Category Archives: Regulation

How Clean Is Clean Enough?

Coal ash pond at Bremo Power Station. Photo credit: CBS 19

Coal ash pond at Bremo Power Station. Photo credit: CBS 19

Regulations for cleaning up Virginia’s coal ash ponds are much stricter — and more expensive –than the old rules. But do the new standards do enough to protect water quality?

by James A. Bacon

Two years ago, few Virginians had any idea that coal ash posed a threat to the environment. Then in February 2014 a Duke Energy facility near Eden, N.C., spilled 39 tons of coal-ash slurry into the Dan River, which flowed downstream into Virginia. The incident alerted Virginians to the potential hazards of dozens of lightly regulated coal ash ponds in the Old Dominion. Now, as the Department of Environmental Quality (DEQ) implements new regulations to clean up those ponds, the disposal of this coal-combustion residue has become a front-burner issue.

The new rules require power companies to drain the ash ponds of water and cap them to prevent rain water from percolating through. The water must be treated to remove heavy metals mixed with the ash, and it must be tested to ensure it meets DEQ standards before it is released into the river.

But when Dominion Virginia Power applied for permits to treat the water from coal-ash ponds at its Possum Point facility on Quantico Creek and its Bremo plant on the James River, scores of citizens appeared at the public hearings last month to express opposition. Corey Stewart, chairman of the Prince William County Board of Supervisors, excoriated Dominion and DEQ. “They don’t care about the public or anything other than the bottom line,” he said of Dominion. “As a county, our first duty is to protect public safety, and Dominion isn’t doing that, in collusion with the state government.”

Dominion and DEQ defend the new rules and water permits, which they say are far stricter than the old regulations, tougher than the minimum standards mandated by the EPA, and tighter in some ways than the standards enacted in North Carolina, site of the Duke Energy spill.

“Dominion has a very comprehensive and robust plan to clean up the environment,” said Dominion spokesman David Botkins. “Our plan and the permits being issued are some of the most stringent ever issued by DEQ on this type of thing.  The water discharge portion will be safe and not harmful or dangerous in any way to human, animal or aquatic life.”

Although the measures are tighter than the old ones, environmentalists say they fall short of what’s needed. The Southern Environmental Law Center (SELC) advocates moving excavating the coal ash and moving it to dry, clay-lined storage away from the river.

As for the permits approved by the State Water Control Board for Possums Point and Bremo, they create a toxic “mixing zone” where the treated coal-ash water enters the river and could send toxic plumes downstream in low-water conditions. Under the worst 10-year drought scenario at Dominion’s Bremo facility,  says SELC attorney Brad McLane, the release of treated water could create a plume 16 feet wide, 2,000 feet long, and toxic enough to kill aquatic life.

McLane would like to see tighter restrictions on mercury and arsenic levels in the discharge so that river water never exceeds safe levels. And in addition to testing the treated coal ash water before it’s discharged, he’d like Dominion to test water quality in the river itself. “The mixing zone is an area of the river where the water is allowed to be toxic,” he says. “Dominion will not be required to shut down operations if the water in the mixing zone falls below standards, only if the concentrations are high enough that water outside the mixing zone dimensions violates standards.”

DEQ spokesman Bill Hayden minimizes the threat. “The permit limits the size of the plume to the greatest extent possible. It’s very unlikely that those [unsafe] conditions will be met. It’s theoretically possible, but it won’t be a common occurrence. It would require a very low flow. Our position is that [the permit] would allow the standards to be met the vast majority of the time.”

(There is a separate issue issue regarding the Possums Point permit, where DEQ allowed Dominion to keep a “toe” drain, the purpose of which is to divert storm and ground water from the coal ash ponds. The Potomac Riverkeeper Network charges that the drain has been discharging contaminated water. Dominion says its tests show that water from the drain is comparable to background groundwater.) Continue reading

COPN Update: Hospital Monopolies Charge 15% More

Image credit: Washington Monthly

Image credit: Washington Monthly

As the General Assembly debates a rollback of the Certificate of Public Need (COPN) process, a new study has found that markets served by monopoly hospitals charge privately insured patients 15.3% more on average for a variety of routine procedures than  hospitals do in competitive markets.

