Thomas F. Farrell II, CEO of Dominion Resources
by James A. Bacon
Thomas F. Farrell II might have publicly stated his opinions about the Clean Power Plan before, but I haven’t read or heard them. Comments he made Friday at a conference sponsored by the Virginia Bankers Association and the Virginia Chamber of Commerce provide insight into what the CEO of Dominion Resources, Virginia’s largest power producer, sees as the nation’s energy future. Farrell’s bottom line: Seventy percent of the nation’s energy will continue to come from fossil fuels for decades to come.
“Our goal is to provide safe, reliable and efficient electricity in all types of weather at all times of day,” Farrell said, as quoted by the Richmond Times-Dispatch.
It’s not hard to read between the lines. The statement clearly referred to the intermittent nature of wind and electric power, clean power sources that the country will increasingly rely upon as the Clean Power Plan forces the shut-down of many, if not most, coal-fired power plants, and as cost issues and environmental concerns dog the expansion of nuclear power.
Farrell stated that it will cost “billions of dollars” to reduce carbon dioxide emissions from Virginia power plants by 32 percent by 2030 from 2005 levels. Dominion Virginia Power has not released a precise estimate on how much the transition to cleaner power will cost because key regulatory decisions have yet to be made. But Farrell’s comment suggests that he believes that however costs are allocated, they will be substantial.
Natural gas is abundant, less expensive and emits less CO2 than other fuels, but Farrell warned that reliance upon one fuel source “leaves us vulnerable” — presumably to supply shortages and price spikes. Meanwhile, solar has its own issues: (1) It generates electricity only when the sun is shining, which means it requires expensive backup energy sources, and (2) it consumes large amounts of land. Farrell faulted the Clean Power Plan for giving insufficient emphasis to nuclear power as a way to diversify fuel supplies.
Dominion has reduced CO2 emissions by 20% at the cost of billions of dollars in recent years, Farrell said. “But that was the easy part. From here, it will be more difficult and much more expensive.”
Bacon’s bottom line: Judging by the T-D account, Farrell didn’t provide many hard numbers, but his skepticism that wind and solar can replace fossil fuels on a large scale comes through loud and clear. Wind power may be viable as a niche product along mountain ridges, but large-scale wind production offshore is many years off, if it can be accomplished economically in Virginia at all. Solar is looking more competitive when viewed on a life-cycle basis (zero fuel cost offsets lower up-front capital costs) but, without a means to store surplus electricity and limited means to import clean power from wholesale markets, Dominion, Appalachian Power Co. and other utilities will need to maintain fossil-fuel generators on stand-by.
On the other hand, Farrell may have a hard time persuading Virginia regulators that nuclear power is a viable option, even if it does emit no CO2, provides fuel diversity and generates electric power continuously. Dominion has acknowledged that it could cost $19 billion to design and build a third nuclear reactor at the North Anna power station. The capital cost is several times more expensive per kilowatt hour than any other fuel source.
In the end, each fuel source offers its own unique trade-offs of cost, reliability and environmental impact.
