Dominion Objects to Testimony on Pipeline Cost

One of the first decisions the State Corporation Commission may need to make in Monday’s hearing on the Dominion Energy Integrated Resource Plan (IRP) is whether to allow and consider testimony about the cost of the Atlantic Coast Pipeline.

Dominion filed a September 7 motion asking that testimony from a witness brought by Appalachian Voices “be stricken as irrelevant and improper,” which the environmental group answered with its own brief filed Friday.  Dominion argues the cost of the pipeline is not part of the IRP and is not properly before the commission in this case.  It will seek to recover the pipeline capital costs when gas from the pipeline is subject to a future fuel cost review.

Gregory Lander of energy consulting firm Skipping Stone states in his disputed testimony that the costs are already built in.  “The Company’s 2018 IRP embeds the costs of the Atlantic Coast Pipeline into each of the generation scenarios it presents…. (but) has not properly costed-out the all-in cost of increasing, beyond its current pipeline capacity portfolio, the costs associated with the level of pipeline capacity it intends to obtain on the Atlantic Coast Pipeline.”

He claims that acceptance of the IRP by the Commission in effect accepts that up to $3 billion of the cost of building and operating it will be passed on to ratepayers over 20 years.  Those are in addition to the cost of the gas.  Opponents of the pipeline argue it is not necessary to bring natural gas via the ACP to Dominion’s generators, and if it does so it will be supplanting lower-cost alternatives.

“In reality, the Company’s goal is not to avoid scrutiny of the ACP costs in this proceeding, the Company’s goal is to avoid scrutiny of the ACP costs in every proceeding,” states the brief in support of retaining Lander’s testimony.  It noted a similar effort to keep the data out was made successfully in 2017’s IRP case and during the certificate of need case for the new natural gas generation plant in Greensville County.

This is just one of the disputes expected when the SCC takes live testimony for two days on the plan, which outlines several scenarios for meeting future demand in Dominion’s territory while meeting current and future environmental rules. The amount of demand growth over the period is itself the main point of contention, with opponents claiming the utility has inflated its needs to justify excessive new plant construction.

In rebuttal testimony Dominion pushed back on claims by the SCC staff and others that it won’t need additional generation. It says the others ignored recent winter peak demands and claimed that an economic slow period responsible for flat demand is coming to an end.  “The lack of economic growth in Virginia has been a key driver to the forecast being higher than what has actually occurred” wrote Dominion’s director of energy market analysis Robert Thomas.

One of the reasons cited for expected growth is the explosion of data centers in Virginia, but representatives of that industry filed their own written comments disputing they will cause higher demand.  The letter was signed by eBay and Adobe among others.

Photo credit: Richmond Times-Dispatch

“Technological advancements are helping to reduce the load burden of our operations—a trend that we expect to grow over time. As such, the current energy demand of an average data center facility will likely decline over time, requiring utilities to adapt to flat or declining load growth. We therefore advise regulators and utilities to consider these advancements before building out expensive fossil-generated peaker plants that could become obsolete and therefore a burden on ratepayers.”

The big headline coming out of earlier SCC staff testimony was a prediction that the shift to more renewable energy outlined in this plan and dictated by the General Assembly earlier this year will add $5.57 billion in ratepayer costs over the 15-year period.  The utility disputed that on several fronts, claiming for one thing that the cost of solar in the SCC projection was too high because it was using too low of a capacity factor.

Assuming higher capacity for new solar farms reduces the staff’s estimate by $1 billion, Dominion claimed.  It also pointed out that the staff had included in the cost the $870 million in demand management and energy efficiency programs called for in that state legislation.

Dominion regulatory consultant Deanna Kesler notes the new state law “only requires the Company to propose $870 million of spending on energy efficiency programs…(and) the Commission is not required to approve energy efficiency programs in this amount. Therefore, it seems inappropriate to reflect the $870 million cost as a line item in his table,”  referring to an SCC chart in evidence.

The rebuttal witnesses also pushed back on the SCC staff analysis that Dominion planned 15 gigawatts of new generation, nearly a complete rebuild of its system, if possible extensions of nuclear plant licenses were included.

Dominion stated decisions on building a major 2,000 MW wind project off the Virginia coast and on extending the licenses of its existing nuclear plants are yet to be made – and those decisions might be no.  Both would be huge capital expenditures and would show up on ratepayer bills as new rate adjustment clauses for decades.

Dominion’s vice president for generation construction, Mark D. Mitchell, said work on extending the licenses at North Anna and Surry into the 2050s is “paused” and it won’t seek to recover any of the money it has spent so far until sometime after January 1, 2020. “The Company understands that any spending undertaken by the Company prior to receiving approval for cost recovery from the Commission is being done at our own risk.”

The projected cost of those new licenses is discussed in the various IRP documents but heavily redacted.  Only people who have signed a non-disclosure agreement for the case can see them.  A 70-page comment filed by Thomas Hadwin of Waynesboro, who regularly contributes to Bacon’s Rebellion energy discussions, estimates the cost at over $4 billion and says that would produce prohibitively expensive power.  Hadwin joins in the chorus attacking Dominion’s load projections and calling for more emphasis on demand reduction.

With the passage of the 2018 legislative package on renewables and the expected enrollment of Virginia in the Regional Greenhouse Gas Initiative (RGGI) the case has taken on added importance, drawing dozens of participants producing thousand of pages of testimony.  However, any plan ruled acceptable by the commission is just an outline and does not bind the company or the commission as the individual elements come up for their own approvals.

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32 responses to “Dominion Objects to Testimony on Pipeline Cost”

  1. SH, you say, “any plan ruled acceptable by the commission is just an outline and does not bind the company or the commission as the individual elements come up for their own approvals.”

