Category Archives: Consumer protection

Consumer protection

How One Gas Plant Can Save Billions

Dominion Virginia Power's gas-burning plant in Brunswick County opened this year. The Greensville power station, scheduled to open in 2018, will be even more cost efficient.

Shown here: Dominion Virginia Power’s state-of-the-art, gas-fired generating plant in Brunswick County. The company’s Greensville facility will be even more cost efficient.

There’s more to the natural gas boom than fracking. Technology deployed at Dominion’s Greensville power plant will squeeze more electricity out of a BTU of gas than ever before. 

by James A. Bacon

Last month Dominion Virginia Power commenced construction of the $1.3 billion Greensville County Power Station. When it opens in late 2018, the facility could well be the most efficient gas-burning electrical power plant in the world. That one facility will save Dominion customers $2.1 billion over its 36-year lifetime, the company says, even as it emits less carbon dioxide per kilowatt hour than other gas power plants and only 40% of that of a coal-fired plant.

Even if stretched out over 36 years, $2 billion represents a significant savings from a single power station. The average savings of $59 million a year compares to $7 billion annually paid by Dominion’s Virginia and North Carolina rate payers.

Rate payers might wonder: How does Dominion calculate that $2 billion in savings. The station will save $2 billion compared to what? Those questions seem all the more germane in light of commonly heard arguments that investing in massive natural gas-fired power plants instead solar panels and wind turbines is a bad idea when the price of gas will only rise in the future and the cost of renewable energy will steadily decline.

“We see the potential for a lot of stranded costs to be put on consumers as emissions of carbon pollution and greenhouse gas emissions continue to be ratcheted down,” says Kate Addleson, director of the Sierra Club-Virginia chapter. Solar is not just non-polluting but in many parts of the country it’s the lowest-cost energy source. As solar technology improves and the cost per kilowatt hour continues to decline, solar could become the low-cost option in Virginia, too. While natural gas might look like an attractive option today, it may not be as gas reserves are depleted and prices rise. Says Addleson: “Dominion is pointing to the benefits of gas because that’s what they see as the best outcome for their profit margin.”

Dominion defends its commitment to natural gas as the best deal for rate payers. The Greensville County Power Station will save money two ways: (1) by extracting more energy value from each BTU of gas, and (2) by using its access to two pipelines to purchase cheaper gas.

Greensville will be the third “three on one” Combined Cycle plant in Dominion’s generating fleet, using waste heat from three gas-burning turbines to power a traditional steam generator. Incorporating the most advanced Mitsubishi Hitachi Power Systems turbines, Greensville will squeeze more electricity from 1,000 BTUs of natural gas than ever before.

Combustion at higher temperatures also releases less carbon-dioxide into the atmosphere. The Greensville plant will emit 780 pounds of CO2 per megawatt hour (MWh), an incremental improvement over the 790 pounds for the Brunswick plant and 2,100 pounds for a typical coal-burning plant. Mike Dowd, director of air quality for the Department of Environmental Quality (DEQ), noted that the air permit sets the limit at 813 pounds per MWh, the toughest ever set on a combined cycle, natural gas power station. Environmental groups claimed credit for the “stronger pollution protection” they lobbied for. But the real enabler of the stricter environmental standards was the same combustion technology that makes the facility so economical to run.

Glenn Kelly, director of Generation System Planning, walked me through Dominion’s methodology for calculating the cost savings. If Dominion did not build the Greensville plant, he said, the company would have to purchase the megawatts from wholesale electricity markets maintained by PJM, the regional transmission organization of which Dominion is a part. “PJM market is always an option. We can always buy energy and capacity there  – that’s our benchmark. ”

In the PJM wholesale market, utilities purchase capacity (the right to draw electricity, if needed) and energy (the actual electricity consumed) in day-before and same-day auctions. Prices vary by season, time of day, weather conditions, and other factors such as the volume of electricity being bought and sold at any given point of time and the ability of transmission lines to deliver the electricity to the consumer in different parts of the country. In all likelihood, Greensville’s replacement electric power would come from a mix of gas-fired, solar, wind, and other energy sources — whatever other utilities and merchant providers are willing to put on the market.

