually true, are you saying they should not have said it? Are there specific facts you believe they got wrong?

          • virginiagal2

            Larry, no offense, but if I’m looking for a good balanced review of the pros and cons of an electricity strategy, I’m not going to something called Power for the People, any more than I’m going to go to something called Stop Commie EPA.

          • vgal2 – they are one of several differing views…

            http://www.rtoinsider.com/va-scc-epa-carbon-rule/

            The Environmental Protection Agency’s proposed regulations on carbon emissions would increase electric bills and harm reliability, Virginia State Corporation Commission staff members said in comments filed last week.

            SCC staff said EPA’s “arbitrary, capricious, unsupported and unlawful” plan could cost Dominion Virginia Power customers alone between $5.5 billion and $6 billion. “Contrary to [the EPA’s] claim that ‘rates will go up, but bills will go down,’ experience and costs in Virginia make it extremely unlikely that either electric rates or bills in Virginia will go down,” staff said.”

            “arbitrary, capricious, unsupported and unlawful” – everything but “commie”.

            I’ve read this document several times.. and it’s not a balanced analysis in my view.. it’s partisan and one-sided and unbecoming of a State agency.

          • virginiagal2

            Honestly, I think the SCC may be right. If something actually is arbitrary, capricious, and harmful, how is it wrong to say so?

          • because it’s a political statement not an analysis.

            do you want to see PJM’s analysis? do you think PJM used those words to
            preface their analysis?

            The SCC has been politicized.. plain and simple.

            more reading for you:

            PJM Interconnection Economic Analysis
            of the EPA Clean Power Plan Proposal

            http://www.pjm.com/~/media/4CDA71CBEC864593BC11E7F81241E019.ashx

            here’s how you preface a substantiative analysis:

            ” Conclusions
            The results of PJM’s analyses are not predictions of future outcomes; they are assessments of possible impacts based on specific assumptions and tempered by uncertainties, including future market conditions, the form of the final EPA rule and the manner in which states choose to comply. Although this report presents specific results under various scenarios
            that highlight changes to wholesale prices, load energy payments, net energy revenues for existing steam resources and compliance costs due to changes in resource dispatch, these numerical results depend on assumptions about industry conditions such as fuel costs, load growth, technological advancements and the form of state compliance plans in 2020,2025 and 2029. Many things can change in the interim regarding industry conditions.”

            you won’t see a word in it about “illegal” but you will see some honest statements.. about higher costs.

      • I’m hard on the SCC because their CPP letter was one-sided and showed almost no consideration of energy conservation nor the subject of this Blog post .

        from beginning to end – it was a political rant.. in my view – and unbecoming of a state agency that is supposed to be looking out for ratepayers – beyond the coal-anchored strategy that they have pursued – and now not only defend but demonize efforts to move away from coal – not just to wind/solar – which is still expensive but they give short shrift to energy conservation – and they do not look 20, 30, 50 years into the future to formulated a longer term strategy – and a future almost surely not based on coal – and not based on a 3rd Nuke at North Anna.

        When reading through their document – I find myself wondering who wrote it because it sounds like the person was affiliated with Dominion, past or present. Then I’d back up a bit and ask why the SCC is dealing with this issue as a State agency that is a regulatory arm – not a corporate entity looking at short and long term strategy.

        THe letter appears to me to be a defiant statement that they are not going to even consider potential ways to meet the CPP goals. THey just dig their heels in and basically defend the use of coal and the stranded investments in coal plants – which they also had a role in getting built.

        So that’s my story and I’ll be the first to admit that I am ignorant on many issues (that does not mean I’m not informed – I’m not completely informed).

        And I welcome other dialogue and especially welcome informed comments that help me understand more than I do now.

        and .. I will re-examine and even change my views.. when new information is provided..

        To me – this is the opportunity of this blog.. . and as long as dialogue can be kept civil and not get into Ad Hominems.. let’s do it.

        • This blog post deals with a subsidiary of Dominion Resources (not Dominion Virginia Power) offering a smart grid program to what looks to be an electric cooperative in Tennessee.

          Dominion Virginia Power is itself operating smart grid trials of its own in Richmond, Midlothian, Charlottesville and elsewhere in Virginia.

          https://www.dom.com/residential/dominion-virginia-power/customer-service/smart-meter-upgrades/smart-meter-locations

          • that’s awesomeIenergy in their homes.. and from which – they will endeavor to replace equipment.

            and when enough people do that – it will impact the demand for electricity.

            I’m on REC and I can login and see my energy usage on a daily basis but not an hourly basis… which is what I would need to make decisions about which appliances and heat pump to be looking at.

          • you’re adding a lot to the conversation and much appreciated and hope you stay around!

        • Larry, was their letter one-sided, or are the facts different than you wish they were?

          I’m not pro Dominion Power, at all,but a quick skim of the SCC document looked to me to be best summarized as:

          Grids are complex things that need a great deal of care to stay stable
          Stable electrical grids underpin our economy
          Trying to change things really fast is likely to jack up rates enormously
          Trying to change things really fast runs a significant risk of destabilizing the grid, which is a complex system

          My personal belief is that renewables are going to be better accomplished at a point of use basis, and their practicality on that basis is coming really, really fast.

          Building a bunch of infrastructure that may be more than needed, one that point is reached, is not good policy, and forcing it to be built probably isn’t good public policy.

        • Oh, and one more point – raising the rates of electric power here in Virginia and in the US simply sends manufacturing overseas, to places where electricity is generated less efficiently, and where carbon standards are lower.

          It may let us feel on the side of the angels, but it hurts US workers and doesn’t actually reduce carbon emissions.

          It’s not enough to have good intentions. You have to be smart. The current plan seems to have more of the former than the latter.

    • The SCC report you linked to says that power will probably cost more, and that the grid will probably be less reliable.

      Indirect effects of higher rates include a risk of less manufacturing in Virginia, as that tends to follow low energy costs.

      Are you questioning the data they used to come to their conclusions, or simply don’t want the conclusions to be true?

      • what manufacturing ?

        Yes, I do doubt the SSC’s report.

        I’m not the only one:

        http://blog.ucsusa.org/epa-clean-power-plan-virginia-goals-state-corporation-commission-708

        the report is long on assertions and claims and short on analysis.

        it does not even address the effect of technology advances and conservation.

        Like gasoline – when electricity goes up – people respond by buying more efficient and being more efficient. That’s a fact not a theory. California and New York have some of the highest rates in the US as well as some of the lowest per capita consumption – and in terms of manufacturing and business, California is the 8th largest economy – in the world… bigger than many countries in the OECD.

        what the SCC is basically saying is – if you want low prices and reliability -you have to burn coal or buy a Nuke and that’s 100% balderdash.

        And it runs counter to what Dominion is actually doing – building natural gas plants, building a pipeline to fuel those plants – AND in other states – investing in grid efficiency technologies.

        You know typically the argument from conservative types is that govt bureaucrats don’t know how business works… but then say “well, yeah, but Dominion is a monopoly” to which I say – Dominion is far, far more of a monopoly than it should be and it’s NOT in the best interest of rate-payers for the SCC to attempt to keep rates low by continuing to use coal and essentially ignoring the technological changes that are ongoing and will transform the way electricity generation works – and will ultimately strand coal plant investment no matter how the SCC is trying to protect it.

        the SCC is working the way that Kodak and other famous bankruptcies worked by denying the inevitability of change and using scare tactics to encourage folks to think that adverse costs and reliability are at risk.

        The SCC did not even TRY to do a real analysis of simple things – like likely technology advances… that we have already seen and more coming.

        Dominion has too much of a monopoly – that prevents other players from building power and selling it to the grid – even though we do the same exact thing with PJM… and ODEC – when it benefits the existing operators then lets them use the excuse that accepting power from other providers will undermine reliability…

        The SCC is more like a lap-dog to Dominion than an advocate for ratepayers.. it actually appears to me to seek to scare the ratepayers… to keep them in line and it seems to work.

        • Larry, I’ll start out by saying that I am extremely uncomfortable with the power that Dominion has in Virginia – I do not think it’s appropriate for an electrical utility to be a “power” (for that matter, honestly, I don’t want regular businesses to be the 600 pound gorilla either, but that’s off topic.)

          I don’t like what they’re doing with eminent domain, I think they give way too much money to legislators, and I’m thoroughly tired of the Times Dispatch giving them a platform in the editorial page while not granting the same level of platform to those who oppose their actions. But not liking them doesn’t make me evaluate data differently.

          I got interested a while back in how the power grid responds to instability and large outages (following an article on the Carrington Event, I think in either Scientific American or Discover) and did a lot of reading on it, because while I’m not an engineer, I like technology and I can muddle through reasonably well.

          To respond to your points, in no particular order: Keeping a grid stable and in balance is actually a pretty complex thing. Complex systems are prone to destabilization. Fluctuating power supplies like wind and solar, in the absence of good ways to store that power and even it out, are inherently destabilizing to the system. They add variability and thus complexity, and adding complexity inherently adds instability.

          Replacing plants adds to costs. Replacing plants with technology with higher operating costs adds to costs. Higher costs mean higher rates.

          High utility rates in California and New York have caused those states to lose manufacturing employment. For example, Tesla’s headquarters is in California. Their battery plant is going in Nevada, because of lower electricity rates.

          As far as “what Virginia manufacturing jobs”, it’s about 200,000, per the VMA. A new manufacturing plant just went in to Chesterfield – guess you missed the McAuliffe press release. It was in the paper here.

          I read the SCC writeup as a matter of timing and speed, more than direction. The EPA is pushing for replacement, and future technology improvements cannot be factored in when your timeline does not allow you to wait on those improvements before you replace.

          I think how we produce and distribute electricity is going to change a lot in the next couple of decades. I think much of that change is going to be a move to generate electricity at point of use, rather than centrally. The EPA plan is not considering that, at all.

          Let me put it this way – to me, the SCC response is stating the obvious – it’s not even surprising.

          Long term, no one is putting in new coal plants – and I don’t think they or we want new nuclear.

          But you can’t use solar to balance solar – you HAVE to have something that can run on demand to balance the grid when you are generating power with fluctuating sources. You have to be able to balance input and output, or the grid destabilizes. Destabilizes is a fancier word for, “the lights go out.”

          • r: ” Keeping a grid stable and in balance is actually a pretty complex thing. ”

            it is and I do not have confidence that the SCC has the expertise to analyze it or let’s put it this way – they used the word and concept more than they provide substantiative analysis. They demagogue it in my view.

            “Complex systems are prone to destabilization. Fluctuating power supplies like wind and solar, in the absence of good ways to store that power and even it out, are inherently destabilizing to the system. They add variability and thus complexity, and adding complexity inherently adds instability.”

            you can combine gas/solar/wind in one co-located site complex. It also takes a more flexible grid – which as this blog post shows – is being looked at in other states but no mention of this by the SCC of what Va might do.

