Dominion’s Track Record on Carbon Reduction

Carbon intensity of 100 largest electric power producers. Source: Ceres

This is the first of a series of posts based on Dominion Energy Virginia’s 2018 Integrated Resource Plan.

Regardless of what happens to federal CO2 regulations under President Trump, Dominion Energy Virginia is conducting its long-range strategic planning on the assumption that carbon regulation of power station emissions is “virtually assured in the future.”

The utility’s 2018 Integrated Resource Plan lays out its path over the next 15 years toward a lower-carbon future that includes a major commitment to solar power, tentative steps to develop offshore wind power, the phase-out of old coal-, oil- and gas-fired capacity, and the construction of several new combustion-turbine (CT) gas-fired units capable of responding quickly to fluctuations in solar power output.

By way of background, the company boasts a bit about its track record in reducing carbon emissions over the past seventeen years. “From 2000 to 2017, the carbon intensity — measured by the annual amount of CO2 emissions emitted per megawatt-hour (“MWh”) of net generation — of the Company’s units serving Virginia jurisdictional customers has declined by 35%. At the same time, power production by these units has increased by 14%.

Based on a study by Ceres, a nonprofit organization pursuing sustainable solutions, in 2015 Dominion ranked 74th out of the nation’s largest electric utilities for carbon intensity (CO2 emissions per MWh of power). The flip side of that data is that Dominion had the 27th lowest CO2 emissions per unit of power generated.

Dominion attributes its CO2 reductions to several initiatives:

  • The addition of 56 MW of solar generation through the addition of the Scott, Whitehouse, and Woodland solar projects.
  • Reduction of the coal-powered portion of its fleet serving Virginia customers.
  • Construction of high-efficiency combined-cycle natural gas power units. Natural gas combustion releases roughly half as much CO2 per unit of heating value as coal combustion.
  • The continued operation at high levels of efficiency of the company’s four nuclear units.

The utility says it will continue to press forward with CO2 cuts:

  • Moving 1,200 MW of fossil-fueled capacity into cold reserve, effectively taking the aging units out of daily operation but keeping them in reserve for reactivation within six months if market conditions dictate.
  • Continued expansion of solar power.
  • Development of offshore wind.
  • Evaluating the feasibility of building a hydroelectric pumped storage facility in Southwest Virginia to supplement variable production by solar and wind.

In Dominion’s commentary on carbon regulation, there is one glaring absence: any discussion of energy efficiency. In a press release issued today, the Southern Environmental Law Center (SELC) asserts that Dominion ranks 50th among the 51 largest electric utilities in the U.S. in energy efficiency.

Dominion relies upon outdated modeling practices to predict future electricity demand, said the SELC, “and it doubles down on this error by proposing to satisfy that in a non-economic fashion. This approach marginalizes lower-cost options like energy efficiency and solar in favor of expensive, company-owned, customer-financed natural gas infrastructure.”

“New natural gas infrastructure won’t grow Virginia’s economy; it will only grow Dominion’s dividends,” said SELC attorney Will Cleveland.

However, as SELC acknowledges, that the Grid Transformation and Security Act of 2018 “requires” Dominion to add $870 million of energy efficiency programs over the next 10 years. Further, it should be noted that Dominion is not planning to build new combined-cycle plants like the $1 billion Brunswick and Greensville plants, which are used mainly for base load generation, but smaller, highly flexible combustion turbines that can be ramped up and down in response to fluctuations in solar and wind energy.

Tomorrow I’ll discuss Dominion’s demand forecasts, the single-most important component of the utility’s strategic plan.

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30 responses to “Dominion’s Track Record on Carbon Reduction”

  1. Acbar Avatar

    Re: “Dominion relies upon outdated modeling practices to predict future electricity demand, said the SELC, “and it doubles down on this error by proposing to satisfy that in a non-economic fashion. This approach marginalizes lower-cost options like energy efficiency and solar in favor of expensive, company-owned, customer-financed natural gas infrastructure.””

