Category Archives: Energy

Clean Power Plan Stalled, Green Energy Still Viable

In a five-to-four vote, the U.S. Supreme Court derailed, at least temporarily, President Obama's Clean Power Plan. Regulatory uncertainty ensues.

In a five-to-four vote, the U.S. Supreme Court derailed, at least temporarily, President Obama’s Clean Power Plan. Regulatory uncertainty ensues.

by James A. Bacon

The U.S. Supreme Court has halted implementation of the Clean Power Plan until challenges to its constitutionality can be resolved, creating uncertainty at the state level, including here in Virginia, on how to proceed.

The high court gave no explanation for its stay, but foes of the plan, which would compel electric power companies to make major cuts to CO2 emissions by 2030, argued that it would “force massive … changes in terms of state policies and resources, power plant shutdowns, and investments in wind and solar power,” which could not be reversed if it were later declared unconstitutional.

As a practical matter, the decision will delay implementation of the plan until the next administration. A federal appeals court is not expected to hear the case until June. If the case were appealed again, the Supreme Court likely could not render a decision until 2017, reports the Washington Post. While a Democratic president probably would press on with the plan, a Republican president likely would reverse it even if the Supreme Court ruled it to be constitutional.

The stay could create a dilemma for the McAuliffe administration, which supports the plan and has been working to implement it. Under the Clean Power Plan, Virginia’s Department of Environmental Quality is required to submit a state plan by June 2016, with the possibility of an extension until June 2017, or June 2018 if it adopts a multistate plan.

The response here in Virginia is mixed.

“Today’s unfortunate decision by the Supreme Court hits pause on the country’s strongest action to lower harmful carbon pollution, but it won’t stop the massive shift to cleaner, cheaper energy already underway in the Southeast and across the nation,” says Frank Rambo, senior Attorney and clean energy leader for the Southern Environmental Law Center. “The goals of the Clean Power Plan reflect this energy shift: we’re embracing cleaner energy options that would be happening with or without this plan. ”

“This comes as no real surprise,” says Dominion Virginia Power spokesman David Botkins. “It continues to be a legal and policy cloud of uncertainty for the country and the energy industry.” But Dominion will continue to move forward with the Clean Power Plan. “We will work constructively with the Commonwealth and other stakeholders on a compliance plan that has our customers as the first priority, ensures reliability, and maintains a diverse mix of electric generation.  We continue to prepare for implementation (of CPP) unless we are notified that Virginia is delaying or halting their development process.”

What does this mean for green energy in Virginia?

While a stay of the Clean Power Plan will slow the transition of Virginia’s electric grid to cleaner energy sources, it will not halt it. Dominion still is planning to shut down two aging, coal-fired units at its Yorktown Power Station, and its long-term investment plan calls for more gas-fired electric power, which emits less CO2 per unit of electricity than coal, and more solar. Indeed, Dominion announced plans two days ago to partner in a 20 megawatt solar facility in Chesapeake that will produce the energy equivalent needed to power 5,000 homes. (Substantial reliance on offshore wind energy still seems to be a distant prospect.)

The economics of wind and solar continue to improve, and many energy consumers — ranging from Amazon Web Services to the Norfolk Naval Station here in Virginia — are willing to pay a premium for renewable energy. Meanwhile, expansion of the electric transmission grid may make it realistic for Virginia power companies to import cheap wind-powered electricity from the Midwest.

Update: I have updated the Dominion quote to reflect company’s assertion that it will continue to move forward with the Clean Power Plan.

Update: A statement from Governor Terry McAuliffe: “Over the last several months my administration has been working with a diverse group of Virginia stakeholders that includes members of the environmental, business, and energy communities to develop a strong, viable path forward to comply with the Clean Power Plan. As this court case moves forward, we will stay on course and continue to develop the elements for a Virginia plan to reduce carbon emissions and stimulate our clean energy economy.”

A quote from John Shepelwich, spokesman for Appalachian Power Co.:  “The Supreme Court’s decision confirms that the legal justification for the Clean Power Plan should be examined by the courts before scarce state and private resources are used to develop state plans. The accelerated schedule for briefing and argument in the lower court assures that the case will be heard promptly.”