            “Replacing plants adds to costs. Replacing plants with technology with higher operating costs adds to costs. Higher costs mean higher rates.”

            using New Source Review loopholes to upgrade older coal plants that should have been retired – also increases costs and pushes higher costs to the back end – becoming a reason to not change.. as they are doing.

            “High utility rates in California and New York have caused those states to lose manufacturing employment. For example, Tesla’s headquarters is in California. Their battery plant is going in Nevada, because of lower electricity rates.”

            and Amazon went to Maryland – what’s your point ? that you can cherry-pick examples that do what – ignore the f act that California is STILL 9th in the world economically – after you factor in all the folks who left and all the folks who moved there.

            “As far as “what Virginia manufacturing jobs”, it’s about 200,000, per the VMA. A new manufacturing plant just went in to Chesterfield – guess you missed the McAuliffe press release. It was in the paper here.”

            Oh I DO SEE it but we also know that manufacturing is becoming less and less a “go-to” industry in the knowledge economy… would you really base your future electricity needs on manufacturing?

            “I read the SCC writeup as a matter of timing and speed, more than direction. The EPA is pushing for replacement, and future technology improvements cannot be factored in when your timeline does not allow you to wait on those improvements before you replace.”

            I read the SCC document as more of a political statement than a substantiative analysis of the future of electricity in Va.

            “I think how we produce and distribute electricity is going to change a lot in the next couple of decades. I think much of that change is going to be a move to generate electricity at point of use, rather than centrally. The EPA plan is not considering that, at all.”

            you’re wrong – that’s EXACTLY what the EPA IS saying and it’s EXACTLY what the SCC is ignoring. Do you want me to extract what the EPA is saying about the future that the SCC is not saying?

            “Let me put it this way – to me, the SCC response is stating the obvious – it’s not even surprising.”

            The SCC report is essentially a defiant defense of the status quo .. in my view.

            “Long term, no one is putting in new coal plants – and I don’t think they or we want new nuclear.”

            and what exactly is the SCC saying about long-term?

            “But you can’t use solar to balance solar – you HAVE to have something that can run on demand to balance the grid when you are generating power with fluctuating sources. You have to be able to balance input and output, or the grid destabilizes. Destabilizes is a fancier word for, “the lights go out.””

            you use combined cycle gas plants to balance solar… do you not understand?

            do a little research vgal2 instead of listing to the anti-CPP folks.. for info.

            ” The transition to CCGT technology is being driven by low gas prices, stricter regulation for coal plants, and the integration of growing amounts of renewable power. Combined cycle plants compliment wind and solar power because they can start and stop quickly, and thus are capable of offsetting the fluctuations in renewable power.”

            http://www.power-eng.com/articles/2014/02/a-report-on-combined-cycle-projects-in-north-america.html

          • virginiagal2

            Grid instability is actually a huge economic issue. It’s what the SCC should be looking at.

            Combining energy sources doesn’t necessarily mean having them all at one location – you need to balance the grid, not one specific plant.

            My understanding is Dominion is already working on more flexible grid technology, and I’m pretty sure I’ve seen multiple articles, including in my own alumni magazine, on that topic.

            Amazon is not a manufacturing company. It’s an online sales and distribution company. The choices in locating facilities are different.

            California has a badly balanced economy with a lot at the top, a lot of grinding poverty at the bottom, and almost nothing in the middle, in part because high energy costs have gutted the manufacturing sector. Businesses and people – especially middle-class people – are moving out. California is NOT something I would want to emulate.

            Manufacturing is not less of a go to industry – cars and toasters do not magically manufacture themselves because I have apps on my phone. We also need jobs for people who don’t sit at desks all day long.

            I disagree with you about what EPA is saying about consumer and business generated energy – IMHO the EPA does not plan for coming technical change in a remotely forward looking way.

            No, combined cycle gas plants are not the only option to balance solar – or wind – BOTH need balancing. What you have to have is something that will work on demand and is not fluctuating to balance out fluctuating sources of power.

            Finally, again, I’m not seeing adequate consideration of private electricity generation, by homes and businesses, which is like to become significantly more popular, particularly if energy rates go up.

            I have done a lot of research on the topic, because I got interested in grid resiliency. I was not reading up on renewable energy, I was reading up on how the grid stays stable, how and why it crashes, and how it’s restored. That means I read articles and some books on how the grid works, largely technical and popular science sources. I did not source it from either pro- or anti-CPP folks. I was interested in grid stability before it became political.

          • re: ” Grid instability is actually a huge economic issue. It’s what the SCC should be looking at.”

            I do not think they have the in-house expertise and they have already demonstrated a bias and willful ignorance in their “analyses”.

            Combining energy sources doesn’t necessarily mean having them all at one location – you need to balance the grid, not one specific plant.”

            of course but that does not mean you can’t combine gas with wind and solar – and ‘right-size” that facility to be compatible with the grid.

            vgal – you’re looking into a back-up generator. Do you know how they work in terms of switching over? That’s exactly how a combined gas/solar/wind facility would work…. the main difference being that all 3 run at the same time and the nat gas modulates to keep the voltage the same. It’s a proven technology.

            “My understanding is Dominion is already working on more flexible grid technology, and I’m pretty sure I’ve seen multiple articles, including in my own alumni magazine, on that topic.”

            and in this blog post -in other states – not in Va. where is the SCC viewpoint on that in their analysis?

            “Amazon is not a manufacturing company. It’s an online sales and distribution company. The choices in locating facilities are different.”

            they are part of the knowledge economy that is the future…

            “California has a badly balanced economy with a lot at the top, a lot of grinding poverty at the bottom, and almost nothing in the middle, in part because high energy costs have gutted the manufacturing sector. Businesses and people – especially middle-class people – are moving out. California is NOT something I would want to emulate.”

            BS vgal2.. https://en.wikipedia.org/wiki/List_of_U.S._states_by_income – you’re reading too much right wing propaganda… California’s economy is bigger than most nations – any way you cut it.

            “Manufacturing is not less of a go to industry – cars and toasters do not magically manufacture themselves because I have apps on my phone. We also need jobs for people who don’t sit at desks all day long.”

            you do – but manufacturing is going to lower cost labor over seas and the ones that stay here are highly mechanized needing better educated workers.

            “I disagree with you about what EPA is saying about consumer and business generated energy – IMHO the EPA does not plan for coming technical change in a remotely forward looking way.”

            thats the fundamental basis of the CPP… go read… they’re looking at the future.

            “No, combined cycle gas plants are not the only option to balance solar – or wind – BOTH need balancing. What you have to have is something that will work on demand and is not fluctuating to balance out fluctuating sources of power.”

            and that’s why you would purposely site solar/wind with a source like gas than CAN modulate in response to fluctuations. I do not understand why you do not get this.

            “I have done a lot of research on the topic, because I got interested in grid resiliency. I was not reading up on renewable energy, I was reading up on how the grid stays stable, how and why it crashes, and how it’s restored. That means I read articles and some books on how the grid works, largely technical and popular science sources. I did not source it from either pro- or anti-CPP folks. I was interested in grid stability before it became political.”

            I’m not a big supporter of wind/solar right now.. it’s still an emerging technology that is not yet ready for prime time.

            having said that – we have an obsolete grid that is relying on an dirty fuel to generate electricity – and pollution – it’s time to change.. for no other reason that more efficiency, less waste and less pollution..

            what the SCC is essentially saying is that the only way to have a resilient grid is older coal plants and I’m not buying it.

          • virginiagal2

            I read this quite a bit differently than you did – and I want to reiterate – I have no love for Dominon.

            I think that the SCC is pretty much stating the obvious – I don’t think anything that they said goes beyond what fairly simple, and basic, logic gets you.

            Regardless of how you combine new plants, when you build a new plant when you have old plants functioning, for each plant you retire before economic end of life, it’s a large additional cost, which means higher expenses and higher rates. if you add that the operating cost is higher, that also means higher expenses and higher rates. Those costs are additive.

            I understand how the sources would switch over.

            Smart grid technology requires infrastructure changes, not just software, which is again, time to install, time to test, and cost to install and test. You don’t just switch it over like plugging in a new lamp. My understanding is that it’s coming, and soon, to all states.

            Amazon’s plants are not part of the knowledge economy – they’re distribution. Amazon’s technology is part of the knowledge economy, but not so much the physical part of its distribution operations.

            I’m not reading right wing propaganda. California has a large number of very wealthy people, and a high average income for that reason. It also has the worst supplemental poverty measure (poverty adjusted for cost of living) in the US at 23.8%, and the 16th worst in raw poverty without adjusting for expenses or cost of living. Verify at https://en.wikipedia.org/wiki/List_of_U.S._states_by_poverty_rate

            From the US Census Bureau on what the supplemental poverty rate is “The official poverty measure, which has been in use since the 1960s, estimates poverty rates by looking at a family’s or an individual’s cash income. The new measure will be a more complex statistic incorporating additional items such as tax payments and work expenses in its family resource estimates. Thresholds used in the new measure will be derived from Consumer Expenditure Survey expenditure data on basic necessities (food, shelter, clothing and utilities) and will be adjusted for geographic differences in the cost of housing. Unlike the official poverty thresholds, the new thresholds are not intended to assess eligibility for government programs. Instead, the new measure will serve as an additional indicator of economic well-being and will provide a deeper understanding of economic conditions and policy effects.”

            Manufacturing location isn’t just based on lower cost labor – it’s also based on productivity. US workers are expensive, but very productive. Manufacturing is coming back, to some degree. No need to kill the resurgence.

            I do not agree about how well the CPP has incorporated coming technical change.

            To me, what the SCC is essentially saying is, change is coming, and fast, but the requested change is faster than can be done with good stability and level energy prices.

            And yes, I buy that.

          • re: ” I read this quite a bit differently than you did – and I want to reiterate – I have no love for Dominon.

            I think that the SCC is pretty much stating the obvious – I don’t think anything that they said goes beyond what fairly simple, and basic, logic gets you.”

            nope. It’s done in an overtly political way and it leaves out other analyses that should have been part of their response – like technology advances for grids. They could have cited that as a necessary component of a transition, given it’s costs and how long to implement, and what it accomplished and what else it would not help.

            “Regardless of how you combine new plants, when you build a new plant when you have old plants functioning, for each plant you retire before economic end of life, it’s a large additional cost, which means higher expenses and higher rates. if you add that the operating cost is higher, that also means higher expenses and higher rates. Those costs are additive.”

            when you don’t retire plants that should have been retired and instead use regulatory loop-holes to back-fit last-resort technology – that has a cost also. In other words if you try to hold on to older technology – there is a downstream cost to that. You’re essentially back-loading the costs and then you’re using those back-loaded costs as excuses to continue to use outdated technologies. It’s not long term thinking.

