Report Outlines Gas Pipeline Risks to Rate Payers

Pipeline construction between West Virginia and Pennsylvania

Pipeline construction between West Virginia and Pennsylvania

by James A. Bacon

The proposed Atlantic Coast Pipeline (ACP) and Mountain Valley Pipeline (MVP), designed to bring low-price natural gas in the Marcellus and Utica shale fields to Virginia and North Carolina, pose significant risks to electric utility rate payers and landowners along their routes, argues a new study, “Risks Associated with Natural Gas Pipeline Expansion in Appalachia.

“Pipelines out of the Marcellus and Utica region are being overbuilt,” states the report, written by the Institute for Energy Economics and Financial Analysis, whose stated mission is to accelerate the transition from fossil fuels to renewable energy sources. “Overbuilding puts ratepayers at risk of paying for excess capacity, landowners at risk of sacrificing property to unnecessary projects, and investors at risk of loss if shipping contracts are not renewed and pipelines are underused.”

A major justification for both pipelines is to provide Dominion Virginia Power and other electric utilities access to natural gas from West Virginia and Ohio, which for several years has been selling at a discount to Gulf of Mexico gas. But once a slew of proposed pipelines is built, the report contends, that price advantage likely will disappear, raising the possibility that the $9 billion cost of building the two pipelines will exceed the savings from lower gas prices.

“Shale drillers cannot continue to produce below cost indefinitely,” states the report. “In the longer term (10-15 years), it is likely that Marcellus and Utica gas prices will stabilize at a somewhat higher level. These longer-term prices will have a significant impact on the long-term economics of the Atlantic Coast Pipeline, which is designed as a 40-year project.”

Aaron Ruby, a spokesman for Dominion Transmission, managing partner of the ACP, disputed the conclusions of the report, saying, “There is no question about the urgent public need for the Atlantic Coast Pipeline. This project was developed in response to the real and demonstrated need of public utilities in Virginia and North Carolina. … Demand for natural gas in the region will increase nearly 165 percent from 2010 to 2013. Yet there is not enough infrastructure or supply … to meet this growing demand.”

Increased demand will come from electric utilities switching from coal to natural gas and from population growth, Ruby said. In Hampton Roads natural gas is in such short supply that service has been curtailed during extreme weather events for industrial customers, and attracting new customers burning natural gas is all but impossible.

Last month 33 area legislators signed a letter saying, “The need for this project is urgent; to put it bluntly, our region’s natural gas transportation system has reached a tipping point. The pipelines serving Hampton Roads are fully subscribed. Without new infrastructure, there is no way to meet our region’s rising demand for natural gas … crippling out prospects for economic growth.”

Mountain Valley Pipeline said that it had retained Wood Mackenzie Inc. to provide an independent analysis of long-term natural gas supply and demand in the Southeast. The resulting report, says MVP spokesperson Natalie Cox, “makes clear that the Southeast market alone has more than enough natural gas demand to support the MVP’s current capacity of 2.00 [decatherms] per day, and it’s important to remember that [the] Southeast is only one of MVP’s target markets.”

Graphic credit: Institute for Energy Economics and Financial Analysis

Graphic credit: Institute for Energy Economics and Financial Analysis

The Marcellus gas boom

The pipeline-building boom has been driven by soaring natural gas production in the Marcellus and Utica shale fields, in which production has outpaced the ability of pipeline companies serving the region to transport the gas to customers. A persistent price disparity has opened up between the “Henry Hub” price for Gulf gas and the “Dominion South” hub for shale gas, as seen in the graph above. Backers of both the ACP and MVP projects have argued that their pipelines will allow electric utilities to access the lower-priced Marcellus gas, saving $377 million a year for ACP’s Virginia and North Carolina customers alone.

The low gas prices are driving a race among natural gas companies to build new pipeline capacity to reach higher-priced markets, states the IEEFA report. “Pipeline companies [are] competing to see who can build out the best networks the quickest.” Continue reading

RVA Snapshot: Nice Vision, but the Devil’s in the Details

rva_snapshotby James A. Bacon

The Capital Region Collaborative, a not-for-profit dedicated to building a more livable, prosperous Richmond region, has just published RVA Snapshot, a set of metrics that compares Richmond to six peer metros of comparable size. The accompanying commentary summarizes the conventional wisdom regarding the region’s strengths and weaknesses, and articulates a “shared vision” for the future.