    The SELC often is not one to criticize others for the selective use of data and of modeling techniques. That said, they have a point here: Dominion has been the rather consistent object of criticism lately, not only from regulators but also from PJM, for exaggerating the forecast need for expensive new generating units. But why not exaggerate? Dominion gets to build these with a guaranteed return at ratepayer expense as opposed to constructing new merchant plants built solely to compete in the PJM energy and capacity markets (at shareholder cost, with a risk of operating losses as well as profit). Planning to purchase more from the PJM wholesale markets might be a much better deal for Virginia ratepayers.

  2. LarrytheG Avatar

    re: buying from PJM versus generating your own and selling the excess to PJM.

    I can see where Dominion wants to control their own destiny here.. but the question is – is this the best path for ratepayers also?

    1. Acbar Avatar

      Yes that is the question. Dominion “controls its own destiny” as the owner of a large number of generating units that operate competitively in locations across the Country, mostly outside PJM, in wholesale markets operated essentially like PJM’s but in other regions. Dominion is fully aware how to operate all its non-Virginia generation (including a nuclear plant) on a merchant basis and how to make a profit at doing so. It continues to do this at shareholder risk, and does so very well.

      Given Dominion’s demonstrated skill at competing, it’s clear that Dominion knows exactly what it’s doing when it avoids competition on its home turf in Virginia. Building new generation at ratepayer expense at a guaranteed rate of return for a guaranteed lifespan regardless of future obsolescence is a sweet deal for shareholders. The Virginia SCC is supposed to approve rates that are just and reasonable for ratepayers as well as shareholders; but they mainly look at DVP’s income and expenses and balance sheet, not the parent, Dominion Energy’s, and at this time they are essentially barred by law from even doing that much except every 3 years.

      I don’t think Dominion’s insistence on building new generation and fuel infrastructure for itself is “controlling its own destiny” here so much as latching onto a financial opportunity for shareholders that is too lucrative to pass up. One hundred percent of Dominion’s generation goes into the PJM markets, and 100% of what reaches DVP ratepayers comes from those same markets; but Dominion clings publicly to the fiction that it remains vertically integrated and must build new generation to “supply itself” and “preserve the reliability of electric service in Virginia” and “minimize Virginia imports of electricity” as though the 12-state PJM grid and marketplaces weren’t even there. And Dominion gets away with that misrepresentation in the GA because the GA as a general proposition doesn’t know any better, and it’s all too complicated to care about, and who wants to talk about anything but Virginia energy independence anyway. What, actually plan to buy a big chunk of Virginia ratepayers’ electricity needs from the wholesale markets? What, actually admit that lowest cost electricity for DVP ratepayers, not highest profits for Dominion shareholders, is the actual goal for the regulated utility? That might interfere with the “Virginia energy independence” narrative that sells so well at the GA.

      It may nevertheless be true that Dominion’s generation construction decisions in Virginia are good ones — but let’s look at the alternatives.

      So who is looking out for the ratepayers? Well, for starters, there is an Office of Consumer Counsel within the Attorney General’s Office; this office operates in the same manner as the “Peoples’ Counsel” in many other mid-Atlantic utility commissions and is an automatic participant in all formal rate proceedings and things like annual review of the IRP. But is that Office effective — well funded and staffed — in Virginia at this time? I don’t know; maybe others can opine on this. And of course the A.G. is from the wrong political party these days so the GA is a hostile audience.

  3. TBill Avatar

    In Virginia, nuclear power has historically dominated the in-state mix, and elec imports from other states has probably dominated over nuclear. So our overall carbon intensity per capita is lower than most states (fine print- within state boundary lines, forgetting about all the coal elec WV burned and sent to VA).

    The defunct EPA Clean Power Plan, recognizing the arbitrary nature of state boundary lines, did *not* say Virginia needs to go to ASAP to zero fossil fuels. Virginia was given, proposed by EPA, the opportunity to continue careful fossil fuel use, maybe even increase within state boundaries, as long as it was very efficient.

    The Virginia environmentalists are basically saying, as strict as the Clean Power Plan was, to them is way was too lenient. They require super duper strict complete elimination of fossil fuels in Virginia. That’s what they are hoping Va. will agree to. If we stick with nuclear and importing elec, we can do that.

