On the Fine Art of Forecasting Peak Load Demand

Comparison of Dominion and PJM growth forecasts in peak load. Source: Dominion 2017 Integrated Resource Plan.

Billions of investment dollars ride on the long-range forecast of Dominion’s peak load electricity demand. But whose projections do we believe — Dominion’s or PJM’s?

In its 2017 Integrated Resource Plan (IRP), Dominion Energy forecasts the increase in its peak electric load and anticipates what combination of new gas, solar and nuclear facilities it will take to meet that demand. Although the IRP is a highly technical document, against the backdrop of the debate over the future of Virginia’s electric grid, it has major political implications. Environmentalists argue that Dominion overstates future electric load and, consequently, it overestimates the number of new combustion turbines (gas-fired turbines designed to generate electricity on call) or the amount of new nuclear capacity that it will need to add.

As evidence, Dominion’s opponents point to the 2017 peak load forecast by PJM Interconnection, the regional transmission organization of which Dominion is a part. Where Dominion’s IRP projects an average annual increase in summer peak load of 1.4%, PJM projects an increase of only 0.4%. Projected over the 15-year planning horizon of the IRP, that amounts to a tremendous difference in peak electric load, as can be seen in the graph above.

Needless to say, Dominion defends its forecast, and offers detailed reasoning in the IRP to support its position.

Which forecast is correct? That of Dominion, which has a more intimate, granular knowledge of its service territory, of that of PJM, which has no profit-maximizing agenda?

It might come as a surprise to outsiders, given the big gap between their projections, but Dominion and PJM coordinate their planning and forecasts very closely. In most ways, the two forecasts are closely aligned. In PJM’s estimation, the difference boils down to two main factors: (1) the assumptions that Dominion and PJM make about the growth in demand from energy-intensive data centers beyond 2021, and (2) assumptions about how to account for rapidly “behind-the-meter” electric generation by homeowners and businesses. To those two issues, Dominion adds two more arcane issues of methodology.

Data centers. Data centers figure largely in Dominion’s forecasts because Northern Virginia has emerged as one of the world’s leading clusters of energy-intensive server farms, drawing upon the region’s rich network of high-capacity fiber-optic cable, low-cost electricity, tech-savvy workforce, and friendly state-local policies. Having observed the success of Loudoun County, other Virginia localities from Virginia Beach to Wise County in far Southwest Virginia, are getting into the act.

Data centers are an anomaly for economic and electric-load forecasters. Because they are such big consumers of electricity to run thousands of servers and cool the heat they throw off, they skew the normal relationship between economic growth and energy consumption. Accordingly, Dominion and PJM have to make special adjustments to their economic models to take them into account.

“Each year Dominion comes to us with information about their projections of data center growth,” says Tom Falin, director of resource adequacy planning for PJM. “We do analysis to see if that growth is already embedded in our forecast. In general, it isn’t. [Data centers] put a drain on the energy grid that’s not normally associated with economic growth — there’s not a lot of employment and housing associated with it.”

Data-center loads reached more than 800 megawatts by 2016 and are projected to amount to 1,500 megawatts by 2021.  That compares to a total peak load of about 20,000 megawatts for Dominion. PJM estimated that it needs to adjust Dominion’s peak load forecast upward by 500 megawatts by 2021 to account for the data centers. At that point, says Falin, PJM assumes that the growth in energy demand will be embedded in the historical load history and won’t require further adjustment. “Perhaps Dominion is assuming stronger growth in these data centers than we are.”

Indeed it is. As Dominion explains in its 2017 IRP:

PJM has eliminated new data center growth in the DOM Zone beginning in 2021 – in other words, it excluded incremental data center growth beyond what is captured in historic trends. This is a significant change from PJM’s 2016 peak demand forecast, which included new data center growth continuing for the balance of the forecast. In comparison, the Company utilizes historical trend data center load coupled with interconnect data from new and existing data center customers to forecast data center growth within its service territory. Over the longer term, the Company relies on data center forecasts that are included in a 2015 study prepared for the Company by Quanta Technology, LLC, entitled “Dominion Northern Virginia Load Forecast.”

