Category Archives: Infrastructure

When Dynamic Pricing Meets Energy Storage


Will Gathright

Other states are targeting energy storage as an industry of the future but Virginia may have the most hospitable climate for it.

by James A. Bacon

Will Gathright was living in New York, where he had earned a Ph.D. from Renssalaer Polytechnic Institute, when he got fired up with the idea to use storage batteries to help business customers cut their electric bills. The idea was to buy electricity when it is cheap to charge the batteries, then draw down the batteries during periods of peak demand to offset consumption when electricity is expensive. For the business model to work, he needed to find a location where there was a wide differential in the cost of electricity.

Initially, he figured he might wind up in Hawaii, California or New York, states that are putting a high priority on energy storage. But after conducting a national search to see where his value proposition would fare best, Gathright moved to Northern Virginia.

“Virginia has the winning combination of three factors not present elsewhere in the country,” he explains. First, although Virginia’s peak-demand rates aren’t the highest in the country, they are relatively high. Second, while a few states have cheaper base rates, Virginia’s are significantly lower than the national average. The spread between low base rates and high demand charges creates a bigger potential for savings.

A third factor, Gathright says, is that Virginia electric utilities belong to PJM Interconnection, which manages the electric grid and wholesale markets for 60 million people in the Midwest and the Mid-Atlantic region. When his batteries aren’t helping shave a building’s peak demand charge, they can help PJM fine-tune short-term fluctuations in the supply and demand of electricity.

Welcome to the new world of electric load management. Power companies around the country are experimenting with novel rate structures that encourage customers to curtail their electricity consumption during periods of peak demand — typically summer afternoons when air conditioners are running flat-out. One of the most promising strategies for shifting electricity demand is energy storage, usually using batteries, and other states are targeting the sector as a strategic priority. California is requiring its utilities to purchase 1,325 megawatts of energy storage by 2020 and the state of New York state has invested $1.4 million in six battery and energy storage start-ups.

Gathright thinks Virginia may be the most promising location in the country to implement energy storage — not that the idea has gotten much attention here. What Virginia has done is experiment with dynamic pricing: using the price mechanism to encourage customers to shift electric consumption away from periods of peak demand when it is most costly to supply.

The results of Dominion Virginia Power’s dynamic pricing pilot program have been modest so far — positive enough to encourage Dominion to continue the project but not dramatic enough to persuade the company that a revolution in electric consumption is in the offing. But the outlook could change if entrepreneurs like Gathright figure out how to help customers capture the savings that the dynamic-pricing rate structures make possible.

With the encouragement of the State Corporation Commission, Dominion rolled out its dynamic pricing program in 2011, branding it as the Smart Pricing Plan. “The basic premise,” explains SCC spokesman Ken Schrad, “is that if customers are willing to modify behavior and use less electricity during high price periods, they will have the opportunity to save money, and the company in turn will be able to reduce the amount of energy it would otherwise have to generate or purchase during peak periods.”

The pilot was limited to 2,000 customers under a residential tariff and 1,000 small and midsized commercial customers under two commercial tariffs. Participation required having Advanced Metering Infrastructure (AMI) or Interval Data Recorder (IDR) meters that record energy usage every 30 minutes, thus allowing Dominion to measure consumption with greater precision.

Dominion provides customers at least 280 days a year with low-priced electric rates (“C” days), up to 30 days with high rates (“A” days), and the balance with medium rates (“B” days). Dominion communicates the classification to customers the day before to allow them to plan accordingly. Additionally, the company designates up to 25 five-hour blocks, or critical peak events, per year to commercial customers with two-hour notice. The rate differential for the critical peak hours could be literally dozens of times higher than the lowest rates.