    Technically that’s correct. But DOM ought to be deeply concerned if the State Corporation Commission rules in this IRP proceeding that X and Y are wrong assumptions or Consequence Z is not to be taken for granted. The IRP, or “integrated resource plan,” is just that, a chance for the Company to look ahead at the big picture and get the Commission on board the same picture, to reach broad conclusions together that will provide a framework for those subsequent, specific facilities, approvals yet to come. This is an important opportunity to eliminate regulatory surprises down the road. What changes are happening on the grid in regard to independent utility-scale and distributed (customer-owned) generation? What are wholesale market prices forecast to be, for energy and for capacity? What’s happening in other technologies such as renewables and batteries? What’s happening with electric load growth in Dominion’s retail territory, both in quantity and in timing? This is the opportunity for Dominion to educate the SCC and for the Commissioners to give feedback, at least initially. And since it’s a public proceeding this is the opportunity for the public to learn what Dominion has in mind and to speak up about these matters where the SCC will hear what’s said.

    Done right, the IRP process should drive most everything else the Commission does concerning Dominion (and the other utilities filing IRPs) for the next year.

    The Commission has to decide how much of its thinking it wants to share with the GA. THat is not a regulatory but a political concern. Of late, the Virginia GA has been about as intrusive as any legislature in the nation when it comes to shielding its regulatee Dominion from normal utility regulation, and I can well understand why the SCC in turn may wish, for political reasons, to protect itself from even more interference, to keep its overarching regulatory strategy closely held and merely make the rulings driven by it without explanation. But that means there’s no opportunity to reach out and develop public support for its policies.

    Does the SCC dare seek popular support for something the GA hasn’t already indicated it will be receptive to? It should; it’s performing a delegated legislative function here. In that regard I will be particularly looking at how the SCC deals with RGGI. There’s also the matter of the open seat on the Commission; will that be filled by the GA in a fit of partisan pique, to correct some perceived offense and “teach the Commission a lesson,” or will it be done responsibly and with the intention to let the Commissioners do what they are elected to do — including, require the biggest utilities in the State to do what is “in the public interest” even if that differs from what the utility believes is in its stockholders’ interest?

    I sympathize with protesters who wish to use the IRP process to attack the ACP. The IRP, as a technical matter, concerns only Virginia Electric and Power Company, the regulated entity providing retail electric service in Virginia, and installing distribution wires and substations in Virginia for that purpose. The SCC does not regulate Dominion’s transmission, or its purchases or sales in wholesale electric markets, or any generation (even if owned by Dominion) for which retail ratebasing (at a regulated rate of return) is not sought. But the cost impacts of Virginia Electric’s construction plans and contracts, its cost forecasts, and all the assumptions driving those forecosts, all are fair game for public inquiry in an IRP proceeding. The Commission is a legislative body and can proceed to reasonably and efficiently weigh the evidence however it pleases. The Commission is also an adjudicative body in some contexts, but it can simplify those by relying upon findings made in its legislative capacity in such proceedings as the IRP. If it fails to do so, it merely puts off a reckoning with the factfinding which must eventually take place in all those individual facilities and rates proceedings that lie ahead, and which is much easier to perform in a comprehensive setting like the IRP — rather than in narrow-focus, isolated, facilities and rate cases which rarely explore the full context.

    The IRP for Dominion ought to be one of the Commission’s most important investigations, and ought to generate a thorough, detailed order that guides Dominion as well as the GA (and the Commission itself) for the near future. Whether the SCC punts to the GA this year will say a lot about the future of regulation in Virginia.

    1. You are right about so many things Acbar. However, let me point out two issues:

      1) The GTSA (the recent energy legislation) required that the IRP include information about several issues that are new to the IRP process. Dominion has ignored addressing those requirements in the 2018 IRP. The GTSA now puts the IRP on a three year cycle. This IRP will be the guidance that informs our energy policies for at least the next three years. My recommendation was not to officially accept it until it meets the minimum requirements and addresses the deficiencies in the load forecasting process.

      2) The IRP includes forecasts about future gas prices that influences decisions about peakers versus batteries, etc. There is no recognition in the IRP that passing through the contract with ACP will add $1.88 to the cost for any gas delivered by the ACP. In fact, the contract says that the $1.88 /Dth must be paid if no gas is delivered by the ACP. Columbia Gas has already agreed to transport Dominion’s allocated capacity with the ACP into Virginia. It is at 7-8 times cheaper to transport gas using the Columbia Gas pipeline than it is to use the ACP. Mr. Lander’s testimony says the ACP cost is already built-in to Dominion’s plans because at last year’s IRP hearing Dominion said that the ACP would be considered a portfolio asset and be expected to be paid in full by ratepayers.

      It is hard to claim something is an asset when it is not needed for supplying power plants (all have been canceled) and would provide much more expensive transportation service than the existing pipelines that are providing reliable service to the existing plants.

      1. So — mention it last year and, without SCC acknowledgement, it’s considered part of the baseline this year. Talk about self-fulfilling prophesy! But I’m behind on reading the IRP testimony — just back from a trip out West.

        Yes, quite right about the new 3-year cycle. Just that much less transparency; just that much less opportunity for public input. Think how much the Grid has changed in 3 years.

  2. LarrytheG Avatar

    so .. electricity will cost 5.57 Billion MORE than it would have if we invest in solar/wind?

    that seems counter-intuitive but it’s what I expect from RTD.. on these issues. Renewables if done right ought to save money over the long run. Even at the residential level it’s claimed that it will pay for itself in 15-20 years. Surely there is some kind of ROI numbers for renewables instead of a 5.57 billion “cost”.

    then also: ” … the utility to reinvest company [870 million] credits for excess earnings in new initiatives to make the system more reliable and reduce power outages, and provide customers with greater opportunity to manage their energy use, and create new clean energy projects.”