The difference between the Dominion and PJM forecasts can be seen in this graph taken from the 2017 IRP:

Source: Dominion 2017 IRP.

The dotted line shows what PJM’s peak demand forecast would look like if adjusted for data-center growth.

Behind-the-meter generation. Another leading factor affecting peak electricity load is the increase in “behind-the-meter” generation (also referred to as distributed energy) — typically solar panels installed on the roofs of houses and commercial buildings. Because most of the electricity is consumed on the spot and never enters the grid, PJM treats growth in output as a reduction in demand on the Dominion grid, not as new supply.

“We don’t count that generation. We see it as reduced load,” says Falin. As part of its forecasting process, PJM contracts with an outside firm to supply a projection across the PJM territory. PJM estimates that behind-the-meter will deduct about 300 megawatts in 2021 from the peak load growth that Dominion otherwise would experience. “Dominion does not make that adjustment,” he says. “They understand that the trend is occurring but they’re uncomfortable counting on those solar panels producing energy at peak demand.”

Dominion’s reasoning is esoteric and not easily explained. But we’ll give it a try… The big challenge of integrating renewable energy into the electric grid is its variable and intermittent production. Electric utilities (and regional transmission organizations) must create sophisticated models to simulate the fluctuations in supply and demand in order to keep the two in constant balance on a second-by-second basis. A higher percentage of renewables creates more variability and fluctuations. Netting out the behind-the-meter capacity makes sense for the purpose of calculating the supply of electricity on the grid. But that doesn’t change the problem of dealing with the variability. If you classify behind-the-meter generation as part of the electricity supply, output varies with weather conditions and time of day. If you classify it instead as off the grid, the  the demand of houses and businesses for juice from the grid still varies. Either way the fluctuations occur, and they must be modeled.

“As a result,” says the Dominion IRP, “the generation and transmission systems needed to support the true load could be underestimated should these [distributed energy resource] facilities underperform during critical system conditions.”

Dominion goes on to quote a document of the North American Energy Reliability Corporation (NERC) as saying, distributed grid resources “should not be netted with load but modeled in an aggregate and/or equivalent way to reflect their dynamic characteristics and steady-state output.”

Dominion peak demand forecast adjusted for data centers and distributed generation.

Other factors. Dominion points to a third factor: appliance efficiencies and saturation. PJM draws data from a U.S. Energy Information Administration forecast for the South Atlantic Census Region (encompassing eight states and Washington, D.C.), while Dominion draws from surveys of customers in its service territory. The company considers the more granular data more accurate than EIA’s regional data.

A fourth difference is the way that PJM and Dominion account for the local, state and government sector, which accounts for 13% of the economy. PJM, asserts the Dominion IRP, assumes only three customer sectors: residential, commercial and industrial. Dominion breaks out government as a separate sector.

Incorporating appliance efficiencies/saturation and the government sector on top of data centers and distributed generation, says Dominion, narrows the difference between Dominion and PJM forecasts to insignificance, as seen below.

The dotted line shows PJM’s peak load forecast after adjustments for data centers, distributed energy, appliance efficencies/saturation, and government.

Bacon’s bottom line: While it is true that PJM’s forecast for peak load growth is significantly lower than Dominion’s, the gap does not reflect fundamental differences in the outlook for economic growth, advances in solar generation, or the inroads of energy efficiency. The divergence can be attributed to four narrow issues:

  • How to account for growth in data-center demand after 2021;
  • How to classify distributed, “behind-the-meter” generation;
  • Whether to use regional EIA data or Dominion-specific survey data to estimate changes in residential appliance consumption; and
  • Whether or not to break out government as a separate economic sector.

The distance between the PJM and Dominion forecasts may be more apparent than real. Any debate over the validity of the projections need to focus tightly on these narrow-bore issues.

