Category Archives: Energy

Do Nukes Have a Long-Term Future in Virginia?

Surry Nuclear power station. Photo credit: Dominion

Surry nuclear power station. Photo credit: Dominion

by James A. Bacon

With little fanfare two weeks ago, Dominion Virginia Power announced its intention to extend the life of its two nuclear units at the Surry Power Station for another 20 years. Commencing service in 1972 and 1973 respectively, the units are licensed to continue operating through 2032 and 2033.

“Over the next several years, we will submit thousands of pages to the [Nuclear Regulatory Commission] demonstrating the safety and technical feasibility of extending Surry’s operating licenses,” said David A. Christian, CEO of Dominion’s generation group. “We are excited to be the first utility in the U.S. to begin this process.”

Dominion timed the announcement to coincide with a White House symposium on the future of nuclear energy, during which the Obama administration underlined the importance of nuclear power in the nation’s energy future. “As America leads the global transition to a low-carbon economy,” states a White House fact sheet arising from that event, “the continued development of new and advanced nuclear technologies along with support for currently operating nuclear power plants is an important component of our clean energy strategy.”

The contribution of nuclear power is all the more critical for Virginia, which relies upon Dominion’s four nuclear plants at Surry and North Anna 3 for about 35% of the state’s electric power output. As Dominion scales back its coal-generated capacity in order to meet a Clean Power Plan mandate to cut CO2 emissions 32% by 2030, the company will be all the more dependent upon its zero-emission nuclear plants to meet demand.

Obtaining approvals from the federal Nuclear Regulatory Commission is just one hurdle. Virginia environmental groups oppose not only building a third nuclear unit at North Anna, at a mind-boggling cost of $19 billion, but extending the life of existing nuclear units at much lower cost. Glen Besa, executive director of the Virginia Chapter of the Sierra Club, likens the aging Surry units to an old car. “The older the car is, the more unreliable it is.”

The pros and cons of the two nuclear options — building a new plant and extending the old ones — shake out very differently.

Dominion wants to spend more than $800 million over the next six years on pre-construction design, engineering and permitting work for the North Anna 3 nuclear unit just to keep open the option of building it later, and that’s on top of hundreds of millions of dollars spent and passed on to rate payers already. Dominion’s logic is that  (a) nuclear has zero carbon emissions,  (b) nuclear will be less affected by fluctuations in the price of its fuel source than natural gas, and (c) the company has gotten really good at running nuclear power plants efficiently.

In the current economic environment, however, it’s hard to imagine the State Corporation Commission approving a $19 billion project when the cost of clean wind and solar power is steadily declining and the option always exists to purchase electricity on wholesale energy markets. Environmentalists also will make an issue of North Anna’s location on a fault line and the expense of disposing of nuclear waste.

The Surry project poses very different considerations. First, the capital cost of rehabbing the power plant to operate another 20 years will be modest — in the realm of $1.5 billion or so, roughly the cost of building a major gas-generated plant. Second, Surry’s operating costs are among the lowest in the nation.

In a ranking by Nucleonics Week earlier this year, Dominion’s Surry nuclear stations were the second lowest cost producers of 27 companies that reported their costs to the federal government between 2010 and 2012 — bested only by the company’s North Anna units.

“Safety, operational excellence and low costs are goals we strive for every day,” David Heacock, chief nuclear officer, told Nucleonics Week. “Key to our low-cost performance is our highly skilled and experienced work force in addition to having identical units. It is gratifying to see that we have been very successful when compared to other operating nuclear units.”

“We have a huge advantage in being able to share spare parts, and share workforce and procedures,” Heacock said. The company also gains a cost advantage over other nuclear operators by performing more work in-house.

Besa with the Sierra Club said that nuclear power plants experience wear and tear after decades of operation. Radioactive bombardment can cause the steel and concrete in the pressurized containment vessel to become brittle and less able to withstand the pressure, increasing the odds of a radioactive incident. “The analogy with an old car is a good example,” he said. “All sort of things start to happen when you have an old car. When a car breaks down, it’s just an inconvenience. When a nuclear plant has an accident, it can be catastrophic.”

Dominion responds that the company has a decades-long record of operating nuclear power plants safely and efficiently, and that nuclear provides much-needed diversity to its power portfolio as the company phases out most of its coal-fired units. Too much dependence upon natural gas exposes rate payers to fluctuating gas prices. Gas is cheap right now, but if history is any guide, it could easily double or triple in price in the future. Too much dependence upon wind and solar creates problems as well. The electric transmission grid can handle fluctuations in wind and solar output up to about 35% of total generating capacity. Any percentage higher than that can create interruptions to the power supply.