Domenech Claims about Clean Power Plan Detract from Serious Debate

domenech

Doug Domenech

by James A. Bacon

There is a principled conservative-libertarian argument to be made against the Obama administration’s Clean Power Plan (CPP), which would compel Virginia’s electric utilities to cut CO2 emissions by 32% from 2005 levels by 2030. Unfortunately, Doug Domenech, Secretary of Conservation and Natural Resources during the McDonnell administration, didn’t make it in a Sunday column in the Richmond Times-Dispatch. Indeed, by building his argument around at least three propositions that are either unsubstantiated or just plain wrong, he may have damaged the credibility of Clean Power Plan critics.

In the spirit of charity, let’s start with what Domenech gets right. He argues that the Clean Power Plan might be unconstitutional. I agree. A serious argument can be made that the Environmental Protection Agency (EPA) usurped Congressional authority by classifying  carbon-dioxide, a chemical essential to life, as a pollutant that can be regulated under the Clean Air Act. Twenty-seven states are suing the EPA on those grounds in a case that will be decided by the U.S. Supreme Court. Until the high court rules, the constitutionality remains in limbo.

Domenech also argues that the Clean Power Plan will do little to effect climate change. Implementation of the plan will reduce projected global temperature increases by 0.018 degrees Celsius by the year 2100 and slow the rise in sea levels by the thickness of two sheets of paper. That’s for the entire U.S. The impact of Virginia’s adherence to the plan will be too small to measure. Even the EPA has conceded this reality, but argues that the U.S. cannot persuade other countries to restructure their energy economies unless the U.S. moves aggressively to decarbonize its own.

Domenech also raises a legitimate question: How much will the Clean Power Plan cost rate payers? Given that the plan calls for phasing out coal-fired power plants, the cost of which is already built into the rate base, and replacing them with gas, nuclear, wind or solar, which must be paid for anew, there are reasonable grounds to believe that the plan will drive up electricity costs here in Virginia.

However, he cites (without naming the source) a study by the American Coalition for Clean Coal Electricity which concludes that electricity rates will increase annually by 14% annually, or roughly 150% over 11 years. That forecast is an extreme outlier. The State Corporation Commission has estimated that Dominion Virginia Power electric rates could increase 20%, while environmentalists have argued, on the implausibly low side, that electric rate increases will be so negligible that, when combined with energy-conservation measures, Virginians will actually pay lower electric bills. Perhaps the most disinterested and credible source, PJM Interconnection, says that the final cost will depend on the particular regulatory regime Virginia chooses and, thus, is impossible to determine at this time.

But that’s nothing compared to two claims that are utterly unsupportable. As Virginia’s chief environmental regulator, Domenech should know better.

First, he gives DEQ and the private sector credit for reducing Virginia’s emissions of sulfur dioxide by 66%, nitrogen dioxide by 43% and carbon dioxide by 27% during the McDonnell administration between 2010 and 2014. “This was largely due to the efforts of the professionals at the Department of Environmental Quality and the actions of Virginia’s corporate citizens. … We were able to reduce CO2 27% without the heavy hand of the EPA.”

In truth, the hand of the EPA was very heavy indeed. In December 2011, about halfway through the McDonnell administration, the EPA finalized its Mercury and Air Toxics Standards, which regulated mercury and other toxic chemicals released into the air by coal combustion. The EPA rules cracked down on dirty coal emissions, forcing electric utilities to switch to other power sources, particularly natural gas, which emits roughly half the CO2 per unit of energy as coal. Much of the pollution reductions cited by Domenech came about as the power industry either anticipated and/or responded to the new standards by installing scrubbers or converting from coal to gas. For instance, Dominion converted two units at its Possum Point from coal to gas in 2013, and its entire Bremo plant from coal to gas in June 2014.

I was not covering the electric power industry back then, so I acknowledge the limitations of my knowledge. But if the EPA’s air toxic standards were not the driving force behind the decline in pollutants, what DEQ initiative was? Domenech provides no alternative explanation.

Secondly, Virginia’s former environmental chief blames the woes of Virginia’s coal industry on the Clean Power Plan: “With this EPA rule, we see the impacts on Virginia’s coal communities. Coal mines are being shut down, miners are losing their jobs, the dreams of coal families are being shattered, coal companies are filing for bankruptcy.” Even CSX and Norfolk Southern railroad profits are plummeting due to drops in coal volume.