    Others have asked and I’ll join in – one would expect such investments to deliver an ROI and not a word about the expected savings from the investments.

    I fault not only Dominion on the lack of info – but the SCC also. This is being conducted like a game of inside baseball… we need an independent 3rd party to objectively evaluate what Dominion is proposed , the costs, and the benefits…

    1. Steve Haner Avatar
      Steve Haner

      Larry, the cost estimate was made by SCC staff and you can’t blame the paper for reporting it. It is over 15 years. And the SCC is the independent third party so I guess you want a fourth party to referee the referee?

    2. Larry,

      The SCC cost estimate includes all of the new projects authorized by the GTSA (new energy legislation). Dominion building nearly all of the solar and putting it in the rate base is more expensive to customers than if the solar was built by third parties and billed as a 35-year fixed-cost Power Purchase Agreement.

      Same thing applies to all of the other items that could be accomplished by others (wind, energy efficiency, etc.) but is more expensive when put in the rate base. The SCC is not saying that solar and energy efficiency are a bad idea, only that having Dominion doing it increases our cost by billions of dollars.

      The SCC has an evidentiary process that allows a variety of points of view to be heard, for those willing to participate. It is the most in-depth review of energy issues that we currently have in the state. Absent any statewide energy policy that is not written primarily by a utility, it is the best we currently have. They need to be free to balance the interests of shareholders and ratepayers.

      We also need to get busy creating a modern energy system that takes into consideration the needs of our utilities and the needs of other stakeholders. This is a complicated process and needs more than a two-day hearing every three years to properly address.

      1. LarrytheG Avatar

        Tom – you are basically confirming the facts but in a more polite way!

        Dom is driving the process… and the only thing the SCC is apparently capble of doing is allowing others to “comment” because the GA has pre-ordained Dom’s stranglehold on the process… so that virtually everything that could be construed to accommodate wind/solar, demand side technologies – even the price of gas is going to go into the rate-base unless the SCC says otherwise – and invites the GA to intervene again on behalf of Dom and against ratepayers.

    3. Jane Twitmyer Avatar
      Jane Twitmyer

      My proposal .. send Dominion and the SCC to ELab at RMI where they work with utilities to chart a path forward for the utility and regulatory board.

      In 2012 and 2013 it was everyone’s belief, including mine, that gas would serve as the transition to a clean energy economy. The problem is … that transition road is a lot shorter than anyone expected, and gas, while it burns at 50% less CO2 emission levels, emits copious amounts of methane. We also learned from the work of some Cornell scientists in 2014 that methane emissions are much more powerful and much more plentiful than anyone thought, being 85 times more potent as a green house gas for the short time they are in the atmosphere and before they dissipate.

      It is also true that the federal gas act gave pipelines permission to use eminent domain back in 1938 when pipelines were fairly new. Community benefit makes eminent domain a reasonable tool to construct pipelines. I don’t believe that right was intended for use by private corporations to ship and sell gas overseas. In addition shipping gas overseas was prohibited when conventional well production was declining. But now we have fracking in the Marcellus Shale, and they say we are no longer in danger of using up all of our gas supply. LNG export facilities are being developed. This too could be a “short road.”

      First, shale companies have never made a profit. In fact they owe $280+ billion in debt and those loans start coming due this year. Plus inaccurate analysis from the EIA helped the drilling companies continue to borrow the money to keep expanding drilling to keep production levels increasing. Unlike standard wells that produce for 20 years, the output of shale wells declines by 70-90% in the first three years of operation. EIA predictions would mean producing more than three times the U.S. Geological Survey’s (USGS) mean estimate of recoverable resources. Natural gas production across all major shale regions is projected to decrease for the first time in September. So is demand for gas, even overseas.

      Demand is expected to increase only in Asia, not Europe where Russian gas has a pipeline for delivery which beats the LNG process every time. BNEF says “John Twomey, head of European gas analysis said: ‘Growth of renewables and batteries will marginalize gas-fired generation in the European power system.’” That overtaking of gas by renewables and storage is happening in the US West and will make it’s way across the country as clean energy prices drop further.

      Since Dominion has cancelled 2 gas plants planned for the 20’s this 2018 IRP calls for replacing 1576MWs of heavy oil and 2167MWs of old coal with 3,664MWs of additional gas fired ‘peaking’ units to turn on only when demand is at its height. The Arizona PUC sent their utility back to the drawing boards to use storage for peak demand. Projections expect storage to beat ‘peakers’ in cost in just a few years.

      The SCC should require a review of alternative ways to meet, or reduce, peak demand and review the ACP analysis already out there. Virginia needs to take seriously the real potential for lowering central demand with on-site generation, demand shifting, efficient buildings, storage and microgrids.

      A trip to Colorado and ELab sounds productive to me.

  3. Steve Haner Avatar
    Steve Haner

    Tom, Acbar, I hoped my post would spur you to add detail. The ACP funding issue is fascinating. The one firm pattern I’ve seen with Dominion is risk avoidance, and if some of the comments are right they are at great risk with this pipeline project. Their generation mix may be less reliant on gas than expected and I still think there is a good chance the SCC will not allow the utility to overcharge us for gas used in generation with a sweetheart contract. Which makes me think big D has another plan, another market for the gas.

    The transition you envision, Tom, is going to be hard to imagine as long as the General Assembly’s judgement is clouded by campaign dollars and the many other ways Dominion has dominated this discussion. I’m not sure I’d like the system that the environmental activists would design, either. Nobody with any independent political clout looks out for the consumer.