Extending the life of the Surry nuclear station will provide that fuel diversity at modest cost for years to come, Dominion says.

Lots of Sunlight, Not Much Transparency

Clear as mud

Clear as mud

by James A. Bacon

Two months ago the Department of Navy announced the signing of a contract with Dominion Virginia Power to purchase enough solar electricity to meet 6% of Naval Station Norfolk’s electric power needs for more than 10 years. The next day, Dominion announced the purchase the Morgans Corner Solar Facility, located within Dominion’s North Carolina service territory but developed by Chicago-based Invenergy, Inc. The net result: Morgans Corner would supply green electricity to the naval station.

Key terms of both deals were not released. Dominion did not say how much it paid to purchase the project from Invenergy, nor did the Navy say how much it would pay for the electricity. Invenergy had little to say about anything. There was little tangible information in either press release, nor could I extract information in interviews to determine if the transactions are in the best interest of U.S. taxpayers or Virginia rate payers.

Virginia’s electric power companies are under pressure from a voluntary Renewable Portfolio Standard to generate 15% of the state’s electricity from renewable sources by 2025. At the same time implementation of the Environmental Protection Agency’s Clean Power Plan, which requires Virginia to reduce its carbon dioxide emissions 32% by 2030, will compel power companies to phase out coal-fired electricity production in favor of natural gas and renewables. Given the relative economics of wind and solar in Virginia, it looks like solar will be the main vehicle for reaching clean power goals.

Here’s the problem: These deals are about as transparent as a muddy windshield. As Virginia utilities position themselves to devote hundreds of millions of dollars in renewables — Dominion alone expects to invest $743 million over the next six years — the public doesn’t know what kind of deals are being cut.

When I started digging into this story, I hoped that the Morgans Corner deal might provide some insight into the economics of solar energy in Virginia. After all, Naval Station Norfolk is part of the Department of the Navy, a public agency that one would think would have a commitment to transparency on matters not compromising the safety of our military forces. But after badgering Navy spokesmen for weeks, all I could get was an email response with information that I, for the most part, had extracted already from Navy websites. Dominion was more cooperative — the company set up interviews with two executives — but the company was limited by non-disclosure agreements as to what they could say. As for Invenergy, repeated interview requests yielded no more than a referral to the company’s original boilerplate-laden press release.

Taxpayers are paying for this solar electricity. Why can’t we have access to the terms of the contract? It’s not as if Naval Station Norfolk is a corporation that maintains secrecy for competitive reasons. I feel like something is being hidden from the public. Sadly, the public doesn’t know enough to care.

Here’s what we know…

As part of the Obama administration’s larger goal of reducing government greenhouse gas emissions, the Department of the Navy has set a goal of producing or procuring 1 gigawatt of renewable electricity by the end of 2015 on its way to producing 50% of its electricity from alternative sources by 2020.

According to Diane Corsello, Dominion’s director of business development for solar generation, the utility has developed a “good working relationship” with the Navy over the years. “They reached out to us,” she said, for help in meeting the renewable mandate. The Navy and Dominion explored multiple options for providing green energy to Naval Station Norfolk, including both on-site and off-site facilities.

Around that time, Invenergy was developing a 20-megawatt solar facility in North Carolina’s Pasquotank County, taking advantage of state and federal tax benefits. The company, which specializes in developing and constructing renewable energy projects, had 3,500 megawatts of such projects in the development pipeline as of September. Developing a solar project entails, among other things, acquiring land, typically near a high-capacity electric transmission line, and obtaining a slew of permits before construction can begin.

“It takes a lot of time to develop a site from a greenfield condition,” explained Todd Flowers, senior business development manager for Dominion.

While working with the Navy, Dominion identified the Morgans Corner project as a good match. Invenergy had moved Morgans Corner far along the development process. The 20-megawatt project, which will install 81,000 solar panels on 110 acres, had all its permits and key agreements in place, and construction was scheduled for completion in April 2016.  Dominion could step in and acquire the facility in a “build-transfer” agreement. Continue reading

Battle Lines Forming Over Clean Power Plan

Attorney General Mark R. Herring

Attorney General Mark R. Herring

The partisan battle lines are forming over the implementation of the Environmental Protection Agency’s Clean Power Plan, which calls for Virginia to reduce carbon dioxide emissions from state power plants 32% by 2030.

