North Anna PixBy Peter Galuszka

Dominion Virginia Power, as is its style, has achieved a quiet but far-reaching regulatory victory. The General Assembly has passed a complicated bill that would help Dominion write off costs for a new nuclear reactor while avoiding giving potential refunds or rate cuts to customers.

The bill, which easily sailed through the legislature, has drawn attention to whether the utility really will build a third nuclear unit at North Anna and why bills to help smaller players trying to create renewable sources of energy seem to get nowhere in Virginia.

Dominion will be allowed to deduct $400 million from its profits in a scheme that allows it to count as costs the nuclear research it does. This will likely help it avoid paying rebates to consumers the next time the State Corporation Commission considers its rates.

There are several curiosities with the scheme. For one, although Dominion filed early plans for a third reactor about a decade ago, the project hasn’t seemed to move very far. The disaster at the Fukushima plant in Japan in 2011 forced a rethink of how the U.S. plans its new reactors. Another problem is that North Anna suffered a major setback later in 2011 when an earthquake forced a shutdown at that station and pushed reactors past their design limits.

The danger is hardly news but may be largely forgotten. In the 1970s, Virginia Electric & Power Co., Dominion’s predecessor, was fined by federal regulators for knowing and lying about some aspects of a geological fault line that runs under the North Anna area when it planned the nuclear power station in the 1960s.

I have visited North Anna in recent years and have asked Dominion about how they plan to pay for a third reactor. Some estimate it may cost about $10 billion. Many reactors on the drawing boards can’t be built without federal loan guarantees. Dominion has said it won’t need such guarantees.

Last month, the Department of Energy announced that the federal government will provide $6.5 billion in federal loan guarantees for two new reactors planned by the Southern Company in Vogtle, Ga. They are the first in such government backing.

A big question is how far along is the third unit at North Anna and why the General Assembly felt comfortable about making such beneficial moves if there’s any question about it.

Meanwhile, Bill Sizemore at The Virginian-Pilot has an intriguing story about how Dominion, which gave $1 million to Virginia politicians last year, has little trouble with its laws while smaller fry in the renewable energy sector struggle.

They have failed at getting the General Assembly to push tax credits to help install solar, wind and other, non-fossil and non-nuclear forms of power. Originally, the proposal called for $100 million in tax credits a year but that was pared down to $10 million and then was put off for consideration next year.

Virginia has voluntary Renewable Portfolio Standards calling for a percentage of new power generation to come from renewable sources. The approach favors large utilities such as Dominion and Appalachian Power. Neighboring states North Carolina and Maryland have mandatory standards and that may be one reason why Virginia has only 5 percent of North Carolina’s solar power capacity.

Dominion points out that it has renewable projects such as solar powered panels at a university and has plans for offshore wind, but these efforts are relatively modest.

One irony with the current situation involving renewables is that conservatives argue that their promoters must meet strict free market tests. If solar and wind and other sources can expand, they need to make it without government help based on their ability to innovate and market salable products. But the traditional, large utilities have no trouble getting billions in government help in federal loan guarantees or in rate write offs that Dominion will enjoy.

So, it seems the fix is in for traditional power in Virginia. That was certainly the case with former Gov. Robert F. McDonnell who wanted to make Virginia “the energy capital of the East Coast.” He strongly backed offshore drilling. Incoming Gov. Terry McAuliffe had been suspicious of offshore drilling in 2009 when he first ran for governor but has since changed his position to the consternation of environmentalists.

“We’re really disappointed but not surprised,” says Glen Besa, head of the Sierra Club’s Virginia chapter.

Share this article


(comments below)


(comments below)


11 responses to “Dominion Benefits As Renewables Struggle”

  1. larryg Avatar

    Crony capitalism, rent-seeking, etc, et all is alive and well in the Commonwealth and not one whimper of complaint from the sniveling critics of wind/solar.

    excellent point, Peter!

  2. Breckinridge Avatar

    The Post got a couple of things wrong. It isn’t “research” that the ratepayers are going to be charged for but the full range of regulatory and engineering costs related to North Anna 3 over the past six or seven years. $400 million. And by compressing those costs into one rate cycle, and by expensing them as operating costs, the added cost will provide an artificial result in the 2015 rate case.