I find the aspirations particularly interesting, as they express the values of the business, political and civic leaders who influence how the region allocates resources to advance the public good.

Education: The region ensures that every child graduates from high school college or career ready.

Job creation: The region enjoys a diverse economy that is competitive in the global marketplace and provides job opportunities for all.

Workforce preparation: The region aligns workforce skills to employer needs.

Social stability: The region embraces our social diversity as a strong community asset and supports a community where all residents have the opportunity to succeed.

Healthy community: The region transforms into a metro area known for an active lifestyle.

Coordinated transportation: The region maintains its status as one of the most uncongested transportation networks in the country while supporting all modes of transportation.

James River: The region will make the James River a centerpiece for entertainment, recreation, and commerce.

Quality of place: The region is the most appealing and attractive destination for arts, culture and entertainment on the East Coast.

By necessity, these aspirations are watered down to appeal to a broad cross section of the population. It’s hard even for a curmudgeon like me to take exception to any of them. The tricky part is figuring out which tangible actions will advance these goals. And that often boils down to political philosophy — what role should government play? To what extent does the community achieve its goals by taxing, spending and regulating, and to what extent does it rely upon voluntary, bottom-up initiatives?

Needless to say, I favor voluntary, bottom-up initiatives. For example, the Capital Area Farmer Markets Association is creating a food guide listing all restaurants, farms, grocers, markets and other businesses where consumers can purchase local food. I doubt I’ll go out of my way to patronize these establishments, but if other people do, that’s great! I’m all for increasing consumer choices.

I’m less excited by the uncritical emphasis on public transit, which the document kinda, sorta endorses by noting that the Richmond region is 8th lowest ranked among its peers with regard to transit coverage and job access. That may be true, and creating affordable transportation options for the public may be desirable, but expanding mass transit is not a win-win proposition, it’s a win-lose. Money is involuntarily transferred from one group of people (taxpayers) to another group of people (transit riders), usually with little regard to economic efficiency or emerging transportation alternatives.

Regardless, all the right-thinking people in Richmond are lining up behind Richmond’s proposed bus rapid transit system. I have yet to see a discussion of appropriate land uses along the bus corridor or streetscape improvements needed to make the corridor more hospitable for passengers walking from the stations to their destination. Nor has anyone considered how the Uber revolution might be extended to privately operated vans and buses as a way to provide affordable transportation access to the poor. Having dealt with none of these issues, the City of Richmond will incur a long-term obligation to continue operating a money-losing service.

Which brings me to my final point: RVA Snapshot gives no consideration to the long-term fiscal health of local governments in the region. Apparently, is it assumed that AAA and AA bond ratings are a birthright that require no special attention. Trouble is, local governments are hard-pressed to maintain the services at current tax rates without expanding their commitments and setting themselves up for future failure. Sound finances are the bedrock of any community’s long-term prosperity. I would add the following aspiration:

Fiscal health: The region embraces sound fiscal practices that support the ability of local governments to maintain competitive tax rates and pursue excellence in core functions over the long run.

Treated Coal Ash Water Flows Today

Jason Williams, environmental manager, addresses members of the Richmond media.

Jason Williams (right), environmental manager, addresses Richmond media.

by James A. Bacon

After months of controversy, Dominion Virginia Power will start draining today more than 200 million gallons of water from its coal ash ponds at the Bremo Power Station. “We’re treating to levels that will be fully protective of the river,” Jason Williams, the environmental manager in charge of the project, told a media gaggle invited yesterday to view the water treatment facilities.

Treating the water to meet quality standards protective of aquatic life will cost about $35 million at Bremo and take a year or more, depending on how smoothly the process goes and how much rainwater is added to the coal ash ponds during the period. If Dominion consistently meets those standards, Department of Environmental Quality (DEQ) officials say that the odds of event negatively impacting human health or aquatic life in any given year are less than three in one thousand.

While the eight-step water-treatment system is basically the same design that the company submitted with its permit application to the Department of Environmental Quality, Dominion agreed to stricter protocols for treating, monitoring and testing the water quality in a settlement with the James River Association.

Coal ash is the residue from coal combustion, and it contains heavy metals that are toxic in high enough concentrations. Historically, electric utilities have stored the ash in ponds where it mixed with water to create a sludge. To prevent leaks and spillage from the ponds, the Environmental Protection Agency (EPA) is requiring power companies to remove the water and then find a safe place to store the ash. The James River Association has signed off on Dominion’s plan to de-water the coal ash at Bremo. Meanwhile, Dominion is applying for a separate permit to cover the disposal of the de-watered ash, which will create its own set of issues and potentially generate a fresh controversy.

