Category Archives: Infrastructure

Alpha Natural Resources: Running Wrong

Alpha miners in Southwest Virginia (Photo by Scott Elmquist)

Alpha miners in Southwest Virginia
(Photo by Scott Elmquist)

 By Peter Galuszka

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Pipelines and Property Lines

Charlotte Rea. Photo credit: All Pain, No Gain

Charlotte Rea. Photo credit: All Pain, No Gain

The Atlantic Coast Pipeline wants to inspect land along a proposed 550-mile route. Legal challenges from landowners could re-write a 2004 law governing property rights in utility surveys.

by James A. Bacon

Charlotte Rea decided when she retired that she wanted to live near where she grew up near Charlottesville. She found “a little piece of heaven” in Nelson County: a 29-acre spread on the north fork of the Rockfish River. With her retirement savings, she purchased the land with the idea of keeping it undeveloped if things worked out but selling two lots if she needed the cash. “All of my money is in the land,” Rea says. “It’s my long-term care insurance.”

She never imagined that someone would want her land for industrial purposes. But her homestead, as it turns out, came to be situated on the proposed route of the Atlantic Coast Pipeline (ACP) linking the natural gas fields of West Virginia with markets in Virginia and North Carolina. The 125-foot pipeline right-of-way would cut a swath across the river and through forested wetlands on her property that host a species of rare orchid. An ag-forestal district designation restricts development and prohibits industrial uses, she says. “Except it appears Dominion can industrialize it by running a pipeline through it. My property  will become an underground natural gas storage site.”

Since announcing its original plans, ACP has redrawn its proposed route, leaving her property untouched. But Rea doesn’t consider the new route to be definitive, and she is little reassured. “My future is totally blown up, not knowing what’s happening to my property. No one wants to buy land with a natural gas pipeline going through the middle of the view shed. I stand to lose $50,000 in property value. I couldn’t sleep at night worrying about the darn thing coming through.” 

The 63-year-old career Air Force veteran decided to fight back, signing up as co-chair of the “All Pain No Gain” group opposing the pipeline. Not only does Rea not want to see the pipeline built, she objects to ACP or its contractors even coming onto private property to survey the land. And she is just one of dozens of landowners who view the pipeline the same way.

Dominion Transmission, ACP’s managing partner, filed suit this spring in local courts against more than 100 property in order to gain access to their land. Many, like Rea, were clustered near the Blue Ridge mountains in Augusta and Nelson Counties. A local judge ruled that the notice letters had been improperly issued by Dominion Transmission, so the pipeline company withdrew the pending cases and started re-filing lawsuits as ACP. As of early July, says Rea, she knew of 27 re-filed lawsuits. Meanwhile, pipeline foes have filed two of their own lawsuits in federal court challenging the constitutionality of the state law.

The lawsuits are shaping up as the Old Dominon’s biggest battle over property rights in years. The courts will be called upon to define the balance between landowners like Rea who wish to be left alone and utilities like the four corporate partners of the $5 billion Atlantic Coast Pipeline — including Virginia energy giant Dominion, Duke Energy, AGL Resources and Piedmont Natural Gas — who argue that there is a compelling public need to build more gas pipelines as electric utilities replace coal with gas in their fuel mix. The legal outcome could influence other pipeline projects as well. Three groups besides ACP have expressed possible interest in building pipelines from the West Virginia shale fields to markets in Virginia and points south.

Pipeline foes make two overarching arguments. First, the Federal Energy Regulatory Commission (FERC) has not yet issued a certificate declaring the ACP project to be in the public interest, says Joe Lovett, an attorney with Appalachian Mountain Advocates. Because ACP cannot yet argue that the pipeline is for “public use,” it has no right to survey land without the consent of property owners.

Second, pipeline foes say, landowners deserve compensation for survey crews tramping over their property. The right to exclude others from entering your property “is one of the most important rights in the bundle of property rights,” says Josh Baker, an attorney with Waldo & Lyle, one of the preeminent landowner rights firms in Virginia. When multiple survey teams — ACP lists five different categories of crews — enter the property, they can cause considerable inconvenience. While the Virginia code allows for “actual damages” resulting from a survey, it allows nothing for inconvenience.

Dominion asserts that it is fully within its rights to conduct the surveys as long as it complies with requirements to request permission in writing to inspect the land and then provide a notice of intent to enter. Obtaining a certificate of public convenience and necessity from FERC is necessary to acquire land through eminent domain authority but not to survey land, says Jim Norvelle, director media relations for Dominion Energy. Surveys are governed by state law.

