Bacon's Rebellion

The year 2011 will be upon us shortly. That’s when Dominion Virginia Power says Northern Virginia could begin experiencing summer brownouts and blackouts during periods of peak electricity demand. KEMA, a power system engineering firm hired by Dominion, projects that 17 “overload violations” could occur that year. The number could increase to 67 by 2016.

It is Dominion’s job to issue such warnings. Federal law requires Dominion to maintain transmission reliability for its service area. And it doesn’t take much imagination to forecast the hysteria — and anti-Dominion recriminations that would fly — if the citizens of Northern Virginia were to experience more than two or three such overloads.

No doubt about it, folks, Northern Virginia is facing a serious problem, and Dominion is doing the right thing by running up the warning flag. But is Dominion’s proposed solution — building a high-power transmission line across northern Virginia’s piedmont — the only one? It is certainly the solution that Dominion prefers, for it dovetails nicely with the power company’s strategy for increasing shareholder value by building more power plants in isolated spots, connecting them to population centers with transmission lines, and generating a low-risk but favorable return on investment under “partial” reregulation. But is it the only alternative?

Dominion says it is, and cites an extensive study by KEMA in support. In addition to scrutinizing alternative transmission-line routes in mind-numbing detail, the study covers the following options:

Demand Side Management (DSM). Demand-side management — conservation — would be of limited value, KEMA says, because it cannot be targeted to the specific weak links in the transmission chain — the Mt. Storm/Doubs circuit in particular — where the overloads will occur. To alleviate the projected 226 megawatt overload at Mount Storm would require reducing Northern Virginia-wide demand by 2,850 megawatts, or about 40 percent — more than anyone thinks is realistically possible.

Distributed generation. The idea of installing small, dispersed power generators throughout Northern Virginia won’t work either, KEMA says, because they, too, cannot be targeted to the optimal locations. Each 1,000 megawatts of effective capacity would require 1,100 megawatts of distributed generators. More than 31,000 new units would be required by 2011, and 77,000 by 2016.

Larger power plant. Building a large power plant inside Northern Virginia is impractical also, says KEMA. The facility would have to generate 3,000 megawatts, making it one of the largest power plants in the country, and it would have to come on line by 2011, which alows insufficient lead time to license and build. Alternatively, three to five smaller plants might do the trick, but they would require upgrades to transmission lines in Northern Virginia.

Here’s what KEMA did not study: A combination of alternative strategies. Conservation + distributed generation + one or two smaller power plants in the Northern Virginia region.

The fact that conservation strategies alone cannot solve the problem is no reason not to pursue them as a partial solution. The same applies to the fostering of numerous, small-scale power sources across Northern Virginia, and also to the idea of adding one or more small power plants in the region.

And here’s what’s not clear: The maps and tables in the KEMA study include the notation “Possum Point off”, but there is no explanatory text. Possum Point is a four-unit power plant overlooking Quantico that burns natural gas and oil. Do Dominion’s projections of electric supply and demand assume that these units will be phased out, as the two oldest units have been already? If so, what are the reasons? Can a case be made for running them for several years more as a bridge to a longer-term solution? Again, I don’t know the answers. I’m just asking questions.

(Update: Jim Norvelle, a Dominion spokesman, reports, “We have no plans to shut down the Possum Point Power Station units. Units 1 and 2 are retired, Units 3 and 4 were converted from coal to natural gas a few years ago, Unit 5 uses oil as its fuel and Unit 6 is the newest unit, a natural gas, combined-cycle unit. Total output of the site is about 1,630 megawatts, or enough electricity to power 407,500 houses at peak demand.”)

Of course, the longer Dominion pursues the transmission-line option to the exclusion of other options, the closer it gets to a fait accompli. At some point, enough time will have gone by that there are no other options. To preclude that possibility, the State Corporation Commission should be prodded to pursue multiple tracks.