For now, though, everyone is on board with the de-watering plan. Williams outlined the eight-step process, which he calls “state of the art.”

treatment_system2

Graphic credit: Dominion (Click for larger image)

  • Aeration. Water from the coal ash pond is piped into a tank where the addition of air facilitates the water-cleaning process.
  • pH adjustment. Acidity is reduced, which encourages particles in the water to separate and settle.
  • Clarification. Chemicals are added to the water to help the particles clump together so they will settle out of the water.
  • Settling tanks. Solids from the clarification process are separated from the water, collected, and disposed of in a landfill.
  • Filtering. The water is passed through filters to remove even more particles.
  • Enhanced treatment. The water is tested. If certain constituents such as heavy metals remain close to trigger levels agreed to by the James River Association, the water is run through an extra piece of equipment to remove them.
  • pH adjustment. If needed, the pH level of the water is adjusted back to levels that are safe for the river.
  • Holding tanks. The water is pumped to one of four 950,000-gallon holding tanks where it is tested again before being released into the water. Dominion expects the water in these tanks to meet standards, but if it doesn’t, it will be routed through the treatment process again.

Continue reading

Even the Washington Post Has Noticed that Metro Is Failing

redlinecrashby James A. Bacon

How bad is the Washington Metro rail system? So bad that only 84% of its trains ran on time, mainly due to poor maintenance. So bad that ridership declined 5% since 2010, even as transit ridership nationally was up. So bad that the system needs an extra $1.3 billion every year to invest in capital projects, and no one knows where the money will come from. The Metro rail system is so bad that even the Washington Post has perked up and taken notice.

The Metro rail system is arguably the most essential piece of transportation infrastructure in the Washington region, and it is engaged in a slow-motion train wreck. If the metro fails, the metropolitan transportation system seizes up and fails.

The Washington Post has detailed the Metro’s failings in a lengthy, front-page article, which shows that shows how deep-rooted the problems are. The original design flaw, write Robert McCartney and Paul Duggan, was the dysfunctional governance system that shares board appointments between Washington, D.C., Virginia, Maryland and the federal government. Responsibility is so divided that no one is held accountable, and nothing important gets done unless the District’s mayor and the governors in Annapolis an Richmond reach a consensus and push an issue forward.

Add to that the political bias toward expanding the Metro over properly maintaining it.

Board members … kept pushing for Metro to grow. The politicians who held the purse strings seemed happy to invest in laying new tracks and opening new stations, where they could tout development at opening ceremonies. But they cared less about spending for maintenance to prevent breakdowns years later, when they might no longer be in office.

In 2006 then-interim general manager Dan Tangherlini urged cost-reduction measures such as replacing short escalators with stairs, selling Metro’s headquarters building, and buying rail cars made from older designs. The board wasn’t interested. After nine months as a fill-in, Tangherlini did not get the top spot, the article says, “because Virginia representatives on the Metro board were worried that his interest in revitalizing existing subway lines would threaten the agency’s commitment to building the Silver Line.”

So, Virginia got its Silver Line to Tysons, but the quality of service is held captive to a dysfunctional organization. Astonishingly, the Silver Line, the newest in the system, is showing the second worst on-time performance of the six lines. According to data cited by the Post, Silver Line on-time performance in 2015 ran under 75%, dropping below 60% in October 2015.

Another original design flaw was a decision to build lines with two tracks, not four as in New York, with the result that crews sometimes must shut down lines to perform routine maintenance. Also consider the dysfunctional unionized workforce which adds to costs. The Post authors glide past union issues with relatively little comment in this article, but the Washington Times produced a devastating series of articles on the topic several years ago.

Bacon’s bottom line: The Metro is so critical to the functioning of the Washington region, including much of Northern Virginia, that it effectively holds the economy hostage. It is the transportation analogue to “Too Big to Fail.”

But no solution is in the offing. Raising the price of Metro tickets, which don’t come close to covering the cost of the service, is not a viable revenue-raising option when riders are already hacked off and inclined to abandon the system. Asking more money from state and local governments is sure to be contentious, especially in Virginia, if bailing out the commuter-rail system means short-changing other regions of funding for their own projects. Taxpayers are not likely to approve dumping more than $500 million a year extra into Metro, especially with no guarantee that the money won’t disappear into a black hole.