    1. Acbar Avatar

      Yes, there are some who would “require super duper strict complete elimination of fossil fuels in Virginia.” But that’s not what the CPP would have done, and that’s not what the RGGI cap-and-trade scheme does either (in its current state-by-state form or if it were adopted nationally). I agree, Virginia could make either one work by “importing” electricity — i.e., becoming more of a net buyer from PJM and thus running Virginia units less. But Dominion is probably right, all those imports would mostly be fossil-fueled and the net reduction in national greenhouse gases would be close to nil. The only way to achieve anything in terms of national greenhouse gas reductions overall is with a national scheme.

  4. LarrytheG Avatar

    My understanding is that the targets in the Clean Power Plan would have been met without any further reductions not already planned anyhow. No?

    Again – there are enviro folks on the far left as well as pro-fossil fuels folks on the far right. What are the moderate enviros advocating? Is that something most moderate folks regardless of political stripes could agree to and leave the folks on the far left and far right to their own arguments?

    The funny thing here is that even folks who claim that global warming is a scientific “scam” .. STILL seem sensitive to the carbon issue… why?

    If folks don’t believe there is such a thing as Global Warming in the first place, why not just oppose any/all measures in response to it?

    Can’t have it both ways.

    Either you do believe there is an issue and we need to respond or you don’t.

    “skeptics” who still want to argue about just how much to reduce – what’s the point if you really don’t believe in GW to start with?

    1. Acbar Avatar

      You say, “The funny thing here is that even folks who claim that global warming is a scientific “scam” .. STILL seem sensitive to the carbon issue… why?” That’s a good question. Perhaps because those folks can see the carbon-emissions cap-and-trade writing on the wall, just like Dominion, and figure they can make a buck getting us there even if they disagree with the necessity for it. Perhaps some of them secretly don’t disagree, just want to save face by getting “pushed” into it.

      As for what moderates could agree to, that is what cap-and-trade was supposed to be: a compromise that allowed a transition while providing the right price signals for future construction. If moderates ever have a political voice again, I hope we’ll return to that compromise on the national level. Obviously the RGGI states don’t want to wait that long, and want to experiment now with the mechanisms of cap-and-trade.

    2. Steve Haner Avatar
      Steve Haner

      Coal is highly inefficient. It takes miles and miles of coal trains to replace the energy in a tractor trailer load of nuclear fuel (perhaps a bit off, but the image is fair) and of course the wind and sun arrive for free. Coal mining is dangerous. Transporting the coal produces a mess and dealing with the “combustion byproducts” is a mess that is now getting to be a political pain in the derriere as well. So yeah, Larry, you don’t have to be sitting up nights worried about global warming to cheer the retirement of coal plants. Oh, yeah, then there is what you have to breathe….although that has gotten better, the air is hardly pristine coming out of those stacks.

      Coal has had a couple of centuries of prominence and created great wealth, but we don’t need it anymore. But I’m fine with natural gas remaining a major part of the mix for a few more decades – way cleaner and easier to transport than coal.

    3. idiocracy Avatar

      Larry–I heat my house with a heat pump instead of a propane furnace and put extra insulation in NOT because I’m concerned about my carbon footprint, but because the heat pump is a cheaper, more efficient way to heat the house, and the extra insulation makes it even more so.

      To the degree that the carbon issue is tied to energy efficiency–and it is–there are valid reasons for supporting it that have absolutely NOTHING to do with global warming.

      1. LarrytheG Avatar

        re: carbon vs energy efficiency..

        re: Steve and idiocracy viewpoints.

        Hey… I’m on the same train as you guys on energy efficiency (except propane is more efficient that heat pump heat strips in cold weather).

        but let’s also be clear here.. If you don’t believe in GW then, on principal you should be opposed to carbon reductions predicated on GW – … don’t weasel the “energy efficiency” part… we all want the efficiency – but some of us do believe in GW and do believe that we need to do something about it while others simply do not – and – on principal – should be opposed to any programs designed primarily to reduce carbon emissions…

        stand up for what you believe! don’t wobble!