How does Dominion know what PJM will charge Dominion years in the future? It doesn’t. It relies upon its economic consulting company, ICF, to make realistic assumptions. ICF assumes that prices will fluctuate around the long-term cost (including a reasonable corporate profit) of generating the electricity, and that the cost of burning gas or building a solar panel can be estimated with some degree of reliability. “Gas prices are very volatile short-term,” says Kelly. Right now prices are depressed, running between $2 and $3 per million BTUs. ICF projects gas prices will likely climb to about $5.11 per million BTU by 2025. “We have it going up pretty fast.”

Many people are familiar with the fact that the cost per KWh of solar energy has gone down as solar panels get more efficient at converting sunlight into electricity, but few are aware how the cost of generating electricity from gas has gone down — and not just because of the fracking revolution that has flooded the market with gas. State-of-the-art power stations extract more electricity from the same amount of gas.

The G Class turbines installed in Dominion’s Brunswick County power station, which opened this year, are more efficient than the previous generation, says Bill Newsom, executive vice president-new generation systems with Mitsubishi Hitachi Power Systems Americas. They are about 59% efficient; that is, they extract about 59% of the energy value from the natural gas. The rest goes up the smokestack or is lost as waste heat. Continue reading

Watch Those Utility Poles!

Odd fact of the day: Last year some 2,000 vehicle accidents across Virginia involved utility poles — more than five accidents per day on average, according to Dominion Virginia Power.

How should you react if you struck a pole and electric wires fell onto the car? Let’s just say the life-saving response is not intuitive. Watch the video above.

— JAB

Alpha Natural Resources: Running Wrong

Alpha miners in Southwest Virginia (Photo by Scott Elmquist)

Alpha miners in Southwest Virginia
(Photo by Scott Elmquist)

 By Peter Galuszka

Four years ago, coal titan Alpha Natural Resources, one of Virginia’s biggest political donors, was riding high.

It was spending $7.1 billion to buy Massey Energy, a renegade coal firm based in Richmond that had compiled an extraordinary record for safety and environmental violations and fines. Its management practices culminated in a huge mine blast on April 5, 2010 that killed 29 miners in West Virginia, according to three investigations.

Bristol-based Alpha, founded in 2002, had coveted Massey’s rich troves of metallurgical and steam coal as the industry was undergoing a boom phase. It would get about 1,400 Massey workers to add to its workforce of 6,600 but would have to retrain them in safety procedures through Alpha’s “Running Right” program.

Now, four years later, Alpha is in a fight for its life. Its stock – trading at a paltry 55 cents per share — has been delisted by the New York Stock Exchange. After months of layoffs, the firm is preparing for a bankruptcy filing. It is negotiating with its loan holders and senior bondholders to help restructure its debt.

Alpha is the victim of a severe downturn in the coal industry as cheap natural gas from hydraulic fracturing drilling has flooded the market and become a favorite of electric utilities. Alpha had banked on Masset’s huge reserves of met coal to sustain it, but global economic strife, especially in China, has dramatically cut demand for steel. Some claim there is a “War on Coal” in the form of tough new regulations, although others claim the real reason is that coal can’t face competition from other fuel sources.

Alpha’s big fall has big implications for Virginia in several arenas:

(1) Alpha is one of the largest political donors in the state, favoring Republicans. In recent years, it has spent $2,256,617 on GOP politicians and PACS, notably on such influential politicians and Jerry Kilgore and Tommy Norment, according to the Virginia Public Access Project. It also has spent $626,558 on Democrats.

In 2014-2015, it was the ninth largest donor in the state. Dominion was ahead among corporations, but Alpha beat out such top drawer bankrollers as Altria, Comcast and Verizon. The question now is whether a bankruptcy trustee will allow Alpha to continue its funding efforts.