As recently as May of this year, U.S. power companies had announced intentions to build as many as 150 coal-fired power plants. But within the last few months, “plans for a new generation of coal-fired power plants are falling by the wayside as states conclude that conventional coal plants are too dirty to build and the cost of cleaner plants is too high,” reports the Wall Street Journal today in a front-page story.

Dominion, which recently highlighted plans to build a $1.7 billion clean coal facility in Southwest Virginia, appears to be an exception to the trend of canceled plants. But many of the same concerns apply: It may be possible to burn clean coal, but it’s darned expensive. (See “Another Inter-Regional Transfer of Wealth .”)

The Journal cites a controversial proposal by Northern States Power Co. to build a coal-fired plant in Minnesota. A hearing judge at the Minnesota Public Utilities Commission is urging rejection of the plan.

The judge concluded it would cost an extra $472.3 million, in 2011 dollars, to make the power plant capable of capturing about 30% of its carbon dioxide emissions, and another $635.4 million to build a pipeline to move the greenhouse gas to the nearest deep geologic storage in Alberta, Canada. Thus, $1.1 billion in pollution controls had the potential to inflate the cost of power coming from the plant by a whopping $50 a megawatt hour, making electricity from Excelsior twice as costly as power from many older coal-fired plants that simply vent their carbon dioxide.

Dominion’s proposed plant in Wise County would sequester C02 in local coal seams, sparing the cost of building a long pipeline. But the facility would still cost some 60 to 70 percent more to build than the average new coal plant.

The big question: With electricity demand soaring, what will take the place of coal? Nuclear power is the obvious alternative, but new nukes will take years to permit and build. Wind and solar offer only limited near-term potential, and don’t provide around-the-clock power. Natural gas is extremely expensive, and likely to get more expensive if the coal plants don’t get built.

Implementing conservation measures to dampen rising demand is the obvious short-term way to plug the gap in supply and demand, but current goals, if met, would conserve only 10 percent by 2020. Virginia needs to set much more ambitious electricity conservation goals and create regulatory mechanisms — smart metering, peak load pricing — to incentivize savings.

I don’t know how residential customers will respond, but I am quite certain that commercial and industrial consumers would move aggressively to cut their energy costs. I am judging submissions to the Governor’s Environmental Excellence Awards right now, and I am impressed by the ongoing programs that several of Virginia’s largest manufacturers have put into place to curb energy consumption in general, and electricity consumption in particular. As a requirement for participating in the awards, they are required to share their best practices. We can achieve dramatic savings we just put our minds to it.

Dominion recently announced plans to build a $1.6 billion coal-fired power plant in Wise County, in the heart of Virginia’s coalfields. The power company is billing the 585-megawatt “Virginia City Hybrid Energy Center” as a state-of-the-art clean coal facility. So far controversy has been muted. Some environmental groups have expressed displeasure, but their critique has gained little attention. What has escaped comment so far is the likelihood that the proposed location of the power plant in Southwest Virginia is driven by political considerations, and could well cost Dominion rate payers in eastern Virginia tens of millions of dollars annually in higher electric rates.

To be sure, the power plant would be an engineering marvel, incorporating a number of expensive refinements to reduce the impact of coal combustion on the environment. According to Dominion, some of those elements include:

• Carbon capture. “Carbon-capture compatible” design, meaning that technology to capture carbon dioxide could be added to the station when it becomes commercially available. Dominion is sponsoring research at Virginia Tech to see if it is possible to sequester carbon dioxide in coal seams in Southwest Virginia. Carbon capture technology is entitled to extra incentive premiums under Virginia’s regulatory framework.
• Fluidized bed technology. The use of circulating fluidized bed (CFB) technology, a clean-coal technology for reducing sulfur dioxide and nitrogen oxide. The power station also will use an air filter called a bag house to remove particulates and mercury.
• Waste coal and biomass. The capability to use a wide range of coals, waste coal, and up to 20 percent biomass. Piles of unused waste coal can lead to acidic leaching that causes environmental problems in Southwest Virginia.
• Pollution controls. Additional controls to remove even more sulfur dioxide and nitrogen oxide.
• Water conservation. Air-cooled condensers to reduce water usage at the station by nearly 90 percent when compared to typical coal-powered facilities.
• Ash recycling. The possible beneficial recycling of combustion by-products for the manufacturing of cement.

