Delays mainly caused by continuing regulatory battles have added another half a billion dollars to the price tag for the Atlantic Coast Pipeline project now crossing Virginia. Dominion Resources CEO Thomas Farrell used a new top figure of $7 billion in a discussion of the project with investors and analysts on November 1.
Back in February it was the Duke Energy CEO who first floated a figure of $6.5 billion for a project that started out with a $5 billion or less advertised price. Those costs do not include financing, which will add to the amount customers pay for the gas in coming years. Dominion is the lead partner in the pipeline, along with Duke Energy and Southern Company, but owns slightly less than 50 percent of the project.
The transcript is rough in places, the fault of the transcriber I’m sure, so I may add some suggested translations here and there.
“The FERC stop work order in (and?) delays obtaining permits necessary for construction have impacted the cost and schedule for the project. As a result, project cost actions have increased the range of $6 billion to $6.5 billion to a range of $6.5 billion to $7 billion excluding financing costs,” Farrell told those assembled on a conference call to discuss the company’s third quarter results. The most recent dispute involves the proposed compressor station in Buckingham County, with its permit decision delayed at the last Air Pollution Control Board meeting.
“The Atlantic Coast Pipeline is pursuing a phase in service approach with its customers whereby we maintain a late 2019 in-service date for key segments of the project to meet peak winter demand in critically constrained regions. ACP will be pursuing a mid-2020 in-service date for the remaining segments. Farrell said later their profits are not threatened if they don’t start pumping gas in 2019 because the are guaranteed to recover funds used during construction.
“Through this process, we’ve already been through one process with customers on the rates, and we’ll continue to work with them. The returns are going to be very adequate and comments (commensurate?) with the normal returns we get in projects like this in our midstream business,” Farrell said.
Dominion Energy Virginia, through another arm of the company, is one of those customers, meaning of course its millions of Virginia ratepayers will ultimately pay off the portion of the pipeline serving Dominion generation plants.
Opponents tend to focus on the top line number ignoring the fact that there will be other customers sharing the cost along the line. Opponents are quite right when they point out that new pipelines cost more than old pipelines built at lower cost. Those issues will be debated in future State Corporation Commission cases, where the higher transportation charges will be compared to cheaper alternatives.
In speaking to the analysts, Farrell was positive about the prospects of another huge capital expense coming at ratepayers like a train – license extensions to add another 20 years of life for its four nuclear reactors. In some recent State Corporation Commission testimony, the company has been equivocal on its plans. Who’s getting the real story, the SCC or the stock analysts?
“Now, on October 16, we filed with the regulatory commission for subsequent license renewable (renewal?) for the [indiscernible] power station reactors. This is an important first step in which we expect will be a multiyear $4 billion investment program that will extend the lives of both the [indiscernible] (Surry?) and North Arizona (North Anna) nuclear stations by an additional 20 years. We expect to submit the North license suspension (extension?) application in 2020. As a result of this initiative, our customers will continue to benefit from clean, reliable and low-cost generation from these best-in-class facilities,” Farrell is quoted in the transcript.
And on a related note…..
Former State Senator John Watkins was actively promoted this past winter as a candidate to fill an opening on the State Corporation Commission. He was apparently derailed by concerns about his votes on key utility regulation issues and his ties to various legislators who have shown little interest in protecting ratepayers when the utility was rewriting the law to its benefit. Yesterday’s Wall Street Journal took note of how things work in Virginia.
Apparently that Clean Virginia group published something pointing to relatively high electricity bills in Virginia, and Senator Watkins rose to the company’s defense in a guest column in The Roanoke Times, a paper far from his Chesterfield County home. Read it and form your own opinion of his fitness for the Commission job, which is still open after all.
One line of his did inspire me. “Facts are facts, and the SCC does a really good job of compiling them. Legislators and the public count on the SCC to provide that information to make sound decisions,” he wrote. My mission at Bacon’s Rebellion to report on the Commission process and the facts that drive its decisions will continue.There are currently no comments highlighted.