Category Archives: Infrastructure

Verizon Decision Leaves Powhatan with Tough Internet Choices

broadbandBy John Szczesny

“How they heck can we get broadband internet?”

That’s the question being asked in rural Powhatan County, where officials earlier this month held a meeting with frustrated residents living without a vital connection to the world around them.

Cable never came to these folks; their neighborhoods weren’t densely settled enough to suit incumbent providers Verizon and Comcast, and thus they were also left without internet service that is typically bundled as a package.

In Powhatan and many other rural Virginia communities the only telecom infrastructure in the ground is copper used to provide land-line phone service, which is fast becoming a 20th century relic as people make the switch to IP and mobile networking technologies.

Verizon owns this copper in Powhatan, but reluctantly so: the company has moved in recent months to sell off a good chunk of its wireline assets in order to focus on the more lucrative wireless business (read: selling us smartphones). Even a direct $144 million dollar subsidy offered by the Federal Communications Commission (FCC) couldn’t induce Verizon to extend internet service to its rural service areas which includes Powhatan. The telco giant refused the money this past summer.

What’s next for Powhatan? Unless Verizon sells off its wireline infrastructure in the county to a willing provider there isn’t much hope of a private sector solution. The Return on Investment (ROI) would need to factor out, and that would be doubtful without the density of customers to purchase service.

And so we’re back to the issue of municipal broadband.

County officials have mentioned Fixed Wireless as a potential solution, on a network with a fiber backhaul to connect with towers. It may not be any cheaper, but this route would encounter less regulatory interference from the state than building municipal broadband on an underground fiber optic network (and without towers).

Unless state telecom regulators step in with assistance, rather than interference, rural communities like Powhatan are going to have to go it alone in an expensive mission to connect with the internet.

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.

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.


Striking a Balance on Municipal Broadband

broadbandby John Szczesny

Changes in latitudes, changes in attitudes… towards municipal broadband, that is. As officials in the Roanoke Valley move forward with plans for a municipal fiber network the state of North Carolina is busy suing the FCC to prevent its local governments from doing the same.

To be fair, municipal broadband is no cakewalk in Virginia. Commonwealth regulators at the SCC require localities to essentially tax their own operations in an amount they would charge an incumbent Internet Service Provider (ISP) for such things as licenses, pole attachments, and street opening permits. They also prohibit cross-subsidizing telecommunications from other government operations, except when no other competitors are vying to offer similar services. Municipal networks must provide open access to other providers. And they can forget about cable TV.

Rules like these typically raise hackles from those on the left who see no problems with municipal broadband, since they relish the expansion of government control.  In their view such telecom legislation is nothing more the genesis of greedy cable companies, and while there’s no denying the influence of the cable lobby in state legislatures — apparently cable companies run the show in N.C. — there are, in fact, dangers in stripping all restraints from municipal network providers.

As long as government entities have a monopoly power on taxes and absolute control over land use, there is a need to hold them in check. Just ask the incumbent providers. Too many communities have abused their authority by exacting unreasonable fees for right-of-way permitting, and have bogged down network deployments through bureaucratic inertia. Much like developers seeking zoning approvals, the ISP network is viewed as another revenue stream.

Virginia regulators will need to find a middle road so municipal networks can fill voids where private sector ISPs are not competing, while also ensuring that municipalities and their network partners aren’t conferred unfair advantages.

Too Little Density, Too Much Road Surface

Millions of square feet of underutilized pavement cost millions of dollars per year to maintain.

Millions of square feet of underutilized pavement cost millions of dollars per year to maintain.

by James A. Bacon

It goes without saying that New Jersey is dissimilar from Virginia in many ways, so it’s hazardous extrapolating conclusions from one state to the other. But a new study about New Jersey roads co-authored by Smart Growth America and New Jersey Future implies that the Old Dominion could have saved hundreds of millions of dollars yearly in road maintenance expenses had higher-density development been allowed to occur instead of the scattered, low-density sprawl that characterized so much of the state’s growth after World War II.