            “I understand how the sources would switch over.

            Smart grid technology requires infrastructure changes, not just software, which is again, time to install, time to test, and cost to install and test. You don’t just switch it over like plugging in a new lamp. My understanding is that it’s coming, and soon, to all states.”

            and WHERE is that discussion in the SCC analyses?

            “Amazon’s plants are not part of the knowledge economy – they’re distribution. Amazon’s technology is part of the knowledge economy, but not its distribution operations.”

            it’s no more or no less than the idea behind uber – putting buyers in touch with sellers.. It’s the technology that powers the distribution.

            “I’m not reading right wing propaganda. California has a large number of very wealthy people, and a high average income for that reason. It also has the worst supplemental poverty measure (poverty adjusted for cost of living) in the US at 23.8%, and the 16th worst in raw poverty without adjusting for expenses or cost of living. Verify at https://en.wikipedia.org/wiki/List_of_U.S._states_by_poverty_rate

            Virginia is 7th and California with 5 times the GDP of Va is 10th? that’s “proof”? come on vgal2.. that’s silly and yes it sounds just like the right logic these days.

            “From the US Census Bureau on what the supplemental poverty rate is “The official poverty measure, which has been in use since the 1960s, estimates poverty rates by looking at a family’s or an individual’s cash income. The new measure will be a more complex statistic incorporating additional items such as tax payments and work expenses in its family resource estimates. Thresholds used in the new measure will be derived from Consumer Expenditure Survey expenditure data on basic necessities (food, shelter, clothing and utilities) and will be adjusted for geographic differences in the cost of housing. Unlike the official poverty thresholds, the new thresholds are not intended to assess eligibility for government programs. Instead, the new measure will serve as an additional indicator of economic well-being and will provide a deeper understanding of economic conditions and policy effects.””

            and what is this paragraph really about? can you distill it down to one sentence? this is all about “proving” what?

            “Manufacturing location isn’t just based on lower cost labor – it’s also based on productivity. US workers are expensive, but very productive. Manufacturing is coming back, to some degree. No need to kill the resurgence.”

            Oh I’m not in favor of killing it at all.. I just don’t think making it our top priority is smart in the 21st century. We are more productive because we automate.. we have modern technology in the plants…

            “I do not agree about how well the CPP has incorporated coming technical change.”

            should I extract the parts that make me feel otherwise for you to comment on?

            “To me, what the SCC is essentially saying is, change is coming, and fast, but the requested change is faster than can be done with good stability and level energy prices.

            And yes, I buy that.”

            and it’s an old and tired – argument that they have been using ever since the New Source Review. It’s an argument for the status quo – to continue to rely on coal and to continue to use stranded costs as an excuse for not moving to a more modern grid.

            If they were going to be honest brokers – they would have had a serious discussion about how to modernize the grid..

            I don’t see what the SCC has accomplished to be honest. They’ve chosen to take a political stance instead of one that truly represents the rate payers interests – longer term – as you point out – inevitable changes will occur.

            The SCC essentially has become a “denier” of – the future.. it’s old thinking and it’s costly thinking in the longer term. It’s a disservice to rate-payers in 2030, and beyond.

            by that time SOLAR is going to be on people’s roofs and using automated systems to ‘balance” grid input with solar – no matter what DOminion does even if they essentially deny people the ability to feed excess solar into the grid.

            it’s going to happen – and when it does – people are going to be using less grid electricity – and when that happens – how does Dominion cover their stranded costs? Increased rates is how.. ..

          • virginiagal2

            Larry, this was a report on specific requirements. I also will point out, this is from the McAuliffe administration, not exactly a right wing think tank.

            Smart grid technology isn’t really the subject of the SCC response or of the proposal. Long term, yes, and it’s coming, and IMHO pretty fast. Short term, not so much.

            Amazon’s distribution centers are not putting buyers in touch with sellers. They are the centers where the physical shipping gets done. The technology that powers the distribution is written and maintained elsewhere. Workers at the distribution centers are pulling and shipping physical items, not writing code.

            Re poverty rates – Larry, poverty RATE is a percentage – it is not dependent on the size of the population. You do understand percentages, correct? It’s not a measure of raw numbers. Where are you getting these numbers that show Virginia as 7th and California as 10th?

            I just pulled the Census Burea’s numbers, and for poverty not adjusted for cost of living, California is tied for 15th worst poverty, and Virginia is 11th best – 11th LOWEST poverty, or 40th (the list includes DC.)

            I am pretty sure California is still #1 for cost of living adjusted poverty, but I’ll have to pull that list later – or you can pull it and post the link if you have time.

            The paragraph that you asked about is the definition of supplemental poverty level – cost of living adjusted poverty – directly quoted from the Census Bureau’s actual definition. California is #1 in poverty when you factor in cost of living, at the link I posted. If you can find newer numbers that show that has changed, I’d appreciate if if you’d share the link. I was not making a point, I was quoting the Census Bureau definition of the technical measurement I was using.

            This is not really about the SCC. Here is McAuliffe’s response to the EPA proposal – link directly from governor’s website. http://www.deq.virginia.gov/Portals/0/DEQ/Air/Planning/vacommentstoepa.pdf – notice they don’t talk about how peachy the CPP requirements are either.

            Building plants we won’t need in 20 years is not the way to reduce “stranded” costs. The point is that I think that the EPA is suggesting is not well aligned with what is needed long term.

          • “Larry, this was a report on specific requirements. I also will point out, this is from the McAuliffe administration, not exactly a right wing think tank.

            Smart grid technology isn’t really the subject of the SCC response or of the proposal. Long term, yes, and it’s coming, and IMHO pretty fast. Short term, not so much.”

            how about in the timeframe ot the CPP proposal?

            “Amazon’s distribution centers are not putting buyers in touch with sellers. They are the centers where the physical shipping gets done. The technology that powers the distribution is written and maintained elsewhere. Workers at the distribution centers are pulling and shipping physical items, not writing code.”

            geeze Vgal2 – it’s the technology that is driving the distribution centers. Without tht technology -the distribution centers would not work the way they do. This is no different that software/technology delivering an Uber car to you.

            “Re poverty rates – Larry, poverty RATE is a percentage – it is not dependent on the size of the population. You do understand percentages, correct? It’s not a measure of raw numbers. Where are you getting these numbers that show Virginia as 7th and California as 10th?”

            I thought I got it from your link but apparently I’m looking at household income not the poverty rate. my bad.

            I just pulled the Census Burea’s numbers, and for poverty not adjusted for cost of living, California is tied for 15th worst poverty, and Virginia is 11th best – 11th LOWEST poverty, or 40th worst (the list includes DC.)”

            you are correct.

            “I am pretty sure California is still #1 for cost of living adjusted poverty, but I’ll have to pull that list later – or you can pull it and post the link if you have time.”

            I think you’re pretty far afield.. here.. anyhow.. you’re several levels away from the cost of electricity which I would believe you if you want to provide a chart showing electricity price – and GDP for California or some such but not the casual and usually right wing approach … of correlation vs causation.. pick anything that works..

            “The paragraph that you asked about is the definition of supplemental poverty level – cost of living adjusted poverty – directly quoted from the Census Bureau’s actual definition. California is #1 in poverty when you factor in cost of living, at the link I posted. If you can find newer numbers that show that has changed, I’d appreciate if if you’d share the link. I was not making a point, I was quoting the Census Bureau definition of the technical measurement I was using.”

            again show me a real correlation.. between the price of electricity and the poverty rate… what you’re doing is basically blather..

            “This is not really about the SCC. Here is McAuliffe’s response to the EPA proposal – link directly from governor’s website. http://www.deq.virginia.gov/Portals/0/DEQ/Air/Planning/vacommentstoepa.pdf – notice they don’t talk about how peachy the CPP requirements are either.

            Building plants we won’t need in 20 years is not the way to reduce “stranded” costs. The point is that I think that the EPA is suggesting is not well aligned with what is needed long term.”

            well no – not if you’re using stranded costs at the same time you’re not looking at technology in that same timeframe … The SCC has basically invested in older technology and now are using it as an “stranded costs” excuse to not upgrade.

            When I see the SCC point to a future with likely technology and then fold that into their stranded cost narrative – I’ll put more stock in what they are saying.

            right now – they’re basically arguing that since they invested in older technology that we cannot afford to upgrade.

          • virginiagal2

            Larry, you first argued that the distribution centers were manufacturing. Now you’re arguing that they’re technology. Yes, distribution is driven by technology – for almost all commercial shipping and distribution today, not just Amazon or app driven jobs. That doesn’t make jobs at shipping centers knowledge jobs.

            For that matter, Uber drivers are working in transportation jobs, not technology jobs. They’re enabled by technology, but so are the vast majority of other jobs, whether app driven or not.

            I’m not sure what your point now is re California. Originally you argued its economy was really good. When I pointed out the very high poverty rate, you challenged that I was wrong. When I showed that cost of living adjusted poverty is currently higher in California than any other state, you say that point is far afield.

            The electricity rate in CA is about half again as high as in VA. CA is one of the highest – VA is in the lower third or so. The cost of electricity is part of what’s used to calculate US Census cost of living adjusted poverty rates.

            The additional impact of higher energy prices is on lower desirability for manufacturing and other industry – this is well documented, is pretty self-evident, and that reduced desirability in turn leads to fewer jobs, particularly middle and working class jobs.

            Stranded costs are stranded now. You can look at new technology going forward, but replacing power plants is expensive, and the rate payers are going to pay for it long term. The question is how fast you are going to replace ahead of actual end of life, and how much economic pain people are willing to bear.

            Smart grid savings depend on several factors that don’t give you a quick fix – people agreeing to let Dominion control some or all of their utilization – people buying devices that can be controlled – and people continuing to use the same energy mix.

          • re: ” Larry, you first argued that the distribution centers were manufacturing. ”

            actually not.. I’m pretty sure I said manufacturing was not something we should be primarily relying on in a knowledge economy and I pointed out that the knowledge economy is about software technologies to provide more for less..

            “Now you’re arguing that they’re technology. Yes, distribution is driven by technology – for almost all commercial shipping and distribution today, not just Amazon or app driven jobs. That doesn’t make jobs at shipping centers knowledge jobs.”

            it does. when you buy something – it gets scanned into a computer database and an re-supply order is built in real -time and a truck at the distribution center is receiving a palletized load that consists of the items that were sold a few hours before

            Whether it’s Amazon or Walmart – they’re both using technology to drive their businesses.. which are to provide goods to people – on the shelves or in the mail when they want them. Everything except the actual physical deliveries is in software and databases.