(2) How will Alpha handle its pension and other benefits for its workers? If it goes bankrupt, it will be in the same company as Patriot Coal which is in bankruptcy for the second time in the past several years. Patriot was spun off by Peabody, the nation’s largest coal producer, which wanted to get out of the troubled Central Appalachian market to concentrate on more profitable coalfields in Wyoming’s Powder River Basin and the Midwest.

Critics say that Patriot was a shell firm set up by Peabody so it could skip out of paying health, pension and other benefits to the retired workers it used to employ. The United Mine Workers of America has criticized a Patriot plan to pay its top five executives $6.4 million as it reorganizes its finances.

(3) Coal firms that have large surface mines, as Alpha does, may not be able to meet the financial requirements to clean up the pits as required by law. Alpha has used mountaintop removal practices in the Appalachians in which hundreds of feet of mountains are ripped apart by explosives and huge drag lines to get at coal. They also have mines in Wyoming that also involve removing millions of tons of overburden.

Like many coal firms, Alpha has used “self-bonding” practices to guarantee mine reclamation. In this, the companies use their finances as insurance that they will clean up. If not, they must post cash. Wyoming has given Alpha until Aug. 24 to prove it has $411 million for reclamation.

(4) The health problems of coalfield residents continue unabated. According to a Newsweek report, Kentucky has more cancer rates than any other state. Tobacco smoking as a lot to do with it, but so does exposure to carcinogenic compounds that are released into the environment by mountaintop removal. This also affects people living in Virginia and West Virginia. In 2014, Alpha was fined $27.5 million by federal regulators for illegal discharges of toxic materials into hundreds of streams. It also must pay $200 million to clean up the streams.

The trials of coal companies mean bad news for Virginia and its sister states whose residents living near shut-down mines will still be at risk from them. As more go bust or bankrupt, the bill for their destructive practices will have to borne by someone else.

After digging out the Appalachians for about 150 years, the coal firms have never left coalfield residents well off. Despite its coal riches, Kentucky ranks 45th in the country for wealth. King Coal could have helped alleviate that earlier, but is in a much more difficult position to do much now. Everyday folks with be the ones paying for their legacy.

Renewable Energy: A Tale of Two Virginias

Apologies to Mr. Dickens

Apologies to Mr. Dickens

By Peter Galuszka

Call it a tale of two Virginias – at least when it comes to renewable energy.

One is the state’s traditional political and business elite, including Dominion Resources and large manufacturers, the State Corporation Commission and others.

They insist that the state must stick with big, base-loaded electricity generating plants like nuclear and natural gas – not so much solar and wind –to ensure that prices for business are kept low. Without this, recruiting firms may be difficult.

The other is a collection of huge, Web-based firms that state recruiters would give an eyetooth to snag. They include Amazon, Google, Facebook and others that tend to have roots on the West Coast where thinking about energy is a bit different.

Besides the Internet, what they have in common is that they all vow to use 100 per cent of their electricity from renewable sources. What’s more, to achieve this goal, all are investing millions in their own renewable power plants. They are bypassing traditional utilities like Dominion which have been sluggish in moving to wind and solar.

So, you have a strange dichotomy. Older business groups are saying that the proposed federal Clean Power Plan should be throttled because it would rely on expensive renewables that would drive away new business. Meanwhile, the most successful and younger Web-based firms obviously aren’t buying that argument.

I have a story about this in this week’s Style Weekly.

In Virginia, the trend is evidenced by Amazon Web Services, which sells time on its cloud-computing network to other firms. It is joining a Spanish company, Iberdola Renewables LLC, in building a 208-megawatt wind farm on 22,000 acres in northeastern North Carolina, just as few miles from the Virginia border. Three weeks earlier, on June 18, Amazon announced it plans a 170-megawatt solar farm in Accomack County on the Eastern Shore.

Dominion, which has renewable projects in California, Utah and Indiana and the beginnings of some small ones in Virginia, says it is not part of the projects. It could possibly get electricity indirectly from them. Amazon’s power will be sold on regional power grids to business and utilities.

