A Mercifully Brief Coal-Ash Update

Coal ash at the Chesterfield Power Station. Photo credit: Richmond Times-Dispatch

A year ago, Virginians couldn’t open up a newspaper without reading about Dominion Energy’s coal ash controversy. Then the issue disappeared from view. Months passed without news of any kind. Then earlier this week, I noticed a stray phrase in Dominion’s 2nd quarter 2018 financial results: The company had written off $81 million to reflect the cost of closing its coal ash ponds at its Bremo, Possum Point, Chesterfield and Chesapeake power stations. 

Wondering if Dominion had written off coal ash-closure expenses in previous quarters, I contacted Dominion spokesman C. Ryan Frazier. He confirmed that the company had made three previous write-offs, bringing the total this quarter to $377 million so far.

The write-offs reflect the cost of two things mainly: (1) treating and draining the coal ash ponds of water, and (2) consolidating the ash at each power station in a single containment basin. Dominion’s preferred plan has been to cap those basins with an impermeable synthetic liner covered by vegetation. However, environmental groups and neighbors fear that groundwater will migrate through the coal ash, pick up heavy metals and leak into public waters.

In April 2017, the General Assembly passed a law ordering the Virginia Department of Environmental Quality VDEQ not to issue solid waste permits for closure of the coal ash ponds until Dominion had conducted an assessment of closure alternatives. Depending on the option chosen, concluded the report written by Dominion’s consultants, landfilling the coal ash could cost between $1 billion and $3 billion. Environmental groups argued that Dominion had significantly overstated the costs and had not given serious consideration to recycling the combustion residue into concrete and other products.

In April Governor Ralph Northam signed legislation into law extending the permit moratorium until July 2019. The law, says Frazier, requires Virginia Power to compile by November 2018 “information from third parties on the suitability, cost and market demand for beneficiation or recycling of coal ash from these units.”

So, there you have it, folks. The coal ash fracas now can safely fade from view again for another three or four months.

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3 responses to “A Mercifully Brief Coal-Ash Update”

  1. LarrytheG Avatar

    It we really want to go forward – we hire an independent consultant to look at options and costs not colored by Dominion or it’s own hired consultants.

    Then we put it out for bid – figure out the costs per ratepayer and take it out of the excess profits refund money.

    That will be a whole lot easier and quicker to get to a conclusion that wrangling with Dominion and wondering about it’s estimates…and “preferred” approach.

    My bet is that some company will figure out how to do it the most cost effectively and perhaps using it in a salable product …

    I don’t think Dominion is seriously motivated to get to a conclusion and that’s why it just goes on and on.

  2. Steve Haner Avatar
    Steve Haner

    Did it earmark the costs as a regulatory asset? Kind of a key question. This gets into some tall weeds of regulatory accounting, taller than I can see over, and TomH or Acbar are better suited to discuss. Dominion has previously announced that work was underway to drain and cap the ponds. It apparently is using base rate dollars to do so, which may be reducing its profit for the year when those costs are booked, but I’m not sure they have forsworn future efforts to recover those costs from ratepayers. Certainly if the very expensive options preferred by some of the environmental advocates are imposed, ratepayers will be right in the cross hairs.

    During the debate several years ago over granting Dominion advanced payment for North Anna 3 (ask SC about that), it was argued that Dominion was “writing off” those costs. But in that case it meant billing it to ratepayers. This was before the 2015 freeze of their rates so any expense they could add in a given year reduced the chance they would have to pay refunds or even reduce rates. The games, the games….

  3. LarrytheG Avatar

    re: ” Certainly if the very expensive options preferred by some of the environmental advocates are imposed, ratepayers will be right in the cross hairs.”

    we keep making the enviros the bad guys here when – if Dominion ONLY did what most other states are doing – we’d be going forward instead of focusing on a tiny number of people who advocate for extreme responses – as opposed to the vast majority of people who also care about the environment and want the mess cleaned up and the foot dragging and excuses to stop.

    If you don’t like the enviros – fine – get a 3rd party to do an independent review and recommendations – because – at the end of the day – most folks are going to side more with the full cleanup than what Dominion wants to do – and ultimately if it is not cleaned up – taxpayers are going to inherit these dumps and have to clean them up anyhow.

    The fact that Dominion has made tremendous excess profits – at the same time they claim cleanup is too expensive – as if the money to do it – does not already exist – is laughable.

    A win-win that I bet a majority of taxpayers and ratepayers would support is to take the excess profits and use it for cleanup instead of letting Dominion use it as a slush fund while they continue to drag their heels on a proper cleanup.

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