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22 responses to “On the Fine Art of Forecasting Peak Load Demand”

  1. PJM is charged by FERC and by “OPSI” (the Organization of PJM States, Inc.”, which includes the VSCC) with preparing its own independent forecasts both of generation and of demand for electricity. PJM uses a uniform forecasting methodology. Its 13 States, and the many more utilities than that within PJM, use their own methods. In PJM’s view, those individual utility methods are not necessarily any less appropriate but, if added together uncritically, 1. they are at least somewhat inconsistent, and 2. the differences in method highlight questions the State Commissions need to ask during their review of the utility’s IRP (or equivalent).

    So here we have two differences, and, moreover, a difference that in one instance, has a specific consultant’s study to back the utility up. PJM generally wouldn’t do its own customer-specific studies. Off-hand, I’d go with Dominion’s forecast on the data centers. But not because PJM is wrong; just not as tailored at the 13-State level to Dominion’s specifics.

    The issue of customer penetration by homeowner solar is a quandary for every utility these days, and particularly in an area that until now has lagged behind similarly situated neighbors. Will Dominion’s service territory experience a home-owner solar catch-up, like Dominion forecasts, or grow more slowly as the past indicates, like PJM assumes? I say let the experts debate this before the SCC and other commissions — that’s why we have them. But yes, it does matter!

  2. TBill Avatar

    With most of the Northeast states except WV and PA reluctant to build power plants, there is lots of potential future need. Virginia is also a major importer of electric power, so the graph is suggestive that Virginia may actually import less than the current ~40% of its power in the future. This seems reasonable.

    Yes some folks (eco-groups, maybe PJM) are trying to hold VA as a major importer of electricity. But as we move forward, VA may shift to less of an importer. This is a not a huge issue.

    1. Acbar Avatar

      PJM is a regional system operator, not a generation builder. PJM does not “hold” Virginia to any preferred generation goal. What it does do is compile a regional forecast based on the trends, and react to what others choose to build or not build. PJM will sound the alarm if the forecast indicates an impending grid overload or safety violation. If others choose to build generation elsewhere because it’s cheaper or has more political support, PJM’s job is only to say, Virginia will (or won’t) have a transmission problem over here (or there) as a result.

    2. CleanAir&Water Avatar


      I could be wrong, but I remember reading awhile back that MT Storm is counted in the imported calculation, which could be why it is as high as it is.

  3. As Acbar suggests, the PJM versus Dominion forecasts will be examined and debated. There is no hurry to reach a conclusion. PJM has a 29% capacity surplus, nearly twice what it needs to maintain reserve requirements. With the rush to build new gas-fired plants that are not supported by load growth in Pennsylvania and other neighboring states, this surplus is likely to grow.

    Last year, Dominion arbitrarily suppressed the ability to import energy to Virginia in order to justify building more gas-fired plants. The SCC was not too keen on that, so they have removed that obstacle this year (and have dropped one of the new combined cycle plants).

    From a strategic point of view, the ratepayers would be better off importing cheap energy for a few years instead of being saddled with a new gas-fired plant that they will have to pay for over 35-40 years that might not earn its keep. I know Acbar disagrees with this possibility, but new gas-fired plants built in 2014 in California and Texas have already gone bankrupt because of the price pressure of new energy technologies which will just keep getting cheaper. The only way to avoid that in Virginia is to slow down the acceptance of the modern, cheaper technologies, which has been the path we have pursued so far.

    The PJM vs Dominion forecast is important, but it really misses the point. The entire IRP process assumes that our future statewide energy system centers entirely around utilities. And that the best way to meet our future energy needs is to continue to add supply.

    I know this is the way that has always been done. But that does not mean it is the way it should be done in the future.

    The cheapest way to create more energy is not to use it. Energy efficiency will save families and businesses the most money of any alternative. When I suggest this, I know most of you visualize standard utility programs that don’t work too well. That is not what I am suggesting. Several states are moving forward with this. The best ones are saving energy at more than twice the rate that Dominion says we need it and over 7 times the rate that PJM forecasts our demand will increase.