Using a novel technique for estimating the surface area of road pavement per capita, researchers found that the most densely developed areas of New Jersey maintain about one-third the pavement surface per capita — about 130 square feet of road surface compared to 423 square feet — as the least densely developed parts of the state.

The conclusion is counter-intuitive. Cities seem to be chock-a-block with streets in a way that rural and suburban areas are not. The key is to look at the space devoted to roads on a per capita basis.

States the study, “The Fiscal Implications of Development Patterns: Roads in New Jersey“:

If for the same population and employment levels, New Jersey had directed development into a smaller land area with at minimum 10 people or jobs per acre (still not very dense — single-family homes on quarter-acres lots would meet the criteria), we estimate that the total area of road New Jersey and its municipalities need to maintain would have been reduced by 36 percent, or approximately 1.9 billion square feet. And assuming an average cost of $0.25 per square foot to maintain the roads, the result would have been a $470 million savings statewide every year.

The analysis draws two broad conclusions: (1) local road maintenance costs per capita decrease as activity density increases, and (2) low-density communities have the most to gain by permitting more density.

Bacon’s bottom line: To get a rough (very rough) idea of what a similar analysis would yield for Virginia, consider that the Old Dominion has about twice as many total lane miles as New Jersey (162,000 compared to 86,000) and that the Virginia Department of Transportation (VDOT) is budgeted to spend $2 billion a year in 2015 (including city and county street payments) on maintenance.

Of course, it’s impossible to go back and tear up the development of low-density areas of Virginia, so the study is academic to some degree. On the other hand, this kind of analysis should guide future investment. Just as Virginians today are paying for poor policy decisions made over the past five decades, future Virginians will pay for our decisions.

I do quibble with the way the authors state their case: It says these savings could have been achieved had New Jersey “directed” development into denser development patterns. I don’t like the idea of government directing how and where people should live. But that doesn’t change the larger point that denser communities cost less per capita on road maintenance than low-density communities. The way to frame the issue in Virginia is this: Had local zoning policies not directed growth into low density areas, average population densities would be higher, less road would have been required, and maintenance costs would be lower.

How Much Is It Worth to Preserve Dominion’s Nuclear Option?

Schematic of proposed North Anna 3 nuclear plant. Image source: Dominion.

Schematic of proposed North Anna 3 nuclear plant. Image source: Dominion.

by James A. Bacon

Perhaps the biggest question facing Virginia as it implements the Clean Power Plan, which mandates a 37% reduction in CO2 emissions from Virginia power plants by 2030, is what fuel mix to rely upon. Compelled to cut coal use sharply, Virginia’s power companies effectively have a choice of natural gas, nuclear and renewables such as wind and solar.

While not committed to building a third nuclear plant at North Anna Three, Dominion Virginia Power has spent hundreds of millions of dollars to create that option. But leading Virginia environmental groups have declared their all-out opposition to nuclear power, despite its zero carbon emissions. Then on Wednesday the Attorney General’s Office, which represents the interests of Virginia’s consumers, publicly stated that Dominion should abandon its nuclear initiative on the grounds of cost.

“How many hundreds of millions or billions of dollars does a company need to spend … before we can say we are planning to build this generation project?” said William Reisenger, an assistant attorney general, as reported by the Richmond Times-Dispatch. “Is there a threshold? Could Dominion spend $3 billion on a generation project without deciding whether it is building that project?”

At present, North Anna 3 is the third most expensive option for complying with the Clean Power Plan, Thomas P. Wohlfarth, Dominion’s senior vice president for regulatory affairs, acknowledged Wednesday in a hearing about Dominion’s long-range planning document, the Integrated Resources Plan. But that ranking could change. “All it takes is some variation on how the state decides to implement the plan, or decisions by other states, or a change in gas prices. You could very easily see a flip in the value where North Anna ends up being the lowest cost. … You can’t go all in on one fuel source.”

Framed this way, the question becomes how much is it worth to maintain diversified power sources for Virginia’s electric grid?

