By Steve Haner
Smart lawyers, and the General Assembly is full of them, don’t ask questions unless they know the answer already and want the information included in the debate. Nobody down at the General Assembly is asking what it will cost Virginians on their monthly bills to build massive offshore wind facilities to generate electricity.
Case in point, a meeting of Senate subcommittee still underway as this is being written. The Energy Subcommittee of the Senate Commerce and Labor Committee has endorsed two Senate bills that will dictate to the State Corporation Commission that it must allow Dominion Energy Virginia to build its proposed 2,600-megawatt turbine farm and pass the costs to ratepayers.
Senate Bill 860 actually dictates that up to 5,200 megawatts shall be found “in the public interest,” including projects built off the shores of neighboring states, and covers power purchase agreements. Senate Bill 998 is tightly focused on the Dominion-built project off Virginia Beach, but goes beyond the “public interest” declaration. It tells the SCC to accept the full cost as “reasonable and prudent” and pass those costs on to ratepayers. Probably over 30 years. With an enhanced double-digit all-but-guaranteed rate of return.
This will be the financial equivalent of Virginia residents and businesses in Dominion’s captive territory paying for a new U.S. Navy aircraft carrier. It will be that many billions and billions of dollars, and it will have a shorter useful lifespan than the carrier’s 50 years.
The bills were presented this morning with barely a peep from subcommittee members. All the witnesses but one spoke strongly in favor of them, and that one speaker – Senior Assistant Attorney General Meade Browder – was the entire “opposition” line but merely expressed his office’s “concern” about the cost impact on ratepayers, not actual opposition. He spoke only on the second bill, the one that dictated “all costs” shall be deemed “reasonable and prudent.” Continue reading
by Steve Haner
Legislation to increase the size of the State Corporation Commission from three to five judges, giving majority Democrats a chance to pack the panel with their appointees, may provide the first real test of how much things have changed in New Blue Virginia.
Freshman Delegate Dan Helmer, D-Fairfax, introduced House Bill 1297, which is on the docket for the full meeting of the House Labor and Commerce meeting Thursday afternoon. One of the three existing SCC judges, Patricia West, could be re-elected this session and is not expected to be, giving the new majority one seat to fill by March. As introduced, Helmer’s bill creates two more seats to be filled at some future special or regular session.
Energy issues, and the SCC’s perceived hesitance to charge forward and save the planet from climate catastrophe, are front of mind with many of the new (and some of the old) legislators. But a reconstituted SCC could also change direction on insurance, banking, corporate governance, pipelines and other areas of regulation under its purview. Its key role on those is often overlooked.
Once the full committee rises, in a meeting of the newly constituted energy subcommittee of House Labor and Commerce, more than twenty energy bills will face their first hearing. The meeting will probably start late and run long, but Friday’s dawn may mark a new green energy age, at least in the House of Delegates. Continue reading
By Steve Haner
Sinners! The hour of redemption is at hand! For years now some of you have deprived your fellow Virginians of a fair hearing in front of the judges set above them. To deny justice is among the worst of abominations, but a chance for salvation has appeared.
Yes, I am talking to the many Virginia legislators who helped protect the profits of the state’s dominant electric utility from proper review and adjustment. You have corrupted the law with “this is in the public interest” and “refunds shall not be ordered unless” and “rates may not be reduced until” and “this shall be deemed reasonable and prudent.” The judges you have fettered with these phrases sit on the State Corporation Commission
Some of you fell from grace in this way in 2013, 2014, 2015 and then again in 2018. One correct vote in 2020 can wipe the slate clean, returning your political souls to purity.
With passage and implementation of House Bill 969, all will be forgiven. Even this author of countless energy Jeremiads will praise your return to the fold. But woe unto you who fail to heed this final trumpet and abandon the people again. The day of decision is here. Continue reading
by Steve Haner
If Bacon’s Rebellion at times has been “Dominion Pravda,” providing a window into that corporate giant’s C suite, our friends at the Virginia Mercury sometimes take the opposite role of “Environmental People’s Daily.”
Its story today is a good example, for what it includes and what it does not. The long, detailed and worthwhile summary of energy and environment issues coming to the 2020 General Assembly has a glaring omission. It makes no reference to the Transportation and Climate Initiative. If anybody could get a straight answer out of the Northam Administration, you’d think it would be Virginia Mercury. The silence is deafening and perhaps significant.
At some point soon somebody has to say something, wouldn’t you think? In others states in the proposed interstate compact, governors are being pinned down, actual TCI bills are pending, legislators are taking positions, coalitions are forming. This will have to happen in Virginia soon if the organizers of TCI want their proposed memorandum of understanding signed by enough states to actually impose the carbon caps and taxes by 2022. Continue reading
Photo credit; Southern Environmental Law Center
By Peter Galuszka
Despite its recent advertising campaign rebranding itself as a “green” utility, Dominion Energy is planning to build four natural gas “peaking units” costing $600 million at its Chesterfield County generating station.
