Who Should Pay for Haymarket Transmission Project, Amazon or Ratepayers?

transmission_linesby James A. Bacon

Dominion Virginia Power wants to upgrade its electric grid to serve a new data center campus in the Haymarket area of Prince William County. Residents are up in arms about the potential loss to property values, and the cost of the project could range between $51 million for the least expensive alternative to $166.7 million for the lowest-impact alternative.

The Haymarket project is re-playing familiar controversies bubbling up around the state as Dominion undertakes a wave of improvements to its transmission and distribution system in response to the shift from coal toward natural gas and renewable sources. But this project has a twist. The justification for the project is to serve a single customer, widely believed to be Amazon Web Services (AWS). (Dominion is constrained by a confidentiality agreement not to identify the customer.)

The State Corporation Commission faces two big decisions: (a) Which alternative should it approve, and (b) who should pay for it — Amazon or Dominion rate payers?

Dominion has applied to the SCC for approval to construct a new substation in Haymarket, upgrade an existing distribution line from 115 kV to 230 kV, and construct a new 5.1-mile overhead line. The purpose is to deliver service to a proposed campus expected to house three data center buildings

According to testimony submitted by SCC utilities engineer Neil Joshipura last week, the data centers cannot be served reliably by the existing distribution system and connecting them to the grid would not comply with federal grid reliability standards. While Dominion has demonstrated a need for the project, noted Joshipura, “the Project is needed to serve a new customer, rather than to enhance overall system reliability, and the Staff notes that without the request for service to the Haymarket Campus, the Project would not be needed.”

The SCC has received dozens of letters from Haymarket residents opposed to the project. The area is part of Prince William County’s “rural crescent” slated for lower density development, and residents have famously fought off efforts to develop land near the Manassas National Battlefield Park and, more recently, build the Bi-County Parkway through the area. Most letters express the fear that the power lines would be visually intrusive in a quiet, rural area and would impact property values.

“We did not move to Gainesville 13 years ago to have an eyesore in our back yard,” wrote Peter Menard in a typical statement filed with the SCC.

If a line must be built, citizens tend to favor the “hybrid” above ground/buried cable alternative, although it costs three times as much as Dominion’s preferred alternative.

Citizens also object to the idea of making Dominion ratepayers pay for AWS’s business decision to locate its data center campus in Haymarket rather than Prince William’s Innovation business park. Joseph Knight put it this way in a letter to the SCC:

Amazon chose to buy cheaper land elsewhere in the Haymarket area, knowing that data center expansion is a key factor in Amazon’s overall long-term growth plans and knowing full well that the power at the Haymarket site was totally inadequate to support such an expansion and would require a major power substation upgrade. … Amazon must have intended from the very beginning to lay the entire cost of the upgrade, the property destruction, and the immense loss of value in private property on a wide swath of Western Prince William County.

Dominion classifies the Haymarket improvements as transmission facilities, not distribution facilities, which would make the project subject to the control of PJM Inter-connection, which operates wholesale electricity markets in a 12-state region. As a transmission facility, the improvements would be paid for by ratepayers in the Dominion Transmission Zone, which extends into North Carolina. A residential customer using 1,000 kWh would see a bill increase of $0.09 under Dominion’s preferred proposal and $0.37 under the hybrid proposal, said Joshipura.

Dominion had no comment on Joshipura’s testimony. “We are aware of the SCC staff report, and it’s under internal review,” said Chuck Penn, Dominion spokesman. “We’ll address it in our rebuttal” to be filed tomorrow.

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15 responses to “Who Should Pay for Haymarket Transmission Project, Amazon or Ratepayers?

  1. Good question – lots of arguable answers. My take would be to look at impact fees as an analog. Development project creates a large impact on surrounding communities, development pays an impact fee to mitigate.
    I guess that would put the burden on the Amazon customers eventually. But it could also be looked at as a zoning and development issue; and penalize the county whose elected officials approved a development in a location that imposes great costs on the community. I don’t think that is as fair an outcome, since it eventually imposes further costs on the same people who are primary victims of the impacts.

    • You raise a really good point that I had not considered — did the Prince William County supervisors give zoning approval for the data center? If so, they cannot very well complain about the impact of the transmission lines on neighbors.

      • “Zoning approval” for the data center was not required as, like many things in Prince William, the zoning ordinance in place at the time essentially allowed anything, anyplace, anytime. PWC has a reputation among land use attorneys not employed by the two principal firms in PWC as the Wild, Wild West where anything goes if you are represented by the proper counsel.