Dominion, like other electric utilities across the country, is increasing its commitment to natural gas. Gas is cheap (at the moment), it is virtually pollution free, and it has half the carbon emissions of coal. But there are legitimate questions how long it will remain cheap. No one is certain how long the Marcellus and Utica shale fields can continue to expand production, or how long supplies can keep pace with increasing consumption, especially after the U.S. starts exporting liquefied natural gas.

The main non-nuclear alternatives to natural gas are solar energy and wind power. In the past, those power sources have been exceedingly expensive, but improving technology has brought costs down. In Virginia, off-shore wind is still wildly uncompetitive in the near-term, and it appears that on-shore wind, sited mainly along mountain ridges, will be only a niche power source. The economics of solar look far more positive. The issue with solar, as with wind, is the intermittent nature of the power production. How much conventionally powered backup will be required, and what will be the impact, as solar becomes a major contributor, on electric grid reliability?

The strategic question Dominion is asking is this: Does Virginia want a future electric grid that relies largely upon natural gas, wind and solar? Or does it want to diversify its fuel mix with nuclear power to provide a stable base? Should the state roll the dice on two or three power sources or spread its bets to include nuclear?

The cost of nuclear is a huge consideration. According an expert witness for the AG’s office, North Anna 3 would cost in the realm of $19.3 billion, a sum that could increase customers’ electric bills by 25%. Irene Leech, president of the Virginia Citizens Consumer Council, declared the nuclear project “the biggest single threat posed today against the pocketbooks of Virginia consumers.”

Dominion spokesman Richard Zuercher says the AG office’s $19.3 billion estimate is “not unreasonable.” But it’s important to understand the context. That is not the up-front capital cost of building North Anna 3. The figure includes the cost of interest, which is paid out over decades. It also doesn’t take into account the fact that, once built, a new nuclear unit would likely have a 60-year life span, longer by decades than the life span of an investment in gas, wind or solar. All things factored in, will nuclear will be economically competitive? As Wohlfarth says, it all depends.

So, how much is it worth to maintain the nuclear option, not knowing whether it will ever be exercised? It’s not clear from the Times-Dispatch article where Reisenger with the AG’s office got the $3 billion figure. (I suspect it was a number pulled out of thin air for purpose of making a rhetorical point, not meant to be an authoritative cost projection.) Whatever the source, Dominion takes issue with it. Wrote Zuercher in an email late yesterday:

We disagree with the $3 billion stated by the witness in reference to how much the company could spend before committing to the new unit. The net capital spending to date is $278 million, net the $301 million that the Virginia General Assembly  allowed to be covered by existing rates, and does not include interest. It is more likely that spending on the unit could be in the $450 million range (net the write off) by the end of 2017, the year in which we expect the NRC to issue the license that would allow us to build and operate the North Anna 3.

Combining the $301 million “write-off” (what Dominion has already spent and is charging to rate payers) plus an additional $450 million, the total cost of preserving the nuclear option would be about $750 million. That’s about one-quarter the $3 billion figure cited.

Is the benefit of of preserving the nuclear option worth spending $450 million over and above the $301 million in sunk costs? If you’re dead-set against nuclear, no number is worthwhile. If your primary interest is holding down electric rates, maintaining system reliability and reducing greenhouse gas emissions over the long haul, reaching a judgment is a lot more complicated.

Wind Power in Virginia… 2017 or Bust


by James A. Bacon

Investors have been trying without success for nearly a decade to build wind turbines along the ridge lines of Virginia’s mountains. Projects have bogged down amid concerns about noise generated by thrumming blades, the slaughter of birds and bats, and the imposition of 500-foot-high machines upon neighbors’ pristine views. While wind turbines have sprouted around the country — generating 25% of the electric supply of Kansas, Iowa and South Dakota — not one wind farm has been built in Virginia.

Charlottesville-based Apex Clean Energy is optimistic that it can break the jinx, predicting that its Botetourt County wind farm, Rocky Forge, will plug into Virginia’s electric grid by late 2017, and that a Pulaski County project, Pinewood, will be up and running by 2018.