Rule by Edict Comes to Virginia

mcauliffeby James A. Bacon

A persuasive moral case can be made to restore the civil rights of former felons. Once a man has served his time and repaid his debt to society, he should be allowed to participate fully in that society.

As Governor Terry McAuliffe stated Friday in announcing his restoration of civil rights to 206,000 Virginians:

If we are going to build a stronger and more equal Virginia, we must break down barriers to participation in civic life for people who return to society seeking a second chance. We must welcome them back and offer the opportunity to build a better life by taking an active role in our democracy. I believe it is time to cast off Virginia’s troubling history of injustice and embrace an honest, clean process for restoring the rights of these men and women.

Former Governor Bob McDonnell thought much the same thing. In 2013, he proposed a series of bills meant to fast-track the restoration of voting rights for non-violent felons. The bill died in committee, but McDonnell recognized what governors like Tim Kaine had acknowledged before him: that the United States is a nation of laws and he did not have the authority to rewrite the law as he pleased.

Perhaps anticipating difficulty in convincing the Republican-dominated General Assembly to pass the law he wanted, McAuliffe has borrowed from the Barack Obama playbook — rewrite the law by executive decree.

Not surprisingly, his sweeping action is being negatively received. ” I am stunned at his broad and unprecedented view of executive power, which directly contradicts how past Governors have interpreted their clemency powers,” said House Speaker William J. Howell, “and I am stunned at his willingness to restore the rights of the most heinous criminals without batting an eye.” He continued:

There are significant constitutional and legal questions regarding the Governor’s authority to take such drastic action.  No Governor in the history of Virginia has accepted such a sweeping view of executive power.  A.E. Dick Howard notes in his commentaries that Governors have considered the “restoration of civil disabilities on an individual basis.”  The Supreme Court has acknowledged the Governor’s authority on the restoration of rights, but only in the context of requests made by individuals.  The Court does not appear to have ever contemplated the view taken by the Governor.  Most recently, in 2010, counsel to Governor Tim Kaine said ‘a blanket order restoring the voting rights of everyone would be a rewrite of the law rather than a contemplated use of the executive clemency powers.’

We’re not talking about technicalities here. An important policy question is whether restoration should extend to all felons regardless of their crimes, such as murder, rape, child rape, and kidnapping. Any policy, suggested Howell, “should take into account the nature of the crimes committed, whether they have paid back their victims and the court system, and their willingness to serve as productive members of society.”

Another question is how to implement the law. Writing to the American Civil Liberties Union of Virginia in 2010, Mark Rubin, counselor to Kaine, warned of several practical problems that McAuliffe will be sure to encounter as he tries to implement his edict:

Neither the information about voting registration concerning whether a felon has completed his sentence are completely available in centralized state records as they are in other states you cited as models. For example, information about whether a felon has complied with court orders including the payment of restitution to the crime victim or whether the individual has successfully met the terms of probation or parole supervision is only available in local court records. Without having this information available in centralized data bases, a blanket restoration of rights for those who have completed their sentences would place an unprecedented burden on local registrars to determine whether a felon is actually qualified to register. It could also lead to significant confusion in the election process with disputes about an individual’s voting status. The risk of undermining the integrity of the election process is not one the Governor is willing to take as he leaves office.

Kaine said individual felons should be encouraged to petition to have their rights restored, and the law should be changed to see to it that lifelong voting disenfranchisement is not an automatic consequence of felony conviction. But the governor could not unilaterally change the law himself. “The Governor,” wrote Rubin, “will be glad to continue to work … to ultimately persuade the General Assembly that this distinction is one to erase.”

Remarkably, in his announcement Friday, McAuliffe provided no legal justification whatsoever for his action — not even a fig leaf of a justification — nor did he refer to any bills he failed to get bills through the legislature as justification for conducting an end run around the General Assembly. His action looks like a raw power grab times designed to infuriate Republicans and mobilize the African-American vote in November.

Bacon’s bottom line: I defended McAuliffe when legislators tried to pack the GoVirginia board with their own appointees, an unjustified legislative intrusion into executive authority. (See, “Here, Piggy, Piggy!”) Now it’s time to call McAuliffe on the reverse — an usurpation of legislative power. I’m not sure what happens from here. Presumably, lawsuits will be filed. Perhaps the General Assembly will take some official action. One way or the other, McAuliffe needs to be reigned in.