For most customers, the jet savings have been minimal. Between October 2013 and October 2014, residential customers saved an average of $48 annually (3% of their electric bills), small commercial customers saved $92 annually (3%). However, larger customers saved $5,900 annually (14%), according to Dominion’s 2015 annual report on the program filed with the SCC. Continue reading

Towards a Smarter Grid


Dominion Virginia Power is using big data to increase the reliability of its electric distribution network. The result: Fewer disruptions and shorter outages for customers.

by James A. Bacon

One day earlier this month, 10,000 people living in Fairfax County lost their electric power around 7:30 a.m. Thanks to sensors and devices that Dominion Virginia Power had installed in its electric distribution system, company operators were able to quickly identify and isolate the problem. Fifteen minutes later, they had restored service to 9,000 residents; within half an hour, electric power was back online for everyone.

If you’re a Dominion customer and it seems as if you’re suffering fewer and shorter electrical outages, it’s not your imagination. Harnessing data to target maintenance spending with better precision, the power company has made a concerted effort over the past decade to improve the reliability of its electric service. Since 2008, Dominion’s 2.5 million customers have experienced a 26% decline in minutes lost to routine service disruptions (excluding major storms) when calculated on a three-year rolling average.

“We’re data driven. We’re a six-sigma company,” says Steven Chafin, director of reliability. Dominion, he says, has evolved from a company employing rough industry rules of thumb to one that collects data across the distribution system to drive continuous improvement.

Average customer minutes without electric service, excluding major storms, three-year rolling average

System Average Interruption Duration Index (SAIDI): three-year rolling average of annual customer minutes without electric service, excluding major storms.

Comparing reliability performance to that of other power companies is difficult because each utility contends with different terrain, weather and settlement patterns. Dominion benchmarks against itself, tracking the performance of 35,000 miles of overhead electric lines, 22,000 miles of underground lines and thousands of miles of high-capacity transmission lines. The numbers exclude major storm events, which are so random and are of such a magnitude as to obscure trends in routine operations. Five different events since 1998 — the Christmas Eve ice storm, Hurricane Dennis, Hurricane Isabel, Hurricane Irene and the Derecho wind storm — caused massive outages that took eight to fifteen days to fully restore.

A 2015 J.D.Power survey of electric utility customers found that the quality and reliability of electric power is a major factor influencing customer satisfaction nationally. Dominion scored a customer satisfaction ranking of 684, above average for large utilities and an improvement from 661 in 2013.

The heart of Dominion’s reliability initiative is a portfolio of more than a dozen programs ranging from tree-and-brush clearance to the upgrading of neighborhood transformers. “We adjust our investment in these programs annually,” says Chafin. The company allocates capital to programs that offer the greatest bang for the buck.

In 2015 more than a quarter of Dominion’s reliability spending was dedicated to clearing trees and brush, the greatest source of downed power lines, Chafin says. The company once hewed to a regular, three-year cycle for pruning vegetation near overhead lines. It was a reasonable rule of thumb, but analysis of the data showed that tree-related outages could be improved — some places need trimming more frequently, others less often, depending upon how fast the trees grow and the voltage of the line, among other factors. (Higher-power lines increase the chances of electricity arcing from the line to a nearby tree.)

The second largest reliability initiative is the “capital asset rebuild” program. Much of Dominion’s capacity was installed in the 1930s, ’40s and ’50s, an era with less advanced technology and less rigorous performance standards. Improving the design of older distribution facilities and rebuilding them to current standards reduces the number of disturbances.

Under its circuit reconditioning initiative, Dominion began ranking the performance of each of its 1,800 circuits for preventable failures and prioritizing the worst performers for fixing. Then, diving deeper, the company started collecting data on breakers, reclosers and fuses in each circuit, some 180,000 devices in all.

The neighborhood transformers program addresses increasing demand in residential neighborhoods. In the 1930s, ’40s and ’50s, the company installed distribution lines and transformers to meet electricity demand of an era before air conditioning, big-screen televisions, computers, appliances and other energy-sucking devices. The same houses today draw more electricity and transformers can get overloaded. To deal with the problem, Dominion has replaced 4,000 transformers during periods of low demand. That proactive maintenance, says Chafin, is preferable to waiting until a transformer blows out on a hot summer afternoon.