        1. idiocracy Avatar

          If you have an 80% furnace which is drawing combustion air from the conditioned space, that combustion air is made up by cold dry outside air. Even when that furnace isn’t running, you’ll still have warm air leaving the house through the flue. Ditto for ANY gas appliances you have that require a flue, like the gas water heater.

          Heat pump strips don’t need a flue.

          Furthermore, as I stated elsewhere, you cannot run a furnace and the heat pump at the same time.

          You can run heat pump strips and the heat pump at the same time. I am aware that some heat pumps are configured to run 100% heat strips below a certain outdoor temperature–there is no reason to do this on a system with demand defrost. On a system without demand defrost, below a certain outdoor temp, the unneeded defrost cycles will reduce the COP below 1, making it more expensive to run the heat pump.

          Also, if the price of propane goes up to levels which have been seen in recent years, it may actually be a wash in terms of operating cost for heat strips vs. even a 91% propane furnace…without even taking into account that propane forces you to meet 100% of the heat load with propane and only propane (because, again, you can’t run the propane furnace and the heat pump at the same time).

        2. idiocracy Avatar

          The effects of reducing energy use on the bottom line are much more certain than the effects of reducing energy use on GW.

          A program designed primarily to reduce carbon emissions that has long-term costs more than the alternative is flawed, especially considering that someone (many someones actually) has to work more to make up those extra costs and that may well INCREASE energy use (driving to work, keeping lights/heating/AC on,etc).

          Also considering that there are many ways to reduce carbon emissions that actually reduce energy use, and therefore costs.

          If it takes a concern about global warming for the granola-crunchers in charge of local government to do something about their ridiculous energy use, so be it. The tax payers benefit regardless of what the motivation is.

    4. TBill Avatar

      It’s the Va. Sierra Club in the Gov’s energy committee. I don’t think what moderates think matters to much. Anyways we will all become wealthy when fossil fuels are banned, and we all live to 2oo yrs old. What’s not to like?

  5. CleanAir&Water Avatar

    I left a primary point out of an earlier post today on the earlier discussion relating to joining to RGGI and the estimates of it’s effects. Here is the missing, an important point, and it applies to this discussion of not adoping efficiency …
    The RGGI Analysis I quoted states …
    “1. … Our “bottom line” finding is that …
    **** net losses to power plant owners (in the form of lower revenues over time as a result of RGGI spending)****, and net gains to electricity consumers (in the form of lower electricity bills over time).

    So RGGI expands the economy by reducing electricity demand … not anything Dominion is about to do without changed rules.

    Dominion can show lower emissions in one way… because we depend relatively heavily on nuclear and we have the Bath County, largest hydro in the country. Moving ahead with more emission reductions is another issue for the company.

  6. LarrytheG Avatar

    As we have been reminded here – some of the largest savings in electricity and concomitant reduction in pollution comes from consumer-purchased demand side technology – as opposed to it being done on a system-wide regional scale.

    In other words – one way to hasten the closure of older higher polluting plants is for those who say they “like” efficiency – to do so and less electricity use hastens the retirement of the older plants.

    LED lights and smart thermostats are two relatively low cost ways but both still require higher up-front. High efficiency HVACs and on-demand water heaters are two more ways with fairly large up-front costs…

    It’s not like it’s impractical or not cost-effective. Everywhere – where electricity is more expensive – it’s done -and in the places where it is done – the per capita electricity use – goes down.

    take a look at electricity prices in other countries. Countries like Germany – if you used as much as we do in Virginia – your monthly bill might be $1000.

  7. CleanAir&Water Avatar

    Nice info …and my old saw …for heating systems and efficiency with large up front payments, efficiency can move faster where energy loans are readily available. Arlington has done the hard work of setting up commercial PACE loans and expects to allow other jurisdictions in VA to use their work as a template.

  8. LarrytheG Avatar

    One MORE thing to also recognize with regard to the use of Natural Gas to keep electricity prices low, reduce pollution and mate with renewables… it’s NOT cheap in other countries:

    1. Steve Haner Avatar
      Steve Haner

      Yes, Larry, neither Japan nor Germany have the gas supply within their borders that the US currently enjoys, and with prudent use can enjoy for a long time. Can I get a “duh!”? Isn’t Germany still dependent on PutinGas?