        In this particular instance, the supervisors knew nothing of the proposed development until after Dominion announced their plans for the transmission line in 2014. Even then, they were reluctantly spoon fed information by staff that had entered into a questionable NDA with Amazon/VAData. To date they still haven’t been provided with all of the data and the public has been completely shut out, having to gather intel from court records and land development records.

        The supervisors and interested members of the public have been stonewalled at every turn by the heads of Development Services and Economic Development who have been aided and abetted by the County Attorney. It took the threat of filing a writ for multiple FOIA violations before the county attorney provided supporting documentation and information that should have been made public months before.

        It is a long sordid story the circumstances of which have its roots long before Amazon/VAData chose the location and purchased the parcel. The property in question is the subject of multiple, questionable CPAs, rezonings, proffer amendments and improper density transfers (PWC does not have the requisite DTR ordinances) and is part of the crazy quilt pattern of incompatible zoning designations that is the hallmark of PWC.

        Things however are starting to change. The new Planning Director is refreshing change from his predecessor, the principal county staffer who enabled the Wild West atmosphere and rolled out the red carpet to one particular land use law firm. As a result, the residents encouraged (forced) the BOCS to dramatically amend the zoning ordinances regarding Data Centers and utility substations, over the objections of the Chamber of Commerce and NVTC.

        This isn’t a NIMBY issue, rather it is a variety of equity issues.

        • Mom, it sounds like you are part of a grassroots citizens group that got organized in response to the proposed data center/transmission line, and it also sounds like you’ve done a whole lot of digging. Does your group have a website? Can you share more detail of what you found regarding the history of the particular parcel in question and Amazon’s activities? Respond online or contact me at jabacon[a]baconsrebellion.com.

  2. kind of interesting given the pipeline issue and the powerlines over the James issue..

    then of course – how many are up in arms down in Brunswick and Greenville counties?

    😉

    NoVa and environs has turned into the worst of the worst NIMBY. It’s say to say that all the roads and powerlines that now are in NoVa – if they were not and had to get approved today -the chances are they’d face very stiff opposition – which is about as ironic as you can get given that most of the folks that moved there – to start with – needed those roads and powerlines.

    But now that they are there – a pox on anyone else!

    more irony Had Amazon been allowed to build on-site solar instead of being forced over to the Eastern Shore to do it -perhaps they would not have had the impact of trying to get back what they were forced to feed into the PJM grid from afar?

    and Amazon a private entity – is pushed away from private sector jobs in a region overrun by Federal govt jobs… geeze… NIMBY’s on steroids!

    • I don’t agree that all of these issues are NIMBY related. The point that many raise is that some of these projects should not be in anyone’s backyard.

      There are ways using existing affordable technology that these data center loads could be dealt with without requiring a new substation and transmission lines. This is a failure of design and lack of opportunity to provide something better.

      As long as we stick with the same old solutions we will have to live with the same old consequences. Why do we have to make such a wretched mess of things before we try something different? Is change really that painful? Aren’t the side effects from these old style projects painful too?

  3. “A residential customer using 1,000 kWh would see a bill increase of $0.09 under Dominion’s preferred proposal and $0.37 under the hybrid proposal.”

    37 cents or 37 mils or 3.7 mils? Almost 40 CENTS per month spread over millions of monthly bills, of all classes, over decades, would add up to some real money. If .40 cents on a resident, imagine the hit on other industrials and large customers. Or did you mean mils, which would be thousandths of a dollar?

    No way should ratepayers cover the cost of underground lines to protect that guy’s illusion he doesn’t live in a mega-tropolis, but he does. He wants that illusion preserved, he pays…… The key issue here is any precedent being set so I personally hope the SCC sends all or most of the bill to Amazon or it’s customers, but there is bound to be precedent already about how to handle one-customer projects. The key claim by big D is that this isn’t a distribution line. If it is transmission and other customers eventually benefit, then split the cost. But what ever the SCC decides will set a precedent.

    The message that Virginia is becoming one large anti-growth economic dead zone has already been widely noted. And you are right, the original siting decision set this up.

    • See my comment above. What if instead of being perceived “as an economic dead zone” Virginia was looked upon as being in the forefront of energy innovation. We could attract data centers and the new businesses needed to design and build their energy systems. That would attract highly paid employees and give them homes in areas not covered by unsightly transmission lines. This is a new era. We can be left behind or we can join the leaders. But we need to decide soon.