As much as electric customers fume at routine disruptions, the lengthy storm-related outages are the ones they really remember, says Le-Ha Anderson, manager for media relations. “When electricity stops, life kind of stops.”

Last year Dominion submitted to the State Corporation Commission (SCC) a plan designed to reduce the length of major-storm outages by burying critical stretches of overline wire. High winds blow branches and other objects into power lines and knock them out. Undergrounding the electric distribution system statewide would be prohibitively expensive — on the order of $83 billion, according to an SCC report. That would amount to thousands of dollars per customer and cost generations to complete, Chafin says. The benefits don’t justify the cost.

After examining the data, however, Dominion discovered that 20% of overhead lines were responsible for a disproportionate percentage of outages and time lost. By burying just the most outage-prone taps lines (the small lines that stem from feeder lines to individual houses), the company calculated, it could cut average restoration times after major storms in half. Dominion said the program would cost only $2 billion up front. (An SCC report concluded that the program would cost customers $6 billion in capital costs, property and income taxes, and financing costs over the life of the assets.)

In a hearing before the SCC last year, Dominion asked the commission to approve the first stage of the project, covering 526 miles of tap lines at an initial investment of $263 million. The project would require a rate adjustment of $24.4 million in the first year, less than $1 per month on the average electric bill.

Consumer groups opposed the petition. Testified the Attorney General’s consumer counsel:

Despite the unprecedented size of the proposed [Strategic Underground Plan], the company has not conducted a cost-benefit analysis, has not provided any estimate regarding reliability improvements or economic benefits to customers, and has not considered any lower-cost alternatives.” Based on this record, we cannot conclude that it is reasonable, and in the public interest for Dominion to invest $263 million — and ultimately to charge customers over $700 million — for the first portion of the SUP…

The SCC proposed instead that Dominion conduct a pilot program targeting tap lines with the worst reliability record to gather data for a realistic cost-benefit analysis. Dominion has not publicly said whether it plans to submit a new proposal.

Meanwhile, the company is applying a cautious test-and-learn approach to integrating solar energy into its energy mix. Dominion worries that the intermittent shining of the sun creates fluctuations in voltage that could disrupt the transmission and electric systems. With new solar projects in its North Carolina service territory and the proposed Remington industrial-scale facility in Virginia, the company is building experience with solar that will enable it to model the impact of larger-scale projects in the future, says Anderson.

Whatever the future of solar facilities and underground lines, Dominion’s collection and analysis of data is likely to improve reliability in routine operations for years to come.

An Intractable Dilemma


When Dominion shuts down the Yorktown Power Station, Virginia’s Peninsula will need another source of electric power. Dominion says a 500 kV transmission line over the historic James River is the best option. Conservationists disagree.

by James A. Bacon

Communities in the historic Virginia Peninsula face a devil’s alternative: Immediately accept a high-voltage transmission line that foes say could mar views of a historic stretch of the James River or face the prospect of rolling blackouts that Dominion Virginia Power says could disrupt the economy for 500,000 people.

The State Corporation Commission (SCC) and the PJM Interconnection regional transmission organization have given the go-ahead to build the 500 kV Surry-Skiffes Creek transmission line to balance electricity lost when Dominion Virginia Power shuts down two antiquated coal-fired units at the Yorktown Power Station. But many residents in and around the history-rich region are up in arms, and Dominion cannot begin construction on the line until it obtains necessary switching-station zoning approval from James City County and a nod from the U.S. Army Corps of Engineers.

If a decision isn’t made immediately, contends Dominion, the power company will be unable to complete construction of the transmission line before it shuts down the Yorktown power plants in April 2017 at the latest.

At that point, reliance upon four existing 230 kV transmission lines will put the electric grid only one or two “contingencies” — unplanned transmission-line outages — away from a meltdown that could send uncontrolled blackouts cascading to the Richmond region and beyond. Rather than risk such a catastrophe, federal regulations would require Dominion to take customers offline on a rotating basis. Depending upon weather conditions and other events, the Virginia Peninsula will be at risk of rolling blackouts 50 to 80 times a year.