The utility filed for a permit for the State Air Pollution Control Board, according to the Chesterfield Observer.
The gas plants would generate 1,000 megawatts of power to electrify 250,000 homes. One phase of the project would be completed in 2023 with another going online the following year. The units will be switched on when more power is needed.
Other than the Observer, there has been remarkably little news coverage of the plans. It could be that Dominion wanted to lie low after announcing plans to build 220 wind turbines off of the Virginia coast. Ads have touted Virginia as a “leader” nationally in renewable energy. Other announcements have involved solar farms and one to turn hog waste into methane. Continue reading
By Steve Haner
So far there appear to be about six schemes before the 2020 General Assembly to save the Earth and its inhabitants from the fiery holocaust of climate catastrophe. The one that is going to cost you the most money in the shortest period of time is still missing in action. Finally we have details, but not from anybody in Richmond.
The organizers of the Transportation and Climate Initiative (TCI) met and held a streamed webinar in Washington, D.C. Tuesday, releasing their long-anticipated draft memorandum of understanding and quite a bit more information about the impact of this new carbon car tax. See the slides here. Does a starting bid of 17 cents per gallon on gasoline get your attention? Do not confuse this with the separate proposal from Governor Ralph Northam to add 12 cents onto the existing state excise tax. Continue reading
Natural gas storage tanks in the Marcellus shale fields. Photo credit: New York Times
By Peter Galuszka
The boom in shale natural gas is over, reports The New York Times.
The trend raises more questions about billions of dollars worth of gas-related projects in Virginia, including Dominion’s plans to build the Atlantic Coast Pipeline and other firms’ efforts to place two big generating stations near Charles City.
The boom in shale gas began a decade ago when hydraulic fracking methods went into wide use in fields such as Marcellus in West Virginia and Pennsylvania, Eagle Ford and Permian in Texas and Williston in North Dakota.
The results were profound as gas displaced coal as a major generator of electricity. A bump in exporting liquefied natural gas (LNG) loomed, as Dominion converted its Cove Point LNG facility to handle exports.
Independent firms such as Chesapeake Energy in Oklahoma led the way. Big energy firms such as Exxon Mobil and Chevron bought up smaller firms and invested billions in shale gas operations. Numerous pipeline projects were announced, including the Atlantic Coast Pipeline and the Mountain Valley projects in Virginia.
The result? Too much gas and resulting price drops.
Virginia voter priorities. Source: Click to enlarge.
by James A. Bacon
A new poll from a “nonpartisan nonprofit think tank,” MassInc., has found that 60% of Virginians surveyed support the Transportation and Climate Initiative Framework while only 29% oppose it and 11% are unsure of their feelings, reports The Virginia Mercury.
We know right off the bat that the findings are nonsense. The fact is, most Virginians have never heard of the Transportation and Climate Initiative. Those who answered MassInc.’s questions were responding to a description of TCI provided by MassInc.’s pollsters:
Under the plan, companies that sell and distribute gasoline and diesel fuel to gas stations in the region would have to pay for the pollution created by the fuels sold and used there. Each state in the program would get a share of the money collected from those companies, based on how much fuel is used in their state. States could use this money to make transportation in their state better, cleaner, and more resilient to the effects of climate change. They could also use it to help residents with any higher costs the companies try to pass on to them.
That poll is about as loaded as you can get. Continue reading
Dominion Virginia Power’s gas-burning plant in Brunswick County.
By Peter Galuszka
International financial analysis firm S&P Global has issued a scathing report criticizing Dominion Energy Virginia for over emphasizing future electricity demand and proposing unneeded natural gas-fired generating plants.
According to S&P: “An examination of State Corporation Commission, or SCC, records; Dominion’s past integrated resource plans, or IRPs; campaign finance documents; and independent reports, along with interviews with utility analysts and environmental advocates and statements from Dominion officials, shows that the company has consistently over-forecast electricity demand to justify building new capacity, primarily natural gas plants with dubious economics that will ultimately be paid for by ratepayers.”
Dominion plans on adding at least eight gas plants with a generating capacity of 3,700 megawatts by 2033, S&P reports. An update to its 2018 IRP plan would add three alternatives that would add 2,425 megawatts of gas capacity by 2044. Continue reading
by James A. Bacon
I’m a big fan of Nassim Nicholas Taleb, whose thinking on such subjects as “black swan” events, “Intellectuals Yet Idiots (IYIs),” “antifragility,” and “skin in the game” I have incorporated into my commentary on this blog. So, when Taleb invokes the precautionary principle in the context of climate change, I take his argument very seriously.