Attorney General Mark R. Herring, a Democrat, announced two weeks ago that Virginia will join a coalition of 17 other states supporting the Obama administration against a lawsuit filed by 24 other states. Foes of the plan argue that the EPA far exceeded its legislative authority in regulating CO2, and observers say the case could well reach the U.S. Supreme Court.

Del. Israel O'Quinn, R-Washington.

Del. Israel O’Quinn, R-Washington.

Meanwhile, Del. Israel O’Quinn, R-Washington, has introduced a bill that would require the General Assembly to approve and oversee implementation of the plan in Virginia. While the Clean Power Plan mandates CO2-reduction targets for each state, it allows each state to figure out how to achieve the goals.

Herring justified his support for the plan on the grounds that climate change “is a real and urgent threat to the health and safety of Virginians, our environment, and our economic success as a Commonwealth.” By way of specifics, he cited the threat of sea-level rise in Hampton Roads that could displace residents and businesses and threaten Naval Station Norfolk, and the prospect of extreme weather, droughts and floods. said Herring: “It’s long past time to acknowledge these realities and take decisive action.”

O’Quinn’s bill would require the Department of Environmental Quality (DEQ) to work in conjunction with the State Corporation Commission (SCC) to prepare a report assessing the plan’s effect on the Virginia’s electric power sector, electric customers, jobs, economic development, economic competitiveness,  and state and local government.

The report also would identify new state laws that might be needed to implement the plan, study whether to rely upon EPA measures for calculating the CO2 reduction goal, and report on whether the Commonwealth should invest in energy efficiency programs, promote non-emitting nuclear power or participate in multistate programs. The report also would advanced recommendations on how best to avoid stranded investments in power plants that would be shuttered before they were fully paid off.

Getting answers to those questions is probably a good idea — the more information, the better — but sure to be controversial is the final item in the bill: “DEQ shall not submit to the EPA any state plan until both the Senate and the House of Delegates have adopted resolutions that approve the state plan in accordance with this act.”

It is safe to predict that the McAuliffe administration will not respond favorably to the idea of requiring the Republican-dominated General Assembly to approve the plan. Separation-of-power issues are potentially at stake here as well as ideological differences over climate change. Look for this to become a hot topic in the 2016 session.


Dominion’s Proposed Six-Year, Virginia Infrastructure Spend: $11.7 Billion


Source: Chmura Economics & Analytics

by James A. Bacon

Dominion Resources proposes to expend $11.7 billion over the next six years on energy infrastructure serving Virginia, including new generating plants, electric transmission lines, a gas pipeline and environmental clean-up, the company announced today. Of that amount, an estimated $5.7 billion will be spent in Virginia, producing a direct and indirect economic impact averaging $1.68 billion per year over the six-year period.

“Our growing Commonwealth requires an expanding and reliable energy infrastructure,” said Paul Koonce, CEO of Dominion’s Energy Infrastructure Group and president of Dominion Virginia Power. “Our capital investment program over the next six years is designed to meet that need and achieve environmental goals of the federal Clean Power Plan.”

Governor Terry McAuliffe weighed in with a favorable comment upon the investment program. “In order to build the new Virginia economy, we must have low-cost, diverse and reliable energy resources. These investments not only build upon an already solid foundation for economic growth in Virginia, they also create tens of thousands of jobs and produce billions of dollars in capital that benefits the Commonwealth today.”

Only one project on the list, construction of the Brunswick County gas-fired generating plant, has received regulatory approval. Others are at various stages of development, from being “on the drawing board” to moving through the regulatory process, according to Dominion spokesman David Botkins. Especially controversial are the proposed Atlantic Coast Pipeline, a natural gas pipeline; continued pre-construction development of the proposed North Anna 3 nuclear power plant; and several proposed electric transmission lines; all of which are opposed by landowners and/or environmentalists. Also controversial, because of potential impact on rate payers, is a proposal to put vulnerable electric distribution lines underground.

Assuming all the projects go forward, the economic impact on Virginia would be considerable. According to a study commissioned by Dominion and conducted by Chmura Economics & Analytics, Dominion’s capital investment would inject $771 million directly into Virginia’s economy in the first year, 2015, and would generate an additional $579 million in indirect and induced impact for a total impact of nearly $1.4 billion. Total impact would peak in 2017 at $2.5 billion and then level off around $1 billion annually in subsequent years.

About half the impact would come from construction spending, the press release stated, while “the rest would result from growth in other sectors of the economy as spending spread.”