I sat down yesterday with Tyson Utt, Apex director of development for the Mid-Atlantic, to discuss land-based wind power in Virginia. When I asked him why there is none,  he didn’t want to talk about what others might have done wrong. Apex’s focus, he said, is on getting it right. The special attention Apex pays to site selection and community relations, he says, minimizes local opposition by framing wind power as an asset, not a liability, to the community.

If anyone is positioned to pull off the feat of generating land-based wind power in Virginia, it’s Apex. Senior management has years of experience in wind, selling a portfolio of projects to BP in 2009 and then launching Apex to acquire stranded wind projects around the country and add to them with internally developed projects. The team includes more than 150 employees steeped in all aspects of siting, constructing and operating windmills. Pocketing $30 million in second-round financing in August to finance its growth, Apex has 53 wind projects in 25 states completed or under development.

The economics of wind power are improving as the turbines that convert wind to energy continuously improve in efficiency, says Utt. Meanwhile, there is growing demand for green energy as states adopt Renewable Portfolio Standards (mandatory targets for renewable energy as a percentage of total electricity production) and as corporations seek to establish their green bona fides by purchasing green power. While concerns persist about the intermittent nature of wind, the experience of other states and some European countries, he says, has demonstrated that wind can account for a significant percentage of total electric power without compromising the reliability of the electric grid.

Apex’s value proposition, says Utt, is the close attention it pays to site selection. The development team does due diligence on potential locations, focusing not only on technical factors such as wind speeds and variability, and economic factors such as proximity to transmission lines, but to intangibles like wildlife habitat and impact on view sheds. “We factor in community acceptance when we site a project,” he says.

High on the list is aligning the interests of the landowner with the company, says Utt. Typically, that means paying the landowner a royalty as a percentage of revenues generated, and it means configuring the project so that the landowner can continue using the land — for farming, forestry, whatever — that he or she had been using it for previously. In the case of the Rocky Forge project, which will have up to 25 windmills, a provision is written into the lease that allows hunters to continue using the land, a measure that has helped win over local hunting clubs. Also critical to building public support is creating an open line of communication with county residents to allay the inevitable fears.

An advantage of the Rocky Forge project is that the wind turbines will be located on isolated mountain ridges that will be seen by relatively few people, says Utt. For the most part the mountain ridges will be screened by other ridges and forested land. Botetourt County has enacted an ordinance laying out guidelines for development of wind projects, including a restriction that limits turbines and their blades to a maximum height of 550 feet.

However, Apex hasn’t won over everybody. In July, eight Botetourt residents filed a lawsuit in circuit court claiming that the ordinance failed to protect them from dangers posed by the giant windmills. “Industrial wind turbines are known to catch fire, to collapse, emit audible and low frequency noise, cause shadow flicker and to throw ice from spinning blades in the wintertime,” the lawsuit states. And that’s just the impact on people. The giant blades also kill birds and bats.

The county isn’t backing down, and Apex is proceeding with development. In July the company applied for a permit to build three temporary meteorological towers, no higher than 199 feet, to collect data on wind speeds and variability. Eight days ago, the company asked the Federal Aviation Administration to issue a determination that the towers would not interfere with passing airplanes.

Important aspects of the Rocky Forge project have yet to be determined, like who will buy the electricity. Apex might sell it to a power company — the site is located next to a Dominion Virginia Power transmission line — or to a large commercial customer, or even to the wholesale market. If the price was right, it could sell the project to another owner, although Apex’s business model calls for operating and maintaining the wind farms itself. The company monitors and controls facilities around the country from a central facility in Charlottesville 24 hours per day.

When asked what the General Assembly, Governor’s Office or the State Corporation Commission can do to make Virginia more hospitable to on-shore wind power, Utt doesn’t have any suggestions. He just emphasizes the opportunity created by the Environmental Protection Agency’s Clean Power Plan, which compels Virginia to reduce CO2 emissions over the next several years, to grow a new industry.