“If there’s a one in million chance of a breakdown, PJM tells us to shed load,” says Kevin Curtis, Dominion’s director of transmission planning, referring to the regional transmission organization that would issue the command to pull the trigger. If Dominion failed to follow through, it could face fines of $1 million per day for violating North American Electric Reliability Corporation standards.

But foes of the transmission line are still fighting back. In early August, the James City County Planning Commission recommended denial of a rezoning request that would allow Dominion to construct a sub-station critical to the project. Meanwhile, the USACE says,  “Due to the many variables yet to be addressed, we are unable to provide a discrete timeline” for when it might decide whether or not the project requires a full-fledged Environmental Impact Statement, which could delay it yet another year.

Margaret Nelson Fowler, founding member of the Save the James Alliance, isn’t buying Dominion’s warning of rolling blackouts. Dominion is making a business decision to shut down the Yorktown power plant, she says. Dominion can continue operating the coal-fired units in a non-compliant status. It will have to pay fines, but fines are Dominion’s problem, not the community’s, she says. “We’ve been told by people who know that blackouts would never be permitted. … This is all scare tactics.”

Surry-Skiffes Creek is perhaps the most controversial of some three dozen transmission line projects that Virginia’s major power companies are planning or implementing as they undertake a sweeping re-engineering of Virginia’s electric grid. Under heavy regulatory pressure, power companies are shifting from coal-fired generating plants to gas, wind and solar energy sources; transmission lines must be built or upgraded to accommodate the re-routed flow of electricity. Dominion lists 27 Virginia projects at some stage of approval or construction; Appalachian Power lists seven approved and pending projects.

The problem is that no one likes looking at power lines, and proposals often encounter local resistance. The Surry-Skiffes Creek proposal arises from a set of circumstances that is particularly complex and intractable. The engineering logic that dictates building a 500 kV Economic transmission line across the James River is persuasive. But so are objections by conservationists and property owners, who say Dominion’s cost-benefit analysis fails to take important non-monetary values into account. The result is institutional gridlock as the proposal works its way through federal, state and local oversight. In this case, the economic consequences of a failure to reach a timely resolution could be highly debilitating to the Peninsula economy. Continue reading

The Slow, Inevitable Demise of Traditional Mass Transit?

WMATA's problem in a nutshell: Expenses, particularly labor expenses, are out of control. Source: WMATA

WMATA’s financial problem in a nutshell: Expenses, particularly labor expenses, are out of control. Source: WMATA

by James A. Bacon

The 2010s were supposed to be the era of mass transit in the Washington metropolitan region. Millenials were jettisoning their automobiles in favor of walking, biking, buses and rail. Localities were zoning for denser development around transit stops and Metro stations. State and federal governments were channeling more money into new rail projects. Real estate developers were plowing billions of dollars into transit-oriented development. But something unexpected happened along the way.

Washington Metropolitan Area Transit Authority ridership actually declined by 17 million between fiscal 2013 and 2015, to 362 million trips, despite the Silver Line expansion of Metro rail. Given the deteriorating fiscal condition of the rail and bus network, which has a $3 billion capital and operating budget this year, that number does not seem likely to improve. In a system dogged by safety incidents, poor on-time performance and broken escalators, customer satisfaction is declining. Meanwhile, capital spending can’t keep up with depreciation, suggesting that service is likely to get worse, not better.

WMATA projects 1% revenue growth over the next five years but 6%  growth in expenses, requiring a relentless increase in state and local subsidies. To balance the current budget, eight county and city jurisdictions jacked up subsidies from $780 million to $877 million. Not only does WMATA propose to lock in those higher subsidies, it proposes increasing them at the rate of 3% annually over five years.