    Another point the Post got wrong. It reported that Dominion’ current rates are excessive by $280 million per cycle, but it is $280 million per year and $560 million per cycle. So this is a win-win for the utility, in that it reduces the risk that its shareholders face over those development costs (but charging them to the customers now) and it gets to avoid having to rebate excess profits in the 2015 rate case. We got rate credits in 2009 and 2011, but don’t count on them ever again.

    Why not in 2013? Dominion pulled the same stunt last year, compressing the storm damages into a single rate case when they should have been spread out over several years. That was another gift from the General Assembly, and in that case AG Cuccinelli helped wrap it up and delivered it. The GA and Cuccinelli took away a rate cut that would have put a quarter billion dollars a year back into customer hands.

    D’s return on equity is in the 10-11 percent range but their return on political capital is absolutely too high to calculate. Nobody needs to give $1 million annually in campaign contributions and hire a dozen lobbyists to do good things for Virginians.

  3. […] Original Post By Google News Click Here For The Entire Article […]

  4. larryg Avatar

    The only thing worse than government trying to run an electric grid is a govt-subsidized monopoly!

    I do not think we should be building last versions of a Nuke technology when newer, safer ones are in the pipeline but Dominion pretty much makes such decisions and the rest of us get to pay for it – even if it’s not the best thing for us downstream.

    I’d much prefer them to make the subsidy case – to upgrade the grid instead and to make it easier to use varied sources such as Nat Gas, solar, wind – and Nukes.

    Dominion thinks that we’re going to need more base load electricity.

    From what I’ve been reading in the WSJ and other publications – it’s not at all apparent that this is going to be the case – and there is a risk – that in a decade or two, well within the intended life of a NUKE) that we may see dramatic improvements in solar – such that people will start installing them even if Dominion is successfully in fending off rules to buy it.

    over time, the same thing could happen to Dominion that has happened to VDOT – as more efficient vehicles and things that use electricity is going to lead to less consumption …

    the difference is that rate payers in Va are going to pay for that NUKE no matter what happens… if fewer people buy electricity – the price of electricity will go up to compensate – to pay for that NUKE – and as more people buy more efficient appliances and start using SOLAR for some things – people will then use even less power – what the Wall Street Journal has characterized as a “death spiral” – but no matter how efficient consumers get – they’re still going to pay for the stranded costs of the Nuke.

    Dominion may well have a strategy here but to this point, it’s inscrutable to average folks.

    For instance, it could well be that the new Nuke is to replace coal plants to be closed and/or retiring older Nukes.

    In that case – a new Nuke might make sense but any such strategies are not shared with the general public – not when they have 9 perfectly good lobbyists roaming the halls of the GA passing out about a million in dollars!

    and .. don’t mistake where Dominion got that million dollars to shower on the GA… from us… to lobby for things – not clearly in the public interest.

    1. larryg Avatar

      It’s easy to be critical of government these days.. it’s become a major national pastime and I plead guilty to it also…

      I think Dominion is in the best position to do two things:

      1. – decide what they need to do to meet their mission or providing reliable electricity to citizens. We all know what happens when the electricity is out for a few hours … in fact a few days.. which is not something we expect or like but it does happen from storms – as opposed to it being the incompetence of the company as we see in other countries sometimes.

      So when they forecast – I tend to not reject it out of hand although ..sometimes it’s hard to figure out how 2. interplays

      2. – they have a responsibility to their shareholders also..

      and between 1. and 2. – there are conflicts between what is good public policy and what is good for the shareholders.

      What I dislike is the cozy relationship between Dominion, the regulators and the GA in their “Virginia Way” pursuit of 2. – when it conflicts with 1.

      and the citizens, the ratepayers in Va get the thumb in the eye treatment from Dominion and the GA.

      Citizens are entitled to more information that we are receiving and an ability to, with that information, challenge… even have an adversarial relationship to defend the interests of citizens.

      we should not be paying through our electric rates – for Dominion making risky decisions about future Nukes .. especially when we have this ongoing conversations about why we should not be subsidizing wind/solar…

      but at this point – we simply do not know basically what is driving this direction by Dominion – and they are not accountable to inform us – they just go give briefs to General Assembly folks from their 9 lobbyists.