      • Without any new transmission or distribution lines? You need the foundational infrastructure at reasonable cost. The cutting edge research at NASA Langley, the high energy physics work at Jeff Labs, the states largest and most advanced nuclear manufacturer, all looking at disruptions due to one delayed line over the James……

        • The need for the transmission line over the James can be solved with the same approach: energy efficiency, significant distributed generation with combined heat and power, and solar. Data centers usually have huge battery backup systems to use for uninterruptible power supplies. Why not use that investment for onsite generation storage. I did not say distribution lines would not be required. My statement is a simplified response to a complex design issue, but it uses technology that already exists.

          But what I am hearing from many is, “transportation without horses, impossible!”. New solutions are not always incremental changes at the margin, rather they are entirely new conceptions of how the issue should be addressed. Energy is one of those cases. Our current solutions are extremely wasteful of materials and inputs, harmful to our environment and health, and ugly. We are an intelligent species. We just need to push down the boundaries of the box we are constraining ourselves with.

  4. I think Va prefers good clean Govt jobs not those messy private sector ones.

    • Good one, Larry!

      Seriously, NoVA is simply not attracting good, high-paying jobs. And this has been the case since the Great Recession, according to both Fairfax County and FC Economic Development Authority leaders.

      It would make sense for McAuliffe to propose a three-year effort to look at transportation and energy needs in NoVA in an open process that includes input from the public. The problems are, however, transportation is constantly manipulated to enrich well-connected landowners, rather than improve transportation and safety; task forces/committees are generally stacked with supporters of whatever is being considered; and crony capitalism permeates the American economy.

      But this is not impossible to solve. Years ago, Arlington formed a task force to deal with the revitalization of the Rosslyn-Ballston Corridor. The County appointed equal numbers of landowners, residents and staff. The first meetings were horrible (I’ve been told) as everyone fought for their way. Soon all realized nothing would happen without everyone addressing the other’s concerns. Over time, consensus developed.

      Similarly, after the Fairfax County BoS took Tysons re-planning from the Task Force and gave it to the Planning Commission, the stakeholders began to realize they would need to compromise. After all the issues were raised, the stakeholders worked with the PC and agreed upon the framework of the Plan that was adopted in June 2010.

      McAuliffe could pull this off if he were to form a task force or committee that was evening stacked with business leaders, members of the public and experts in the fields. Won’t happen; crony capitalism is too strong.

  5. Amazon. Costs of doing business. This is one of the best pieces of journalism I have seen in ages. It truly shows how big business manipulates things so they’ve come down from a 30+% tax rate to 11% and then fostering costs on the little people.

  6. re: ” We are an intelligent species.”

    and an exceedingly greedy one. Each is after their own interests – real or perceived!

    people want uncongested high speed highways all the places they want to go – when they want to go – but not anywhere nears their homes except for a nice access point!

    they want 100% reliable power but don’t want power lines !

    they want really, really good schools but not the property taxes necessary to fund it.

    They want the best health care at affordable prices but they don’t care what happens to those who don’t have access – and don’t want to pay for those folks health care.

    we want METRO – but we want it to be bulletproof, not cost much and not have any nasty union workers!

    so yes – we’re “intelligent” but we lack a few other qualities with regards to caring about how we get our good stuff and whether or not others are impacted in getting that good stuff.

  7. So let me respond to your question. Amazon should pay. Period. It’s actually a very basic argument, based on Dominion’s own line extension policy, which, by the way, The Coalition to Protect PWC has been asking about in our discovery to Dominion Power. But for the magnitude of power that these Amazon Data Centers require, this transmission line is a distribution line for one private customer, Amazon.

    If you decided to build your house on top of a mountain, you would need power, but would it be the responsibility of the rate payers to bring you your power? Would you be able to negatively impact your neighbors investment and property because YOU chose to build your house on a mountain?

    The Coalition says no, you would have to pay for your own extension cord. And so should Amazon, and to get their power, they should not be allowed to destroy established business’s and homes in the process.

    It actually quite simple, it’s expecting the law to be applied equally. Just because it hasn’t been applied this way before, doesn’t mean the law isn’t applicable.

    Data Center energy needs are monumental, and the more data we need, the more data center must be built. We must as a community understand that this is not an either/or choice. Either we have data centers OR we have healthy vibrant communities We can, and must, do both. It’s called good Planning, and that was NOT done in the Haymarket Amazon project.

    http://www.protectpwc.org

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