In a FY 2017 budget guidance document, WMATA management acknowledges that local governments will be hard pressed to deliver. “Some jurisdictional representatives have made it clear that they cannot sustain such high levels of subsidy growth year over year given their own revenue growth and competing needs for investment in tools, public safety and other priorities.”

So, what can be done? As Martin Di Caro writes for, rising personnel costs account for 70% of the cost growth in the 10-year outlook. The current contract with the Amalgamated Transit Union expires June 30. Given the potential for disruptive strikes, however, it’s not clear that management has the stomach to extract significant concessions from the union, either in reduced compensation or reform of productivity-sapping work rules.

Another option is raising fares — charging riders a higher percentage of what it costs to provide a ride. Di Caro considers a fare increase “likely,” although higher fares are likely to depress ridership, undermining the goal of raising revenue. Yet another alternative is pruning money-losing bus lines, although cutting service would not endear WMATA to the localities it is asking to pay bigger subsidies.

As WMATA rightly observes, a system failure is unthinkable. WMATA provides a critical service; the Washington-area transportation system cannot function without it. But it’s clear the system is in a slow-motion train wreck.

Bacon’s bottom line: WMATA should be a warning to every Virginia jurisdiction about what can go wrong with mass transit. The blue-state mass transit model is broken. By “blue state,” I refer to a set of attitudes that are most prevalent in blue states: a sympathy for transit unions, which means high compensation costs and low productivity; a reluctance to charge riders the full costs of providing their service, which depresses revenues; and a proclivity to seek federal aid, which comes with expensive regulatory strings attached.

The only good news in this picture is that transportation is undergoing a shared-ridership revolution, in which private companies use smart phone apps, savvy algorithms and flexible routes to provide bus and van service at a competitive price. Instead of increasing subsidies for a failing business model, Virginia’s Department of Rail and Public Transportation and local governments should be asking themselves how they can foster the rise of the new mass transit paradigm.

(Hat tip: Tim Wise.)

Virginia’s Maritime Future Is Now

The Northern Javelin, one of the new-generation container ships visiting the ports of Virginia. Photo credit: Virginia Business.

The Northern Javelin, one of the new-generation container ships visiting the ports of Virginia. Photo credit: Virginia Business.

by James A. Bacon

Virginia’s maritime industry has long anticipated the arrival of the new giant, post-Panamax ships, and now they’re here — a couple of years before they were anticipated, and well before the completion of the Panama Canal expansion that is expected to release the floodgates. As the East Coast port with the deepest channels, Hampton Roads is attracting more than its share. The leviathans pose special logistical problems but the maritime industry is working through them. Virginia Business has the story here.

As author Jessica Sabbath writes, the world’s largest ships can carry twice the number of containers that the big ships of 10 years ago could. These bad boys represent almost 60% of the shipping world’s total cargo capacity. Any port with growth ambitions will have to accommodate them.

The Ports of Virginia planned for the arrival of the big ships by digging 50-foot channels, the deepest on the East Coast, and erecting modern cranes that can reach across the wide-girthed vessels. But by virtue of their enormous size, the post-Panamax ships require more precision in their handling and scheduling. If Virginia’s ports can climb the learning curve faster than other ports, they can create an important competitive advantage even as rivals seek to deepen their own shipping channels.

The big ships must move more slowly to avoid damaging wake. They require especially high-powered tugboats to maneuver in tight quarters. Because the big ships take longer to unload, longshoremen work longer shifts. Even with longer shifts, the maritime industry has added more than 200 longshoremen to handle the increased cargo volume — which increased 8.8 percent to a record 2.5 million TEUs (equivalent to 5 million containers) in Fiscal Year 2015.

The movement of these giants through the ports and their containers through the supply chain creates issues of vessel bunching and equipment imbalance. Shippers often scramble to find available motor carriers. When bunching occurs — it can take more than 24 hours to transfer a container from the ship to a Norfolk Southern railroad train — shippers and motor carriers experience larger demurrage fees. These are the kinds of problems would expect anywhere in similar circumstances, and they take time to sort out. If the maritime community does so successfully, Hampton Roads could well enjoy years of growth and job creation.