As for land surveys constituting a “taking,” there is plenty of legal precedent to support ACP’s position, Norvelle says. “We do not expect to damage anyone’s property when surveying. In the unlikely event there is some damage, we will reimburse the landowner.”

A half century ago, pipelines in Virginia were either intrastate pipelines under State Corporation Commission jurisdiction or they were segments of interstate pipelines built and “stitched together over time,” says Jim Kibler, who was active in eminent domain litigation in Virginia before joining Atlanta-based AGL Resources as senior vice president-external affairs. Local public utility commissions, including Virginia’s SCC, provided most regulatory oversight. Continue reading

Renewable Energy: A Tale of Two Virginias

Apologies to Mr. Dickens

Apologies to Mr. Dickens

By Peter Galuszka

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

It isn’t the first like this has happened.

The Ironies of Virginia’s Growing Diversity

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

 By Peter Galuszka

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

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

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

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

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

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

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

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

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

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

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

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

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

Salvaging Wind Power in Virginia

One of these bad boys costs $100,000 to $200,000 per day, and it has to come all the way for Europe -- a big expense for just two experimental turbines.

One of these bad boys costs $100,000 to $200,000 per day, and it has to come all the way from Europe — a big expense for just two experimental turbines.

Dominion thinks $400 million is too much to pay for two experimental offshore wind turbines. The utility is exploring ways to drive the cost down.

by James A. Bacon

When Dominion issued a request for bids this spring to erect experimental wind turbines off Virginia Beach, senior executives knew the project would be expensive. Offshore wind farms are built most economically on a scale of dozens or hundreds of turbines. But this project would have only two, and both would incorporate untested technologies. Moreover, there was no supporting maritime infrastructure on the East Coast of the United States. Key components and construction vessels would have to be imported from Europe.

Internal estimates put the cost around $230 million. The cost per kilowatt of power generated would be so expensive that Dominion executives expected the project to be a tough sell to the State Corporation Commission. But they figured they could make the case that the company would learn enough from the turbines that it could bring down costs for large-scale wind development — some 300 turbines — down the road.

So it was an unpleasant surprise when only two companies bid to build the project, and only one of them in full compliance with the contract specifications. And it was even more discouraging when the sole compliant bid came in at more than $375 million.

“We thought we’d have a challenging [approval] process at $230 million,” said Thomas Wohlfarth, vice president for regulatory affairs at a stakeholders meeting Friday to discuss the future of offshore wind in Virginia. “When the cost went to $375 million, we went, “Whoah!’ We like to show a positive net present value to customers. This would be very challenging.”

Until that point Dominion had moved steadily, if ploddingly, ahead with plans to exploit Virginia’s offshore wind resources as a source of renewable carbon-free energy. The company had conducted a cost-reduction study in 2011, completed two internal transmission studies — finding that it could bring in up to 45 megawatts of offshore electricity to its Virginia Beach power grid without significant cost — spent $1.6 million in a blind auction to acquire offshore wind rights, and successfully solicited Department of Energy grants to help underwrite preliminary engineering and design on the two experimental turbines.

The disappointing $375 million bid threw a monkey wrench into Dominion’s rotor. Putting wind development on hold, the company convened in Richmond a gathering of dozens of stakeholders — from business vendors and partners to government officials and environmentalists — to deconstruct what went wrong and to plot a more cost-effective path to full-scale development.

“Dominion really wants to see his project move forward ,” said Mary Doswell,  senior vice president of energy solutions, told the stakeholders. “We need to push our way through, and we need your help to do that.” While she did not say development of the larger offshore wind project would be stymied if the experimental turbines weren’t built, she didn’t deny it either.  It’s not something she had thought about, she responded to a question. “We’ve been so laser-focused on this project that we haven’t considered what might happen.”

The experimental turbines would incorporate state-of-the-art technologies, never tested before anywhere else, that would affect the cost efficiency of a subsequent, large-scale wind development off the Virginia coast. The most feature important would be a hurricane-resilient design affecting the interaction of rotors and blades in high winds. While wind turbines operate in harsh weather conditions in the North Sea, where winds have been known to reach 90 miles per hour, turbines off the Atlantic Coast would be at risk of exposure to Category 3 hurricanes which generate wind speeds of up to 129 miles per hour. “It’s a very robust design,” said Mark Mitchell, the project construction manager.

The experimental turbines also would incorporate a new Alstom design for the drive train, and a twisted jacket foundation for the turbine. The turbines would be placed in a configuration that would enable Dominion to measure what kind of wind wake one turbine creates for another another — critical for determining layout in a wind field of 300 turbines. Additionally, Dominion would test remote monitoring technologies that would allow for predictive maintenance, such as replacing fatigued parts before they wore out.

