SCC Says Dominion Must Seek Third-Party Solar Alternatives

solarThe State Corporation Commission has nixed Dominion Virginia Power’s proposal to construct a 20-megawatt solar projects near its Remington Power Station in Fauquier County, stating that the power company must first see third-party alternatives.

In its final order, the Commission said, “As a ‘small renewable’ solar project, the Remington Solar Facility is one type of generation resource that the General Assembly has identified as in the public interest. … The General Assembly, however, has not declared it to be in the public interest that renewable power can only be obtained from the applicant’s own self-built project … or at any price, no matter how burdensome to consumers.”

The estimated cost of the proposed facility would be $2,350 per kilowatt, and its capacity factor (the percentage of time that it would operate) would be 22 percent. “The comparatively high cost to consumers and low capacity factor … underscore that serious and credible efforts, as required by the General Assembly, must be made to determine whether lower cost alternatives for obtaining renewable power are available in the market from third parties.”

Dominion issued the following response:

We are disappointed in this setback in our efforts to add  renewable energy. We believe we have shown this project is among the most cost-effective ways to add solar generated capacity in Virginia. Large-scale solar is needed in order to meet new federal carbon rules, diversify Dominion’s fuel mix and support bipartisan legislation passed in the General Assembly and signed by the governor, to build at least 500 megawatts of solar generation in the state by 2020.  We are evaluating our options regarding this project.

The SCC invited Dominion to re-file after seeking third-party alternatives. See Dominion’s Remington solar page here.

— JAB

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14 responses to “SCC Says Dominion Must Seek Third-Party Solar Alternatives

  1. why is Dominion the only entity that can propose solar in VA?

    why not just open it up to 3rd parties totally not connected to Dominion at all?

  2. Fantastic!! We have needed to allow 3rd parties into the state for a long time. Dominion and AEP have managed to control everything. They want to earn market rates but don’t want the competition. Finally! !!

  3. I’m sure the politics behind the SCC’s decision will be revealed soon enough, but for now we can speculate. It seems to me the SCC has used its order on Dominion’s Remington application to announce a major regulatory policy shift.

    A few years ago the GA reversed Virginia’s earlier adoption of electric “retail competition”; nevertheless the FERC went ahead with its requirement for independent system operators and, in this part of the country, real-time wholesale electricity markets. FERC required Dominion to join an ISO (and Dominion chose PJM). Now, we have Dominion operating generation at several locations inside PJM, which makes Dominion an active player in the largest real-time electricity market in North America. At the same time Dominion is trying to cling to an integrated-utility model for building new generation to meet its load growth in Virginia at a regulated rate of return. The prevailing business model elsewhere these days is to build new generation to sell into the competitive wholesale markets, at the builder’s risk.

    The SCC appears to be using the framework provided by Virginia’s CPCN law, and specifically its requirement that any builder of new generation today must first consider the “third-party market alternatives,” to require that any new generation built by a Virginia utility on behalf of its customers and at their expense must also be competitive with what the marketplace offers, even if built for a regulated return. [Of course that begs the question, if the unit is competitive with the marketplace, why not compete there, and pocket all the profits rather than operate for a fixed rate of return?] I think there’s a warning here for Dominion: the old integrated-utility model will not enough to win uncritical regulatory approval for generation investment going forward.

    The Commission suggests Remington might simply be too expensive for a solar plant; but its bottom line is, “serious and credible efforts, as required by the General Assembly, must be made to determine whether lower cost alternatives for obtaining renewable power are available IN THE MARKET FROM THIRD PARTIES.” The G.A. requirement referred to (quoted by the SCC in its order, which is available at: http://www.scc.virginia.gov/docketsearch#caseDocs/134258 > Final Order) says, “A utility seeking approval to construct a generating facility shall demonstrate that it has considered and weighed alternative options, including third-party market alternatives, in its selection process.” Importantly this is a general provision governing ANY application for a CPCN for new generation construction, not just one specific to renewables.

    Dominion’s proposed Remington plant will automatically operate within the markets run by PJM, the regional ISO. PJM already has around 2% renewables power and that percentage is expected to grow rapidly. PJM’s forecast for renewables within its 12-State footprint is dependent upon penetration levels that will respond to many uncertain factors including politics, but, assuming 20% penetration overall and on-shore wind units located mainly in the best locations (on mountaintops and lakeshores), they are looking at these renewable generation amounts by 2026 (just 11 years from now):
    Onshore wind 39,452 MW
    Offshore wind 4,851 MW
    Centralized solar 8,078 MW
    Distributed solar 10,111 MW
    Source: Table 4.3 at: http://www.pjm.com/~/media/committees-groups/subcommittees/irs/postings/pris-task3b-best-practices-from-other-markets-final-report.ashx What that shows is the huge growth PJM expects in both large-plant solar and distributed solar generation. So, during the lifetime of any new renewables generation built by Dominion, there will be plenty of “third-party” market alternatives out there.