When they complete such sales, the Net-focused firms will get renewable energy certificates that can be used to show that they have put as much renewable energy into the electricity grid as they have used, says Glen Besa, director of the Virginia chapter of the Sierra Club.

This will be especially important in Northern Virginia where there are masses of computer server farms used by Amazon and others. These centers used 500 megawatts of power in 2012 and demand is expected to double by 2017. Also, for years, the region has hosted such a large Internet infrastructure that at least half, perhaps 70 percent, of the Net’s traffic goes through there.

Part of the back story of this remarkable and utility-free push for renewables is that environmental groups are shaming modern, forward-looking firms like Amazon to do it.

Amazon Web Services was the target of criticism last year when Greenpeace surveyed how firms were embracing renewable energy. The report stated that the firm “provides the infrastructure for much of the Internet” but “remains among the dirtiest and least transparent companies” that is “far behind its major competitors.”

Dominion also got bashed in the report. Greenpeace says, “Unfortunately, Dominion’s generation mix is composed of almost entirely dirty energy sources.” Coal, nuclear and natural gas make up the vast majority of its power sources.

Its efforts to move to renewable sources have been modest at best. In regulatory filings, Dominion officials have complained that renewable energy, especially wind, is costly and unreliable although they include it in their long-term planning.

Dominion has plans for 20-megawatt solar farm near Remington in Fauquier County and is working on a wind farm on 2,600 acres the utility owns in southwestern Virginia. It has renewable projects out-of-state in California, Utah and Indiana. The output is a fraction of what Amazon plans in the region.

In a pilot offshore wind project, Dominion had planned on building two wind turbines capable of producing 12 megawatts of power in the waters of Virginia Beach. It later shut down the project, saying new studies revealed it would cost too much. It says it might continue with a scaled down project if it got extra funding, such as federal subsidies.

The utility says it must build more natural gas plants and perhaps build a third nuclear unit at its North Anna power plant to make sure that affordable electricity is always available for its customers.

As Amazon announced its new renewal projects, Greenpeace has changed its attitude about the company. Now it praises Amazon for its initiatives in Virginia and North Carolina. “I would like to think we have pushed Amazon in the right direction,” says David Pomerantz, a Greenpeace spokesman and analyst. He adds that Amazon has some work to do in making its energy policies “more transparent.”

One unresolved issue is that two neighboring states, North Carolina and Maryland, have “renewable portfolio standards” that require that set percentages of power produced there come from renewables. West Virginia had such a standard but has dropped it. In Virginia, the standard is voluntary, meaning that Dominion is under no legal obligation to move to solar or wind. It also gives the SCC, the power rate regulator, authority to nix new power proposals because they might cost consumers too much, providing Dominion with a handy excuse to move slowly on renewables.

Another matter, says Pomerantz, is whether Virginia’s legislators will enact “renewable energy friendly policies” or watch hundreds of millions of dollars in renewable project investments go to other states, such as North Carolina.

So, you have a separate reality. Traditionalists are saying that expensive renewables are driving away new business, while the most attractive new businesses are so unimpressed with traditionalist thinking that they are making big investments to promote renewable energy independently.

It isn’t the first like this has happened.

Does Uber Save Lives?

Should have called Uber.

Should have called Uber.

Speaking of safer roads… Consider the impact of Uber on peoples’ driving habits. Richmond Biz Sense reports that more than 1,200 vehicles in the City of Richmond, Chesterfield County and Henrico County have signed up with the Virginia Department of Motor Vehicles to pick up passengers for hire under the Uber banner. That’s more than double the number of traditional taxi vehicles registered to provide service.

Twelve hundred vehicles is a lot of cars, seemingly enough to inundate the Richmond market. But Uber wouldn’t be contracting with all those drivers if there weren’t a demand for the service.

People employ Uber for many reasons, but the one with which I am most acquainted is to avoid drinking and driving. Most people know that driving while intoxicated is an exceedingly bad idea. But if staying alive and not killing others isn’t incentive enough, Henrico County courts are draconian in their punishment of drunk driving.