In a nutshell, Taleb contends the accuracy of climate models predicting catastrophic increases in global temperatures don’t matter. We have only one planet, and if there is even a remote chance that rising CO2 emissions will wreck it, humanity cannot afford to take that chance. The environment is a complex system, he writes. “Push a complex system too far and it will not come back.” The uncertainty surrounding climate change projections, far from being a reason to dismiss predictions of catastrophe, puts the burden of proof upon those who claim absence of harm. Read a succinct statement of his thinking here.
I’ve been pondering this argument for quite a while, and I agree with it… to a point. But I think it is incomplete. In the statement I linked to above, Taleb (and his co-writers) do not explore the implications of their logic. The obvious follow-up question is, OK, if climate change is an existential threat, what do we do about it?
What if the proffered solution to climate change creates its own existential threat? Continue reading
Crying All The Way To The Bank
By Steve Haner
After a long, expensive and contentious legal battle producing a huge case record, the State Corporation Commission left Dominion Energy Virginia’s authorized profit margin unchanged Thursday. The return on equity figure did not go higher, as the utility demanded, and did not go lower, as just about everybody else involved in case demanded.
The SCC order is here.
You will see report after report in news media now that the authorized return is 9.2%, such as this one. This is wrong. The authorized return, because of Virginia’s uniquely pro-stockholder state law, is really 9.9%. The law allows the utility to keep 100 percent of the first 70 basis points of excess profit above the stated allowed profit. With the large amounts involved over multiple years, that extra 70 basis points is real money out of your pockets. Continue reading
Virginia City Hybrid Energy Center in St. Paul, which burns both coal and wood biomass. It is the centerpiece of Dominion’s proposed 100% renewable service, infuriating environmental opponents. Dominion photo.
By Steve Haner
Is Governor Ralph Northam now on both sides of the electricity retail choice issue? Having sent a strong signal weeks ago that he would oppose 2020 legislation creating competition for all customers, his administration has now intervened in a regulatory dispute asking to protect competitive choice for 100% renewable electricity. You are only free to choose if you choose green?
In order to stop other companies from selling so-called 100% renewable electricity in the Dominion Energy Virginia territory, the utility needs its own version of this shell game approved by the State Corporation Commission. The next hurdle in that long road is a hearing at the SCC Thursday.
When we visited this saga in August, Dominion’s application for what it calls Rider TRG had been filed but few of the likely opponents had responded. A long list of complaints about the idea is now part of the case record, including objections from the Northam Administration filed Friday in the name of the Department of Mines, Minerals and Energy.
by James A. Bacon
Virginia’s move to an energy future dominated by solar and wind power will necessarily be accompanied by battery storage. Vast arrays of batteries will be needed to store and release electricity to offset the intermittent generation of solar and wind farms. Battery storage is exceedingly expensive now, but the price is expected to decline significantly in the decade ahead. While the speed with which batteries become economical to deploy on a large scale is highly uncertain, there can be little doubt that batteries eventually will become an integral part of Virginia’s electric grid.
A recent state-commissioned report, “Commonwealth of Virginia Energy Storage Study,” suggests that the near-term potential for energy storage in Virginia (over and above the Bath and Smith Mountain Lake pumped-storage facilities) could reach 24 to 113 megawatts of capacity, while the potential grows to between 239 and 1,123 megawatts over the next decade. The study, written by the Strategen consulting firm, recommends establishing a goal of 1,000 megawatts by 2030. (That would be two-thirds as much capacity of the state-of-the-art, natural gas-powered Greensville County Power Station.)
A number of things must happen to achieve this potential. The Commonwealth of Virginia has no control over the pace of technology advance, the global supply of critical raw materials (particularly cobalt and manganese), or the evolution of wholesale electric markets. But it can do a few things. Foremost is to address safety, permitting and environmental issues before they create bottlenecks to large-scale battery deployment. Continue reading
By Steve Haner
“Do you actively support efforts to reduce corruption in government?”
Of course, any candidate presented with that question will reply yes. What do you expect? “No, I’m quite passive about corruption in government. Live and let live.”
That was one of the softball questions on the Clean Virginia candidate survey form, which will be taking on added significance given the number of Clean Virginia-funded and endorsed candidates who were successful Tuesday. You can read the full questionnaire here, and potential 2021 candidates are advised to print it out and start a file on coming roll call votes. Continue reading
by James A. Bacon
Dominion Energy estimates that the cost of developing a proposed off-shore wind farm in Virginia waters will cost up to $8 billion, The Virginia Mercury reports today, although utility officials do say they “will work hard to bring that number down” as the offshore-wind supply chain develops over time. Dominion’s previous cost estimate for Virginia offshore wind (current only two months ago) was “up to $1.1 billion.”
The Dominion website says that the offshore wind farm will be built in three phases of about 880 megawatts each, for a total of about 2,640 megawatts. That comes out to about $3 million per megawatt. For purposes of comparison, the utility’s newest combined-cycle natural gas-generating facility in Greensville County cost $1.3 billion for a capacity of 1.588 megawatts, or about $820,000 per megawat — roughly a quarter the cost. Continue reading