Dominion expects to learn much else that would help it advance the 300-turbine project. For example, what are the seabed conditions? “You can’t just run a cable out there,” Mitchell explained. Hampton Roads is a major naval base. Is there unexploded ordinance on the sea floor? How hard is the seabed? What are the sand migration patterns? Ideally, the cable is buried a couple of meters underground. Dominion doesn’t want the sand to drift away and leave it uncovered. In a related matter, Dominion needs to know how deep to drive the steel piles underground to provide the needed stability for the turbine. More steel translates directly into higher costs.

Most of the feedback came from Dominion’s contractors and suppliers who helped put the bid together. Several main themes arose from the conversation. Continue reading

Can’t Beat those Old Nukes for Cheap Energy

Image credit: Nuclear Energy Institute

Image credit: Nuclear Energy Institute

by James A. Bacon

Dominion has shut down both nuclear power units at its Surry County station to repair water leaks. The first one was taken offline over the weekend, the second was deactivated Monday. Reports the Richmond Times-Dispatch:

The leaks amounted to about 1,000 gallons, all of which was captured and processed for reuse once the reactors are running, [spokesman Rick] Zuercher said. Each reactor’s coolant system operates with about 71,000 gallons of water.

“These happen occasionally. They’re not significant,” Zuercher said. “There are levels of leakage that require us to shut down, but these did not rise to that level. We always try to capture problems when they’re small and fix them so they don’t become big problems.”

The incident follows a leaking pump in January that reduced the Unit 2 reactor to 60 percent capacity during repairs, and a shutdown this spring to refuel the two units. When Dominion shuts down its nuclear units, it has to make up the difference from other sources, either within its own fleet of power plants or by purchasing power from other companies over the PJM Interconnection grid. That energy can be expensive during the peak demand period of the summer.

Every time a nuclear plant shuts down for repairs, it seems to make the news. I suppose it’s the old Three Mile Island syndrome. Stuff that happens at a nuclear power plant is way scarier than the stuff that happens in any other kind of power plant. Other kinds of power plants shut down for maintenance and repairs, too — we just don’t hear about it.

The reality of the situation is that nuclear power plants spend more time online, operating 24/7, than any other type of electricity-generating plant. Based on 2013 data, the Nuclear Energy Institute asserts that nukes operate 90.9% of the time. That handily beats coal- and gas-fired plants and it clobbers wind and solar (although biomass plants experience relatively little downtime). That’s why Dominion Virginia Power can seriously talk about building a third nuclear generator at its North Anna facility despite a mind-numbing price tag measured in the billions of dollars. Not only do nukes generate power two to three times more of the time than alternatives, they tend to be longer-lived — 40 years routinely, and potentially as long as 60 years.

surry

The Surry nuclear station

In its 2015 Integrated Resources Plan, Dominion expressed its intention to inform the Nuclear Regulatory Commission of its intent to “potentially submit” a license application to extend the Surry Power Station Units 1 and 2 for another 20 years. Built in 1972 and 1973, those units are already 40 years old. I presume that the initial construction cost of the two units has been fully written off. Assuming they can be operated safely, extending their life another 20 years would provide incredibly inexpensive power for Virginia.

Old versus new. That’s not necessarily to say that nuclear is the best option for new plants. Nuclear has hard-to-quantify risks not shared by other power sources. The fact that the North Anna station is built on a fault line does not inspire confidence. Neither does the fact that United States has yet to devise a permanent solution for the disposal of radioactive waste. The engineering and physics of nuclear power are so complex that anyone (from power companies to environmentalists to neighborhood kooks) can make any claim and members of the public have no ability to appraise them. That inherent uncertainty weighs heavily against nukes in the popular mind.

Not long ago, Dominion appeared ready, willing and able to start pushing for a third, 1,453-megawatt nuclear unit at North Anna, a proposal that would be sure to ignite massive controversy. For now, having spent hundreds of millions of dollars in preliminary work, the company is keeping that option alive. But the 2015 IRP seems less settled upon nuclear than before. The company’s own portfolio risk assessment showed that, on a risk-adjusted basis, new nuclear was marginally more expensive than alternatives that rely more upon gas or solar.

Why Can’t Dominion Do Big Wind Projects?

A wind farm in Texas

A wind farm in Texas

 By Peter Galuszka

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

How to Bring Broadband to Your Community

broadbandBroadband access is increasingly critical infrastructure for every community, a critical element for government efficiency and responsiveness, economic development, education, public safety, healthcare and the conduct of peoples’ personal lives. What can a rural community or small city do if the dominant broadband providers aren’t in any hurry to build broadband infrastructure?