Interestingly, one issue that Sabbath did not mention: roads. The McDonnell administration had feared that clogged roads would make it more difficult to ship containers out of Norfolk and Portsmouth. Adding capacity to the Midtown and Downtown tunnels should alleviate localized congestion. But plans for upgrading the U.S. 460 highway connection between Suffolk and Petersburg were sharply curtailed after a funding debacle. Norfolk Southern is accommodating some of the surge in freight traffic with its double-stacked trains destined for Midwest markets. Judging by the article’s silence on the subject, highway congestion has not yet emerged as a bottleneck for the maritime industry’s growth. But if freight traffic continues growing at last year’s pace, congestion could become an issue.

Why Doesn’t Virginia Have More Wind Power?

Map credit: National Renewable Energy Lab

Map credit: National Renewable Energy Lab

Why hasn’t Virginia made more progress in generating energy from wind power? This map from the National Renewable Energy Lab highlights the problems we face. Unlike the plains states, where almost every square mile is wind blown, Virginia has few suitable locations. Wind power is practical only offshore and on scattered mountain ridges.

Putting windmills on mountaintop ridges poses a problem because it disrupts viewsheds. Every mountain-ridge wind project proposed in Virginia has generated opposition from the surrounding population. In several instances, local governing bodies have used their zoning powers to thwart the projects. Of the half-dozen wind farms proposed over the past decade, not one has been built. As long as (a) people believe they have a right to exercise veto power over land uses for aesthetic reasons, such as protecting viewsheds, and (b) local governments have the power to restrict land uses based upon aesthetic impact, wind power projects likely will be blocked at the local level.

Building wind power projects off-shore avoids the viewshed issue because  turbines can be placed far enough at sea that they won’t be visible from the shore. However, offshore wind power on the East Coast of the U.S. faces a chicken-or-egg problem. Wind power is incredibly expensive because the supporting maritime infrastructure is not available on the East Coast; specialized ships and equipment must be brought in from Europe at great cost. But the wind-power industry is not willing to invest in establishing an East Coast presence until there is sufficient volume of business to support it.

It might be possible to overcome the chicken-or-egg problem if enough players committed to enough wind projects within a relatively narrow time frame to make it financially worthwhile for the wind industry to make that commitment. So far, no one has undertaken such an effort. Offshore wind initiatives remain frustratingly piecemeal.

Perhaps one thing the McAuliffe administration could do to advance wind power in Virginia and the East Coast would be to convene a meeting of every East Coast state with an interest in wind power along with major wind industry players to build the necessary critical mass. Hampton Roads, with its large existing shipbuilding fabrication industry and central East Coast location, is the logical location for the wind industry to be situated. We have the most to gain, so we should take the lead.


It’s the Buzzard Talking

Buzzards on a power line -- no telling what might case an outage.

Buzzards on a power line — no telling what might cause an outage.

If you want to understand why Dominion Virginia Power does what it does, visit the Henrico County operations center where the company manages 6,400 miles of electric transmission line.

by James A. Bacon

Electric power companies have spent tens of billions of dollars hardening their electric transmission grids and building redundant systems to guard against the varied threats that nature, mankind and animals throw against them. Tornadoes, hurricanes and ice storms pose a frequent danger. Then there are the ditch diggers who cut underground lines, the loggers who drop trees onto above-ground lines and the barges that run into river-spanning towers.

And let’s not forget the vultures. There have been documented instances of large birds knocking out power lines. A buzzard perched on a power line in a sub-station might take flight, releasing what Kevin Curtis, director of transmission planning for Dominion Virginia Power, politely refers to as a “streamer.” The material creates a connection between a conductor and a tower, and kaboom! Says Curtis: “It’s not uncommon on a landfill [near a power station] to find a dead buzzard on the ground.”