    Energy efficiency results in the greatest cost savings for all ratepayers and creates the most jobs of any energy alternative.

    If we can remove the obstacles to widespread development of solar by parties other than utilities, the amount of new capacity projected to be built in an IRP will greatly diminish.

    This will create a new set of problems. It will be harder to track new generating additions and the utilities will need new regulations to keep them financially whole, but the statewide economic activity that this would unleash would make it worth the effort.

    Considerations about load forecasts, new power plants, new pipelines, and the future role of utilities are all difficult issues. But they are made doubly so because we insist on finding solutions to our 21st century problems using a 20th century mindset. We must find a way to do 21st century energy planning without being solely confined to the IRP process.

  4. TooManyTaxes Avatar

    “The cheapest way to create more energy is not to use it. Energy efficiency will save families and businesses the most money of any alternative. ”

    There simply is not enough income growth for this to happen. Sure Amazon and Google can afford big investments in energy efficiency, but most residential and business customers cannot. And what gains must compete with increases in local taxes, college tuition and ordinary cost of living. The payback periods for say reinsulating our buildings is too long. Toss in a growth in electricity consumption through electric vehicles and the Internet of Things and we will be consuming more energy even as our “appliances” themselves are more efficient.

    1. TMT,

      I am confused. Most of energy efficiency projects for which I am advocating do not require any added income or any up front investment. The best places to invest in energy efficiency first are in the commercial, industrial and government sectors. The residential sector does have a lower return and it is often best served by utility programs because they have all the data and are usually unwilling to share it with third parties.

      With no investment required, the federal government embarked on a retrofit of Naval Air Station Oceana. Over 100 buildings were retrofitted with various types of energy savings improvements. The energy service company that performed the work will receive a stream of payments over time. Including these payments the Navy base received an immediate savings of over $6 million per year. The DOD has a number of these projects underway at bases throughout the world. Virginia could become the lowest cost of occupancy for federal installations if we promoted widespread energy energy efficiency projects in the federal facilities in Virginia. This is a huge long-term job creator, many times larger than the jobs created by conventional utility projects. Over two million are employed in activities related to energy efficiency in the US, many times more than are employed in an other type of energy related job in the US.

      A similar project was done for the Empire State Building resulting in $4million of savings per year from year 1. Several commercial buildings in NOVA also had efficiency retrofits and received net savings of hundreds of thousands per year as soon as the project was completed. All appropriately designed energy efficiency projects result in savings as soon as the project is complete.

      When stated the same way we do for power plants, investments in good energy efficiency projects result in costs of about 2-3 cents per kWh (far lower than any other energy option except Great Plains wind generation).

      Widespread use of electric vehicles could be a benefit to our future energy system if we design it right. Using batteries in cars that have already been paid for would be a cheaper way to store excess solar production in the daytime, for later use by the grid or to move the vehicle. This could actually result in a savings to customers compared to building more conventional power plants or installing more grid based storage.

      The Internet of Things also promises energy and cost savings. The IoT will provide precise real-time control over appliances and other devices that will shift load away from peaks and control operations for more efficient energy use.

      The only way we will encourage these developments is to promote the development of a modern grid in Virginia and open-up participation in these activities to innovative, less expensive third-party services. We must change the rules and provide different incentives to our utilities to let them prosper in their new role too.

      Projects that would improve the energy efficiency of substandard housing for low income groups would improve their lot and save everyone else money too (by lowering the peak and total energy use). But these types of projects are more complicated than the ones that I was suggesting that we do first.

      1. TooManyTaxes Avatar

        Tom, I should have added that I am responding in part based on some work done by MWCOG staff. They found that, in order to get major, reductions in energy use/carbon emissions, all older stock housing (what is that?) and smaller commercial buildings would need to be retrofitted at great cost. That cost may be unaffordable. I noticed you mentioned that in your reply.

        I don’t think that, except in Bernie Sanders’ world where we all work to benefit the government, the money is there to retrofit the housing stock. Indeed, due to lower income growth, people are keeping their cars much longer. So even making cars substantially more efficient would take years.