That is stupefyingly, breath-takingly wrong. If he wants to blame government regulation, Domenech could plausibly cite the impact of the Mercury and Air Toxics Standards, which with the fracking revolution and low price of natural gas pushed electric utilities to scrap dozens of coal-fired power plants around the country or convert them to gas. No question, that wave of regulation sharply reduced demand for steam coal. On top of that, export markets for steam and metallurgical coal (used in steel making) also have collapsed. But to blame the Clean Power Plan, which hasn’t resulted yet in the shut-down of a single coal-fired plant, for the current condition of the coal industry just isn’t credible. If Domenech wants to make a connection between the Clean Power Plan and the coal industry, he could plausibly argue that the plan will demolish future demand for coal, that it will destroy any hope of a coal industry recovery, and that the economic woes we see in the coalfields today will become even more widespread. But that’s not the argument he makes.

Over and above questions about its constitutionality, the Clean Power Plan raises important issues for Virginians. The plan will engender complex trade-offs between costs to rate payers, the reliability of the electric grid and the environmental benefit of shifting to low-carbon or zero-carbon power sources. To what extent should we diversify our fuel sources? How rapidly will demand for electric power increase, how much new capacity should we build, and who will pay for that capacity if we build too much? To what extent should we purchase electricity in wholesale energy markets, and can we build enough electric transmission lines (which nobody likes) to accommodate the large-scale wheeling of power across state lines? What kind of grid is more resilient in the face of cyber-sabotage, terrorist attacks or natural calamities — the Big Grid vision of large power plants and large transmission lines, or a small-is-beautiful vision in which householders and businesses generate much of their own roof-top power?

These are the kinds of questions I’m asking at Bacon’s Rebellion. Conservatives and Republicans can either be part of a serious discussion or they can throw dust  in the air to distract the electorate. Sadly, the misinformation in Domenech’s op-ed is so easily debunked that it’s hard to take him seriously. Republican legislators would be well advised not to fall into the same trap.

Curse Thee, Demon Smart Meter!

Photo credit: Pew Charitable Trust

Photo credit: Pew Charitable Trust

Smart meters could be a key contributor to America’s evolution to an energy-efficient future. The devices measure gas and electricity consumption, helping consumers reduce energy consumption, save money and reduce the CO2 emissions implicated in global warming. The widespread use of smart meters could enable power companies to offer incentives for consumers to shift their electricity consumption away from periods of peak demand, thus cutting costs for everyone.

But a backlash against smart meters is picking up steam. Some say the data they convey over wireless networks can be hacked by criminals to target homes. Utilities say the fears are overblown, but 15 states now allow consumers to opt out of smart meter installations. Pew Charitable Trusts’ Stateline has the story here.

Good intentions are no match for the stubbornness and perversity of mankind.

— JAB

The Electric Grid Just Got Smarter

Interesting development… Dominion Voltage, Inc., a subsidiary of Dominion Resources and sister company of Dominion Virginia Power, has announced the launch of a new product, EDGE Stabilizer, to help electric utilities manage the reliability impact of solar, wind and other distributed energy resources (DER) on the electric grid.

“Market forces are significantly increasing the amount of DER, and utilities need cost effective ways to safely and efficiently integrate DER into their grids,” said Todd Headlee, executive director of DVI. “In areas with high levels of DER, EDGE Stabilizer minimizes the need for additional costly hardware devices or other distribution system upgrades by orchestrating the use of existing residential smart inverters, large scale inverters, load tap changers, capacitors, voltage regulators and AMI/smart meters to ensure utility customer voltages remain in compliance.”

EDGE Stabilizer also integrates detailed weather forecasts to anticipate voltage volatility on a circuit by circuit basis.

Bacon’s bottom line: It will be interesting to see how Dominion’s right hand and left hand work together. Will Dominion Resources use its smart-grid technology to help Dominion Virginia Power, its regulated subsidiary, better integrate wind and solar into its generating mix? Or will regulatory obstacles and/or strategic considerations hamper the application of the technology? Another way of phrasing the question: Will a smart-grid technology invented in Virginia be applied in Virginia? I’ll be posing those questions to Dominion when I get the chance.

Dominion Doubles Down on Natural Gas

Questar pipeline operations

Questar pipeline operations

by James A. Bacon

With the acquisition of Questar Corporation, a Salt Lake City-based natural gas distribution and pipeline company, Dominion Resources is making a $4.4 billion bet that natural gas represents the energy future.

“Dominion expects the value of the Questar pipeline system to rise over time as Utah and other Western states seek to comply with the requirements of the U.S. Environmental Protection Agency’s Clean Power Plan and meet state-mandated renewable standards, with increasing reliance on low-carbon, gas-fired electric generation,” stated Dominion, parent company of Dominion Virginia Power (DVP), in a press release announcing the deal.