            “For that matter, Uber drivers are working in transportation jobs, not technology jobs. They’re enabled by technology, but so are the vast majority of other jobs, whether app driven or not.”

            Uber is driven by software.. surely you must admit this..

            “I’m not sure what your point now is re California. Originally you argued its economy was really good. When I pointed out the very high poverty rate, you challenged that I was wrong. When I showed that cost of living adjusted poverty is currently higher in California than any other state, you say that point is far afield.”

            I argued that it’s the 9th biggest economy in the world.. you pointed out poverty – and you were correct but unless you can tie that poverty to higher electricity prices grid technology, etc. – what’s your point? California has a significant immigration issue.

            “The electricity rate in CA is about half again as high as in VA. CA is one of the highest – VA is in the lower third or so. The cost of electricity is part of what’s used to calculate US Census cost of living adjusted poverty rates.”

            okay… if you can show a correlation between electricity prices and poverty rates on a per state basis – I’ll accept your premise. otherwise – you’re using selected anecdotal data that may well not represent the bigger picture. So to convince me – a nice chart showing a correlation between high electricity prices and poverty rate would be pretty convincing. Are you going to claim that the highest poverty rates are in Hawaii, New York, Connecticut because they have much higher electricity rates?

            “The additional impact of higher energy prices is on lower desirability for manufacturing and other industry – this is well documented, is pretty self-evident, and that reduced desirability in turn leads to fewer jobs, particularly middle and working class jobs.

            again – do some data to back up what you’re claiming.. how about electricity costs verses per capital GDP or per manufacturing jobs?

            “Stranded costs are stranded now. You can look at new technology going forward, but replacing power plants is expensive, and the rate payers are going to pay for it long term. The question is how fast you are going to replace ahead of actual end of life, and how much economic pain people are willing to bear.”

            stranded costs are in the future if you make wrong decisions now by continuing to cling to obsolete technologies

            “Smart grid savings depend on several factors that don’t give you a quick fix – people agreeing to let Dominion control some or all of their utilization – people buying devices that can be controlled – and people continuing to use the same energy mix.”

            not looking for quick fixes.. looking for Dominion to be adapting and adopting technology as it comes online rather than clinging to older ‘stranded” technology that ultimately will harm Virginia and it’s rate payers.

            I don’t think we’re going back to coal and I’m alarmed that Dominion apparently wants to export natural gas rather than retain it and maximize it’s longevity by modernizing the grid and encouraging and incentivizing an inevitable transition to solar and wind.

            Here’s a question for you. Do you think making lowest cost the primary goal – always – a viable longer term strategy given the changes we are seeing in technology?

            If Dominion prioritizes it’s investments in older technology -will they be prcluding a future switch over to modern technology without incurring losses from stranded investments?

            If you’ve already invested in obsolete technologies – when is the best time to switch – only when you no longer have stranded money?

  2. Larry, there are always legal/regulatory issues associated with a utility’s unregulated subsidiaries performing services for the utility. And there should be, as affiliated transactions can be used to pad costs or cut out more efficient competitors. Also, a large-scale project like this (if done for Dominion) could well be beyond the affiliates’ experience and skill set. Working with a small co-op in a nearby state may well be a good step for all.

  3. A&N Electric Cooperative
    Central Virginia Electric Cooperative
    CFC
    Community Electric Cooperative
    Mecklenburg Electric Cooperative
    Northern Neck Electric Cooperative, Inc.
    NRECA
    NRTC
    Old Dominion Electric Co-op
    Prince George Electric Cooperative
    Rappahannock Electric Cooperative
    Shenandoah Valley Electric Cooperative, Inc.
    Southside Electric Cooperative

  4. Of course we do, as you noted. But if they are tied into Dominion’s distribution network, there still could be instate legal/regulatory issues. Starting out of state still sounds reasonable to me. Or the Virginia coops may not be interested in working with Dominion or in the project.

    • well , I think we don’t know much about much of this, eh?

      as a customer of REC – I often end up with “power cost adjustments” which add to my bill..

      Since REC does not generate power but instead buys it – and I presume from Dominion (but could be from PJM)… I pay them 60.00 for “delivery” and the rest is for “electricity supply service” and the “power cost adjustment”.

      so I suspect most folks know even less about the electricity business than they do about health care, transportation and how the local school board spends discretionary money above the state mandate.

      In other words – ignorance reigns!

      we got lots of opinions.. though…

      • REC, along with most other electric cooperatives in Virginia, owns Old Dominion Electric Cooperative, which is a generation cooperative. ODEC produces power at facilities it owns and co-owns with Dominion and makes purchases from the PJM grid to serve its members as needed. ODEC is a part owner of the Clover Power Station in Southside Virginia and owns 11% interest in the North Anna nuclear stations. It has other facilities (and member cooperatives) in Delaware and Maryland.

        • REC owns ODEC? can you provide something to show that? thanks.

          so ODEC generates power and sells it to the electric cooperatives – via Dominion’s power grid?

          how about PJM? do they own parts of the grid or what is their role in electricity in Va beyond being a supplier of electricity? Do they own or operate grid, or powerlines or substations? Does Va generate power that PJM can buy and distribute to other PJM members?

          thanks…

          • Here you go:

            http://www.odec.com/our-members/

            “The areas served by our 11 member owners covers rural, suburban and even urban areas. This includes several attractive growth areas with high residential concentration, which provides stability in our markets.”

            The way PJM works is that all power generated in its footprint is sold into and bought out of its wholesale markets. ODEC sells its power into PJM and its members buy it out of PJM. Most of the transmission where the coops serve in Virginia is owned either by Dominion or Apco. The distribution coops distribute this power from substations that they own where the power is delivered.

            PJM is the grid operator, but does not own any transmission lines itself.

          • Thank you.

            I note that ODEC had planned to build a huge coal plant near Surry .. 1500 megawatts – 6 billion dollars…

            put on hold or cancelled???

            but does ODEC currently generate enough power to supply the member Co-ops and if they don’t – where do the member co-opts get the rest – from DOminion or PJM or ODEC which buys from PJM?

      • I’ve represented a couple of electric co-ops over the years. You are correct; they rarely generate their own electricity, but buy it and sell it. They tend to serve areas where big power companies felt customer density was too low to warrant the investment in distribution plant.

  5. Pretty good balanced article here:

    Getting from here to there
    Virginia’s energy industry looks to natural gas and more renewables as it responds to tougher federal limits on carbon emissions

    http://www.virginiabusiness.com/news/article/getting-from-here-to-there1

    • That is a good solid article found at http://www.virginiabusiness.com/news/article/getting-from-here-to-there1

      Incredibility, its underlying message remains unchanged.

      Renewables after 45 years of trying, despite all the enormous cost and time, still unbelievable command only 3% of the market share.

      And, according to the statistics, if all goes as planned (a big question mark), Renewables in Virginia will only gain another 2% of the market by 2030.

      That is an incredible record of failure and wasted opportunity.

      I am a fan of solar. I hope we find a way to make solar work.

      But lets not throw good money away after bad and drag our economy in Virginia through the mud by buying a whole bunch of something before we are sure that it works best, particularly so given our new and unexpected gift of cheap gas resources and new highly efficient generation gas plants.

      Wind is different. Wind is highly inefficient. It’s expensive. It is an environmental disaster Four Ways to Sunday.

      Outlaw wind power. Start a War on Wind for the Sake of Avian Wildlife, Humankind, and Civilization Generally.

      • Here’s why I think SOLAR — AND WIND will continue to optimize:

        Rankings: Average Retail Price of Electricity to Residential Sector, April 2015(cents/kWh)

        Rank State Average Retail Price of Electricity (cents/kWh)

        1 Hawaii 30.54

        and this:

        Mauna Loa Observatory Site –

        Average Wind Speed: 11mph
        Max Average Wind Speed: 45mph

        My “theory” is that when electricity costs 30 cents a kwh – that it’s
        a huge incentive to pursue wind and solar.

        and I’ll be the first one to admit – that right now – Hawaii (nor any other island) has successfully used wind and solar to reduce the price of electricity.

        it’s not happening yet…

  6. As concerned citizens and concerned consumers, we need to ask for the lowest possible electric rates, as well as a clean environment. Lot’s of folks including elected officials, Dominion, and now I must add Larry, may want to use the EPA CPP plan as a justification to pursue costly options, whereas the rate payer must guarantee the cash flows. I saw this happen in New Jersey, where we had probably the highest electric costs in the nation, presumably due to NJ’s aggressive build-out of nuclear in the 1970’s. Well you can see what happened to NJ’s manufacturing base, it is substantially depleted and my new home Va. has a chance in the long term to add manufacturing base if we keep energy costs lower than the rest of the Northeast. If energy is scarce we have to pay the price, but we should not self-inflict high costs, which is the tendency unfortunately.

    If we do in the future have high state elec costs, industry has for decades generated its own power just like Amazon, except natural gas cogen was the more normal choice. Yes today we can add solar to the options for businesses to generate their own power. I do not have a problem with it, because, as a consumer, I like more decentralized power.

    • lowest price – and lowest pollution.

      that’s right.

      now tell me what lowest pollution means…

      does it mean what we have right now and so price is the sole issue?

      What the EPA has done – they have not outlawed coal.

      they have set emission limits – based on health impacts.

      The folks who like coal say there is no way to meet those targets so that it essentially means outlawing coal – as opposed to setting limits on pollution.

      it depends how you want to look at it. If you’re invested in coal and you think the pollution is necessary even if it causes health impacts – you’re not going to change your focus to minimizing health impacts.

      EPA not only did that – they’ve done cost-benefits and the reality is – we’re paying for the health impacts…billions of dollars more than if we pursued less pollution.

      and I guess..no one believes it, eh?

    • Agreed.

      The good news is that today we have the means to achieve plentiful electricity at low prices (including environmental costs).

      It would be irresponsible and damaging all (individuals and businesses alike) to artificially jack up energy prices to achieve the misguided and impractical goals of special interests.

      It is remarkable how many special interests actively work to artificially drive up the cost of everyone else’s energy so as to drive out affordable power and replace it with their own vision of inefficient unaffordable power.

      In practical affect these special interest want other people to pay for the goals of special interests that will harm the very other people who will then be forced to pay for those bad policies. The best label for this actively is to call it what it is – a War on the American People and their livelihood.

      • PS –

        In this websites latest article “Zoning for Solar) by Mr. Marsh, Jim Bacon in his comments puts his finger on the technique most often used to jack up the cost of everyone else’s power by imposing arbitrary government mandates, irrespective of free market pricing.