    As far as Remington itself is concerned, we probably should be in favor of Dominion building a small central solar plant and getting experience with operating it. We know the cost of PV panels is declining with increased manufacturing volume, and there are new panel technologies on the horizon, but neither is a sufficient reason for Dominion to delay getting operating experience in preparation for what is coming. I expect the SCC eventually will approve a reworked application for a solar plant at Remington.

    But learning how to operate its own solar plant will not prepare Dominion for distributed and customer-owned solar, let alone encourage the growth of independent solar such as those commercial-scale plants Amazon is building in Accomack County. Maybe the SCC will hold Dominion’s Remington proposal hostage until it receives a parallel application from Dominion that manifests serious promotion of distributed solar; time will tell. Meanwhile, it’s probably no coincidence that Accomack County is not in Dominion’s service territory.

  4. You are right on. Yes, Dominion has the best of both worlds and has controlled the General Assembly to have it control the SCC. I’d be thrilled to see the SCC finally taking its job back! We got it in the first place because the General Assembly realized it couldn’t do the needed things for rail because the industry had so much control over the Assembly. Over the last 20 years, Dominion took control and has been calling the shots.

    Now, Dominion is attempting to build and operate a gas pipeline as part of an LLC with partners – protecting its risk – but trying to claim its obligation to serve at the same time. It’s a for profit venture over which the SCC has no say. It should not have access to eminent domain for this. FERC is set up to help the companies but I hope this is something we’ll change – if not in time for this effort, to prevent future grabs of private property. The model needs to change for landowners consistently with changes the industry has accomplished. Enough of having their cake and eating it too!

    Dominion has some other solar going. It got planning commission approval for a farm in Buckingham county last month. It needs to build and operate solar – but it needs to stop controlling the entire marketplace.

    I HOPE you are right in your assessment.

    • Thanks VaC — the federal Natural Gas Act was indeed a New Deal era statute designed to foster interstate gas pipelines and help get our economy out of the Depression; Dominion’s ACP pretty clearly meets NGA criteria to apply for a federal CPCN and the SCC will have no say over it; and if the CPCN is granted by FERC, Dominion will be able to condemn property for it. What’s less certain is whether Dominion can win that CPCN at FERC. Dominion must show that, on balance, the ACP is in the public interest pursuant to FERC precedent on what that means accumulated over 80 years; economic benefit to the public will play a large part in that showing. The ACP’s opponents will be heard and FERC isn’t in Dominion’s pocket. After all that, if the ACP gets a green light, opponents have to answer the question, why should a single landowner still be able to block what’s been found to be in the public interest? We have to have a way to make such decisions!

      • I would think that Dominion would need to prove to FERC that their pipeline is the most efficient, cost-effective, less consumptive of private land – etc – compared to the other proposals including the existing pipeline owners claiming they already have infrastructure ready to go.

        no?

        • The level of proof, detail, etc. is very general and not to a level most would consider “proof.” All they had to file to prove this was the best route was a statement saying it is the best and no other will work. No details, no proof required.

          • so basically a company can get eminent domain just by proposing a route and without regard to whether it’s a for-profit venture or not or is a public necessity?

          • Yes, Larry. If they show there are people to buy the gas, it’s assumed it’s in the public benefit, we’re told. We need to challenge that. We do need more infrastructure if there really is as much gas as they think, but everyone is currently trying to be the owner of the infrastructure to get it out. It’s hard to imagine we will need all the proposed infrastructure, especially for very long. If we get a lot of gas out and sell it abroad (keeping the prohibition on exporting is vitally important) the prices will increase because prices elsewhere are so much higher than ours. There are some who think there is a lot less gas there so we’ll also use it much faster and could end up with a lot of unused infrastructure for most of the years of the lifespan of the infrastructure. As far as I know, there’s not been serious discussion of replacing existing lines – even those that have been there forever and are likely to be allowing gas to escape, etc. due to aging. The proposals active here in Virginia are from entities that don’t own much or any transmission pipelines in Virginia. They have no interest in working with an existing pipeline – they want their own.

  5. Yes, Acbar, I know how FERC got the responsibility and the state has none, however, I think it’s important to consider the big picture, not just pieces. Sorry, but you must not be watching the FERC I’m watching. It has approved all but one proposal before it in the last 10 years. It looks at each proposal separately, without consideration of cumulative or compounded impacts – which is something we’re trying to get it to do differently this time.

    I’ve been appalled at the lack of specific, detailed information required for the filing. Broad generalizations are accepted where I would expect them to be laughed out of the building as totally insufficient. All that was required to document consideration of alternatives was to say “we considered all alternatives and only this one is acceptable.” No criteria were discussed, no specific alternatives described; there is nothing we can find to be convinced that our property truly is the best alternative for everyone.