In the same statement, the company noted that it has committed $1 billion for three solar-generating facilities located in Beaver, Iron and Millard counties in Utah. “These solar facilities are backed by long-term power purchase agreements with local electric utilities,” the company said.

The announcements come at a time when the McAuliffe administration is wrestling with which strategy Virginia should pursue in meeting the requirements of the Clean Power Plan. The EPA gives states some flexibility in meeting its tough goals for reducing CO2 emissions from electric-generating plants. DVP has been leaning toward natural gas as the dominant fuel to replace coal, while keeping open the expensive nuclear option. The Sierra Club and other environmental groups are pushing for much more aggressive use of wind and solar, which emit zero CO2 but create grid-reliability issues when operated on a large scale.

Dominion and DVP contend that the giant Marcellus and Utica shale basins in West Virginia, Ohio and neighboring states will provide years, perhaps decades, of inexpensive natural gas. Although gas combustion does emit CO2, it creates far less than coal. The cost is lower than that of wind and solar, and the fuel source provides more flexibility. Critics counter that the price of gas is volatile and not necessarily the optimum long-term choice. Dominion prefers its DVP subsidiary to burn gas, however, in the expectation that DVP will purchase gas transported on the proposed Atlantic Coast Pipeline, of which Dominion is the managing partner, and utilize its gas storage assets in the Marcellus basin. Keeping the business all in the family, so to speak, will create more profit for the parent company.

The Questar acquisition suggests that Dominion’s top brass really does see natural gas as the energy future. Serving markets in Western states, Questar gains no benefit from its association with Dominion Virginia Power. Rather, as the company explained in its press release, “Questar would provide enhanced geographic diversity to Dominion’s natural gas operations. Dominion’s existing operations lie in the heart of the mid-Atlantic, whereas Questar’s system is the ‘hub of the Rockies’ and a principal source of gas supply to Western states.”

At the same time, Questar fits Dominion’s broad corporate strategy. “This addition is well-aligned with Dominion’s existing strategic focus on core regulated energy infrastructure operations,” said Thomas F. Farrell II. “Questar boasts best-in-sector customer growth in states with strong pro-business credentials and constructive regulatory environments. These high-performing regulated assets will improve Dominion’s balance between electric and gas operations.”

Market commentators had little light to shed upon the merger, noting mainly that stagnant demand for electric power due to energy efficiency has spurred a number of deals between utilities and natural gas distributors, which enjoy stable prices thanks to the supply glut from shale fields.

“Top-line growth in electricity is basically nil,” Kit Konolige, an analyst for Bloomberg Intelligence, said Monday. “They’re looking for a business on the gas side that’s similar to what they’re doing but, as they see it, would have better growth prospects.”

Gas Worse Carbon Polluter than Coal, Says Sierra Club

global_warmingby James A. Bacon

The Sierra Club has attacked the idea of natural gas as a “clean fuel” in a new broadside against the proposed construction of the Atlantic Coast Pipeline (ACP) and the Mountain Valley Pipeline (MVP) through Virginia. When viewed over the “natural gas fuel cycle” — including production, transportation and combustion — natural gas would be a bigger contributor to climate change than the existing electric generating fleet, including coal-fired plants, the environmental organization charged late last week.

“Natural gas only seems like a cheap and easy fix for climate change,” said Glen Besa, director of the Sierra Club Virginia Chapter, in a statement accompanying the white paper. “In reality, methane pollution is a serious problem that makes natural gas a dead-end solution. We have to stop kidding ourselves. Virginia should be investing in wind and solar and energy efficiency, not expanding infrastructure for more fossil fuel burning.”

The Sierra Club issued the report as the Virginia Department of Environmental Quality makes important decisions about how the state should implement the federally imposed Clean Power Plan, which calls for a massive reduction in carbon-dioxide emissions from Virginia power plants by 2030. The Sierra Club and other environmental groups have called for the most aggressive options, which would require more solar and wind and less natural gas than proposed by Dominion Virginia Power. Backers of the ACP and MVP pipelines have justified the projects on the grounds that they will supply gas-fired power plants in Virginia and North Carolina with cheap shale gas from West Virginia and Ohio.

“The overwhelming consensus of state and federal policymakers – which the Virginia chapter of the Sierra Club ignores – is the increased use of natural gas for electric generation is essential to meeting the Clean Power Plan,” responded Jim Norvelle, director-media relations for Dominion Energy, the managing partner of the ACP.