        Another technique is to hide the cost everyone else in fact has to pay by giving away tax credits to those who produce unaffordable and inefficient power and/or for the government to give away the taxpayers money directly to those who produce unaffordable and inefficient power.

        Those government policies impose a great drag on America’s economy, killing jobs and driving people out of business. It is a classic case of ill advised Government programs that do far more harm than good yet are imposed on all the American people by reason of the power of special interests who gain huge financial profit off the backs of other people, everyday American citizens.

  7. I’m probably never going to convince Vgal2 or Tbill or others – but when Dominion/SCC commit to a technology with a 40-50 year time interval, what was their risk analysis with regard to that technology becoming outmoded before the end of it’s anticipated lifespan – it’s capital costs?

    what was going to be their plan if newer technologies came along and render their investments moot?

    We’ve got folks who are essentially blaming the EPA for pointing to advancing technologies on the horizon.

    It won’t be the EPA that does in Dominion and in turn the ratepayers.

    it will be technology – much like the way that technology that killed Kodak even as their leadership dithered about what to do.

    Cheap natural gas and rapidly advancing technologies are more likely going to what strands costs for Dominion – not the EPA.

    At some point not far into the future – Someone is going to knock on Vgal2 door and offer a solar/backup generator combo that is guaranteed to pay for itself in 10-15 years (assuming no increase in electric rates) and at that point – Vgal2 staunch defense of the SCC is going to evaporate even as DOminion and the SCC are going to go to the GA to ask for rate increases to cover their stranded costs.. being exacerbated by companies selling solar/backup gen combos.

    This is why I don’t put much stock in the SCC “analyses”.. If they actually dealt with these issues and expressed a view with respect to how long their existing investments might last compared to advancing technologies – maybe gave a best case, middle case, and worst case estimate – I’d put more stock in their views. And they could have done that without a word about the EPA, “arbitrary, capricious, illegal” dogma.

    they could have made a reasoned and non-political assessment.. of the future of electricity in Virginia…

    instead they purposely chose a bellicose approach much like DOminions approach to the pipeline.. intending to drive a wedge between those who want less pollution and those who don’t want to pay a penny more right now even if it means disaster in the out years.

    They could have written an informed and informative analysis about the preferred path for the future – even if that path was not the CPP route.

    At that point – they could have offered a competitive alternative and justified it.

    Unfortunately as has become more common in our politics – it’s not about offering a better approach – it’s about opposing the proposed one.

    and that’s the problem I have with the SCC – they’re not looking downstream… they’re defending their past decisions and making them the reason why we cannot afford to change

    so my question to the SCC is when do we change and to what? What’s the plan?

    • All technologies become obsolete. So do all plants. Typically, you do not mothball a plant before the end of its working life, unless the net present value of replacing it is cheaper than the net present value of continuing to use it.

      Older technology does not make your investment moot. Pointing out advancing technologies on the horizon is a really good thing. Planning for the advance of that technology is a really good thing. Abandoning working technology for immature new technology, when the new technology is still changing really, really fast, is not always a good idea. Sometimes you need to wait just a little bit.

      If you go back to my posts last week, what I was talking about – last week – was the game changer that PowerWall battery backup could be, if combined with solar, and that IMHO we are almost certainly looking at many, many more people generating their own power at point of use, for both businesses and individuals.

      I pointed out that the availability of a PowerWall made a generator look undesirable – and once I have a PowerWall and an inverter, then it makes solar look good as an add on. I didn’t say I was getting a generator – I said that the better battery packs made me change my mind about a generator, and open up to the possibility of solar for the house I have now.

      I also pointed out that if battery technology continues to improve, solar and wind become much more viable and the issue with fluctuating output becomes moot.

      And I also pointed out, last week, that this would change Dominion’s role from being primarily a generator of power to needing to focus on load balancing, backup, and smart grid. Please do go back and look at my notes if you don’t remember all this.

      This is, in fact, why I don’t think that the EPA CPP is the right approach. IMHO the right approach is to ride the wave, encourage individual adoption of solar and wind, which is happening now and IMHO is going to speed up fast, and to focus on what is needed if Dominion is not the primary source of power for the state.

      If battery technology improves, you may not need a combined solar/gas plant. What you may actually need may be solar with battery. And if companies and homes start generating more of their own electricity, Dominion may need less new generating capacity than you think. What you need depends on how far energy storage technology improves, and how fast.

      Take a look over at Ars Technica, which has a nice article noting that there is finally more solar capacity in individual homes and businesses than in commercial plants, and it’s accelerating.

      I don’t think Dominion’s business is going to be at all the same in ten years, and I think it’s going to be more different still in twenty. My concern is that EPA is not forward looking ENOUGH, and it’s coming up with half measures that will cost a ton, and be obsolete in twenty years. It makes more sense to be flexible, roll with the changes, and figure out the radical change – and I think it’s going to be pretty darn radical.

      I would not be at all surprised, in 20 years, if many – maybe most – of us here have home solar and/or home wind, store our excess power ourselves in battery packs, use them to tide us over during outages – and use Dominion primarily to load balance, maybe sell back excess power, and only pull power from the grid in cases of equipment outage.

      • Tesla’s Powerwall is certainly shaking things up, but they are still quite expensive. The near term plan is to incorporate them in future SolarCity residential solar installations, as well as to sell then in Australia and Europe.

        It is a more optimal to a have larger, less expensive (per unit of energy) battery installed by a utility (or a third party provider as is being considered in New York) that provides storage, load balancing, perhaps volt/var regulation and is paid for that service. Perhaps these are installed for a microgrid or a group of neighborhoods. This way customers receive the greatest benefits at the lowest possible costs.

        We are in the midst of this revolution right now. In order to have the grid services that we will need in 2-3 years, we must begin today. And the SCC must create the regulatory structure for utilities or third-parties to be properly compensated for these services. It requires a complete shift from our 100-year old way of dealing with the energy business.

        If we don’t do this now, we will have an inexpensive, yet inadequate system, while our prime employers seek better locations.

        • At 3,500 a pack, with I’d guess 2-3 needed to replace a whole-house generator, they’re pretty comparable in price with the big generators. Last time I checked the Tesla website, they’re sold out through 2016. They’re definitely being marketed for home use. Price does not include inverter, which you would have already if you have solar.

          I think a lot of the appeal, and why they’ve sold so well, is that they aren’t ugly, and they don’t take up a ton of room – they look quite suitable to mount in a garage or utility room (if not damp.) They can be mounted without looking hideous, and the design means you don’t lose a lot of space.

          I haven’t seen anything comparable offered by a utility company or other vendor – what I’ve seen offered for solar backup is typically big, takes up lots of space, and is really ugly. This isn’t. Never underestimate the value of good design.

          I’m including a link for those who haven’t seen it – http://www.teslamotors.com/powerwall

          There may be other similar products just as good or better, and it may have caveats that make it impractical for now – but this is the first one I saw that I really liked – and liked to the point that I got really excited about it.

          Totally agree that this and other changes are going to completely change what we need from our utilities, and also totally agree that change is coming faster than planning for the change.

          • thanks for the link. It’s 3500 for 10kw.

            Don’t know about you guys but my bill says 40kw and more per day.

            that’s 14K .. not counting the SOLAR! and these batteries – they do go bad – they have 10hr warranties..

            and if you think about it – that’s EXACTLY what the SCC is saying –

            they’re saying that the cheapest generation – by far – is coal.

            and they are opposed to anything that costs more…

          • New coal isn’t really an option in the U.S. anymore, especially in the heavily populated east. With the EPA’s mercury and arsenic limits (MATS) old coal will be retired early and new coal will have costly extra scrubbers added to remove these elements. The courts have upset the implementation of these regulations a bit, but they are coming. Although the U.S. coal company stock valuations have been very hard hit, they still have an overseas market.

            I think there just might be a push to delay the phase out of existing coal units. They are paid for and can be used for peak and intermediate generation. But if we buy extra time with these units, it will be at a heavy price in pollution and GHG. Load reduction measures would be much cheaper and less polluting.

            But the domestic market for new generation has been taken over by natural gas and renewables. (We need much more attention to energy efficiency. it is the cheapest option of all).

            There are proponents for nuclear, partly because of the lack of CO2. But these will be the most expensive units of all; despite being the most heavily subsidized of any form of generation (100% federal loan guarantee, without which there would be no chance of building one). Nuclear plants just cannot make the grade economically. They are 6-8 times more expensive than equivalent gas-fired plants (assuming you could really get one built at the stated cost). The one under construction in Norway is being built by a very experienced french contractor and after 28 months it is already 24 months behind schedule.

            The fuel savings, which once was a major selling point, is beginning to disappear. Over 65% of fuel for U.S. nuclear plants is now imported and selling at a much higher price. Assuming you could build one at an affordable price, no insurance company will insure its operation. Dominion is keeping it in their IRP, but pushing it back because I don’t think they know what else to put there.

          • wow – that’s a relatively tiny unit to power the whole house! I’m pretty skeptical… but I bet it doesn’t scare Dominion much.

            but it got me to thinking a little .. in terms of capital costs.

            here you have the Tesla unit and solar which I think will run 10-20K and up… that’s a hunk of money.. but if you amortize it over 10-20 years.. maybe not so bad.

            but few people will pay up front for lower costs downstream.

            but if we calculated the capital facility costs for Dominion on a per household basis – in Va – what would it be?

            so let’s take an example:

            Dominion Resources Inc. announced today that it plans to build a 1,600-megawatt natural gas-fired power plant in Southside Virginia.

            The company said the plant would cost about $1 billion and that it could power 400,000 homes when operating at peak capacity. ”

            that’s about $2500

            ” Dominion Virginia Power Proposes Building $1.1 Billion Power Station in Brunswick County

            With a generating capacity of more than 1,300 megawatts, the station would produce enough electricity to power more than 325,000 homes”

            That’s about $3000 per home.

            the planned (defunct?) ODEC Cypress Creek COAL PLANT

            6 billion dollars and 390,000 homes.

            Ouch ! that’s more than 15K per home!

            that would be $100 a month per home for more than 10 years!

            looks like a coal plant costs way more than a gas plant!

            no wonder Dominion and the SCC are antsy about stranded costs!

            but going back to the Tesla/solar combo – based on a 10 year time span – you’d likely be paying $150-200 a month for electricity…and if the units lasted longer than 10 years – say 15-20 then maybe under $100 a month – …

            and of course that’s before you get into whether you get a loan – and pay interest – or use saved money – and forgo it earning interest – opportunity costs.

            so I’m not that surprised. After all if Hawaii pays 30 cents KWH – you’d think they’d be the earliest of the early adopters of technology to reduce that cost.