      And yes, CAW, as price rises the incentives for efficiency and conservation grow. RGGI raises the price (not overwhelmingly, based on that IRP, but noticeably.) Additional financial incentives to help families and small businesses convert to more efficient equipment can have great merit.

      1. LarrytheG Avatar

        One take away here – ought to be that gas is not going to “save” the planet from GW or reductions in carbon. Not only German and Japan but other parts of the world to include North and South America.

        Turns out that coal is still a big problem in a lot of other places – and there is no gas to replace it – so what is the answer in those places – which total up to be a lot more in population than Virginia?

        In those places, it’s actually the higher cost of electricity that leads to less use and more conservation.

        Viewed in a world context – what is Dominion really accomplishing by burning gas instead of incentivizing less consumption?

        It appears to me that Dominion is doing what is best for Dominion and not what is best for it’s own users of electricity.

        I think it’s been Tom and CAW and others who have pointed out – over and over – that demand side is where the best reductions in use – and pollution and carbon – come from and yet we are basically allowing Dominion to be a monopoly that discourages other competitors from helping consumers reduce their use – so that Dominion can make a “profit” at selling more electricity and using the excess profits for nebulous “efficiency” purposes that have no real input nor accountability from others.

      2. CleanAir&Water Avatar

        This old Crow .. CAW .. would like to say that PACE is not in anyway an ‘incentve.’ It is a loan program that allows commercial building owners to borrow the money to make major energy improvements at a relatively low rate with an extended payback. The result of the security of the loan, paid with tax bill every year, and the time period, means that the improvements generate cash flow on day 1. It was devised first in Berkeley and can be used by residences in some states with some restrictions.

        Now, could you answer a question. Dominion buys 10% of the energy it uses. What does that do to the emission statistics?

  9. LarrytheG Avatar

    Here’s another item of interest in this arena:

    “Recycling solution? Dominion to come up with coal ash remedy by November

    A bill that requires Dominion Energy to conduct a request for proposals for recycling options at its two legacy coal ash “ponds” at the Chesterfield Power Station passed with near unanimous support. Gov. Ralph Northam signed the bill (SB 807) into law March 30.

    The new law delays closure of the ponds – which are now mostly dry – and requires Dominion to produce a business plan that complies with the request for proposals by Nov 15.”

    Does anyone see the irony of Dominion claiming it has had some of the lowest prices for electricity in the US – and this mess that is the direct result of “low priced” electricity that actually does result in far more consumption of electricity than if the coal ash had to be processed at the time it was being generated? So.. we actually ARE .. STILL PAYING for that “pollution”, no?

    Similarly – how much will it cost to “clean up” spent nuclear fuel? Who ultimately will pay for that? One guess.

  10. Steve Haner Avatar
    Steve Haner

    A very hefty down payment is already sitting in the bank, unused, (and masking the true size of the federal deficit.)

  11. Peter Galuszka Avatar
    Peter Galuszka

    I can’t get the lead graphic to enlarge so I can’t read anything and am not sure what “carbon intensity” means.

    1. Thanks for the heads up. WordPress used to automatically make it possible for readers to click on an image to see the original version (not a compressed version that fits on the page). This appears to be one of the rare technical fixes I’m capable of making.

      If you go back, you should should be able to click on the image and see a nice, fat, clear version of the graph with all details revealed.

  12. Steve Haner Avatar
    Steve Haner

    Oh! Now that I can actually read it, note where AEP is on that chart – way up there. Most of the plants that provide juice for Appalachian are not in Virginia but they are upwind. In fairness to Dominion the contrast is stark, but AEP is largely out of reach of Virginia’s climate warriors.

  13. Peter Galuszka Avatar
    Peter Galuszka

    I can read it now. thanks.

    Steve H. Let’s skip the sarcasm. AEP is still 47 percent coal. It is so because it is on the right side of the Appalachian and Illinois Basin coalfields and its coal shipping costs must be among the cheapest in the country. Maybe they’ll shift some day.