Frank Rambo senior attorney with the Southern Environmental Law Center, responded in an email communication that Dominion should reallocate its investments from capital-intensive projects, which “produce high shareholder profits at the ratepayers’ expense,” into more labor intensive energy resources such as renewable technologies and energy efficiency. A shift from an over-reliance on natural gas to clean energy, he said, “will not only create more jobs but also help lower electric bills and create healthier communities.”

Bacon’s bottom line: The impact of Dominion’s proposed energy projects on Virginia’s economy would be considerable. More important than the short-term stimulus of the design, engineering and construction work is the necessity of expanding the capacity of Virginia’s energy infrastructure to meet the anticipated growth of Virginia’s population and economy — a critical point made in the press release by Virginia Chamber of Commerce CEO Barry DuVal. That benefit, not captured by the Dominion numbers or the Chmura study, would dwarf the impact of the capital expenditures themselves.

However, not all energy projects are created equal. Some offer a higher risk-adjusted Return on Investment than others. Is it worth $808 million to keep open the option of a third nuclear power unit at the North Anna power station that even Dominion concedes would cost rate payers $19 billion — with no guarantee that the project ever will be built? Is it worth spending $1 billion to bury roughly 20% of Dominion’s local distribution system to reduce the number of electric outages and shorten recovery times during major storm events?

Perhaps more fundamental is the question of what kind of electric grid Virginia wants to build. Dominion’s vision of the energy future is one in which Dominion continues to play a major role, building the power plants (including nuclear, natural gas, solar and wind), the electric grid, and the natural gas pipeline to supply the gas, all embedded in the larger, multistate PJM Interconnection system in which Dominion would swap electric power with out-of-state power producers as needed to meet peak demand and ensure reliability. Dominion’s critics envision a decentralized future with more wind and solar generated by independent, small-scale power producers less dependent upon large-scale transmission lines that shuttle electric power long distances. The costs and benefits of the competing visions are all but impossible to estimate with econometric models.

Dominion Acquires Accomack Solar Plant

solar_panelsby James A. Bacon

Dominion Energy, an unregulated subsidiary of Dominion Resources, announced today that it will acquire a planned 80-megawatt solar facility on the Eastern Shore for an undisclosed price. The solar plant, the largest yet announced in Virginia, will supply Amazon Web Services data centers in Northern Virginia.

Dominion is purchasing the project from Community Energy, Inc., which had announced the project in conjunction with Amazon back in June. Community Energy had consolidated 44 properties into a 900-acre site near a Delmarva Power electric transmission line in Accomack County and inked the necessary agreements with Amazon, PJM Interconnection, Delmarva Power, Dominion and municipal authorities. Construction is expected to begin in 2015, and the plant is scheduled to enter service in fall 2016.

“We look forward to expanding our relationship with Amazon as it seeks to increase the mix of renewable energy on the electric grid powering its data centers,” said Thomas F. Farrell II, chairman, president and chief executive officer of Dominion. “This project also shows Dominion’s commitment to building additional clean, renewable solar facilities in Virginia.”

Through both its regulated and unregulated subsidiaries, Dominion has ramped up its commitment to solar power in the past year. Dominion Virginia Power has set a goal of building 400 megawatts of large-scale solar by 2020, and it filed with the State Corporation Commission (SCC) in October for approval of three separate projects in Powhatan, Louisa and Isle of Wight counties totaling 56 megawatts. Shortly thereafter, the SCC rejected a previously filed proposal to build a 20-megawatt solar facility near its Remington gas-fired power plant. The commission ruled that Dominion needed to seek third-party market alternatives before building its own facility.

Dominion also purchased in October a 25-megawatt facility under development in North Carolina by Invenergy, Inc., a Chicago company. That facility will supply electricity to the Naval Station of Norfolk, advancing the Department of Navy’s goal of bringing 1 gigawatts of solar electricity into procurement. Moving in a parallel track, Dominion has built a significant solar portfolio in six other states across the country.

Bacon’s bottom line: While Dominion may not be  moving quickly enough to satisfy some of its environmental critics, the company clearly is upping its commitment to solar energy. I expect the pace to pick up. As a regulated utility, Dominion Virginia Power in particular has a conservative corporate culture that puts the reliability of the electric system at the top of its list of priorities. The company is determined to move cautiously, adding solar in incremental steps and building experience not only in how to develop and operate solar facilities but in how to integrate the fluctuating energy production into the electric grid.

What I can’t get a handle on is the economics of solar. Yes, yes, as a broad generality, the cost of solar is declining steadily, and one day could be the most economical form of energy on the grid. But how economical is it in Virginia now? What are the trade-offs between high up-front capital costs and zero fuel costs? I just can’t get the numbers. Everyone seems bound by non-disclosure agreements, and no one is releasing the numbers. I’ll write more about that shortly.