“This is the view of President Obama and elected officials from states across the country,” he said. “It is also the clear guidance of the [Environmental Protection Agency], which identified increased use of natural gas generation as one of three key building blocks for meeting the goals of the Clean Power Plan.”

Because the combustion of natural gas releases less CO2 per unit of heat than the combustion of coal, it is commonly argued that a switch to gas, while less helpful than a shift to solar and wind in reducing CO2, does make a significant contribution as a “bridge” fuel in the fight against global warming. But the Sierra Club argues that such a combustion-only analysis excludes the impact of the release of gas during fracking operations and pipeline leaks. Summarizes the Sierra Club statement:

In addition to emitting large amounts of CO2 when burned, natural gas is a major contributor to climate change in the extraction and transmission stages, where significant amounts of methane escape from wells and pipeline leaks. Methane is a much more powerful greenhouse gas than CO2, and these “fugitive emissions” of methane have emerged as an area of serious concern that undercuts the case for natural gas as a cleaner substitute for coal. …

Greenhouse gas emissions for Atlantic Coast Pipeline would be more than five times the annual emissions from Dominion’s Chesterfield Power Station, the largest coal fired plant in Virginia, and equal to more than 80% of the total carbon pollution from all 177 stationary sources in the EPA’s 2014 inventory of GHG emissions in Virginia, states the Sierra Club.  The impact of the Mountain Valley Pipeline would be even greater.

Critics of renewable fuels counter that solar and wind farms produce electricity only  when the sun is shining and the wind is blowing, not when there is a demand for electricity. Natural gas generation can be dialed up and down quickly as electricity demand changes. That flexibility is particularly critical if electric utilities are to adopt “demand-response” rate structures that encourage users to conserve energy during periods of peak demand. Gas advocates also note that the gas infrastructure has less impact on the landscape. Solar and wind requires far more land to generate comparable amounts of electricity; wind turbines and vast expanses of solar panels also are more visually intrusive than buried pipelines.

Sparks Will Fly

gridby James A. Bacon

Step aside Medicaid expansion. The big uproar in the General Assembly this year is over who gets the final say over the shape of Virginia’s Clean Power Plan: General Assembly Republicans or Democratic Governor Terry McAuliffe.

At stake is the future of Virginia’s electric grid. Democrats and their allies are pushing for 30% renewable energy by 2030 compared to 2005 levels. Republicans and their constituencies fear that excessive investment in intermittent energy sources like solar and wind would saddle rate payers with billions of dollars in unnecessary costs.

In a straight party-line vote earlier this week, the House of Delegates passed House Bill 2, which would require both the House and the Senate to approve any plan developed by Department of Environmental Quality (DEQ) to regulate carbon-dioxide emissions from electric power sources before submitting it to the Environmental Protection Agency.

After the bill’s passage, House Speaker William J. Howell, R-Stafford, said the energy plan will have a “devastating impact” on Virginia’s economy, according to the Richmond Times-Dispatch. “It is critical that the people have a say in the energy policy of the commonwealth through their elected representatives, not by unelected bureaucrats in Washington and Richmond.”

The bill likely faces a veto by McAuliffe, who has said that he would combat any effort to limit the state’s ability to respond to climate change and sea level rise.

The state faces two strategic decisions on how to reach Clean Power Plan emission goals.

The first decision is whether to go with an “emission standards” plan or a “state measures” plan. An “emission standards” plan would apply EPA standards to coal- and gas-fired power plants in the state. A “state measures” plan would include a mix of measures, not just focusing on power plant emissions but allowing other elements such as renewable energy standards and residential energy efficiency. A stakeholders group advising the DEQ reached a consensus, according to the meeting minutes, “that the emission standard approach was preferred.”

The second decision is whether to adopt a “mass”-based approach or a “rate”-based approach for reducing CO2 emissions. A mass-based approach sets targets based on the absolute volume of CO2 emissions by electricity producers within a state. A rate-based approach sets targets based on CO2 emissions per kilowatt hour of electricity generated. The stakeholders group started tackling this issue in December and will resume the discussion in its February meeting.

Meanwhile, in an open letter to McAuliffe, 50 Virginia environmentalists and progressives pushed for an aggressive implementation of the Clean Power Plan. States the letter: “Virginia can and should reduce its total carbon pollution from power plants at least 30% by the year 2030, by applying the same emissions limit to all plants (existing and new) and increasing our use of energy efficiency and renewable energy. With this strategy, Virginia’s Clean Power Plan will reduce electricity bills and grow our economy, while helping to meet our obligation to future generations.”