  5. DJRippert Avatar

    Of the 21 members of the House of Delegates with the courage to vote against this giveaway 16 were Republicans and 5 were Democrats.

    Opposition in the Senate came mostly from Democratic Party pols – 6 to 2.

    The legislation was patroned by Walter Stosch, a Delegate from the land of cronyism and subsidies (i.e. Henrico County). Stosch demonstrated his utter disdain for the intelligence of his constituents by saying, “The ratepayers are clearly going to be better off with this bill than without it,”.

    Faux free market adherent and US Congressional candidate Barbara Comstock had no problem voting to lard the pockets of Dominion by taking rebate money out of the pockets of her constituents.

    The reliably populist duo of Creigh Deeds and Chap Petersen both voted in opposition. It is heartening to see that there is at least a kernel of legislators who reliably oppose Henrico-style cronyism and subsidies.

    Mark Herring ironically became a fan of Virginia constitutional tradition by saying effectively that these kinds of rate decisions should be made by the SCC and not legislated.

    Time for a new state slogan. Out with “Virginia is for Lovers”. In with “Virginia is for Suckers”.

  6. larryg Avatar

    You know with all the increased dialogue about government, the purpose of govt, the incompetence of government, crony capitalism, rent-seeking, the “free market”, “free market principles”, etc, etc, etc, et al

    this is an interesting slice of it (at least to me).

    the two things we most take for granted (in my view) that are fundamental to life as we know it – and totally made possible by government is public roads and electricity.

    without those two things – we’d effectively be a 3rd world country.

    the question is – how did we develop these two vital components versus other countries? Was it produced by a free market or by government?

    did the free market produce roads and electricity to satisfy a private market demand or was it a visionary aspect of something that government should enable?

    just asking…

  7. mbaldwin Avatar

    Larry, of course government in the U.S. — state and federal — has enabled transportation and electricity in critical ways; NY State’s Erie Canal, the federal enabling of the Cumberland Road, federal largest and stimulus to facilitate the intercontinental railroad, the federal Bureau of Reclamation, Corps of Engineers, TVA, Bonneville hydro projects. And state utility commissions facilitated the regulated (and tax-paying) utility monopolies throughout the country. Then Ike and the Interstate Highway System. Without government we’d have gone nowhere, and electrify little.

    1. larryg Avatar

      well.. MBALDWIN – we agree.. and even the railroads were total subsidized crony capitalism but ultimately it move the country forward.

      but listen to the anti-govt folks now days…

      right here in BR.. some days..

  8. larryg Avatar

    NOW, that we have given away millions of acres of acres of land away to the railroads and given the right of Eminent Domain to pipeline owners and electricity companies and have subsidized Nukes, and built the interstates by using Eminent Domain.. we have folks demanding ROI and no more subsidies for wind and solar.. but still for Nukes.

    I’m not necessarily advocating for subsidies for wind and solar but asking why we use a double standard where we subsidize one kind of energy then claim that wind/solar cannot compete … economically.

    We have a GPS and NOAA satellite system that was totally subsidized with taxes and never had an ROI performed on it – and never had the private sector interested in doing it themselves – not just in the US but worldwide.

    what would have happened to GPS and NOAA weather satellites if we had demanded ROI -up-front before they were approved?

    would Smartphones that can find parking lots or self driving cars or drone technology even be a reality today if we had used the same standards for GPS that we know apply to wind and solar?

    what’s the difference with the opponents of wind/solar? why was GPS okay to subsidize but not wind/solar?

    again – I’m not necessarily advocating subsidies for wind/solar nor am I arguing against ROI but I am asking :

    1. where would we be right now with these technologies and their benefits to society and the economy if we had insisted on the same ROI, “no-subisdy” opposition that we now see?

    2. is there anywhere on the face of the earth where this “the government should not do this PERIOD , the free market should do it” – has proven to have actually worked and resulted in a better economy that the countries, like ours and OECD that _have_ subsidized emerging technologies?

Leave a Reply