          • Vgal2 – I’m thinking you would need a BANK of these critters for most homes. Perhaps you are a super frugal type who keeps the air on 80 and hangs clothes out back to dry, etc..

            we try to be frugal but 80 is too high and occasionally will clothesline for drying.. but the fridge stays at 43 and the freezer below zero…

            If I had a way to fingerprint each device in terms of it’s actual usage, I would as I am convinced that one or more devices right now are energy hogs.

            For instance, how many of us actually know how much power the heat pump/air conditioner is using on a daily basis? Could you convert to dollars – how much it costs to run your heat/pump on a 90 degree day?

            electricity is dirt cheap in Virginia compared to many other places… especially islands with no native fossil fuels – that have to import fuel – usually plays out to 40-50 cents a KWH – easily 4 times what we pay in Va.

            so – you’d think the Tesla thing would have huge interest anywhere where electricity costs 40 cents a kwh and they would become the early adopters, right?

            so I’d watch them… to see what they do as a guide to my own considerations.

        • TomH – you are more articulate than I on these issues!

          and you have nailed the issue – succinctly.

          Vgal2 thinks she can just leave Dominion when the technology she likes comes along.. I think she’ll end up “owing’ Dominion and as long as she is connected to their grid – they’ll get their pound of flesh.

          so I’m a skeptic that we’re going to get the kind of technology that allows us to completely disconnect from the grid.

          At the end of the day – Virginia is not going to let Dominion be seriously economically damaged. They will put those costs on Virginians.

      • “All technologies become obsolete. Typically, you do not obsolete a plant before the end of its working life, unless the net present value of replacing it is cheaper than the net present value of continuing to use it.”

        we agree.. what is the net present future value of coal plants?

        “Older technology does not make your investment moot. Pointing out advancing technologies on the horizon is a really good thing. Planning for the advance of that technology is a really good thing. Abandoning working technology for immature new technology, when the technology is changing really, really fast, is not always a good idea. Sometimes you need to wait just a little bit.”

        agree. why are other states moving ahead and we are not?

        “If you go back to my posts last week, what I was talking about – last week – was the game changer that PowerWall battery backup could be, if combined with solar, and that IMHO we are almost certainly looking at many, many more people generating their own power at point of use, for both businesses and individuals.”

        I do remember. do you think it will never happen or happen suddenly?

        “I pointed out that the availability of a PowerWall made a generator look undesirable – and once I have a PowerWall and an inverter, then it makes solar look good as an add on. I didn’t say I was getting a generator – I said that the better battery packs made me change my mind about a generator, and open up to the possibility of solar for the house I have now.”

        I don’t think I’d put my eggs in a 100%, fail-safe power-wall … myself

        “I also pointed out that if battery technology continues to improve, solar and wind become much more viable and the issue with fluctuating output becomes moot.”

        you mean for residential solar – right?

        “And I also pointed out, last week, that this would change Dominion’s role from being primarily a generator of power to needing to focus on load balancing, backup, and smart grid. Please do go back and look at my notes if you don’t remember all this.”

        I remember it all.. do you think .. that such an outcome would change the dynamics for “stranded”?

        “This is, in fact, why I don’t think that the EPA CPP is the right approach. IMHO the right approach is to ride the wave, encourage individual adoption of solar and wind, which is happening now and IMHO is going to speed up fast, and to focus on what is needed if Dominion is not the primary source of power for the state.”

        you think Dominion is not going to be the primary power provider and that’s why you don’t think CPP is the right approach? so you think both the EPA and Dominion are going to be overcome by technology events and they can’t plan for that?

        “If battery technology improves, you may not need a combined solar/gas plant. What you may actually need may be solar with battery. And if companies and homes start generating more of their own electricity, Dominion may need less new generating capacity than you think. What you need depends on how far energy storage technology improves, and how fast.”

        I’m an optimist but not that much of an optimist. I guess if you’re going to dream – fine – but tell me what Plan B is if your dream takes longer to come true.

        “Take a look over at Ars Technica, which has a nice article noting that there is finally more solar capacity in individual homes and businesses than in commercial plants, and it’s accelerating.”

        I’m a believer! you don’t have to convince me! I’m worried that we’re all going to end up losing money because we’ll be paying for Dominions stranded investments!

        “I don’t think Dominion’s business is going to be at all the same in ten years, and I think it’s going to be more different still in twenty. My concern is that EPA is not forward looking ENOUGH, and it’s coming up with half measures that will cost a ton, and be obsolete in twenty years. It makes more sense to be flexible, roll with the changes, and figure out the radical change – and I think it’s going to be pretty darn radical.”

        Geeze Vgal2 – it’s DOMINION and the SCC that is holding on to COAL and caterwauling about stranded investments!

        “I would not be at all surprised, in 20 years, if many – maybe most – of us here have home solar and/or home wind, store our excess power ourselves in battery packs, use them to tide us over during outages – and use Dominion primarily to load balance, maybe sell back excess power, and only get on the grid in cases of equipment outage.”

        You may be right and on your utility bill with be a charge of 30.00 for “stranded investment”. Whatever you save with the new technology – half of it will go to pay Dominion for their lack of longer term planning!

        • “we agree.. what is the net present future value of coal plants?”

          Off the top of my head, that’s calculated along the line of revenue stream, times years useful life, minus costs for that time period, and there’s a factor you have to multiple the result by to calculate the present value – it adjusts for the value of a dollar now versus a dollar later. Oh, and years useful life is generally calculated by years where revenue minus costs is greater than a threshold.

          I do agree we need to keep moving on smart grid – VA started it early, but it’s not in place all over and we’re not a leader like we should be. Wanted to be sure you knew I agree there.

          I think people like the idea of generating their own power, whether it’s their home or their business. People (including me) feel like things are kind of out of control – if I can pay a little more for a little more certainty, I don’t have to worry quite as much about energy prices tripling when I’m an old lady. I don’t want to be old and have to hold the thermostat to 50 in the winter and 85 in the summer. I’m not saying “kill a tree” ethos, but “don’t freeze or cook” would be nice.

          Better energy storage affects both plants and home – being able to store fluctuating power is kind of the Holy Grail for renewables. Most of the research probably won’t pan out, but some will. Some already has, but it isn’t all the way home yet.

          I think if solar gets cheaper, and battery storage gets better, more and more people will want solar. I think if there is a significant move to individual power generation, it affects the amount of plant capacity Dominion needs. I do think it changes the dynamics for stranded – if you can get a little more life out of existing plants, you can buy a little time to see which way the wind is blowing and what will last. I do not see new coal or for that matter nuclear going online and I’d strongly expect they should offline the dirtiest plants first.

          Right now, the home market is IMHO going to be partly the same people who buy whole house generators plus the people who buy hybrid cars – people with disposable income – who see it as offering energy during blackouts, with the added cachet that supporting green energy is seen as an intrinsic good.

          I think Dominion is going to be generating a lower percentage of used power in the future, yes. Some possiblity of much lower, or even very much lower. I don’t think Dominion wants it to happen, and I don’t think EPA yet really believes it will happen without coercion. I think it will happen even if no one is pushed.

          Plan B if that shift doesn’t materialize fast enough is simply, replace with the best technology you have at the logical time of replacement. Best and logical includes allowing for greenhouse gas effects and considering price. If it’s solar and gas, use solar and gas. If it’s wind and battery, use wind and battery.

          Also, how much of this can be done outside of the framework of CPP? In other words, if the state gives tax credits, and Amazon, say, decides to generate their own power with solar or wind, can we get credit for that carbon reduction? Does it all have to be carbon reduction through Dominion, or can we bypass Dominion? Does reduction by personal solar install count?

          Agree we’ll all probably get hit up for stranded investments regardless.

          • All things equal – and they never are – Virginia ratepayers will inevitably pay for Dominion’s stranded costs… bottom line. It may be done in a creative and obtuse way…

            And as this excellent discussion has pointed out – Dominion has long ago hedged their bets on 3rd party and other would-be innovators at the GA level some time ago. Give Dominion credit – they DID see the future!

            Normally a state agency regulating a utility will find itself in an adversarial position trying to sort out conflicts between investor-owned monopolies and customers/ratepayers.

            In all fairness we did try de-regulation – and it did fail.. but being a suspicious person sometimes , I wonder if it was customized to Dominion’s liking and failure was not seen as a bad thing because once dead -it could be used in the future as a reason not to go back.

            But just as Virginia will not let it’s citizens initiate referenda – leaders pretty much have a view that the “Virginia Way” means doing what is best for citizens – those decisions relegated to those with the knowledge and capacity to make informed decisions in the best interests of the less so – if you get my drift.

            Dominion and their allies in the GA are way, way ahead of would be innovators…!!! It’s like when folks fight the gate closed – that said gate was not locked recently – but long ago.

            The question is – is Dominion too smart for their own britches on some of these issues. Should they be leading the innovators or blocking them?

    • Oh, and PS – I’ll repost this – http://www.ecocapsule.sk/

      Itty bitty house-let with built in solar and wind, and rain cache.

      If it just had air conditioning ….

      • vgal2 – what about water/sewer?

        these “little house” folks are not of the real world sometimes.

        and have found that folks who move from the city to the rural – don’t even know what a septic tank and drain field are sometimes. They think it’s city sewer! and they are shocked when they find out why their water has minerals and other smelly components in it … not already removed and they actually have to put in a filtration system …!!!

        Oh – one more thing In this world of ubiquitous and nasty govt regulations – there is not a single one (in Va) if you get your water from a private well… (other than the initial drill).

        once the well is built – it’s totally and completely up to you to insure the water in it remains fit to drink.

        Now that’s all the more amazing if you think about how close your well is – to your drain-field and what goes into your drain-field and how it then migrates down to your well..

        Just imagine what life would be like if wells and drainfields were not allowed because of health concerns!

        • It’s not meant to be a primary residence unless you’re one of the tiny house people – and even then, it doesn’t have a foundation or even a tie-down, that I can see, so good luck in hard weather.

          It comes with water cache and filtration, and a composting toilet.

          Basically intended as something like a weekend getaway / housing for relief workers after emergency / place to live while your real house is built / or put it on wheels for a weekend travel home.

          I like the idea of non-huge houses (there’s a nice book called the Not So Big House) and I think the teeny weeny houses are charming, but I expect a lot of people who move into one full time (rather than temporary or weekend) are not totally thrilled long term. It would be like living full time in a pull trailer – in fact, some of them are essentially pull trailers.

          Still really cute, and a cool idea.

          • or you get a mobile home or an RV and put it up on blocks.

            onboard composting toilets.. I’d have to think on that.. usually you want them nearer to the earth… RVs have black water tanks that need to visit the sanitary dump station.

            water – 5 gals weighs 40lbs.. many RVs have about 20-40 gals on board.
            filters are modern things… and “horrors” not re-usable. they’re disposable!