    1. LarrytheG Avatar

      re: ” … The ACP funding issue is fascinating. The one firm pattern I’ve seen with Dominion is risk avoidance,”

      Geeze Steve – Dom could HAVE avoided the “risk” of the pipeline but they chose not to and went full steam ahead – claiming it is for a “public purpose” that allows them to not have to really negotiate price with property owners but more than that – they want the SCC to look the other way on whether or not ratepayers should have to essentially pay for that pipeline through the rate base.

      The reason WHY there are so many “comments” is that the SCC clearly is not seriously representing the interests of the ratepayers – and these comments basically highlight that fact.

    2. LarrytheG Avatar

      re: ” I’m not sure I’d like the system that the environmental activists would design, either.”

      Well.. yes.. if the Enviro’s plan is to use more and more wind/solar and use battery technology that is not yet ready for cost-effective use.. but Dom is basically trying to sell MORE gas at higher prices and more electricity use while promoting the idea that it’s using “more” solar and a more “reliable” grid without every really quantifying either much less making an ROI argument.

    3. Steve,
      As you mentioned, I wrote 70 pages of detail to the SCC to point out areas where customers will have higher energy costs without receiving much, if any, benefit in return.

      Regarding the pipeline:

      1. All of the major gas-fired power plants currently operated by Dominion Energy Virginia have long-term transportation contracts with existing pipelines that transport gas at a cost that is 3-8 times less than the cost of transportation using the ACP (based on information filed with FERC and the SCC).

      2. Dominion says they will build no more combined cycle (major gas consuming) plants. Even if they did, the existing pipelines that serve Virginia are expanding their capacity in an amount much greater than what would be provided by the ACP. Virginia can have all of the gas it needs without new pipelines; transported at a much lower cost, because existing pipelines have been mostly paid for by previous customers.

      3. The gas-fired peaking units proposed by Dominion in the IRP run only about 5-10% of the time and will likely be located in the load centers not along the ACP corridor. Battery storage will be equal in cost to the gas-fired units in 2022 and provide more benefits. By 2025 batteries will definitely be cheaper and continue to get cheaper.

      4. Dominion Energy wants to build a pipeline that it will earn a 15% rate of return on. This is 50% more than they can earn by building transmission lines and power plants. They can also push their risk onto the ratepayers of their subsidiary (DEV). A subsidiary of DEV has signed a 20-year contract that says it will pay the ACP in full ($4 billion based on published rates), regardless of the amount of reserved capacity that is actually used. Pipelines only sell the transportation service, gas is purchased separately.

      As things stand, none of this capacity would be used. No new power plants are being built that would need more gas. If they were to be built, the ample capacity in existing pipelines would deliver the gas much cheaper than the ACP. Ratepayers are being asked to pay billions for something that they will receive no benefit from.

      5. The lack of gas supply to Virginia was a fabrication. The Columbia Gas pipeline is expanding by 1.3 billion Dekatherms per day (Dth/d). A portion of that capacity will be available to Virginia. The FERC application for the ACP shows that Columbia Gas agreed to deliver DEV’s entire allocation of gas from the ACP (300,000 Dth/d) from West Virginia to Virginia. With no additional gas needed by DEV this provides twice as much gas as is required by Virginia Natural Gas (155,000 Dth/d). Columbia Gas already serves VNG. If necessary, an additional pipeline could run on the existing right-of-way to serve VNG at a fraction of the cost of the ACP.

      6. The Atlantic Sunrise project will be completed in a few months. It provides 1.7 billion Dth/d in additional capacity (larger than the ACP) to the Transco system that serves Virginia and the Carolinas. Cove Point has reserved 350,000 Dth/d from this pipeline. Even though the pipeline is fully subscribed by gas producers and marketing companies looking for customers, the ACP claimed that no gas would be available to Virginia and North Carolina. After the Cove Point allocation, the amount of available capacity from Atlantic Sunrise was almost exactly the amount subscribed by the utility subsidiaries controlled by the owners of the ACP.

      7. The ACP was justified by the claim that 80% of its capacity would be used to serve new power plants in Virginia and North Carolina. Both new power plants that were proposed in Virginia have been canceled. Four of the six new plants proposed for North Carolina at the time of the pipeline application have also been canceled. The remaining two could succumb to the lack of load growth and lower cost renewables that caused the cancellation of the other plants. Ratepayers in Virginia and North Carolina will be asked to pay billions of dollars for a pipeline they don’t need.

      8. Dominion commissioned a study that said the ACP would provide $377 million per year in savings to Virginia and North Carolina. It is deeply flawed. It assumed that the cost advantage at the Dominion South Hub in West Virginia would increase its price advantage over the next twenty years. This goes against what traditionally happens when enough pipelines exist to bring all of the gas to market – the price typically equalizes with other zones.

      But assume the $1.61 per thousand cubic feet (mcf) savings at Dominion South exists, as the study assumes. The study then concludes that this savings would “far exceed” the cost of using the pipeline, and then goes on to run the $1.61 through an economic multiplier to calculate the total savings. The cost of using the ACP is $1.88, based on the tariff filed with FERC. The preliminary tariff was developed before the ACP announced that it would cost $1.5 billion more to build the pipeline than originally projected. The ACP has a chance to raise the rate based on the actual costs of construction and initial operation.

      The faulty assumption about the $1.61 in savings is more than offset by the $1.88 in costs of using the ACP to transport the gas. The entire narrative of the ACP providing cheaper gas to Virginia is based on bad math. The ACP adds 60-70% to the current price of gas whether that gas comes from West Virginia or Pennsylvania. The ACP would result in a delivered price of gas that is significantly higher than we could obtain from existing pipelines serving Virginia.