        IoT does have potential to save energy and deliver many other societal and economic benefits. But 5G deployment will be costly, and many citizens will fight building the network needed to connect the things. And, of course, the things all need to be replaced with new things with microprocessors.

        Call me a pessimist on widespread energy conservation. I think we will see it in buildings owned by entities with deep pockets. But, unless income grows and the rules change, it will only slowly hit the masses.

        1. TMT,

          I agree with you on many issues. That’s why I said that most of what I was recommending for energy efficiency is not what most people envision when they hear the word.

          I think if we open up opportunities for energy service companies (ESCOs), small businesses won’t need deep pockets, just a reliable positive cash flow to make the monthly payment. Many ESCOs have access to capital and are happy to earn a return on it that is greater than their cost. The ESCOs also are more able to benefit from some of the various incentives that exist and can pass on at least a portion of the savings. Utilities are notoriously poor at energy efficiency programs, especially since they don’t serve their financial interests under current regulations.

          Public buildings such as local, state and federal facilities can benefit from no down payment arrangements and can use the savings to at least hold the line on tax increases (I don’t think they will give any of the savings back). This would benefit many individuals.

          Campuses for hospitals and universities are also good candidates and they could use the energy efficiency savings to hold the line on cost increases as well, benefiting many.

          Let’s say we just saved the amount equal to how much load is expected to increase. Many states have achieved levels above that for many years. That would avoid the need to build new conventional power plants. Every time we build a new power plant, everyone’s rates go up. So energy efficiency would benefit more than just the owner of the building receiving the retrofit.

          That is why I recommend it so highly. It’s cheap. It can benefit many, even those who don’t make an investment in efficiency. It is the largest job producer of any energy option. And it gives us time to sort out our energy future without worrying about reliability.

          IoT does have possibilities, although I am concerned about some of the issues if most of the control stays in the cloud and requires a 5G network. Will have to see how that develops. It will be an urban/early adopter phenomenon for a while.

          We could add some updated efficiency items in the building code as California has done, that would help with new construction. But we are still faced with the issue with many buildings where the owner is not the occupant and has little financial incentive (at least today) to lower the cost of occupancy through investments in energy efficiency.

          In the meantime, we need to move our utilities into the modern era and find ways where doing what is good for the customer also benefits the shareholder. Otherwise,Virginia will fall further behind the states making significant inroads on this.

          1. TooManyTaxes Avatar

            TomH – I agree with you at the top side of the market, which includes government buildings at least at the federal level. I’m just more pessimistic below that for the foreseeable future.

            Since 5G standards have not been set, there are still a lot of unknowns. They include what tech breakthroughs will be made. I see 5G as more of a slow roll as well, both in terms of deployment and in smart appliances (which I define as anything that can be measured or controlled remotely). Everything I’ve read suggests 5G will have a maximum separation distance between antennae of no more than 1km and as close as 100 meters. The millimeter waveband frequencies require line of sight and are affected by rain, humidity and vegetation. And, as you can imagine, there is a giant need for backhaul, which, in turn, requires lots of fiber and/or mid-band radio spectrum.

            I puzzle over things such as how does an antenna located on a street light pole transmit to, and receive, from an antenna on a car – presumably through a conversion of millimeter wave band to lower band commercial frequencies. And since millimeter wave band cannot penetrate walls, other spectrum is needed. But I fully expect engineers have or will solve these problems.

            The economics is something else. If the cost of appliance-based controllers is incremental, over time we’ll have smart houses and offices, but chiefly with more affluent families and larger businesses. I think the services will be cloud-based and controlled by big players. As part of an energy conservation program, I could see Dominion operating a free service to control usage and to allow consumers to make their own adjustments. Much of the services seem to be government related such as monitoring and controlling traffic. I can see speed limits and actual driving speeds controlled within certain heavily trafficked areas, say I-66 from D.C. through Prince William County and I-95 through Richmond. With holograms, I could see VDOT controlling traffic flow in Tysons, such as by preventing left turns at certain intersections at certain times and also catching violators at the same time. But when are there enough smart vehicles and cost savings from eliminating some manual government functions to see this happen?