    Benefit is expressed at the state level, and cumulative and future costs to landowners are ignored – they don’t even pay the property taxes on the land they “use!” From everything I am experiencing and hearing, landowners are not “heard.” We get limited formal opportunities to attempt to make our cases, but what is said seems to be totally ignored. I do not have proof that anything we’ve said has been heard and acted upon – respected. Only one time limited compensation is awarded to us, and only for directly affected land, not losses putting that infrastructure there causes the rest of our land, and certainly no compensation for the real financial and physical risks we’ll shoulder for the rest of time because of the ticking time bomb placed in the middle of our property. The company doing this is an LLC, and we know if there is a major accident it will simply take bankruptcy and we’ll be stuck.

    Who FERC views as the public that will benefit is another problem – it is far different from what citizens believe appropriate, as we saw in the Kelo case and in resulting changes to state laws/constitutions made because of it. Virginians believed we were protecting our land from takeover by another business because their need was perceived to be greater than ours when we voted in the constitutional amendment. If only Virginia were being served and if only Virginia energy needs were being served, this magnitude of infrastructure would not be required and the smaller, less pressure would be far easier to live with. This is being done for profit and probably will result in export which will only raise our prices. Even though we’ve been where we are for over a century, we have to take unfair risk and loss so others, who don’t even serve us and have no existing presence in our area, can make lots of money.

    There is no apparent consideration of how losses counteract the benefit that is anticipated because it is simply stated, not proven, that there are no losses. Projected job growth is unrealistic, especially in the affected counties. This week the Governor claimed new jobs in an area of the state that will not be served by the pipeline because of it. Our loss. Their benefit. I will let these examples suffice.

    There are rare situations where eminent domain should be available today. Where it’s essentially one business taking advantage of another, which is what we’re facing, it is flat wrong. Our utilities all want enticements to do things, not penalties. We landowners are no different. If utilities had to entice us, rather than threaten us as they currently do, maybe we’d have a level playing field. Support of far more landowners would be achieved if landowners were approached with honesty, full information, were heard (changes made to accommodate landowner needs) and adequately compensated for all losses, and eminent domain truly was a last option, not a starting point.

    I increasingly find that those who live in our more urban areas are willing to throw all of the undesirable things (pipelines, trash, prisons, etc.) to rural areas and unwilling to fairly compensate us directly or indirectly. Every situation, utility, etc. is viewed in isolation and has to make financial sense for the non-rural entity. There is no consideration today of sharing the good things in our economy, especially to areas that take the negatives of society, or of fully compensating when there are takings. On one hand we’re told that we cannot have affordable, dependable, broadband for cable and internet because companies cannot make a profit in our communities. However, we’re told to accept another business taking over our private property and changing what we can do with our own property while exposing us to daily risk of personal and property harm for the good of “the public.”

    Everyone knows FERC is in the industry’s pocket with a revolving door back and forth between them. FERC holds meetings with industry to help it get proposals approved. However, FERC has repeatedly refused to balance the table and develop an office to represent consumers or to give consumers’/landowners’ contributions real consideration. The employees who ran some of the Scoping Meetings showed complete disrespect and disdain for the public.

    Yes, we have to have a way to make such decisions but the rules need to be fair. The current system is a very, very, very long way from being fair. No one landowner should be able to block something found to be in the public interest, but the public interest needs to be fairly defined and the process for determining it needs to be unbiased, transparent, and fair.

  6. Yes. Right now, they are looking at each proposed pipeline as if it were the only one being considered. That’s why we’re asking for the Programmatic Environmental Impact Statement (PEIS) vs accepting just individual EIS’s that pretend the others don’t exist.

  7. If I recall, Gov McAuliffe asked Dominion to build ~500 MW of solar in exchange for the favorable-to-Dominion recent GA bill nixing the normal rate review process. Are we saying that was just a political stunt to give the Gov an excuse to approve SB1349?

  8. I think we can say that it’s not a sign that Dominion has embraced solar and is actively seeking to make it really work – experimenting with storage (which is an area growing by leaps and bounds) and doing other things to try to seriously focus on renewables. Right now the SCC is reviewing Dominion’s plan for providing energy over the next 15 years and it is still very slim on renewables and energy efficiency. They are doing a little, to make the Governor happy, but still trying to primarily depend upon fossil fuel and nukes. If they’d just invest the money they’ve been spending on a potential new nuke trying to make renewables and efficiency work, we’d be way ahead. Remember natural gas is only supposed to be a bridge to renewables – not a long term solution. So instead of making huge long term investments in infrastructure for fossil fuels and nukes, we need to start seriously building our alternatives.

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