Dominion Green Energy Costs Continue to Grow

Dominion Energy Virginia’s major capital projects, listed in its pending integrated resource plan. The SCC staff added the lifetime revenue requirement, the total dollars extracted from ratepayers over time which includes financing costs and the company’s current profit margin. Source: SCC

by Steve Haner

As sobering as they were, the initial estimates of how a green energy conversion will explode Dominion Energy Virginia rates have now been revised up. The State Corporation Commission staff now sees it costing an additional $800 per year for a residential customer to purchase 1,000 kWh per month by 2030, an increase of just under 60%.

The main drivers of the higher costs will be all the offshore wind and solar generation Dominion proposes to build, as outlined in its most recent integrated resource plan. That plan is now being reviewed by the SCC, and the staff filed its analysis late last week, summarized here on pages 4-5.

The separate cost analysis by Carol Myers of the SCC’s Division of Utility Accounting pushed up the utility-issued estimate by disputing assumptions the utility made. Staff disagrees with the utility projection that by 2030 less than half of its electricity will be used by residential customers. It is now about 55%. Should the portion shrink as Dominion projects, more of the project costs would be imposed on commercial users.

Myers reported it is also unrealistic to assume most residential households use 1,000 kWh per month, when the history show usage at or above 1,100 kWh.  Plugging that into the data would increase the projected cost to families even beyond $800. Myers’ testimony also shows huge increase in commercial (60%) and industrial (65%) power costs by 2030, even larger on a percentage basis than residential. For the state’s economy, they also matter.

Reading her testimony demonstrates how many variables are involved in these projections. Behind the “gotcha” headlines, it is clear these estimates could easily be too high or too low. Much but not all of the coming price increases can be blamed on the 2020 Virginia Clean Economy Act, which is dictating the massive wind, solar and storage investments. The General Assembly is also responsible for the vast majority of the other recent decisions driving up your future bills.

There is also no reason to assume that a General Assembly which has rewritten utility law several times in the past decade will not continue to do so going forward. Each integrated resource plan seems to survive as a useful document only until the next General Assembly session, if that long.

One of the major unanswered questions is whether the North Carolina regulatory authority will impose these capital costs on its citizens served by Dominion. If not, that will further increase the bill on Virginians.

The new analysis by the State Corporation Commission staff confirms that the green energy law passed by the General Assembly is indeed the “Clean Energy We Don’t Actually Need Act.” Dominion Energy Virginia will be collecting $100 billion from its customers to build far more electricity generation than we need, either to meet renewable energy goals or to simply meet demand.

Environmental opponents of the plan will seek to stop continued operation of the coal-fired Virginia Hybrid Energy Center in Southwest Virginia, which on an accounting basis is actually a money-losing operation with a net present value of negative $472 million by 2030.

Along with fossil fuel plants not being closed, Dominion proposes to add 970 megawatts of new natural gas generation by 2024, “to address what (Dominion) characterizes as probable system reliability issues resulting from the addition of significant renewable energy resources and the retirement of coal-fired facilities,” the staff wrote.

SCC Staff versus Dominion estimates of residential cost increases by 2030. Plan B assumes a 25% solar capacity factor, and B19 assumes a 19% capacity factor.

Like Gaul, your future Dominion bill increases are divided into three parts in Myers’ testimony, as her table above illustrates.

First, identified in the document as Plan A, are increased costs not directly tied to the 2018 or 2020 legislation. Those include the Assembly-approved plans to remove coal ash, to place hundreds of miles of residential tap lines underground, and various demand management programs where customer A pays customer B to use less power. Also included are the cost of gaining new 20-year operating licenses for Dominion’s four nuclear reactors.

The second tranche of higher costs are projects which were mandated in the 2018 Ratepayer Bill Transformation Act (also called the Grid Transformation Act). That includes a portion of the planned solar, a broadband program subsidized by ratepayers, even more demand management, and a planned pumped storage facility to provide 300 megawatts of backup to renewables.

The third tranche comes from 2020’s VCEA: Four or more waves of wind turbines built off Virginia Beach, thousands of megawatts of new solar, battery storage, the cost retiring coal plants early, and the new carbon tax Virginians will pay as part of the Regional Greenhouse Gas Initiative.

Myers includes a table comparing the new generation sources, the amount of energy generated when they operate and their initial cost and all-in cost, including financing and profits over time. That’s how $45 million in capital costs translates into $100.6 million in customer payments.

Do the division and it turns out the offshore wind will cost $7 million per constructed megawatt, solar will cost about half that at $3.7 million per megawatt, and the natural gas generation less than $2 million per megawatt.  The disparity is even worse, in reality, because solar and wind are unreliable, intermittent producers.