            I like the charm of simple living – like in a mountain cabin.. or even an Adirondack shelter on the trail but make no mistake water and sewer are front and center in terms of necessities.

            composting toilets are not what the Park and FOrest service typically use in the US – they use tanks that are pumped… in part because composting toilet need a lot of footprint per pooper.. and campgrounds have way too many poopers for a smallish toilet area.. it would have to be much larger.. then the other problem is people and how they dispose of things… that do not belong in the toilet whether it is compost or tank.

            people are not good poopers.. in general unless they have a magic porcelain pipe to somewhere away from their living area!

          • virginiagal2

            I think it’s meant for 1 or 2 people, and for most uses, not as a primary home. Which means less waste to dispose of.

          • but the undeniable truth of the matter is………

            that poop is poop no matter how you view it.

            😉

            we camp on multi-day river camping trips . some times 5, 6, 7 or more. we parcel out the work, supper, dishes, latrine….etc

            Latrine duty involves finding a good site that won’t pollute the river, but has foliage cuz the gals are particular about being seen or not… and finally how big a hole to dig.. which is an interesting subject… with lots of good learning experience for those who underestimate and then have to go back and tidy up… dig new holes, etc…

  8. I just caught up with this post. Whew! So many good thoughts and opinions. We need a robust conversation about our energy future here in Virginia. Crucial decisions are being made now and over the next few years that will govern our energy future and economic climate for years to come.

    Utilities have historically been paid to build things. Power plants, transmission lines, pipelines, etc. The regulators would set rates that would repay the initial investment, cover operating costs and provide a reasonable return to shareholders. This system worked well for over 100 years.

    For the last seven years, electricity use in the U.S. has been flat or declining (look at Dominion VA’s revenues for the past 5-6 yrs). This has disrupted the traditional business model for our investor owned utilities. States who foresee both the threat and opportunity in that change are aggressively discussing ways to reshape the energy landscape in their states. Virginia thus far has elected the business-as-usual approach.

    By far the cheapest way to provide more energy is find ways not to use it. Energy efficiency measures and innovative demand response programs yield $2 – $8 for every $1 invested. Unfortunately, in most rate schemes utilities do not get paid for this – it just makes their problems worse (less revenue). But regulators can create new ways for utilities to be paid for energy services.

    The distributed energy revolution is also stressing utility systems. Smaller, customer-located generation will ultimately provide a less expensive, more reliable and resilient system. In the meantime, it is straining our aging distribution infrastructure. But the grid needs to be modernized anyway. Why not seize the opportunity to do it in a way that creates many opportunities to provide energy at a lower cost.

    Gas-fired micro-turbines located in industrial plants or office complexes can extract 85 -90% of the energy from natural gas. Far higher than the 50%+ efficiencies with the best gas combined-cycle plants that Dominion is developing. These units also provide heating and cooling services as well as producing electricity. Because they can be controlled remotely from a central power control center and respond instantly to changing output, they are perfect complements to distributed solar installations.

    A plan based on energy efficiency and renewables could allow Virginia to be the low-cost energy provider in the southeast. But only if that was enthusiastically implemented by Dominion and supported by the SCC.

    We are on a path to a high energy cost future in Virginia and the loss of jobs and economic vitality that follows. The low-cost gas from the Marcellus shale formation that Dominion is counting on to fuel its three new gas-fired power plants will reach a peak of production in 2018 – 2020 according to two in-depth, independent studies. The push throughout the U.S. to burn more gas in power plants and to export LNG (Dominion’s Cove Point facility) will cause our supply of affordable gas to disappear even more quickly. More gas will be available, but only at much higher prices.

    Currently a public review of Dominion’s financial situation and plans are postponed until 2022. Other states such as New York are vigorously discussing the ways to revamp their energy system and create winners at all levels. If we don’t convene a similar conversation in Virginia we might see our leading companies slip away to other states.

    Solar is already here. Over 50% of all generating capacity added in the United States in the first quarter of 2015 was solar. Prices are estimated to fall by 50% over the next 5 -6 years. Two large solar facilities in Texas and Nevada will provide electricity at $0.04 /kWh which is below the price provided by the new Dominion plants even before the price of gas goes up.

    For utilities, stranded costs are real. Typically, it takes 20 -25 years to pay off the debt for construction, but the useful life is expected to be about twice that long. The 1358 MW facility under construction in Brunswick Co. due to begin service in 2016 is expected to run 24 hours per day (a base load plant). If natural gas prices go up significantly, it will be placed farther down the economic dispatch list at PJM and won’t run as much as projected, reducing Dominion’s economic return.

    New gas-fired plants are not covered in the current CPP, but when they are covered by the plan, Dominion might be faced with additional CO2 abatement charges in the future. What happens to our rates and Dominion’s financial condition when the centerpieces of its generation plan don’t perform as expected?

    We need an active energy conversation in Virginia, not just one dominated by a few parties. The stakes are too high, the choices too numerous. If we delay, we will be on our way to second tier status as other states assume the lead. Wouldn’t it be nice if the SCC developed ways for the utilities to prosper when they lowered your bill?

    • LarrytheG:
      You make note of the experience in Hawaii. That is a good example. I lived on Kaua’i for five years when the rate was “only” $0.22 /kWh, rates on Oahu were higher. We created our own co-op and rates came more under control. Oahu and Maui and the big Island kept their investor owned utilities. With rates this high you can imagine that solar was competitive, but the utilities would not allow it to be connected to their grid for fear of “stranded costs”. People installed solar hot water systems but could do nothing except go off the grid and battery technology was not yet economic or reliable.

      Now the Hawaiian utilities are in disarray and are in danger of mergers, acquisitions or being replaced by co-ops. With the availability of systems such as the Powerwall (remember the prices you see listed are wholesale prices – you still need installation and balance of system components to make them functional), people are considering going off the grid completely just to stop the nonsense dealing with the utility. Those that can afford it are doing so. Those that can’t will pay even higher costs because the utility will have fewer and fewer customers over which to recover their costs.

      This should certainly be a cautionary tale for Virginia. The circumstances are unique in Hawaii but it shows the damage that can be done when a short-sighted regulatory body and a short-sighted utility work in tandem. This did not have to happen. By trying to protect the status quo, they created chaos.

      The cheapest option by far would have been to create rates that allowed the utility to prosper while allowing third-party installation of residential solar. Costs to improve the grid could have been put in the rate base and investments in storage, voltage regulation and other services could have been profitable as well. Now everyone is losing. Utilities cannot be rewarded for ignoring changing conditions. But they do need to be encouraged and shown that there is a profitable role for them in a new energy landscape. An integrated, modern, intelligent grid with room for utility and private providers is far less expensive and more resilient than a bunch of individual customers isolated with their own systems, with a small group of remaining customers who are unable to pay.

      Dominion seems to have the ear of the SCC, I don’t know who else could carry the message that we need to deal with this issue without delay.

      • Tom, what are the legalities involved in forming a coop? Can a neighborhood have one? An office park? Is Dominion required to allow you to attach to the wider grid? Are you required to do so, permitted to do so, or do you have to be stand alone?

        • Out of concern for the lack of forward thinking by Dominion and the SCC, I was working with one of our city councilman to investigate setting up a municipal utility. We are in Dominion’s service territory. Dominion has had a law passed which makes it illegal for a municipal utility in Virginia to sell electricity at retail, effectively ruling out the formation of a new municipal utility. Existing coops serve the territory in Virginia that is outside of the service territories of the investor owned utilities (Primarily Dominion and Appalachian Power Co. and a little bit of DelMarVa Power). The SCC governs the IOU’s and the coops but not municipals (if you could create one).

          We wanted to demonstrate all of the things we that we have been discussing and be a source of data and model results for Dominion and the SCC to use for deciding how to develop a rate structure for Dominion to successfully move into this new era. We thought it would be easier and quicker to do on a small scale without the time delay of regulatory oversight. Then they could take our results and decide how best to proceed on a larger scale with Dominion.

          I was shocked and saddened to discover that a right that exists in every other state that I am aware of – is denied to us in Virginia. To me this is the cradle of liberty. The birthplace of the author of our Declaration of Independence. The land that gave us four of the first five Presidents. I could not believe that our state legislature would deny such a basic choice. But that is the way it is at the moment.

          Could you form another coop within the territory of a coop? I don’t know. But they serve the rural areas where the IOU’s didn’t want to go, so it may be more difficult to do these more innovative programs in less dense population areas.

          If you need to make any connection to Dominion’s grid to gain access to wholesale power or provide an emergency source of power, it seems Dominion makes all of the rules.

          • virginiagal2

            What if you want to be a private coop? Like a neighborhood association? or tenants of an office park?

            I’m not surprised.

  9. Virginiagal2 –

    What is the name and reference to your “posts” last week? I missed them.

    Meanwhile thanks for your valuable insights.

  10. As said earlier, I was shocked to learn that renewable energy comprised only 3% of the US market in the year 2000 after 30 years of effort to get it going.

    I was shocked again to learn the day before yesterday that renewable energy comprised still only 3% of the Virginia market after now 45 years of effort.

    Now Virginiagal2 comes along with her remarkable findings so articulately described, well analyzed, and thoughtfully interpreted. Well Done!

    Then TomH puts on his shiny gloss on the whole matter of his version of a soon to be upending revolution of life in America all of it akin to Einstein’s annus mirabilis!

    What’s an old guy to think?

    Not sure.

    But suspect now is the time for healthy skepticism. Demands for deeper proofs, as Virginiagal2 suggests, most likely are in order.

    (But still really like that little tiny 2nd home with propeller though)

    Remember Galileo’s and Kepler’s stuff didn’t come along until around 1600, some 100 years after Copernicus, and even that wasn’t pulled together by Newton till around 1700!

    That’s a total of 200 years of hard work by four very smart and obsessed folks, and here we are talking about upending the last 100 years of commercial electric power in this country (the original home of electric) during a slow month of July, 2015. That’s a tall order.

    Of course, Jeff Bezos has upended books (how they are made, purchased and read) and flipped over public Libraries, all in little more than a decade. And Jeff is on this case now, too!

    Time, by and large, moves a great deal faster now carrying with it massive data and information, and, although knowledge goes slower now however faster than before, by all appearances wisdom now goes in reverse.

    So let’s be careful here.

    A lot of questions need be asked an answered.

    For a two of many:

    What is the real cost of solar power being built and generated today after subtracting all the hidden costs put on taxpayers, for starters.

    Why are gas resources here given the half life of one afternoon’s breeze?

    • Slightly off topic – I think the little pod looks like an itty bitty propeller beanie – just really cute. Not sure how much actual wind power the little tiny turbine would generate.