      9. That is why DEV does not want to discuss this issue in the IRP hearing. The SCC has been encouraged many times to to deal with this issue in advance of a Fuel Factor case. The SCC avoided convening an Affiliates Act case which is the appropriate forum for this. The State Supreme Court also avoided dealing with this case on its merits, making a curious ruling saying that the affiliate arrangements existed before the pipeline was proposed. They basically said the pipeline contract was approved before the pipeline was applied for. No one in Virginia wants to deal with the facts about this project. It is too politically charged.

      But as I testified to the SCC the past two years, avoiding dealing with this before the pipeline is built guarantees that one party or the other will be harmed. The pipeline will be built if it is included in a Fuel Factor case. The SCC must follow state law in passing through costs to ratepayers. The pipeline will not be needed to supply gas to existing power plants, if it does it will deliver gas that is more expensive than could be obtained by other means. Either the ratepayers will be asked to pay more for something they don’t need, or DEV will not be allowed full recovery of the cost of their contract with ACP. A very bad, expensive outcome will occur for somebody. It is not fair to charge customers for something they don’t benefit from. It would also be harmful for the utility to swallow billions in costs for a contract their parent company had them sign for the parent company’s benefit.

      They only good solution is to decide this issue before the pipeline is built. Someone needs the political courage to step up and protect both parties. Just having a lawful water quality process would resolve the issue. A large new pipeline through the mountains could not likely be built in Virginia if it had to meet State law regarding the non-degradation of state waters. But such a ruling would likely be challenged in court.

  4. LarrytheG Avatar

    I did wrongly blame the RTD messenger but RTD nor the SCC actually explailn what Tom just did on 3rd party versus rate base.

    Nor did the SCC do the gas analysis that Tom did…either

    the SCC is supposed to represent the ratepayer but they are not doing the relevant analyses that ought to be done AND should be presented to the public as their findings. I don’t know why they are not doing this but the bottom line is that the IRP itself is not a good document – it’s short on data and long on Dominion’s proprietary hopes and wishes … and more analyses and commentary from a truly unfettered 3rd party will clear out a lot of the miasma.

    Look at where we are headed on energy in Virginia.

    1. Dom is building a pipeline that will cost far more to transport gas than existing pipelines AND they want to incorporate it into the price of electricity.

    2. Dom refuses to support a competitive 3rd party solar industry in Virginia that WOULD result in lower costs than if Dom does it themselves.

    3. – Dom wants to spend their ill-gotten profits on things they choose with similar lack of transparency and accountability to include a fair and objective analyses of what things would deliver what ROIs.. It’s little more than slush fund for whatever they want to use it for – and make PR hay from it rather than purposely intending to use those initiatives to actually REDUCE the demand for electricity -which is obviously not in their game plan.

    Dominion’s purpose here is to make as much electricity as they can and get as high a price as they can from rate payers.. and the SCC in my view is nibbling on the edges and not doing true due diligence – and if they cannot or will not -then Virginia needs to get an independent 3rd party to review the IRP and get Virginia onto an energy policy that actually uses solar and wind as cheap fuels – when they are available and can be used instead of other fuels like gas. We also need to quantify what reliability is – in terms of ROI… we can’t spend millions of dollar on “reliability” and that money goes into a de-facto black hole and all we got is a claim that we are “more” reliable than before.

    Finally – the RTD – a newspaper friendly to DOm and the GOP -dains to ask the hard questions that Tom and others are asking of Dom.. they’re pretty much parroting Doms “company line” and taking whatever words they can from the SCC to bolster that viewpoint. That’s a disservice to us all especially from a newspaper that has no trouble attacking Northam for policies. Dom’s “policies” on energy deserve just as hard a look from RTD as it does for those pesky liberals they love to demonize!!!

    I figure as long as BR has so many that like to attack the media – I’ll join in and add my favorite ones to similarly attack for their selective analyses of SOME entities but ignore others – like Dom.

  5. Steve Haner Avatar
    Steve Haner

    Gee, Larry, you distrust the SCC (which you seem to only barely understand) and seem to recognize Dominion’s motives – who do you trust in all this, the General Assembly? Let’s see what the SCC does.

    1. LarrytheG Avatar

      Steve – I do not mistrust the SCC.. I think they have been compromised by the threat of the GA further neutering them – the same GA who gets money from Dominion.

      I look at the issues brought up by the commenters – and it’s obvious that they are major things that the SCC to this point is largely silent on. Who in their right mind pays no attention to the cost of that pipeline and the intent to put that cost on ratepayers..such that when people try to bring it up – the SCC is put under pressure to not allow it.

      I don’t think Dominion is particularly nefarious – they do what most companies do to better their own interests. The difference is that they are now configuring their business to evade regulation by FERC and the SCC. It’s a clever and well executed strategy and if the SCC does not do their duty – ratepayers will end up paying more for electricity – already have – because Dom was allowed to run amok …

      It then becomes up to someone besides the GA or SCC to act in ratepayers best interests by bringing in a more objective and fair outside consultant to help develop an IRP that truly serves ratepayers and an energy policy for all of Virginia not just Doms service area. We did that with Offshore Wind. It appears to me we need to expand it to solar, demand-side conservation – and to not let Dom get away with essentially financing their pipeline on property owners and ratepayers.

  6. TooManyTaxes Avatar

    Are any business organizations involved in this proceeding? One would think that the state chamber of commerce and other major regional or local chambers would be fighting for their members against excessive electric rates.

    1. Steve Haner Avatar
      Steve Haner

      The local utility is usually their largest member! Dominion dominates the chambers in its service territory and the state chamber. A coalition of large industrial customers is participating as it usually does.

