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?