These are all commendable. What’s missing from Dominion’s press release, however, is what all this gee-whiz technology will cost to install. I don’t pretend to be an expert, and I’m willing to stand corrected. But to get a basis for comparison, I refer to a National Energy Technology Laboratory document, “Tracking New Coal-Fired Plants,” dated May 1, 2007. On page four of the PowerPoint presentation, it notes that 151 proposed new plants would generate 90 million gigawatts nationally at a cost of $145 billion. That averages out to a cost of $1.6 billion per gigawatt.

Coincidentally, $1.6 billion is what the Virginia City Hybrid Energy Center would cost. But instead of generating a full gigawatt of electric power, it would generate only 585 megawatts — or 58.5 percent of the average. The balance, or roughly $650 million, represents an additional cost to Virginia rate payers.

But that’s not all. States Dominion: “Under a state law encouraging the construction of the station, it would be powered by Virginia coal.” As it happens, Virginia has very high-quality, low-sulfur coal. But after 100 years of mining, Virginia’s remaining coal seams are either very thin or very deep, which means production costs are very high. Bottom line: Virginia electric consumers will pay more for their coal than if Dominion were free to purchase the fuel from any location. Thus, rate payers would pay more in two ways: for the up-front construction and for the fuel.

(I haven’t even discussed the cost of transmitting the electricity from SW Virginia to the population centers in the eastern part of the state. How’s that going to work? What transmission lines will be used? Will Dominion need to add to its electric transmission capacity?)

(Update: Dominion spokesman Jim Norvelle clarifies the transmission-line issue: “In our application with the SCC we identified the electrical switchyard at AEP’s Clinch River power station as our preferred intertie location. That is about nine miles away from our site in Virginia City, all of it adjoining an existing transmission line right-of-way belong to Old Dominion Power. The application says that PJM is performing its studies on possible intertie locations now. Of course, we would have to file a separate application with the SCC for the transmission line.”)

The underlying motive for locating the power plant in Southwest Virginia and for burning Virginia coal is to boost the depressed economy of the Southwest Virginia coalfields. The station would employ up to 800 workers during construction. Once complete, it would have 75 full-time employees and support about 350 mining jobs.

What is the legislative story behind this facility? I wish I knew. But I would be willing to wager that the origins of the Virginia City Hybrid Energy Center project is intimately bound up with approval of the electric utility re-regulation legislation enacted into law earlier this year. One of the key lawmakers who shepherded electric re-regulation through the legislative process was Del. Terry Kilgore, R-Gate City, whose 1st district encompasses Lee and Scott counties, and parts of Washington and Wise counties. The Dominion power plant would be located in his district — or right on the edge of it. (I can’t find a detailed map of the 1st House of Delegates district. Perhaps someone can help me.) Also not to be overlooked is the influence of Sen. William Wampler, R-Bristol, one of the most powerful members of the state Senate.

At a time when environmental and conservation groups are clamouring for a shift to conservation, renewable energy and a distributed grid, proponents of Big Grid electricity infrastructure contend that solar power, wind power, biomass-generated energy, cogeneration, etc. are impractical. Renewables just aren’t competitive with coal-fired electricity. Say what? Wind power is not competitive, but a coal-fired plant costing twice the national average would be competitive?

Bloggers and the news media need to dig deeper, and do it fast — before the State Corporation Commission approves the project. I would approach the story with a working hypothesis: By costing rate payers hundreds of millions of dollars more than a conventional coal plant, the Southwest Virginia facility represents an extravagant, inter-regional transfer of wealth. I also would investigate the politics of the deal: Did Dominion agree to the project to gain the help of Southwest Virginia legislators in getting its re-regulation legislation through the General Assembly?