      1. Reed Fawell 3rd Avatar
        Reed Fawell 3rd

        That fact, that “Dominion dominates the chambers in its service territory and the state chamber”, is exceedingly unhealthy. It comprises the makings of a cartel state, like fascism.

        Meanwhile Steve also says, “A coalition of large industrial customers is participating as it usually does,” protecting its interests.

        So who gets left out of the whole process?

        Who is thus forced to paying higher and unfair utility bills so that the elite eating at the table can force the public to unwittingly subsidize the special interests of the elites at the table, including their shareholders, too?

        Well, surprise, surprise, the rate paying public gets the shaft. These are the private workers struggling to make a living, support his or her family, gain savings to retire when elderly in dignity, these are the people getting the shaft.

        Meanwhile, the special interests profit enormously at public expense, namely at the great cost and loss of workers and families.

        This is the same thing that is going on in Higher Education.

        The public (whether in Virginia and Federal taxpayers, and students, and their families), these are the people who pay the great bulk of the bills to support the skyrocketing monies being spent by the universities and their allied private interests, such as researchers and administrators, who reap most all the benefits for themselves, and the institutions that pay them.

        And, amid all this corruption, the peoples representatives to the government say nothing. Why? Because those representatives are in on the take, too, benefiting in a whole variety of different ways. This explains why those politician in the Virginia General Assembly have stripped the State Corporation Commission of so much of its independent regulatory oversight over Dominion, among others. And why they say nothing useful or honest about what is going on in the universities.

        We live today in a corrupt system that is rigged to benefit the elite at enormous public expense. This should be no surprise to us. This corruption is the way human societies and their rulers have always worked until America came along and almost uniquely found unique ways to break and dilute that elites’ grip on their nations power, including their own. Hence the astounding rise of the American middle class, unique in history, and its highly unusual ability to control or heavily influence power in American society, which was their own society.

        What has happened now to change the happy state of affairs in America?

        That middle class, and its influence, is falling apart, and dying.


        The American middle class is falling apart under the constant assault of big government and its allies, big business (big crony businesses, and otherwise), and those support and live off those institutions. This includes the ruling professional class who rule or live off those big institutions in the state, such as elite universities, main stream media, big law firms, big health care and infrastructure firms, like utilities.

        We see this great power struggle playing out around us now everyday. It is splintering the entire nation apart, while consolidating power in an ever even smaller group of ruling oligarchs.

        1. Reed Fawell 3rd Avatar
          Reed Fawell 3rd

          These comments are not meant to contradict Acbar’s fine comments above dated September 22, posted at 5:58, this tread’s first comment.

          It is meant instead the reinforce the importance of Acbar’s suggestions as to what is possible if this hearing be conducted to best advantage.

          My above comment is also meant the suggest a restoration of the State Corporation Commission’s former power to fully protect the interests of “ordinary” citizens who must use electricity of live, but who seek no special favors in their use of it at the expense of their fellow citizens.

          It seems that now, based on the overwhelming evidence and commentary on the blog for more than a year, that Virginia’s State Corporation Commission forums, the rules under which they must be conducted now, are too easily tilted unfairly against legitimate interests of the small private rate payer (the general public) to gain advantage for a few who’s primary interest is profit at public expense.

          And that ways must found to restore critical balance to protect all concerned, irrespective of their raw political power in the state, because politics has no legitimate interest in resolving these issues properly before the State Corporation commission.

      2. TooManyTaxes Avatar

        Exactly like I figured. It’s not much different that the Northern Virginia Chamber of Commerce f/k/a Fairfax County Chamber of Commerce. I once raised the issue of the damages done by overweight trucks and the need to charge them more to avoid higher gas taxes on other businesses. The response was my position was anti-business. So much for representing the general business community. Better they drive on crappy roads and pay higher taxes than to reduce the subsidies to the trucking industry.

        Similarly, most chambers of commerce in my neck of the woods support the Outer Beltway despite Maryland’s adamant opposition and the VDOT study that shows only 7-8% of Beltway users coming from Virginia turn north on I-270. The developers want the upper crossing and give more money to the chambers. Ergo we see advocacy that is contrary to the interests of most businesses.

        We need a separate section of the VSCC staff and AG’s office to function as a Consumer Advocate to represent consumers and small businesses. Back in the early 1980s, I help draft a rewrite of Iowa’s regulatory law (representing the telecom industry in Iowa). The new statute included establishment of an Office of Consumer Advocate with the Iowa PUC. While I wound up battling the Office before I moved east, it serves a needed function by challenging both the utility and, as appropriate, the staff and intervenors.

    2. LarrytheG Avatar

      The magic words for the Chamber is “economic development”.

      and for some reason – moving gas over long distances to “economic development” is better than having economic development where the pipeline
      is . Then we have another issue which is – it costs more money to move gas to make electricity than it would cost to make electricity closer to where the gas is – and move the electricity instead.

      1. The economic developers in southeast Virginia look at “economic development” as bringing in big industries. Many of those industries rely on gas for process heat or as a feedstock that electricity cannot provide.

        I am concerned that giving away tax breaks, etc. for industries that rely heavily on gas is not a great long-term investment. Those industries will see the price of gas double or triple over the next 15 years (based on Dominion’s projections). Then what happens?

        But if Southeast Virginia still wants to pursue that route, there are several much less expensive alternatives than the ACP for getting more gas in the area. They are operating on the assumption that the ACP will provide them with cheaper energy, because that is what they have been told. Adding the transportation cost of the ACP (based on published rates) will add a 60-70% premium to the current price of gas. That will not make southeast Virginia an attractive location for any highly gas-dependent business, even if the gas is available.