Would the Suicide Epidemic Get More Attention if the Victims Were Women and Minorities?

Graphic credit: Wall Street Journal

Graphic credit: Wall Street Journal

When does a suicide epidemic become a national crisis? When women and minorities end their lives in greater numbers than men and whites, thus confirming the dominant narrative of a racist, patriarchal society that discriminates against all manner of oppressed groups… Until that time, the rising suicide rate will get only passing attention. Depending on the age group, according to new data, American men kill themselves at a rate four to ten times the rate of women. Whites also end their lives at three times the rates of African-Americans, Latinos and Asians.

In a society stained by “white privilege,” and “male privilege,” a strikingly large number of white males seem to think otherwise. Rather than basking in their advantages, they’re checking out in ever greater numbers. Reviled in the dominant narrative of our age as the oppressor, white males are the one group whose cultural mores reject the idea of victimhood and grievance mongering. Rather than interpreting the inevitable setbacks and vicissitudes of life through the lens of race, class, gender, the so-called “angry white male” is far more likely to direct his anger inward by means of suicide or outward in explosive, mass shootings and death-by-cop incidents.

Graphic credit: American Foundation for Suicide Prevention

Graphic credit: American Foundation for Suicide Prevention

While the right-thinking people are all caught up in the latest victimization drama — the trauma of transgendered people unable to use the bathroom of their choosing — the suicide epidemic receives very little notice. Sure, the problems of transgendered people are real, but c’mon, so are the problems of people whose lives suck so badly that they kill themselves.

According to the American Foundation for Suicide Prevention, Virginia’s suicide profile matches that of the nation (which should come as no surprise, because our demographic profile matches that of the nation). There were 1,122 suicides in Virginia in 2015 — 12.86 per 100,000 population, a hair below the national average. Suicide is the 11th leading cause of death in the state; more than three times as many people die by suicide here than by homicide.

Does anybody care?

— JAB

Explaining Fairfax County by Way of New York City

domestic_outmigration

Graphic credit: StatChat

by James A. Bacon

National population migration surveys invariably show Fairfax County to be a big loser. The county experienced a net domestic out-migration of 16,800 in 2015 and 46,500 since 2010. When viewed in isolation the numbers make Virginia’s largest locality look like a war zone — call it Little Aleppo. Yet somehow the population continues to increase, and somehow the county manages to support one of the highest per capita incomes of any jurisdiction in the United States.

Writing at the StatChat blog, Luke Juday explores the seeming contradiction by taking a look at New York City, which shows a similar profile of massive domestic out-migration and increasing population. By way of explanation, he points to two trends: foreign in-migration and natural increase. In New York, a wave of immigrants more than replaced the native-born Americans who were leaving. Furthermore, the demographic profile skews younger than for the nation — and people in their 20s and 30s have more children than people in their 50s and 60s.

New York is not turning into another Detroit as its native-born population moves away. Sky-high real estate prices may drive out the middle class, but unaffordable real estate is a sure sign of high demand. As Juday points out: “Its population continues to climb despite an astronomical cost of living that suggests even more people would live there if they could.”

That New York is a gateway for immigration is a secret to no one. But the idea that it is a young city is less widely recognized. Writes Juday:

New York is a young city compared to the nation as a whole. Like most cities, it has a disproportionate share of young adults in their 20’s and early 30’s. Young adults are important in demographics for two reasons. First is what they don’t do: die. A population of 20-somethings will have far fewer deaths in any given year than a population of 60-somethings. Second is what they do: have babies. Women between the ages of 20 and 35 are in their prime childbearing years. Unsurprisingly, places that have a lot of women in their prime childbearing years tend to have a lot of births as well.

The people moving to New York are younger than those who are leaving. Think college graduates seeking the bright-lights-big-city in Wall Street, Madison Avenue or Broadway while snow birds retire to Boca Raton. (The numbers also suggest that native-born households in the child-raising years, along with their children, also leave the city — presumably to a less hectic life outside the urban core.) The end result is a city with a high proportion of young, creative, entrepreneurially vital people in their 20s and 30s.

Unfortunately, Juday does not close the loop in his blog post. Is what’s happening in New York also happening in Fairfax County? Well, after accounting for foreign immigration, Fairfax County has actually experienced a net in-migration of 9,200 since 2010, so at least one of New York City’s demographic drivers is the same. Juday does not tell us whether Fairfax has a similar population profile heavily weighted by people in their 20s and 30s. But he promises to reveal more in a later post.