    If you are going to judge Dominion by the biggest coal polluter in the country, then also judge by the cleanest utility.

  14. It is no surprise that Dominion’s approach to carbon issues is all about money. We have discussed how the CPP was a ruse used by Dominion to extract $1 billion from ratepayers as a result of the rate freeze. The proposals in the 2018 IRP are a continuation of the policy of appearing to do one thing while actually doing something else.

    First, let’s examine where Dominion stands regarding CO2 emissions. The CERES report says Dominion generated 98,306,504 MWh of electricity in 2015. A portion of this generation came from merchant plants owned by Dominion Energy operated in other states.

    Considering its total generation (power produced in MWh, not capacity), Dominion is the:

    12th largest power producer in the U.S.
    13th largest power producer from fossil units (gas, coal, oil)
    17th largest power producer from coal-fired units
    14th largest emitter of CO2

    Because a significant portion of its generation is from nuclear plants (44% in Virginia), Dominion prefers to speak about its CO2 emissions in terms of tons/MWh (intensity) rather than as total CO2 (mass). Emission rates for CO2 are as follows (in lbs/MWh):

    753 from all sources of generation
    1,415 from all fossil plants
    2,086 from all coal plants

    But intensity applies to the old CPP structure. It has nothing to do with reducing total CO2 emissions.


    Governor McAuliffe wrote an executive order that required Virginia to reduce carbon emissions and get “trading-ready” to control carbon emissions using a market-based system. The only market-based carbon regulation system in the U.S. is the Regional Greenhouse Gas Initiative (RGGI).

    The cap-and-trade system to control CO2 was originally proposed by the Republican governor of New York, George Pataki. Nine states are members of the initiative which began in 2009. RGGI committed to reducing carbon emissions to 50% of 2005 levels by 2020. They have thus far achieved a 45% reduction at the end of 2017.

    Power producers that emit CO2 must purchase allowances in quarterly auctions equal to their CO2 emissions. The auction price in January 2018 was $3.80 per ton of CO2.

    Proceeds from the auctions are distributed to the participating states. The bulk of the money has gone to energy efficiency programs, with substantial chunks also going to community renewable energy and direct bill assistance.

    From 2009-2015 the investments resulted in:

    $2.3 billion in lifetime energy bill savings
    9 million MWh of electricity use avoided
    28 million MMBtu of fossil fuel use avoided
    5.3 million short tons of CO2 emissions avoided
    Boosted regional employment by 30,000 job-years (1 yr full-time employment for 1 person)

    Virginia’s history of carbon reduction is not nearly as good. According to the DEQ, Virginia power producers emitted 38 million tons of CO2 in 2005, reduced that to 24 million tons in 2012 and increased it to 34 million tons by 2016. We have achieved about a 10% reduction in CO2 compared to RGGI’s 45% reduction since 2005.

    Virginia has proposed to enter RGGI in 2020 with a state cap of 33-34 million tons of CO2 emitted. Virginia would add 42% – 44% to the total cap of 78 million tons for the existing nine RGGI states in 2020. RGGI has responded by basically saying- come on guys, you can do better than that! RGGI plans another 30% reduction in CO2 emissions by 2030. There are five Republican and four Democratic governors in RGGI.

    What is different for RGGI utilities compared to Dominion?

    Most of the utilities in RGGI are deregulated and are members of the New York or New England ISO. The carbon price is bid as part of the wholesale auction price so the generators are reimbursed for the cost. Power is produced by merchant generators and the profits and losses are at the risk of the shareholders. No generating units are in the rate base or covered by RACs.

    The utilities purchase energy at wholesale from the ISO markets and resell at retail prices to their customers. The carbon price is part of the wholesale price so essentially the customers pay for it. But the utilities have no incentive to build more than necessary or sell more than necessary. Because of that, six RGGI states were in the top ten in energy efficiency in the U.S. in 2015. Energy usage is declining and saving customers money with no harm to the utilities.