Could the Clean Power Plan Double Virginia’s Electric Rates?

coal_powerby James A. Bacon

The Clean Power Plan for reducing carbon dioxide emissions in the nation’s electric power plants could drive up Virginia’s electric rates by as much as 14% per year (non-compounded) on average between 2022 and 2033, according to a new report published by the American Coalition for Clean Coal Electricity (ACCCE). The worst single year could see rates increase by 20%.

“States should be braced to pay higher costs,” said Laura Sheehan, senior vice president for communications for ACCCE, an outspoken opponent of the Clean Power Plan. “Consumers only lose in the Clean Power Plan.” (The state-by-state breakdown can be seen here.)

The ACCCE state numbers reflect the highest of five compliance scenarios explored by NERA Consulting, which used a “state-of-the-art energy/economy model” to assess the impact of the plan. By forcing states to implement their own state-level plans to reach aggressive CO2 reduction goals, the Obama administration is effectively forcing the shut-down of dozens of coal-fired plants around the country in favor of natural gas, solar power and wind power.

The impact is significantly higher than the State Corporation Commission’s estimate last year that rates for Dominion Virginia Power, Virginia’s dominant utility, could increase by 22% in total, not to mention the Environmental Protection Agency’s (EPA) forecast that rate increases would be so modest that, when energy efficiency initiatives were included, rate payers actually would see an 8% reduction in their electric bills.

ACCCE gave two main reasons why its forecast is so much higher than the EPA’s. First, it thinks that the EPA is under-estimating the cost of achieving energy-efficiency savings. Second, ACCCE assumes more coal plants will be retired as a result of the plan than EPA does.

Bacon’s bottom line: In effect, ACCCE is saying that the Clean Power Plan single-handedly could increase Virginia electric rates by 150% over an 11-year period. That 150%-number represents the worst case of the five scenarios explored. I’m not knowledgeable enough to critique ACCCE’s econometric model but, given the plummeting costs of solar and wind power, I find that number highly implausible.

On the other hand, I find the Obama administration’s happy-face scenario that the EPA can shut down dozens of coal-fired plants and force-feed wind and solar into the nation’s electric power system without impact on rate payers to be a fantasy as well.

The ultimate impact of the Clean Power Plan is unknowable — humans just aren’t that good at economic forecasting. Moreover, everybody’s forecast is subject to bias. The Obama administration and allied environmental groups have a vested interest in minimizing the impact. ACCCE has a vested interest in exaggerating the impact. The SCC, charged with balancing the interests of the rate payers with reliability and environmental considerations, has the least overt bias, but even the commission has its blind spots. What the ACCCE study does accomplish is to broaden the range of potential outcomes.

Putting Easements to the Test

As gas and electric companies propose dozens of pipeline and transmission-line projects in Virginia, landowners are finding their conservation easements don’t provide as much protection as they thought.

Elizabeth Terry Reynolds (left) and her sister Grace Terry show a map of family land in Roanoke County. The current iteration of the proposed Mountain Valley Pipeline route would cut through family land, and a construction access road would run through land held in a conservation easement (seen in blue).

Elizabeth Terry Reynolds (left) and Grace Terry show a map of family land in Roanoke County. The current iteration of the route for the proposed Mountain Valley Pipeline would run through family property, and a construction access road would cut through land held in a conservation easement (seen in blue). The sisters traveled to Warrenton yesterday to speak before a subcommittee of the Virginia Outdoor Foundation.

by James A. Bacon

As a surge of proposals for gas pipelines and electric transmission lines in Virginia works through the regulatory process, a backlash by grantors of conservation easements is brewing. In letters and in public hearings, landowners are openly questioning whether conservation easements provide the protections they were thought to provide, and some are pressuring the Virginia Outdoors Foundation (VOF), which holds most of the easements, to work more aggressively to safeguard them, even to the extent of getting more actively involved in cases before the State Corporation Commission (SCC).

“The process we’ve used for the past 100 years in Virginia is no longer working,” said Chris Miller, president of the Piedmont Environmental Council (PEC), at a VOF committee hearing yesterday in Warrenton. The PEC’s membership includes dozens if not hundreds of conservation easement grantors.

In Virginia, the SCC approves electric transmission line routes, Miller said. The SCC uses an “adversarial” process, in which power companies, environmental groups and other interests present their evidence and their arguments. Rather than conducting its own investigations, the SCC relies upon the material that is submitted. Typically, VOF has not taken sides in these hearings. Given the increasing collision of interests, Miller said, “There is distrust now in the landowner community whether the VOF has the capacity to protect their values.”