Fostering the growth of Virginia-based wind farms keeps economic activity in the state, Utt observes. Virginia is one of the largest importers of electric power of any state in the country. Why not create a revenue stream for Virginia landowners and a Virginia company instead of importing green power from outside the state?

Thanks to improving technology, the cost of wind has come down 58% over the past five years, says Utt. Between the growing demand for green energy and the declining cost, growth of the wind industry is “inevitable.” Virginia might as well take part.

Woolly Headed Thinking about Transportation

Woolly headed

Baaah! Baaaaaaah!

by James A. Bacon

Virginia Beach’s ongoing debate over light rail is emblematic of everything that is wrong with Virginia’s system for determining which transportation projects get built. While the Virginia Department of Transportation is implementing a mechanism for ranking road and highway projects, there is no mechanism for ascertaining the proper balance between roads/highways and mass transportation or even to prioritize mass transit projects. Those choices remain as muddied and politicized as ever.

The latest episode in the long-running saga of Virginia Beach light rail, which would extend Norfolk’s existing The Tide rail line to the Virginia Beach resort area, revolved around a bid yesterday by Virginia Beach Councilman John Moss to use $10 million dedicated for light-rail plans to plug a projected $33 million budget hole. City Council rebuffed the measure, but a vocal minority of citizens continue the fight against the rail line. (See the Virginian-Pilot coverage here.)

Foes oppose a rail line that will require heavy up-front subsidies to build and ongoing subsidies to operate. They make a legitimate point. Rail supporters retort that building and maintaining roads also entail taxpayer subsidies. They, too, make a legitimate point. Ever since Virginia abandoned the user-pays principle of transportation funding in the bipartisan transportation-funding legislation of the McDonnell administration, all forms of transportation are subsidized to a greater or lesser degree. Because everything is subsidized, it is exceedingly difficult to determine whether any project is economically justifiable. Anyone can make any claim without any effective way to test it.

In an ideal world, Virginia Beach’s mass transit project would pay for itself through (a) fare revenues, (b) ancillary revenues such as advertising, and (c) revenues from special tax districts surrounding rail stations to capture some of the increased real-estate value created by the rail service. A transit authority would issue bonds to be repaid from those revenue sources, and bond buyers would exercise an independent, non-political judgment as to whether they were likely to earn a competitive, risk-adjusted return on their investment.

But it’s not an ideal world. Mass transit advocates argue rightly that rail competes against subsidized roads. No longer does Virginia pay for its roads mainly through the gas tax. But, rather than hold road funding to a higher and stricter standard, Virginia carves out a percentage of transportation allocations for mass transit. Funds are spread around to appease regional constituencies and ideological enthusiasms.

To see where fuzzy logic of transit funding leads us, read this op-ed by Nelson Reveley, a co-coordinator for the Richmond Clergy Committee for Rapid Transit. Reveley invokes social justice, the environment, public safety and economic development in support of a “comprehensive transportation system for the sake of all our citizens” in the Richmond region. Writes Reveley, a doctoral candidate in religious studies at the University of Virginia:

This isn’t about any singular neighborhood. It’s about all our neighborhoods, as we appreciate and celebrate our intimate interrelation as one metro ecology of education and commerce, employment and leisure, justice and mercy, beauty and creativity, vulnerability and mutuality.

My stomach heaves in rebellion against such treacly sentimentality. Nowhere in his op-ed does Reveley wonder how much this majestic mass transit system might cost. Obviously, the concept of “alternate opportunity cost” is not taught in the UVa religious program, for nowhere does Reveley wonder what could be accomplished by expending the same sum in other ways. Nor does he much care who will pay for this vision of his, although we can be certain it will not be the people who ride the buses or otherwise benefit from the transit lines through the higher property values he insists will occur or workforce benefits accruing from the young talent he suggests will be attracted to the region.

Further, nowhere does Reveley acknowledge the emergence of an alternative, private sector-driven model as epitomized by companies like Uber, Lyft and Bridj, which, given sufficient time and dismantling of regulatory barriers, could provide a shared-ridership transportation alternative far more robust and comprehensive than a public system.