        Unfortunately, Virginia Natural Gas is already committed to paying the ACP over $2 billion over the next 20 years, regardless of how much of its reserved capacity on the ACP is actually used.

        Increasing energy efficiency in the region would greatly increase economic activity and produce thousands of new jobs. It would also free up more natural gas in the region. Or, in the worst case, VNG could connect to Columbia Gas or Transco that are expanding their capacity much more than what the ACP will provide. Such a connection, on existing rights-of-way would cost a few hundred million for a lifetime of service. Compare that to $2 billion for just 20 years of service.

        The ACP is not a good deal for anyone in Virginia, except the owners of the pipeline.

  7. I have been baffled by the support that business and labor leaders have given to the pipeline and the new energy bill. I think it is because they do not understand (or believe) that the various projects will increase energy costs to families and businesses around the state.

    The utility has been very effective at painting a different picture.

    If the costs of the pipeline get passed through to the ratepayers in the way that Dominion hopes they will, the pipeline is revenue neutral to the utility. They will be just the bill collectors for their parent company that will be the one that makes billions in profits from it.

    All of these policies are being driven by Dominion Energy, not VEPCO. In the last several decades Dominion Energy has gone from getting about 40% of its revenue from regulated subsidiaries to getting 80% of its revenue from regulated sources. They have made a huge bet on their ability to influence the legislative and regulatory process in a way that serves them. And they have been very successful at it.

    This is understandable. Dominion Energy is an unregulated for-profit enterprise. Their executives see that it is their responsibility (and benefit through bonuses) to increase shareholder value. This pushes them to create as much near-term profit as possible.

    As a former utility guy, this concerns me. The basic agreement between utilities and the public says that in return for monopoly power, a utility will be subject to a regulator whose job it is to set fair rates to customers and a fair return to shareholders. This balance has been greatly distorted by legislative action in Virginia. It harms families, businesses, and the state economy right away through higher than necessary energy costs and I believe it will harm the utilities in the long run as the higher prices will cause many customers to use less energy (using energy efficiency and self-generation). This won’t end well for anyone.

    That is why I keep harping on changing the scheme by which our utilities are compensated. As long as they get paid more only if they spend more and put it in the rate base, we will get more of what we are getting now. And the downward spiral will continue.

    We need to change things so that customers have more choices and lower energy costs. But it must be done in a way that keeps the utilities healthy too. They should be able to earn more by providing services that have value to their customers. Like other businesses, if they provide more value, they should get paid more. We don’t reward other businesses just for spending more. Why should we continue to do that for our utilities?

    Utilities usually don’t embrace this right away. They are too set in their ways. The impetus needs to come from the governor and the legislature, who are also supposed to balance the interests of the people and businesses in the state, as well as the interests of our utilities.

    We need financially healthy utilities to help build a modern grid. But our energy companies will not remain healthy in the long-run if they continue to set the interests of their shareholders against the interests of their customers. Such an unbalanced situation cannot last.

    In unregulated businesses, the market provides the balance. If a businesses continues to gouge its customers, it will be replaced by another business that better serves the customers’ interests. There is little opportunity for that in the way we are managing the energy system in Virginia. We must evolve or pay the price.

  8. […] 9-22-18 Bacon’s Rebellion. Dominion Objects to Testimony on Pipeline Cost. […]

  9. LarrytheG Avatar

    I don’t really have a problem with the pipeline per se as a for-profit venture that negotiates with property owners and is held to basic environmental protections and not allowed to compromise them because of the false claim that it’s a critical public necessity – it’s clearly not.

    but it also points up some other things.

    The Mountain Valley Pipeline (MVP) is ALSO portrayed as a public necessity but NOT because it supposedly is needed to generate electricity – combined cycle nor peaker…

    And APPARENTLY – it’s backers believe that as a general purpose pipeline that it IS financially feasible – i.e. they can make a profit selling gas even though they’ll have to amortize the cost of the new pipeline.

    So when you bounce that off of Dominion’s pipeline – one might think that Dominion is also thinking THEIR pipeline is financially feasible with or without selling gas for electricity.

    In another world – you have two competitors who want to sell the same product – transportation of gas to end users.. and apparently the investors of both – each of them – think it’s a worthwhile risk.

    I’m no industry analyst and do not play one on TV but the narrative that there is already plenty of gas and the ACP is “not needed” – would seem to also apply to the builders of the MVP .. so what gives?

    It’s a puzzle!!

    1. It’s not really a puzzle. The owners of the MVP and the ACP had their captive subsidiaries sign 20-year contracts to transport gas on pipelines that the parent companies owned. FERC looked only at these contracts. They performed no independent analysis of whether the pipeline was needed or would be a benefit to its customers, before they approved it.

      The utility subsidiaries expected the state regulators to pass through the cost of these contracts to their ratepayers. Thus the cost and risk of the pipeline projects would be offloaded to families and businesses.

      Only 0.5% of MVP’s capacity is under contract to actual end-users of the gas. Consolidated Edison notified its state regulator that its 12.5% share of the MVP capacity has no value to its customers. Others such as WGL and NextEra either don’t need the capacity or it will be considerably more expensive than other alternatives. The MVP adds a 30% premium to the price of gas just to transport it to the Transco system in search of customers somewhere.

      Both the MVP and the ACP will likely seek out export markets that will pay for higher priced delivered gas. A consultant to Congress and the Department of Energy said exporting gas will increase domestic gas prices.

      Australia is the world’s second largest exporter of LNG (behind Qatar). In the 10 years they have been aggressively exporting, domestic gas prices rose over 300%. Factories that had converted to gas either switched back to coal or closed. Utility bills skyrocketed.