The VOF, a publicly funded entity, promotes the preservation of open-space lands and administers roughly 4,000 easements covering more than 750,000 acres of land, an area about the size of the state of Rhode Island. The foundation recently created an Energy and Infrastructure Committee to address the incursion of big infrastructure projects on land protected by easements.

Brett Glymph, VOF executive director, said she will take Miller’s proposal under advisement, consult with legal counsel, and make a recommendation to the full board of directors. Unless a special meeting is called, the earliest the board could take up the issue would be in March, she said.

Conflicts between utilities and landowners have sharpened as the number of easements and energy projects have increased in recent years. Successive Virginia governors have made it a priority to bolster the amount of scenic, historic and environmentally valuable land either owned by the public or protected by conservation easements. As an incentive, state law allows landowners to claim up to $75 million in state tax credits each year for land grants and easements. The result has been a dramatic increase in the acreage of protected land in Virginia over the past decade.

At the same time, a transformation of the energy economy has put Virginia in the path of major energy projects. The development of the Marcellus shale fields in West Virginia and Ohio has created a boom in natural gas production. There are four active proposals to build or upgrade gas pipelines through the state to serve growing markets in Virginia and North Carolina. Meanwhile, electric utilities, compelled by Environmental Protection Agency rules to reduce pollution and carbon-dioxide emissions, are closing coal-fired power plants, building gas-fired plants and swapping more electricity between each other, all of which requires the rerouting of electricity flows and the construction of new transmission lines.

Four energy companies — Dominion Virginia Power, Appalachian Power, the Atlantic Coast Pipeline, and the Mountain Valley Pipeline — briefed the VOF committee about their individual projects. None of their representatives addressed Miller’s comments, but they did describe the challenges of devising routes for pipelines and transmission lines while also trying to protect wildlife habitat, rivers and streams, historic areas, cultural artifacts, view sheds and conservation easements. Routing pipelines, said Brian Wilson with the Atlantic Coast Pipeline, is “very much an exercise in competing constraints.”

SCC spokesman Ken Schrad responded in an interview today that “any interested party” can participate in an SCC transmission-line proceeding. The commission is required by law to weigh the environmental impact of a project along with its effect on rate payers and electric-system reliability. Staff members do some research, but because staffers are not environmental experts, the commission also hires consultants. Further, Schrad said, the SCC works with the state Department of Environmental Quality (DEQ) to solicit input from a myriad of state agencies, including the VOF, about environmental impacts.

“The commission certainly gets environmental testimony,” Schrad said. “A conservation easement would have to be taken into consideration in an environmental review.” Continue reading

If You Like Wind and Solar, You’d Better Like Transmission Lines, Too

If you want more of this....

If you want more of this….

by James A. Bacon

Wind and solar power are becoming increasingly competitive with fossil fuels and nuclear as an electric power source. As Virginia integrates more renewable energy sources into its electric generation mix, a big question is how much can the power grid handle before the intermittent nature of blowing winds and sunny skies threatens the reliability of electric service. The answer, according to PJM Interconnection, is quite a lot.

... you need to build more of this.

… you need to build more of this.

PJM, the Pennsylvania-based entity that oversees the reliability of the electric grid in a multi-state region in the Mid-Atlantic and Midwest, including Virginia, commissioned GE Energy Consulting to examine the issue. The conclusion:

The PJM system, with adequate transmission expansion and additional regulating reserves, will not have any significant issues operating with up to 30% of its energy provided by wind and solar generation. … No insurmountable operating issues were uncovered over the many simulated scenarios of system-wide hourly operation. …

Bacon’s bottom line: This is not news to anyone in the electric power industry — the study is a year old. But it’s news to me, as I slowly climb the learning curve on this topic, and it may be news to readers who have been moving up that learning curve with me, not to mention legislators who shape the regulatory environment for Virginia utilities.

There is one critical caveat in the quote above that bears close attention: “with adequate transmission expansion.”

PJM’s grid could handle 20% renewable penetration with modest requirements for new transmission lines, the study states, but costs soar at the 30% level. Depending on the scenario, PJM estimates that the regional grid would require construction of between 754 and 2,946 total miles of transmission lines ranging in cost between $3.7 billion and $13.7 billion.