    2. CleanAir&Water Avatar

      TMT, Lots of studies have estimated very large savings for building efficiency, Here is one mentioned in my other comment. “ACEEE places VA’s energy efficiency savings potential at 23% cumulative energy savings in 2030 relative to 2012 consumption. A statewide goal of creating efficient buildings could avoid 25TWh of electricity generation in 2030.”

      Regarding financing the retrofits … PACE (Property Assessed Clean Energy) loans are doing the trick in 19 states. VA passed a PACE law in 2009 but that law was not aligned with best practices so the law was amended in 2015. Arlington is in the process of developing a program, Virginia’s first. Unlike other state laws Virginia left the program design up to each local taxing district. In Texas for instance the local districts can order the program. called ‘PACE in a Box’, from the state.

      PACE was designed at the Milkin Institute with all stakeholders involved. The first program was put in place by Berkeley, CA and the original $1M available sold out in 10 minutes.

      Here is the information from Pacenation.us
      PACE is a financing mechanism that enables low-cost long-term funding for energy efficiency … The voluntary loan is repaid as an assessment on the property’s reguiar tax bill and is processed in the same way as local assessments for sidewalks etc.
      Projects can be funded with no out of pocket costs and terms can extend to 20 years making deep retrofits possible and creating annual savings. PACE savings usually exceed the annual assessment payment and are cash flow positive from day one.

      1. TooManyTaxes Avatar

        This has possibilities, with appropriate changes in the law. Many localities around the nation have laws that permit them to levy special assessments to recover the costs for homeowner/business-benefiting improvements, such as new sidewalks. I could see the process being used to finance energy retrofits if the funding came from third-parties. I don’t see cities, counties or states using their taxation and borrowing powers to fund home retrofits. Too contentious.

        Perhaps, this could be done in Virginia under its service district law or the law that permits Fairfax County to offer trash and recycling pickup to certain neighborhoods. A big problem might be situations where only a handful of people sign on in a neighborhood.

        1. CleanAir&Water Avatar

          I believe the law is operable now. Arlington is preparing the loan specs etc that they hope will serve as the template for other Virginia jurisdictions.
          The Berkeley program was funded with a bond issue. CT set up a Green Bank with seed funding and convinced CT banks to designate specific funds for the Green Bank. Their statewide specifications allow for securitization of the loans. I couldn’t convince the people working to change the loan recently that stanardization was the better way to go.

          Most PACE programs are for commercial properties only as the banks put up a fuss and Fannie and Freddie withheld approval of lending to properties with PACE loans. Most programs require specific approval from mortgage holders as a ‘bank objection’ fix. It shouldn’t matter as the PACE loan ‘runs with the property’ and is transferred to new owners if the property is sold.

          1. TooManyTaxes Avatar

            Thanks for the additional information. The residential market is clearly the most problematic, with the next difficult, smaller commercial buildings. When I look at my own utility bills, both gas and electric, I’m not sure I’d sign up for the PACE program. I don’t think I could save enough on my bills to warrant an extra “loan payment” each month. Where I fit on the spectrum I don’t know.

            On a broader scale, what is missing, IMO, is some good projections for the cost of actions that would result in achievement of sufficient CO2 reductions to avoid what the environmental groups have projected to be the cost of “climate change” to the United States by the end of the 21st Century – 2% of GDP. I use that number because it is the biggest estimate of the “cost of doing nothing.”

            The United States should not spend more than the cost of doing nothing. That is not to argue we should not use renewable energy sources as their costs fall below the costs for incumbent energy sources. Neither I am arguing against individuals and companies taking steps to become more energy efficient. But we should not spend more to avoid the changes than the costs of “living with them.” Personally, if we had credible estimates in this area, I think much of the climate change emotion on all sides – except at the fringes – would dissipate. Government policy changes in this area should be based on economics, rather than emotion. Emotion on all sides.