“Hospital market structure stands out as one of the most important factors associated with higher prices, even after controlling for costs and clinical quality,” write the authors of “The Price Ain’t Right? Hospital Prices and Health Spending on the Privately Insured,” published by the National Bureau of Economic Research.

The study is germane to Virginia’s COPN debate because state regulations impede the entry of new competitors in the medical marketplace. Most metropolitan markets in the state are monopolies or near-monopolies in which a single health care system own a dominant market share and enjoys pricing power in negotiations with private insurers.

If you want to know the premium that employers and patients pay in monopoly markets, 15% is a good rule of thumb. Employers/patients pay a roughly 7% premium in duopoly markets, and a 5% premium in triopoly markets. The price differential for Medicare is smaller because the federal government exercises monopolistic buying power (technically, that’s called a monopsony) and sets take-em-or-leave-em rates.

— JAB

Domenech Claims about Clean Power Plan Detract from Serious Debate

domenech

Doug Domenech

by James A. Bacon

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

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

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

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

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

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

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

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

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

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

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

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

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

A Greater Role for Nurse Practitioners

nurse_practitionerby James A. Bacon

While Medicaid expansion may have been dead on arrival at the General Assembly this year, the Senate Education and Health Committee has been thinking of other ways to improve medical access for Virginia’s poor. One solution is to loosen the regulatory restrictions that limit the ability of nurse practitioners to handle routine medical cases without a physician’s supervision. Three bills passed by the committee would improve medical access by expanding the role for nurse practitioners.

Reports the Richmond Times-Dispatch:

  •  SB 369 would establish a pilot program in which nurse practitioners would practice without direct supervision of a physician in clinics in medically under-served or high-unemployment areas. The nurses would collaborate with physicians via tele-medicine, and would have authority to issue prescriptions.
  • SB 264 would allow a nurse practitioner to provide care for up to 120 days in the event that the physician overseeing the patient care team dies, retires, becomes disabled or no longer has a license.
  • SB 463 would authorize nurse practitioners certified as nurse midwives to practice without the requirement for collaboration and consultation with a patient care team physician.

By themselves, these measures will not solve the plight of Virginia’s uninsured population, which Medicaid expansion is meant to address, but they are a step in the right direction. Combined with other measures such as the rollback of Certificate of Public Need regulations and the expansion of primary-care clinics, Virginia can do a lot to ensure better access for the poor and near-poor without exposing taxpayers to the massive fiscal risk of expanding Medicaid.

Advocates of Medicaid expansion tend to overlook a critical point: Having access to health insurance is not the same as having access to primary care services. Because Medicaid tends to pay health care providers less than it costs them to provide a service, Medicaid patients are money losers. As a consequence, many primary-care physicians, who tend to be over stretched as it is, refuse to take Medicaid patients. The looming physician shortage makes it increasingly difficult for Medicaid patients to find a primary-care physician, which is why so many end up in the emergency room.

The U.S. health care system is an extraordinarily complicated organism, and its problems cannot be fixed by throwing money at it. By taking up the if-you-don’t-like-Medicaid-expansion-what’s-the-alternative challenge, Virginia can build a health care system that works better for all. These three bills are excellent examples of the kind of thinking we need. If Republicans win the White House in 2016 and succeed in their dream of dismantling Obamacare, we’ll be darn glad we chose this path.

Gas Worse Carbon Polluter than Coal, Says Sierra Club

global_warmingby James A. Bacon

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

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

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

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

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

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

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

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

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

Sparks Will Fly

gridby James A. Bacon

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

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

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

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

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

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

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

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

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

The EVs Are Coming. Let’s Get Ready!