Under the 30% renewable-penetration scenario, PJM assumes that much of the power will originate in Midwest states with strong, steady winds where wind power is most economical, and the grid will need transmission capacity to move electricity to markets in the east. But even with solar-intensive scenarios, new transmission lines also may be needed on a local level as power companies reconfigure the flow of electricity from decommissioned coal, nuclear and, eventually, gas-fired generating stations to the solar facilities.

And that raises a new question: Can power companies build those transmission lines on a timely basis? Environmental and landowner groups put up staunch resistance to the construction of intrusive high-capacity transmission lines through wilderness, countryside and areas of historic value, as has we have seen on numerous occasions in Virginia. These conflicts can be protracted. Friday night, for instance, the U.S. Army Corps of Engineers held another public hearing on the proposed Surry-Skiffes Creek transmission line, even as Dominion Virginia Power warned that the line will take at least 18 months to construct and will create a months-long window of vulnerability when it shutters two coal-fired units at its Yorktown Power Station. Residents and businesses on the Virginia Peninsula face a high likelihood of rolling blackouts in 2017.

The re-engineering of the electric grid to address the global problem of climate change could result in more intense conflict at the local level over disruption to wildlife habitat, soil erosion, water quality and other environmental values — not to mention economic disruption. Virginia has only begun to grapple with this contradiction.

(Hat tip: Kevin Chandler.)

“Cultural Attachment” the Latest Barrier to Infrastructure Projects?


Take me home, country roads…

by James A. Bacon

Landowner and environmentalist groups have advanced a number of arguments against building more gas pipelines (see previous post), but among the more novel is the idea that the proposed Atlantic Coast Pipeline (ACP) will disrupt the “cultural attachment” rural landowners feel for the land that would be traversed. What foes are contending here is that construction of a pipeline will do far more than hurt property values. It will damage peoples’ culture in ways that cannot be mitigated.

Most arguments against the Virginia pipelines are familiar in the sense that they appeal to widely (if not universally) recognized principles of economics and environmental stewardship. The “cultural attachment”gambit  is not like anything I have seen before.

Here’s how a letter to the Federal Energy Regulatory Commission from some 30 environmental and landowner groups makes the case:

The proposed route of the Atlantic Coast Pipeline will cross primarily rural landscapes where agriculture and forestry are the dominant land uses. The communities that would be affected by the ACP have deep roots in and strong cultural identification with the land and its rural character. In addition to adverse effects associated with the use of eminent domain, construction and right-of-way maintenance … the ACP will have significant adverse effects on the character of these currently non-industrialized areas.

The adverse effects of the taking and alteration of private property … must be assessed in light of the affected communities’ “cultural attachment” to the land. Cultural attachment is the “cumulative effect over time of a collection of traditions, attitudes, practices, and stories that ties a person to the land, to physical place, and kinship patterns.” Much of the land that would be affected by the ACP has been held in families for generations and people’s reliance on the land for survival and prosperity has resulted in high levels of cultural attachment. Rural Appalachian communities have historically suffered from significant intrusions, such as railroad highway constructions, that have “undercut the cultural patterns that had developed through people’s relation to the land, physical place, and kin.

As the U.S. Forest Service recognized in a 1996 Draft Environmental Impact Statement for an Appalachian Power Co. project in rural West Virginia and Virginia:

Substantial outside-generated intrusions (such as highways, railroads, and transmission lines) that breach the boundary of a high cultural attachment area may have significant adverse impacts to the sustainability of the local culture. … The permanence of the intrusions is a symbol of the imposed dominance of commerce and economic interests. … Permanent and elongate linear intrusions tend to bifurcate previously existing cultural units into new units. This tends to fracture informal support systems and create new boundary areas. Boundary areas created by intrusion are often abandoned by area residents from cultural management, thereby increasing the likelihood of additional intrusions.

Bacon’s bottom line: It strikes me that this argument is getting at something real. Some people feel an attachment to the land so strong that it transcends the monetary value of the land. Disruption to these ties cannot be measured by any conventional means, thus they cannot be compensated.

If the Virginia Department of Transportation wanted to run a highway through my home in western Henrico where I have lived for 13 years, I would be plenty unhappy. But I wouldn’t be devastated. My personal identity is not tied up in the house. I have no ancestral ties here, no spiritual ties. Leaving the house would have no impact on my network of kin and friends. I fully expect to sell the house when I retire and I’m ready to downsize. The house is a commodity in a way that property is not for people with strong attachments to the land.

I sympathize with those who fear the loss of something that can never be retrieved. But I have concerns. The idea of “cultural attachment” is so vague and hard to define that it could be applied to almost anything. There is no way to measure cultural attachment, and there is no way to ascertain the sincerity of the people who claim to have it. If this new doctrine were given legal force, it could be invoked to block any infrastructure project that ran through a rural area, that is to say, almost every road, highway, rail line, transmission line or pipeline ever proposed.