    Things would work differently for Dominion if Virginia became a full member of RGGI. PJM does not currently include a carbon price in their wholesale power auctions. The utility would have to pay for the carbon allowances themselves. Normally this would be considered a cost of doing business and recovered in normal rate reviews. But Dominion is recovering so much excess profit with the current rates they might have to swallow the carbon price in order to avoid a rate review. However, the interim regulation proposed in Virginia allows the utilities to get the carbon allowances for free, totally destroying the market concept behind the program.

    But Dominion gets something much more valuable. They get to put generation in the rate base or a RAC. They get paid by the wholesale market for all of their generation just as do the RGGI utilities, but Virginia utilities (and their shareholders) don’t have to take any market risk or even pay for the power plant. They get the entire investment for the plant and its cost of financing reimbursed by the ratepayers. Plus, they are guaranteed a profit of about twice the amount of the investment in the new plant. This greatly incentivizes them to build as much as they can; using any rationale that can be accepted by the GA or the regulators.

    Dominion’s Position

    In the 2018 IRP, Dominion says that linkage to RGGI would increase costs. It is hard to follow the logic on this. First, they cite the phony imported power argument. All of Dominion’s power comes from PJM. Dominion’s new combined cycle units will be the fossil units that run most of the time, not less as they claim will happen with RGGI. Dominion’s new units along with the other new combined cycle units that are being added in PJM will set a lower price and displace the older, less efficient, and more polluting fossil units in PJM. This lowers the wholesale price and the tons of CO2 emitted.

    It will be Dominion’s older, more polluting units that will run less often, not the new ones. This reduces the CO2 output and makes Dominion more money. The wholesale price of power is much lower now than the price that is built into the base rates established in 2007, or before. This is a major reason Dominion accrues excess profits each year.

    When the old units run less, Dominion saves money from operating them, but still recovers money from ratepayers for them because they are still in the unadjusted rate base. The 1,200 MW of older fossil units that Dominion says it “must” put into cold storage for CO2 reasons, is a major addition to profits for Dominion. They save money by not paying for manpower and other expenses, but still receive the full rate base reimbursement for units that no longer have value to customers because the rate base will not be adjusted for years.

    It is building new units, whether it’s Greensville, new utility solar or gas-fired peaking units that cost customers so much more. Requiring ratepayers to pay 3-4 times the cost of the unit (with two times the cost going to the utility as profit) is the heavy burden for customers. Paying the wholesale cost of energy to PJM actually saves customers money compared to building more (it would save them even more if the lower cost of this power was factored into a rate review).

    Nuclear Extension

    Extending operation of the existing nuclear units is another example of using the carbon issue to extract more money from ratepayers. Let’s assume only the $4 billion last announced by Dominion is all that is needed to gain 20 more years of operation from those 60-year old units. This would require the ratepayers to repay about $12-$16 billion using the typical rate calculations.

    Is this really a low-cost method of reducing CO2 emissions? Or is this more corporate welfare? I have continually advocated for regulatory revisions that will maintain financially healthy utilities. But I don’t think it is fair or wise to do it at the expense of families and businesses in Virginia. We have discussed how all of the nuclear generation could be replaced at a much lower cost by energy efficiency. Or it could be offset by opening up development of distributed customer-sited solar and storage, at no cost to the ratepayers. There are many solutions to this issue and spending time arguing about solutions based on the wrong assumptions won’t help us develop them.

    1. Steve Haner Avatar
      Steve Haner

      Bravo, Tom. I had to read it twice as well….. I fear that comments this deep into a discussion don’t get read so we need to get this out in other ways. I am just about converted to your cause and I’d really like to see how it would work to split the generation operation off from the distribution company.

    2. TBill Avatar

      I agree the utility structure we have is bad. I felt the same in NJ.

  15. LarrytheG Avatar

    Good Lord… I’m gonna have to re-read this a few times to completely digest it!

    As usual… Tom adds a LOT to the discussion… and puts in on the reader to actually read and understand it!

    I cannot blame Dominion for protecting and enhancing their monopoly and the financial integrity/vitality of their company but there is a serious question as to what is good for them – is as good for the ratepayers and the environment.

    Burning gas willy-nilly as a way to make a profit is the name of the game…

    check out the Power for the People blog on this:

    ” For Dominion, the answer to every problem is more gas”

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