The prevalence of blinkered, woolly headed thinking in the Old Dominion is just staggering. It goes a long way towards explaining our stagnation and relative decline among the 50 states.

Environmentalist Update on Offshore Wind

Alstom wind turbine like that contemplated for installation off Virginia Beach.

Alstom wind turbine like that contemplated for installation off Virginia Beach.

by James A. Bacon

Judging from comments made in a Environment Virginia-sponsored webinar held this morning, environmentalists, the McAuliffe administration and Dominion Virginia Power are operating on the same wave length when it comes to developing offshore wind power in Virginia. If environmental groups have big differences with Dominion on how to proceed, no sign of criticism surfaced in the webinar presentations.

The main focus of environmentalists, as it is for Dominion, is bringing down the cost of offshore wind power. The top priority nationally is building a big enough pipeline of wind power projects off the Atlantic Coast to persuade manufacturers, specialty vessels and others in Europe’s established wind-power supply chain to create a presence on the U.S. East Coast. The existence of a supply chain, along with continued technological development, could make offshore wind power far more cost competitive in the U.S. than it is today.

Here in Virginia, the top priority is ensuring that Dominion builds two experimental turbines off Virginia Beach that will provide the data needed to optimize the development of hundreds of wind turbines in a subsequent project potentially large enough to power 700,000 homes. The big hurdle is persuading the State Corporation Commission that such a massive investment would constitute an acceptable trade-off between cost, reliability and environmental goals.

David Carr, general counsel for the Southern Environmental Law Center, provided an overview of Dominion’s offshore wind initiatives. Dominion solicited bids to build a two experimental turbines off the Virginia coast. (The turbines would test an unproven hurricane-resilient design and a new turbine foundation.) The original plan was to seek SCC approval in 2015, said Carr, but the low bid of $375 million to build the two turbines far exceeded the original estimate of $230 million. Dominion has restructured the contract by breaking it into four components in the hope of stimulating more competitive bidding and reducing the risk premiums bidders build into their offers. The new goal is to file with the SCC by June 2016.

Hayes Framme, advisor for infrastructure and development with the Secretariat of Commerce and Trade, said the McAuliffe administration played a key role in moving the Dominion’s experimental-turbines project forward by negotiating a complex lease with the Bureau of Ocean Energy Management and other federal agencies to lease the ocean bottom where the turbines would be located. “Without this lease,” he said, “we would not be able to get these turbines in.”

An offshore wind farm would advance two McAuliffe administration goals: increasing the state’s commitment to renewable energy and also promoting economic development. A study completed this summer found that Virginia is “uniquely positioned” to house “at least a portion, if not most, of the supply chain” supporting an East Coast offshore wind industry, Framme said. Virginia ports are located in the Mid-Atlantic, providing convenient access to projects to the north and south, and it has a large existing ship-repair infrastructure.

“Having a commercial deployment off Virginia’s coast sends a signal that we are serious,” Framme said. “If we don’t lay the foundation now, it will be more difficult for us to take advantage of that opportunity when it does come.”

Virginia’s projects are not sufficiently large by themselves to coax the offshore wind supply chain to bolster its U.S. presence. That will take commitments from multiple states. Fortunately, that commitment seems to be forthcoming, said Stephanie McClellan, director of a special initiative on offshore wind housed at the University of Delaware. The states of New York, Massachusetts, Rhode Island, Maine and Maryland all are actively exploring offshore wind opportunities. The state of New York has set a goal of 50% renewables by 2030, while New York City has established a goal of 100% renewables for electricity consumed by municipal operations.

To build a supporting infrastructure for offshore wind, said McClellan, eastern U.S. states need to provide market visibility and revenue certainty for a volume of projects over time, as well as more data on site-specific conditions such as wind speeds and wave size. The cost of wind power dropped “precipitously” in Europe as the industry gained scale; it will do so in the U.S. as well, she said.