Many people of my social acquaintance carry breathalyzers with them. If their alcohol levels exceed the legal limit, they call Uber for a ride home. Some friends don’t even bother driving to social functions at all — they call Uber for rides both ways. I don’t know the percentage of Uber riders who are intoxicated, but I’d wager that it’s a high number.

Tough laws, breathalyzers and Uber — it’s a powerful combination. I’m betting that roads in the Richmond region are a lot safer these days.

— JAB

The Ironies of Virginia’s Growing Diversity

Midlothian’s New Grand Mart taps state’s growing diversity

 By Peter Galuszka

Suddenly immigration is popping up as a major issue in Virginia and the nation.

Virginia Beach has been dubbed a “sanctuary city” for undocumented aliens by Fox News and conservative Websites. GOP presidential hopeful Donald Trump is scarfing up poll number hikes by calling Mexicans trying to enter the U.S. illegally “rapists” and proposing an expensive new wall project to block off the southern border. Pro-Confederate flag advocates are pushing back against anti-flag moves, but they can’t escape the reality they are conjuring up  old visions of white supremacy, not their version of respectable Southern “heritage.”

So, if you’d like to look at it, here’s a piece I wrote for The Washington Post in today’s newspaper. When I visited a new, international food store called New Grand Mart in Midlothian near Richmond, I was impressed by how large it was and how many people from diverse backgrounds were there.

Looking further, I found one study noting that Virginia is drawing new groups of higher-income residents of Asian and Hispanic descent. In the suburbs, African-Americans are doing well, too.

The Center for Opportunity Urbanism ranked 52 cities as offering the best opportunities for diverse groups. One might assume D.C. and Northern Virginia would rank well, and they do. More surprising was that Richmond and Virginia Beach rank in the top 10 in such areas as income and home ownership. True, mostly black inner city Richmond has a 26 percent poverty rate but it seems to be a different story elsewhere.

Stephen Farnsworth of the University of Mary Washington says that economic prosperity and jobs that had been concentrated in the D.C. area, much of it federal, has been spread elsewhere throughout the state. It may not be a coincidence that New Grand Mart was started in Northern Virginia by Korean-Americans who undertook research. It revealed that the Richmond area was a rich diversity market waiting to be tapped. They were impressed and expanded there.

Other areas that do well in the study are Atlanta, Raleigh, N.C. and ones in Texas, which show a trend of job creation in the South and Southwest outpacing economic centers in the Northeast, Midwest and in parts of the West. Another story in today’s Post shows that there are more mostly-black classrooms in Northern cities than in the South. The piece balances out the intense reevaluation of Southern history now underway. A lot of the bad stuff seems to have ended long ago, but somehow similar attitudes remain in cities like Detroit and New York.

This progress is indeed interesting since old-fashioned American xenophobia is rearing itself again.

In Virginia, the long-term political impact will be profound as newer groups prosper. They may not be as inclined as whites to embrace Virginia’s peculiar brand of exceptionalism, such as their emotional mythology of Robert E. Lee and Thomas Jefferson. Their interest in them might be more dispassionately historical.

And, as the numbers of wealthier people from diverse backgrounds grow, they may be less willing to keep their heads down when faced with immigrant bashing. That’s what people of Hispanic descent did in 2007 and 2008 when Prince Williams County went through an ugly phase of crackdowns on supposed illegals. They could strike back with their own political campaigns.

Whether they will be blue or red remains to be seen. It’s not a given that they’d be Democratic-leaning. Farnsworth notes, however, that as more diverse people move to metropolitan suburbs, whites in more rural, lower-income places may become more reactionary out of fear. Hard-working and better-educated newcomers might be out-classing them in job hunts, so they might vote for politicians warning of a yellow or brown peril.

In any case, New Grand Mart presages a very crucial and positive trend in Virginia. It shows the irony of the hard right echo chamber peddling stories designed to inflame hatred and racism, such as the one about Virginia Beach being a “sanctuary” for illegals. In fact, the city is attracting exactly the  well-educated and hard-working newcomers of diverse backgrounds upon whom it can rest its future.