The Center for Innovative Technology has just published a manual, “Improving Broadband Access and Utilization in Virginia,” that lays out a roadmap and highlights examples of how several communities have taken matters into their own hands.

The most prominent is the City of Bristol in Virginia’s far southwest, which deployed its own fiber-to-the-premises in 2001, reaching 6,000 customers within the first two years. Bristol Virginia Utilities was the first municipality in the country to build a fiber network to deliver the triple play of phone, Internet and cable television. Though not as far along, the City of Danville built a fiber system connecting 120 local government and school buildings, and then expanded it to serve more than 100 businesses and, more recently, residential customers.

Other models include rural co-ops, like the one in Floyd County, and public-private partnerships, as seen in Franklin County and King and Queen County. The report suggests that communities begin with a citizen survey to identify unmet needs, form a stakeholder group that can aggregate demand and hold discussions with Internet Service Providers.

As an aside, the Tobacco Commission, much criticized on this blog (by me among others), helped fund a number of these initiatives. Accelerating the deployment of broadband infrastructure in under-served areas is one of the most worthwhile investments the Commission could make. Unlike a foot-loose manufacturing plant that comes then leaves ten years later,  fiber-optic cable doesn’t pick up and move away.

— JAB

Reports at Forty Paces

pistol_duel

Dueling reports

by James A. Bacon

How do citizens know whom to believe in the debate over the Atlantic Coast Pipeline (ACP), a proposed 550-mile natural gas pipeline between West Virginia gas fields and markets in Virginia and North Carolina?

Dominion, managing partner of ACP, has commissioned studies from Fairfax-based ICF International, a technology and management consulting firm, and Chmura Economics & Analytics, a Richmond econometrics firm, to analyze the pipeline’s economic impact. Both  reports buttressed the utility’s case that the project would be overwhelmingly beneficial.

In “The Economic Impact of the Atlantic Coast Pipeline,” ICF concluded that over the next 20 years Virginia and North Carolina could expect to gain $377 million a year in energy cost savings,  2,200 permanent full-time jobs, $131 million in annual labor income, and $218 million in annual gross state product. Likewise, in “The Economic Impact of the Atlantic Coast Pipeline in West Virginia, Virginia, and North Carolina,” Chmura said the project would inject $456 million annually into the three-state economy between 2014 and 2019 and support 2,873 jobs.

Yesterday the Southern Environmental Law Center (SELC) and the Allegheny-Blue Ridge, which oppose the pipeline, released its own report. That document, “Atlantic Coast Pipeline Benefits Review,” prepared by Synapse Energy Economics Inc., out of Cambridge, Mass., contends that the alleged pipeline benefits are “overstated, lack sufficient supporting data, and fail to account for environmental and societal costs.”

The Synapse report doesn’t make any economic forecasts of its own; rather, the authors point out limitations and weaknesses in the Dominion-sponsored reports and enumerates negative impacts that those reports did not take into consideration. Among the criticisms:

  • Assumed differential in gas prices. ICF argues that gas from Marcellus shale in West Virginia and neighboring states, to be transported by the ACP, will be cheaper than so-called Henry Hub gas from the Gulf Coast, which Virginia and North Carolina consume now. But Synapse questions whether that price differential will last.
  • Assumed savings to electric customers. ICF assumes that cheaper natural gas prices will be passed to Virginia consumers as lower electricity prices. But due to the nature of inter-regional power sharing, Synapse says is it unclear whether those savings would be passed on to Virginia consumers or shared regionally.
  • Assumed job creation. ICF assumes that Virginia consumers will spend that energy savings, stimulating local economic activity. But “the study did not provide any underlying data to support this claim,” says Synapse. “Critical inputs and assumptions — such as the assumed direct energy savings by sector — are necessary to satisfactorily review this finding.”
  • Are permanent jobs really permanent? The ICF study estimates that 2,225 jobs will be supported over 20 years (for 44,600 total job years). But the study doesn’t break down the impact year by year, so it is impossible to know if the jobs are sustained over time or if they start strong and dribble out over time.

Synapse also argued that ICF and Chmura failed to take into account negatives such as the pipeline impact on property values, damage to wildlife habitat and clean water, and the risk of accidents.

The SELC report holds ICF and Chmura to a high standard — it insists that  consultants provide sufficient detail in their data and assumptions to allow third-party review and verification, and that studies be more transparent with their numbers. “In an economic jobs and benefits analysis,” Symapse says, “a complete set of modeling assumptions, inputs, and outputs” typically would be included.