Bacon’s bottom line: I posed one question to the presenters: Given the intermittent nature of wind production, has anyone studied the impact of a massive wind farm on the reliability of Virginia’s electric grid? The short answer: No. However, presenters noted that European countries have integrated large off-shore wind projects into their power grids, and PJM Interconnection, the group that ensures grid reliability in the Mid-Atlantic and parts of the Midwest, including Virginia, has looked into the issue.

Update: Regarding the impact of massive off-shore wind power on the electric grid… a Dominion planning department study published in 2010 concluded, “It is possible to interconnect large scale wind generation facilities up to a total installed capability of 4500 MW with the existing transmission system in the Virginia Beach area.  The study also indicates that when the actual output of the wind farm or farms approaches 2700 MW, there are greater probabilities that the output will have to be limited due to transmission constraints unless transmission infrastructure improvement are made.” Those improvements could cost between $30 million and $70 million.

How about Habitat Exchanges for the Cow Knob Salamander?

If ranchers, mineral companies and environmentalists can work together to protect the greater sage grouse, can't Virginians work together to protect the Cow Knob salamander?

If ranchers, mineral companies and environmentalists can work together to protect the greater sage grouse, can’t Virginians work together to protect the Cow Knob salamander?

by James A. Bacon

I’ve been cogitating a lot recently over the difficulty of building major infrastructure projects in Virginia that are vital to the economy yet intrude upon landowner rights and the environment. One problem, which I dubbed the “rule of firsties,” is the spreading conviction that existing landowners (the ones who got there first) have a right to undeveloped view sheds comprised of other peoples’ property. Another problem is the near impossibility of building a highway, power line or pipeline that doesn’t impinge upon some historical home, burial plot, neolithic Indian settlement or some Freebish Loutwort of a rare species. Most recently I highlighted the ruckus over the Cow Knob salamander whose habitat lies in the proposed path of the Atlantic Coast Pipeline.

It’s more difficult building Big Infrastructure today than it was a century ago because we value things that we didn’t back then and want to protect them. We don’t like bulldozing our history and cultural heritage. We don’t like driving endangered species into extinction. We don’t like steamrolling landowners who just want to be left alone. So, what’s to be done?

There are no easy answers, just different trade-offs. But some trade-offs arguably are less painful than others. When I wrote about the Cow Knob salamander yesterday, I suggested that the Atlantic Coast Pipeline might somehow mitigate or offset the effect of its destruction to the salamander’s habitat. Frankly, I had no clear idea how that might be done, although I was thinking vaguely that we could create a mechanism like wetlands banks, in which a developer or builder offsets the destruction of wetlands by creating new wetlands somewhere else.

Could we do something similar for Cow Knob salamanders? Well perhaps we can. The Environmental Defense Fund (EDF) has taken the lead in prairie and Rocky Mountain states to create “habitat exchanges” that are doing for the greater sage grouse, the lesser prairie chicken and the mule deer what I kinda, sorta had in mind for the salamander.

Writes Fred Krupp, president of the EDF in the Wall Street Journal today:

Think of it as an Airbnb for wildlife. Just as the online company Airbnb allows homeowners to get paid for opening a spare bedroom to travelers, habitat exchanges allow landowners to get paid for providing quality habitat for vulnerable wildlife. The revenue is supplied by infrastructure, energy and other developers, which need to mitigate the environmental impact of their projects. But concerned individuals, nongovernmental organizations or corporations can also share in the cost, donating funds to an exchange. …

Though it would be ideal to set aside enough habitat to ensure the survival of the nation’s critters, practically speaking we can’t. The best alternative is to share resources so everyone wins.

I don’t know what kind of legal framework might be needed for Virginians to start creating habitat exchanges, but someone ought to take a look. We likely won’t devise a solution in time to address concerns raised by the Atlantic Coast Pipeline or the Mountain Valley Pipeline, but you can rest assured that other Big Infrastructure projects will be proposed in the future and that the same kinds of issues will be raised. We can either stagger from one zero-sum-game slug-fest to another, or we can devise options like habitat exchanges to make the inevitable trade-offs less painful. The choice is ours.

Read more about habitat exchanges here.