The idea has been around at least 20 years (since the 1996 U.S. Forest Service report at least). It doesn’t appear to have gained much traction since then. It will be interesting to see if FERC gives it any credence.

Pipeline Foes Appeal to FERC

This map shows approximate routes of four proposed natural gas pipelines running through Virginia. Image credit: Dominion Pipeline Monitoring Coalition

This map shows approximate routes of four proposed natural gas pipelines running through Virginia. Image credit: Dominion Pipeline Monitoring Coalition. (Click for larger image.)

by James A. Bacon

A coalition of pipeline opponents has called upon the Federal Energy Regulatory Commission (FERC) to conduct a comprehensive review of the need for four natural gas pipelines running through Virginia rather than reviewing them on their individual merits. The coalition, which includes numerous environmental and landowner groups, was joined by two Virginia state legislators: Sen. John S. Edwards, D-Roanoke, and Del. Joseph R. Yost, R-Giles.

Foes have raised a host of issues regarding the impact of the proposed pipeline projects on the environment and landowners. While the pipelines would be buried, their rights of way would be maintained clear of trees and brush, they argue, creating erosion issues, disrupting wildlife habitat, despoiling view sheds, and harming local agricultural, craft and tourism economies. Wider impacts from bolstering the consumption of natural gas would include an increase in the greenhouse gases implicated in global warming (CO2 and methane) and environmental damage caused by fracking.

Of the four pipeline projects, the Atlantic Coast Pipeline (ACP) and the Mountain Valley Pipeline (MVP) have been actively mapping of routes, and both have filed applications with FERC. Both MVP and ACP say demand for natural gas is increasing as electric utilities switch from coal to gas, and both companies have lined up customers to purchase most of the gas that would move through their pipelines. The public need, they say, is demonstrated by the fact that the pipelines have hard contractual commitments for the gas.

FERC has not accepted previous requests for comprehensive reviews, and the response of a FERC spokesperson did not suggest than any re-evaluation of its position was imminent. “The commission’s stance has been that we don’t develop infrastructure, that we process the applications that come through FERC,” spokesperson Tamara Young-Allen told the T-D.

But pipeline foes are giving it another try. The details of their arguments can be found in a letter to FERC addressing the Atlantic Coast Pipeline specifically.

Pipeline foes say FERC is required to determine whether a pipeline applicant has made efforts to minimize adverse effects upon landowners, communities, existing pipelines and their captive customers. “To demonstrate that its proposal is in the public convenience and necessity, an applicant must show public benefits that would be achieved by the project that are proportional to the project’s adverse impacts.”

The Atlantic Coast Pipeline, states the letter, does not provide any benefit that existing pipelines could not provide. Central to their argument is that new pipelines are not needed to meet the market’s growing demand for gas.

Evidence shows that significant existing pipeline capacity may be available to serve the South East and Mid-Atlantic markets. … Gas pipelines nationwide on average utilized only 54 percent of their capacity between 1998 and 2013. FERC has similarly acknowledged the underutilization of pipeline capacity and found that improved scheduling of natural gas deliveries would make “more efficient use of existing pipeline infrastructure.”

ACP would tap bountiful Marcellus shale gas deposits in West Virginia and Ohio, creating a supply alternative in Virginia and North Carolina to gas originating in the Gulf of Mexico. But foes argue that existing or already-approved pipelines to the north can move gas from Marcellus to the existing Transco superhighway pipeline, which serves Virginia markets. In the past Transco moved gas only from south to north. But by 2017 it will be able to move gas both directions, providing a way for Marcellus gas to reach Virginia markets.

Utilizing the existing infrastructure to the maximum extent possible, foes argue, would minimize the disruptive impact of building new pipelines.

For an in-depth discussion of the four Virginia pipeline projects, see “A Plethora of Pipelines.”

Update: Dominion, managing partner of the ACP, has provided a more detailed response than appeared in the T-D article: FERC will assess the cumulative effect of ACP and other proposed projects within a three-state region. ACP anticipates minimal impact due to “implementation of specialized construction techniques, the relatively short construction time frame in any one location, and carefully developed resource protection and mitigation plans.”

While critics have called for a programmatic Environmental Impact Statement — “a much broader, speculative regional analysis” — FERC has said in recent rulings and statements that an EIS  would not present “a credible forward look and would therefore not be a useful tool for basic program planning.”