ICF stated that it based its analysis upon years of experience in North American natural gas and “proprietary software tools and databases,” including its Gas Market Model and Integrated Planning Model to model the North American gas and electric markets with and without ACP.

Dominion stands by the ICF and Chmura numbers. Unlike Synapse or SELC,the company has skin in the game. It seeks the best forecasts it can find because it bases business decisions on the data. The utility uses ICF’s commodity price forecast for the Dominion Virginia Power Integrated Resource Plan and other regulatory filings. The company also uses ICF for its own internal business deliberations, says Jim Norvelle, director-media relations for Dominion. “It is safe to say there are significant business decisions made using the ICF International forecast.”

“ICF International and Chmura are internationally known and respected firms,” says Norvelle. “Their findings quantify what is obvious and undeniable: the Atlantic Coast Pipeline will bring significant financial and other benefits to the residents and businesses of Virginia, West Virginia and North Carolina. It is Economics 101. More natural gas supplies mean lower prices, more money available for investment, better reliability and cleaner air. Just plain common sense.”

Bacon’s bottom line: Synapse makes a good point: Consultant studies should be fully transparent, providing sufficient data and articulating their assumptions for third parties to critique them. But what’s sauce for the goose is sauce for the gander. When SELC and pipeline opponents make assertions about the pipeline’s economic and environmental effects, they need to abide by the same standards they demand of Dominion. They, too, need to lay out their facts and assumptions for public scrutiny.

A Long and Winding Pipeline

Virginia Natural Gas' Hampton Roads pipeline under construction. Photo credit: Virginia Natural Gas

Virginia Natural Gas’ Hampton Roads pipeline under construction. Photo credit: Virginia Natural Gas

by James A. Bacon

The developer of the 550-mile Atlantic Coast Pipeline wants to alter its proposed route between the West Virginia gas fields and markets in Virginia and North Carolina, reports the Richmond Times-Dispatch. Dominion Transmission Inc., leader of the company formed to build the pipeline, filed proposed route changes with federal regulators that would make greater use of existing rights of way, primarily Dominion-owned electric transmission lines.

The route changes partially address landowner criticism that the pipeline should run as much as possible along existing rights of way, be they state highways, electric transmission lines or other pipelines. But the changes submitted to the Federal Energy Regulatory Commission (FERC) are not likely to allay criticism from landowners in Augusta County and Nelson County where opposition to the pipeline is centered. The route changes would occur in Brunswick County, Southampton County and the City of Suffolk.

Foes told the Times-Dispatch that they were encouraged by Dominion’s effort to use existing rights of way, but… “Hopefully, this is a start, not a finish,” said Nancy Sorrells, co-chairwoman of the Augusta County Alliance and the All Pain, No Gain public relations campaign against the pipeline.

Dominion said the new proposed route would travel 16 miles of existing utility rights of way in Brunswick County, nine miles in Southampton, and seven miles in Suffolk.

Bacon’s bottom line: Routing pipelines is an incredibly complex undertaking. Pipeline projects are subject to intensive environmental review processes that consider impact on wildlife habitat, clean water and cultural & archaeological heritage. Running pipelines along existing rights of way saves considerable hassle as well as land acquisition costs.

“Utilities love to co-locate, if they can do it. You only have to deal with one landowner,” says James Kibler, senior vice president-external affairs for AGL Resources, an Atlanta-based gas pipeline company, one of the Atlantic Coast Pipeline’s four partners. Before joining AGL, Kibler conducted right-of-way acquisition work for Dominion.

As an example, Kibler says, the Virginia Natural Gas Crossing Pipeline, built in 2010 to connect the gas distribution systems north and south of Hampton Roads, utilized Dominion high-voltage transmission line right of way, drilled under an Old Dominion University parking lot, followed a City of Norfolk sewer lateral, and used six miles of Norfolk Southern rail line.

Trouble is, existing rights of way don’t always go where the pipeline needs to go, and the right of way may not be able to accommodate a pipeline. As the Times-Dispatch explained:

Dominion … said it is harder to route an underground pipeline along existing utility corridors in mountainous western Virginia than it is in the flat terrain of Southside.

“In the western part of the state, there’s just not a lot of opportunities there. There’s just not,” [said Greg Parks, construction supervisor].

Dominion spokesman Jim Norvelle said the company also is constrained by lack of space for a pipeline in existing public rights of way “because the pipeline cannot be built directly under electric transmission lines, on top of other pipelines, or alongside or in the median of highways, for safety reasons.”

Says Kibler: “It is a very involved, tedious process in which no one is ever totally happy.”