  5. CleanAir&Water Avatar

    You say Dominion primarily relies on differences in measuring to describe the 20% discrepancy in demand projected by PJM and by Dominion. I think three of their four objections are part and parcel of the same issue … how much independent ownership of generation, or decline in grid demand, will Dominion allow in their old fashioned monopoly territory?

    First, Dominion claims data center growth will require much more generation than PJM has modeled. In many states the IT industry is buying third party generation through Power Purchase Agreements, securing a long-term price that can’t be had from a central utility burning coal or gas. In Virginia, Dominion has created a way for the utility to be a part of that generation compact by becoming that third party.

    Last year, Dominion Virginia Power, a subsidiary created by Dominion, completed the first 80 MW of what should become one of the East’s largest photovoltaic solar fleets by the end of 2017. When completed, the Amazon solar arrays will spread across parts of six counties. And, under agreements between Dominion and Amazon and endorsed by PJM, Dominion will move clean energy from solar and wind generation sites to Amazon’s data centers in Northern Virginia and Ohio.

    As the renewable energy supplier, Dominion rightly expects more growth than PJM has projected. However, Dominion dismisses the fact that major corporations across the country are driving the on-site solar and efficient buildings market. Half of Fortune 500 companies have adopted clean energy goals because reducing operating expenses are good for the bottom line. Elon Musk, CEO of Tesla, believes on-site generation, when combined with batteries will supply a third of our total electricity. CitiGroup predicts utilities could eventually suffer a “50%+ decline in their addressable market.”

    Regardless of whether the behind the meter generation is growing or not, Dominion’s IRP says the company must build enough “generation and transmission systems to support the “true load”, citing the intermittancy issue. Their response that seems more appropriate to then regulatory structure than reality. Dominion says they can’t move faster because there are too many technical issues to be dealt with when it comes to integrating intermittent power into the grid, even though a growing chorus says there are technology fixes available. An IEA German study said with “better information technologies and a balanced set of resources, the intermittancy issue can be dealt with” today, and massive storage isn’t needed.

    Then here is the potential reduction in grid demand that can come from a commitment to efficient buildings, not just appliance replacement. ACEEE places VA’s energy efficiency savings potential at 23% cumulative energy savings in 2030 relative to 2012 consumption. A statewide goal of creating efficient buildings could avoid 25TWh of electricity generation in 2030. It would also create a very different demand prediction from the 2016 IRP, which anticipates annual efficiency savings of between .5 and 1%.

    Other states are saving money and expanding the economy by choosing efficient buildings. In Minnesota the state’s efficiency program returned $4 for every $1 invested, helping to create almost $6 billion in new economic output. One of Warren Buffet’s utilities expects to reduce demand enough to close a couple of old coal plants and not need any new generation until 2028, simply by financing retrofits for its customers’ buildings.

    Finally, Georgia Tech has a paper about energy opportunities in the Southern states. One emphasis is building retrofits, but also adding DR and wind and solar. The average Virginia household could cut its electricity bill in 2030 by $307 (or 12.6%) and could save a total of $2,899 over the next 15 years. Across all of Virginia’s households over the next 15 years, this would represent a cumulative electricity bill savings of $9.9billion.

    Virginia is trailing behind other states and foregoing billion of dollars and thousands of well paying jobs by not making real regulatory reforms. Efforts in New York, California, and Texas are on the right track. Reducing the amount of electricity that needs to be generated by traditional power plants, transmitted long distances, and distributed locally, reduces the overall cost and environmental impact of our energy system. That’s not just clean, it’s smart

    1. TooManyTaxes Avatar

      “One of Warren Buffet’s utilities expects to reduce demand enough to close a couple of old coal plants and not need any new generation until 2028, simply by financing retrofits for its customers’ buildings.”