It’s Curtis’ job to preserve the reliability of Dominion’s electric grid, which serves roughly five million Virginians and a not inconsiderable number of North Carolinians in the face of fluctuating temperatures, power surges, foreseeable threats like storms and hurricanes, and crazy stuff like an uncontrolled emission of buzzard poop that no one can predict.

The good news is that the electric grid is more robust than it was on August 14, 2003, around 2 p.m., when a high voltage power line in northern Ohio became overloaded, heated up, drooped, brushed against some overgrown trees and shut down. The voltage in the system found alternate routes and overloaded new lines, three of which shut off. A cascade of failures ripped through southeastern Canada and eight northeastern states. Fifty million people lost power for up to two days in the worst blackout in North American history.

As disruptive as the infamous 2003 Northeast Blackout was for electricity customers — it contributed to at least 11 deaths and cost an estimated $6 billion — it was traumatic for the electric power industry, which has since re-engineered the North American grid to ensure, hopefully, that nothing similar happens again.

The bad news is that new threats to the grid, what some have called the world’s largest and most complex machine, are emerging: an electro-magnetic pulse from nuclear weapon, cyber-attacks, terrorist sabotage and, more prosaically, a re-structuring of the grid for environmental purposes that entails shuttering stable, reliable coal-fired power plants and plugging in intermittent power sources such as solar and wind power. The utility has a host of critics who maintain that it’s moving too slowly on reducing CO2 emissions, it’s too stodgy about implementing new smart grid technology, it’s insensitive to landowner rights, its transmission lines are blasting through Virginia’s cultural heritage. And they all have a point. But, then, it’s not the critics’ job to keep the lights on. It’s Dominion’s. And the stakes are very high.

As part of my coverage of energy and environmental issues (sponsored by Dominion), I determined that I needed to learn a lot more about how the electric grid works — not the distribution lines that run through our neighborhoods but the backbone of the system, the high-voltage transmission lines that transport electricity from power plants to sub-stations where the voltage is stepped down to levels for transfer to the distribution lines. I asked David Botkins, director of media relations, for a tour of the Dominion Operation Center in Henrico County. Not only did he agree, he lined up Kevin Curtis, director of transmission planning, as the tour guide.

The operation center in Innsbrook takes security seriously. Visitors are not allowed admittance to the main operations room itself but to a viewing room, with movie theater-style seating, a locked door and a retractable screen that is kept closed except for scheduled viewings. No photography was allowed. I was only the third journalist granted admittance to the viewing room in 11 years. The others were a reporter from NPR and a reporter for the Richmond Times-Dispatch. I wasn’t sure whether to be flattered or whether the subject was just so esoteric that most journalists never think to ask.

The viewing room opens onto a much larger room — the brain of Dominion’s electric grid — with about a half dozen work stations and a massive wall board. The wall schematic displays the 6,400 lines of transmission line in the Dominion system: 500 kv lines in green, 230 kv lines in blue, and 115 kv lines in red. Bulbs light up at critical junctures like power plants, sub-stations and other important nodes to indicate an “abnormal” condition.

In Curtis’ ideal world, the board is blank — no lights. That means everything is functioning entirely normally. (Ironically, everything being normal would be an abnormal situation; there is always something going on.) A light is not necessarily a cause for alarm: Often it simply means that a facility is down for planned maintenance, as was the case for a Pentagon City substation that lit up like a Christmas tree the morning I visited. But every light makes the job of keeping the grid stable just a little more complicated.

Dominion runs a computer program every three minutes to check for trouble in the system. As a double check, PJM Interconnection, the regional transmission organization of which Dominion is a part, also runs a computer program. There is zero tolerance for allowing a situation that might lead to a melt-down. The standard set by the North American Electric Reliability Council (NERC) is to keep at least “two contingencies” away from a crisis. In other words, the system must maintain enough redundancy to accommodate two unplanned outages in extreme conditions. All it takes to shed load, says Curtis, is “a one in a million chance of a breakdown.” Continue reading

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.