The staff testimony and all the other documents in the IRP case may be found here. Below is the revised version of a chart used earlier.

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17 responses to “Dominion Green Energy Costs Continue to Grow

  1. Now, include the health costs of pollution.

    • But you forget. The coal and natural gas plants stay in place, and will continue to run. That’s what is really hilarious about this, it is a sham. But that’s fine with me, because I see no environmental downside to natural gas, only coal (which truly does produce major air pollution.) I do not accept that CO2 is a pollutant. It fills my lungs (more so when I put on my Nancy Mask.)

      And the environmental impact of waste solar panels is going to be enormous. Plenty of toxic ingredients and no easy way to recycle. This is madness.

      • Try a 25% CO2 atmosphere. Make that 10%. Ah a Nancy mask…. Trump says you don’t need it, so I’m amazed you bother.

        • That would be great for marijuana growing operations. No need for CO2 tanks in the grow room!

        • Gee, current CO2 readings are what, 400 ppm? 10 percent would be 100,000 per million…so a ways to go. And guess what, the worldwide pandemic recession that reduced all those human-generated emissions has not moved the needle on any of the monitors. Might not be your lawn mower after all….

          I take no medical advice from Trump. Not even taking it from you!

          • I was just making sure. Overkill has never been one of my concerns.

            400 ppm? 2000 ppm is headaches, so a 2-fold increase. Yeah, we’ll get there.

            BTW, 10% by weight, or volume?

          • No Nancy, no we won’t see a five-fold increase in atmospheric CO2. The wildest most insane models used by the Crazy Ones doesn’t even come close to that.

          • 5-fold would be way over. 2-fold is 4x, 3-fold is 8x. It’s a common misinterpretation that y-fold means y times. It actually meant 2^y.

            Although nowadays it may be used as you have, but it literally meant fold as in folding paper.

        • Some additional CO2 will help those pine trees I planted to grow faster. Need some additional screening between my house and the racetrack, err, I mean road….

  2. As Steve has pointed out before, the $800 per household is only part of the story. The costs will be redistributed to lighten the burden on the poor…. which means the middle class will pay more.

    • Yes, I don’t see references in what I read to this “Percentage of Income Payment Plan,” with the surcharge/RAC still to be determined. Nor is there an estimate on the surcharge to be added to cover the unpaid bills blamed on the pandemic recession. Just….plan to pay much more.

  3. James Wyatt Whitehead V

    I think the middle class is going to use less energy and still pay more. What a deal!

  4. Are the numbers for future cost hikes adjusted for inflation?

    • In general, no. The assumption is flat levels of several key costs, so as incomes rise the bite might be reduced. Maybe. The capital project pay-off schedules are fixed once set (like your mortgage), and the most variable part of the electric bill is the fuel costs. Base rates are unchanged in the projections. Again, they are working with assumptions and you know how that goes. For the wonk, Carol Myer’s testimony is interesting to read as she explores several variables.

      As as is always the case, lots of key data is redacted.

      Love or hate this plan, when advocates claim you can build $45 billion in new generation assets and collect $100 billion to pay for it without raising customer bills, that is simply outrageous.

  5. As usual, Steve is doing the readers of BR a great service by monitoring and dissecting these regulatory documents and then explaining them in terms that people like me can understand.

    I think global warming is real and it is largely caused by the human production of greenhouse gases. I support the switch to renewable energy, such as wind and solar, although those acres and acres of solar panel farms are sure ugly.

    What annoys me to no end is the structural approach that Virginia is using to make the conversion. Dominion has a monopoly not only on the distribution of power, but a virtual monopoly on its production. Steve and others on this blog have explained in the past how other states are taking the approach of putting the burden and risk of building wind power facilities on private companies, with utilities then purchasing that energy at negotiated rates. (I think I have this right.) The results are wind energy costs significantly lower than those projected by Dominion. (The same probably applies to solar.) Ironically, the “progressive” Democrats in the General Assembly are captive to a private corporation, which has a guaranteed rate of return on any investment or cost it undertakes. The result is that there is little risk for investors (stockholders) as the ratepayers bear the vast brunt of any costs.

    As we move into a new environment of energy production, the Commonwealth needs a new model of energy regulation. However, for reasons we have discussed in the past, I don’t foresee that happening anytime soon.

    • I’m glad you have grasped the point on how much better it would be if merchant generators built the big projects and then sold the power to Dom and others at market rates. Acbar, TomH and Rowinguy have preached the same gospel and educated me. We’ll have another chance to debate anthropogenic “global warning.”

  6. Pingback: GOP Group Seeks Repeal of 2020 Energy Omnibus | Bacon's Rebellion

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