      This, I think, might work. While the devil is in the details, if the amount spent was significantly less than the amount needed to build more generating capacity, I could see state law being amended to allow Dominion to capitalize the costs for retrofitting homes and small businesses; earning a return on that investment; and amortizing the investment of a period of time. To level the playing field state/federal law might need to be amended to require competing generating companies to purchase a proportionate share of the retrofitting investments as a condition to enter the market.

      The numbers you suggest (The average Virginia household could cut its electricity bill in 2030 by $307 (or 12.6%) and could save a total of $2,899 over the next 15 years) are simply too meager to inspire the average household to make a major capital investment in energy, IMO. I think the program won’t work without the power companies financing it.

  6. LarrytheG Avatar

    There are some seemingly contradictions. DOM is said to have some of the lowest-priced electricity in the US… but they are also purchasing it from the PJM region.. rather than generating themselves.

    Yet – they are planning to generate themselves… more… but apparently not as cheaply as the power they purchase from the PJM region.

    I’m sure I’m screwed up in my observation and someone will correct me..

    1. Dominion does not have anywhere near the cheapest electricity rates in the US. But they are slightly below average, as are most of the states in our region WV, TN, KY, NC.

      PJM sells at wholesale, not retail, to Load Serving Entities. With the capacity surplus and lower cost renewables coming into the mix, the auctions clear at lower prices, also thanks to historically low prices for natural gas, which are now going up.

    2. Acbar Avatar

      No contradiction. Sometimes DOM buys, sometimes it sells, on a net basis depending on its load and which of its units are running. But remember, for energy market purposes, DOM isn’t choosing whether to run its own units or to buy from PJM. PJM decides, based on what produces the lowest overall energy market price for every LSE in PJM. Then, PJM pays those generating companies whose units ran to produce that result. PJM treats Dominion as two separate entities: DOM the LSE, and DOM the generation owner. As a generation owner, DOM makes more income than average (because its units are lower cost and are dispatched by PJM more often and more profitably), which as TomH says brings down its annualized, average net retail rate for electricity to the LSE’s customers to “slightly below average.”

  7. LarrytheG Avatar

    well, okay – AMONG the lowest… that claim is made as evidence that they are a well run company who has made good planning choices… that has benefited ratepayers… i.e. – if they’d not – ratepayers would be paying the price!

    But it sorta seems like that if they’ve been buying power from PJM that there are like a lot of other utilities – not such a standout…. In other words – the CONCEPT of PJM is the really good idea and, in fact, all the other electric cooperatives in Va could do just as well if they also bought power from PJM rather than buying from Dominion or other generators – as long as they could get it reliably routed to them on whoever grid infrastructure if came via.

    and perhaps… the benchmark for any would-be offeror generator would be if they could generate at the typical clearing price.. and make a profit.

    I’m assuming that’s why we actually are seeing independent generators setting up in Virginia – like in Chesapeake…. which I presume may not be operating under the same SCC rules as Dom.

    1. Acbar Avatar

      You are exactly right here. The co-ops, which are LSEs and also co-owners of (or contractors with) ODEC, a generating company, are treated by PJM the same as Dominion: the co-op LSE pays the PJM wholesale energy price for deliveries from the grid, and that’s adjusted by the co-op for the net cost (income for ownership, expense for purchases) of their contractual deal with ODEC, and the coop customer pays an average annualized rate to the coop reflecting either the recent historical net of all that, or a monthly “pass through” adjustment clause based rate. I believe REC has a pass through retail rate.

      As far as I know, Chesapeake builds under the same SCC rules as Dominion.

      1. LarrytheG Avatar

        re: ” As far as I know, Chesapeake builds under the same SCC rules as Dominion.”

        take an example. Instead of in Chesapeake – they were just over the line in NC and generating power and selling it via PJM – and that power then was purchased by an electric cooperative in Va… would that power or that generator of that power be regulated by the SCC?

        Is ANY generator of power in the PJM region – that is outside of Virginia but the power they produce – is purchased for use in Virginia – ???

        do all generators of power that is purchased for use in Virginia – have to register with the SCC to “do business” in Virginia – essentially via a 3rd party – the PJM?

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