But we’re in an age of bloated billionaires with helmet hairdos and no military experience claiming that former Republican presidential candidate John McCain, a shot-down Navy pilot who spent five years in a brutal North Vietnamese prison, is not a hero. If Virginia can ignore such time-wasters and embrace diversity, it will be a better place.

Why Can’t Dominion Do Big Wind Projects?

A wind farm in Texas

A wind farm in Texas

 By Peter Galuszka

Down in the swamplands and farmlands of northeastern North Carolina, construction has begun on a huge new wind farm that will be the largest so far in the southeastern U.S.

Iberdrola Renewables LLC, a Spanish firm, has begun construction on the long-awaited $600 million project with financial help from Amazon, which also plans a solar farm on Virginia’s Eastern Shore. The Tar Heel project will stretch on 22,000 acres and could generate about 204 megawatts of power.

The curious part of this is that the farm is only about 12 miles of the Virginia line northwest of Elizabeth City, N.C.

That’s not far at all from the Old Dominion. But Dominion Resources, Virginia’s leading utility, has been sluggish in pushing ahead with wind, citing concerns about cost. It pulled the plug on an offshore pilot project involving only two wind turbines that would have a relatively tiny power output off of Virginia Beach.

So why were renewable energy firm executives and public officials celebrating yesterday in North Carolina and not Virginia?

That’s an easy one. North Carolina has a renewable portfolio standard that requires utilities to produce at least 12.5 percent of their power from renewables. Virginia has a similar plan, but being a “pro-business” state, Virginia has made it voluntary. So, Dominion doesn’t really have to do anything at the moment to push to wind, solar or other renewable.

It might have more incentive to do so when the U.S. Environmental Protection Agency finalizes rules on its Clean Power Plan later this year, but no one really knows what the final form will be.

Nonetheless, Dominion has marshaled its money and its lobbyists to change how regulators over see it in this regard. The General Assembly, some of whose members get huge contributions from Dominion, hurriedly passed a bill this session changing the rules in ways that Dominion wants.

To be sure, Dominion has some wind farms in other states. But here in Virginia, it is pitching the old saw that wind power is too expensive and unreliable and so on.

It may have been at one time. When Iberdrola pitched the plan to put 102 wind turbines on 22,000 acres in N .C., the common wisdom was that the southeast just doesn’t have the natural wind power. The winds are too light, usually.

But this changed when new technology allowed wind turbines to go from about 260 feet into the air to more than 460 feet or almost as much as the Washington Monument. Once that happened, the Carolina wind farm became a go. Of course, critics say that wind turbines have negatives such as their capacity to slice apart birds and be an eyesore.

What’s better for humanity, however? Coal or even natural gas plants or ones that have no pollution, especially carbon, footprint?

Another interesting aspect of this story is how Amazon is getting involved. The retailing giant is becoming an electric renewable utility in its own right. It wants to have renewable power run the massive servers that it relies upon to do business. But instead of screwing around with hidebound, traditional utilities like Dominion that are often reluctant to warmly embrace renewable energy, Amazon is doing it itself.

Amazon is also putting in a 170 megawatt solar farm in Virginia’s Accomack County which has terrain similar that of Perquimans and Pasquotank Counties in North Carolina that will host the wind farm.

To be fair to Dominion, the utility has a legal responsibility to supply its customers with electricity on a 24/7 basis. It needs a diverse energy mix to be able to do that.

But one wonders why Dominion keeps pushing this bugaboo about wind. Its sister utilities have raised the same cry. That could be why wind represents only 5 per cent of the electrical mix in the U.S., even though there are wind farms in 36 states.

It’s different in other countries. Denmark gets 28 percent of its power from wind. Spain, Portugal and Ireland each get 16 percent from wind.

Isn’t it time for Dominion to get off the dime and do more with wind, rather than using its deep pockets to get paid-for Virginia politicians to do its bidding and change regulatory rules at its whim?