      I can think of 3 real life situations where it might have been useful to me or my family – (1) when my dad bought lakefront property that didn’t have a house yet, and we didn’t want to stay in a tent, so we didn’t go very often – (2) when another relative bought land for a mini-farm, and put horses on it before the house was up – and (3) when we (spouse and I) were looking at property for a small farm, and were trying to figure out where we would live if the old house sold faster than we could get a new house and outbuildings up.

      I don’t think it’s meant as a primary home.

      • yup – all valid temporary uses –

        I’ve seen folks do that and put in the well & septic first to serve the temporary dwelling that then makes it much easier to get the main structure down without feeling rushed… or some folks – they build it themselves over time using the temporary dwelling until the big day.

        we’ve had a couple of kerfuffles in our own subdivision when folks wanted to do just that and had to promise to remove the temporary dwelling later.

      • Well, there has gotta be a major market for these solar and wind powered Metallica sheathed 2nd home eggs designed & engineered in Slovenia by Slovenian millennials for America’s recently graduated college youth.

        Here I’m talking about those young Americas who must return home to their parents place, given their lack of a job due to our poor economy, and/or their lack of skills or learning needed for an entry level job due America’s failing educational system, and/or for lack of motivation or emotional maturity due to America’s failing culture and society.

        If local zoning laws allow such Slovenian eggs in US parent’s back yards, these folks will have hit a home run.

        • Love your description! It is super-trendy – even got the front page of CNN’s website and a tweet from Susan Sarandon. Whether that translates into a business model or not, it got a lot of attention.

          Localities have recently been changing zoning to allow for granny pods, which are a bit larger and fancier than these. Who knows, maybe they’ll do it for slacker pods too.

          Although, honestly, if I had kids boomeranging back, I would not be putting them in housing that didn’t have its own washer and dryer.

    • in terms of solar growth – might want to keep a objective view:

      In the U.S., Solar Energy Has More Than Doubled Since Last Year

      http://goo.gl/BLO8ON

    • Reed Fawell 3rd

      Why are gas resources here given the half life of one afternoon’s breeze?

      Reed, this is probably the most important issue for us to discuss in Virginia. Dominion is committing billions of dollars on projects such as three large gas-fired power plants (4200 MW between 2014 and 2019), a $5 billion dollar pipeline and a $3.8 billion Liquefied Natural Gas (LNG) facility in Cove Point, MD. All of these projects receive their economic justification from the assumption that we have a long-term supply of affordable natural gas.

      This is a long, complex story, but I’ll try and keep it short (I know – I have trouble with that).

      In the 90’s gas was cheap ($2 per thousand cubic feet – mcf). The easy money of the 2000’s boosted the economy, demand for natural gas rose, our conventional wells started to run out, we started to import natural gas, and prices skyrocketed to $13.50 mcf in 2008.

      High prices allowed us to use an expensive technique called “fracking” to extract gas from shale formations. Shale gas wells rapidly declined in production within the first few years. Drillers had expected the wells to decline over decades the way conventional gas wells had performed. Now they were deep in debt with much lower than projected revenues to pay off loans. They had to continue drilling (even at a loss) to generate enough cash to service the debt. With a surplus of supply and an economic downturn, prices plummeted (down to around $3 mcf).

      In the early days, the Department of Energy’s Energy Information Administration (EIA) published information about the projected shale gas resources in the U.S. (Resource is what is in the ground – no price is attached and it might not even be technically possible to recover it – a reserve is the amount of a resource that can be brought to market at a certain price.) These numbers were exaggerated by many who said that we now had “100 years of natural gas” in the U.S.

      With the housing market crash, Wall Street investment banks looked for new profit opportunities. They found the struggling shale gas drillers and repackaged their drilling leases in much the same way they had repackaged mortgages (with misleading information making them out to be good investments). A large share of the leases were sold to foreign investors who were experiencing the peak of world oil prices in 2011 and thought they were getting a long term source of cheap gas. This second group repeated the experience of the first.

      To keep their scheme working, the Wall Street bankers continued to trumpet in the press what an “energy bonanza” the shale gas plays were. The investment banks made huge sums through their mergers and acquisitions departments helping the ailing second group of shale gas developers find strong partners to bail them out. They helped these companies take huge write-downs on the investments that the bankers had promoted as “safe” just a short time earlier.

      In the meantime, drillers kept drilling in order to pay their debts. And prices fell further still; which many interpreted as proof of a large source of cheap gas.

      This challenging situation forced developers to get very efficient and focus on only the most productive locations. Some made money.

      The Marcellus formation is the largest of the shale gas formations in the U.S. covering most of Pennsylvania and West Virginia. Dominion has built 11,000 miles of gas pipeline in this area to gather natural gas from the wellheads and move it to storage locations and natural gas liquids processing plants (which Dominion owns). Much of this area is still not well connected to the national pipeline system (it will be in 2017), so the growing supply gets stranded. When you have more than the market needs, the price goes down. But the drillers had to keep drilling to pay the debts.

      With all of the hype and uncertainty about the true size of the shale gas resource, independent studies were undertaken. A three year study conducted by petroleum geologists, geoscientists and resource economists at the University of Texas was funded by the Sloan Foundation.

      The Texas team analyzed plots of one square mile in the major shale formations and used actual well performance information. The EIA assessed entire counties, hundreds of square miles, and assumed that all future wells would perform the same as the first wells had (usually the best prospects are drilled first). But this approach, the Texas team argues, “leads to results that are way too optimistic”.

      Dr. Patzek, head of the University of Texas at Austin’s Department of Petroleum and Geosystems Engineering, and a member of the University of Texas research team, says that after the peak of production from the shale gas plays, “there’s going to be a pretty fast decline on the other side”. “That’s when there’s going to be a rude awakening for the United States.” He expects that gas prices will rise steeply, and that the nation may end up building more gas-powered industrial plants than it will be able to afford to run.

      Much of the U.S. energy policy is now geared towards rapidly increasing our amount of gas-fired generation. Many others, including Dominion, are hoping to profit by exporting the abundant cheap natural gas to Europe and Asia. These new demands on top of our traditional uses will use up our gas supplies even faster.

      An in-depth study was done using actual well data from all of the wells in operation in 2014 (in Pennsylvania – 85%+ of the Marcellus production). Some of the findings are as follows:

      • Field decline averages 32% per year in the Marcellus. Over 1000 new wells are required each year just to maintain production levels.
      • Drilling is concentrated in the top counties which have the greatest economic payback; the cheapest gas is being produced now, leaving the expensive gas for later.
      • Better technology is no longer increasing average well productivity in the top counties. This is a result of either drilling in poorer locations or from well interference – where one well cannibalizes another well’s gas.
      • Current drilling rates are sufficient to keep Marcellus production growing until its projected peak in 2018, followed by a terminal decline (which assumes gradual increases in price; sudden major increases in price could temporarily check this decline if reflected in significantly increased drilling rates).
      • As for the massive investments in infrastructure on the assumption of cheap and abundant gas for the foreseeable future – CAVEAT EMPTOR.

      This doesn’t mean that we run out of gas. It just means that if we want more gas it will be much more expensive. Does it really make sense to send our affordable gas to other countries? Does it make sense to invest $3.8 billion on a LNG project that will take 20+ years to pay off, when it might only be profitable for a few years? Who pays when it doesn’t work out?

      The head of the University of Texas team remarked, “we’re setting ourselves up for a major fiasco”. “The bottom line is, no matter what happens and how it unfolds,” he says, “it cannot be good for the US economy.”

      The CEO of Dow Chemical and the head of an industry group representing U.S. manufacturers with a combined $1 trillion of annual revenue have argued that these energy policies will cost Virginia thousands of its 231,000 long-term manufacturing jobs.

      Are our politicians and policy makers aware of this? If this is our future, it can’t be good for Dominion or its customers. This is not a time for good people to be silent. There are many good ideas and ways of doing things. The current proposals don’t seem to be among them.

      • One presumes that if 3 companies are willing to invest billions of dollars in pipelines that they expect to get their investments back and some profit.

        On top of that they think there is more than enough so they can export the excess.

        So which is it? Is DOminion and the others gambling that we’ll not run out of gas in a decade leaving no fuel for all these plants they are now building?

        It sounds irresponsible as all get out.

        Is Dominion really that irresponsible ?

        When the gas runs out – what happens.??? for electricity? back to coal or Nukes?

        gas is the only fuel that is truly dispatchable. Coal and Nukes are baseload

        • The gas won’t run out – it will just get more and more expensive to extract.

          The new gas-fired units are all designed to be baseload facilities, that is they will run 24 hours a day ( about 70 – 80% of the possible hours in a year after accounting for scheduled and unscheduled maintenance). But they are more flexible and can more quickly respond to dispatch orders than can nuclear or coal. The older, more expensive to operate units will become the intermediate and peak load units running only when necessary to meet demand. The nuclear and fossil fueled units are all “dispatchable”, meaning that you can run them when you need to – as opposed to solar and wind which only generate when the sun is shining or the wind is blowing.

          • re: more expensive

            than…. other fuels? coal, nukes, what else?

            also – how long before it gets a lot more expensive?

            it still seems that before Dominion would commit to billions of dollars for new plants and a pipeline -they’d have some idea of the financials for the next 20-30 years..

            finally – if grid electricity gets more expensive – what will happen with
            consumers and rate payers?

          • how long before it gets a lot more expensive?

            It really depends how quickly we ramp up the non-traditional uses such as power plants and LNG exports. Many utilities, not just Dominion, are building new gas-fired plants to replace the coal and old nuclear plants that are being retired. If some are those are slowed down by energy efficiency measures or replaced with renewables the affordable gas will be around a little bit longer.

            Sabine Pass in Louisiana, the largest LNG facility, is under development now. The Cove Point LNG plant that Dominion is developing was formerly an LNG import facility and it is being refitted to export LNG. It is planned to open next year. The export markets are uncertain so it’s not clear how much gas will leave our shores. When Marcellus hits the peak of production of affordable gas in 2018 -2020, I would expect to see prices increase shortly after that.

            Increased fuel costs will pass directly through to customers without any action on the part of the SCC. So electricity rates could go up. It depends on the actual cost of generation from the new units vs what they were paying for power from other sources before the new unit goes on line. As prices go up around the country, everybody will pay more.

            It is not an encouraging scenario. Dominion will have the fixed cost of a power plant to pay off for 20 – 30 years and who knows what the price of fuel will be versus a known price for building renewable facilities with no fuel costs. These aren’t exactly apples to apples comparisons because the renewables are not baseload dispatchable power. But what if they could displace two of the three gas-fired units. That would provide a huge cost savings in the long run to Dominion customers. Dominion could have a more reliable rate of return and Virginia would have a lot more jobs.

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