Image credit: Evatran

Image credit: Evatran

by James A. Bacon

The market for electric vehicles has not matured as rapidly as many proponents hoped, and the low price of gasoline in the past year hasn’t helped. But when EVs do attain mass-market status, as eventually they will, there is a good chance that a crucial innovation helping them get there will have come out of Virginia. Evatran Group, a six-year-old, Richmond-based startup, has emerged as the country’s leading maker of wireless recharging technology, addressing a big drawback to electric vehicles: the hassle of recharging.

The company’s website describes the value proposition this way: “Hands-Free, Hassle-Free.”

With the Plugless L2 System, you simply pull into your parking space and your EV starts charging automatically. No dirty cords to untangle and no chance of forgetting to charge. The wall-mounted Control Panel guides you as you approach the Parking Pad to ensure correct alignment. Most people get it on their first try!

Writing in Style Weekly, Peter Galuszka describes how 29-year-old Rebecca Hough co-founded Evatran with her father shortly after graduating from the McIntire School of Commerce in 2008. With early-stage financing from New Richmond Ventures, the company has grown to the point where its wireless charger can be installed in the automotive after-market for 60% of the EVs sold in the United States. Additionally, Evatran is raising $10 million in Series B financing to sell plugless units in China.

EV-forecastBacon’s bottom line: Like the quip about Brazil — it’s the country of the future, and always will be — electric vehicles have been touted as the cars of the future for 15 or 20 years now. But venture capitalists and automobile companies are committing serious money to EVs, the rate of technological innovation seems to be accelerating, and the price of gasoline won’t stay below $2 per gallon forever. Within the foreseeable future, there will be millions of EVs on the road.

While contemplating the inevitable rise of the EV, it’s worth thinking about the implications for the future of the electric grid. It seems prudent to draw at least two conclusions.

First, electric vehicles will boost the demand for electricity. In its 2015 Integrated Resource Plan, Dominion Virginia Power projected that there will be 334,000 electric vehicles and plug-in hybrid electric vehicles on the road in its service territory by 2030, which would translate into 369 megawatts of peak load and an annual energy usage of 1,462 gigawatts from charging.

Second, EVs will drive a shift in the electricity load. Assuming most recharging occurs while cars are parked at home, EVs are expected to boost demand in the evening and night-time hours. That could be either a blessing or a curse. During the summer, peak electricity loads occur in late afternoon when temperatures are still high and people come home from work and turn on appliances. If they plug in their cars at that time, EVs could seriously strain the electric grid. However, if people wait until late in the evening when electricity demand slackens, EVs could reduce the gap between peak and non-peak loads, making it easier for utilities to balance the load. Better yet, Night-time recharging of EVs would boost the market for clean wind power, which blows most reliably at night.

Virginia policy makers need to ensure that the load shift to later, off-peak hours takes place.

Dominion is more than four years into a pilot program to shave peak power load by offering EV users voluntary, experimental rates to charge their cars during off-peak hours. The program provides two options. A “whole house” rate provides a preferential off-peak rate for both premises and vehicle. An “EV only” rate provides the off-peak rate for just the vehicle. As of April 2015, 377 customers were enrolled in the whole-house program, and 119 in the EV-only rate. The pilot program extends to November 2018.

The number of participants falls far short of the 1,500 total allowed under the State Corporation Commission (SCC) order. Hopefully, Dominion will have learned enough from the trial that the SCC can seriously consider enacting a long-term, demand-shaving tariff. If not, the commission needs to identify ways to boost participation to the point where valid conclusions can be drawn.

As a bonus, EvaTran could be well positioned to benefit. If Evatrans’ automatic-recharging system can be programmed to recharge during certain hours and not during others, the product will eliminate another hassle factor: remembering when the lower tariff goes into effect and going to the garage late in the evening to manually insert the charger into the car. Such a synergy would be a boon both to consumers and to one of Richmond’s rising entrepreneurial stars.

Editor’s note: I have updated the article to incorporate more up-to-date data on the pilot program from Dominion. — JAB