      The Industrial Energy Consumers of America, representing U.S. manufacturers with over $1 trillion in revenues, says that exporting gas will cost us jobs, reduce investments in manufacturing, and cost us all much more in increased energy costs. They say that companies in the energy industry will benefit, but the rest of us will pay much more.

      Owners of the ACP and MVP are asking citizens and businesses to pay more for pipelines they don’t need and to give their pipeline companies permission to seize private property in order to make a private profit that will cost the rest of us more in higher energy prices.

      This entire process has been a series of regulatory failures at both the state and federal level. We the people deserve better.

      We need to design a better system that does not require our energy companies to develop unnecessary projects in order to prosper.

  10. LarrytheG Avatar

    Also.. in terms of “helping” Dominion find ways to remain a profitable enterprise so it can properly operate and maintain a reliable grid…etc..

    the day that battery storage becomes truly cost-effective – it would seem Dominion’s current business model is in trouble as thousands of people will then put solar on their roofs and batteries in their garages.. and dramatically cut their consumption of grid electricity except at peak hours or when multi-day clouds, etc..

    there may be an interim period where utility size battery is cheaper than residential – like it is with solar… perhaps…

    We ARE starting to see some battery storage on some islands – more as a pilot than a 24/7 whole island alternative to using diesel generation.

    Surely – there are other utilities in the US – and the world that are adapting to the technological changes and will make that transition … or .. if not – then it may well be that electricity will revert to a municipal model like water/sewer… – and keep in mind – there are quite a few for-profit water/sewer companies.. like Aqua Virginia…

    It just seems like when batteries become cost effective – it’s not going to save Dominion… it may well be the opposite.

    1. LarrytheG Avatar

      I guess I’m more easily understanding how the ACP was supposed to “work” but not near as clear on how the MVP might “work” – if it is more general purpose transport of gas to “markets” as opposed to the claimed ACP scheme of dedicating that gas for electricity generation.

      I can sorta see Transco amortizing the cost of the MVP like they would other expansions to their system… it would already fit within their existing pricing.

      But if neither of the two pipelines can transport gas competitively with existing pipelines then it would seem that, yes, they’re headed to the coast where they can export it… and yes.. in doing so.. it will essentially link the price of gas domestically with what it is worth exported.

      Of course not a hint of this in their planning docs.. eh?

  11. Here is what you have been asking for:

    “A remote tropical island has catapulted itself headlong into the future by ditching diesel and powering all homes and businesses with the scorching South Pacific sun.”

    “Using more than 5,000 solar panels and 60 Tesla power packs the tiny island of Ta’u in American Samoa is now entirely self-sufficient for its electricity”

    “With cyclone season approaching, when heavy rain and grey skies can be daily occurrences, Malae said he was interested to see how the solar panels held up, but was not worried about maintaining Ta’u’s electricity supply, as the grid could store enough to power the island for three days.”

    This took place back in 2016. Prices are much lower now.

    As I noted, batteries are expected to compete head to head with peakers by 2022 and be cheaper from 2025 onward. I know these are projections that some might distrust. Solar and batteries have not met previous forecasts. Their prices have gone down much faster than projected.

    Nationwide, it is expected that by 2025 residential sited storage will be greater than utility-scale storage. This why we must design a system that keeps utilities healthy by resetting their role and paying them differently.

    “I can’t see a reason why we should ever build a gas peaker again in the U.S. after, say, 2025,” said Shayle Kann, a senior adviser to GTM Research and Wood Mackenzie, speaking at Greentech Media’s Energy Storage Summit. “If you think about how energy storage starts to take over the world, peaking is kind of your first big market.”

    1. LarrytheG Avatar

      Well..we’re on the same wavelength but maybe have different views of how fast it will happen.

      I’m familiar with Ta’u and that article. it’s 17 square miles with about 1000 people and the diesel costs 400K a year… that works out to about $400 a year per person – so I’m doubting they have a 24/7 grid for the whole island. Diesel power usually costs on the order of 30-40 kwh.. twice or three times what we pay on the mainland – easily $300 a month and more… so the numbers are not working.. at least for me and I’ve tried to find out more info and have not been very successful.

      And here’s the clinker: ” “The cost of setup for solar is high and there has been a push-back against that,” he added. “But it is ideal if governments absorb that cost, especially for these remote communities that would otherwise be totally reliant on non-renewable energy sources.”

      hmmm.. so the “govt” is paying not the users? ickadoo

      But that’s okay. It it is a success – it will spread fairly quickly because even cutting down on how much diesel that is imported would be worth it.

      And when that happens – there are many other islands and actually many places on the continents that are “off-grid” even in North America!!!

      And when that happens – what is to keep folks in Virginia from putting solar on the roofs and Tesla in their garages and “sip” power from Dom only when they need it ? And what happens to Dom if that happens? How will we
      keep them “healthy” and on task with a reliable grid?

      I just continue to be a skeptic.. When I see Hawaii or Puerto Rico go big for solar/Tesla .. I’ll start putting salt/pepper on that proverbial hat!!! 😉

  12. “And when that happens – what is to keep folks in Virginia from putting solar on the roofs and Tesla in their garages and “sip” power from Dom only when they need it ? And what happens to Dom if that happens? How will we
    keep them “healthy” and on task with a reliable grid? ”

    What you describe is where much of the nation is headed. That is why nearly 40% of the states no longer pay their utilities to build more generation (through recovery in the rate base). The utilities must operate their new generation as “merchant generators”, meaning new power plants must pay their way in the wholesale energy markets. This removes the incentive for the utility to over-forecast load growth and to build facilities that do not serve the customers. They no longer can use ratepayers’ money to guarantee a profit for new facilities. This makes them much more cautious about building projects that are unlikely to payoff in the long-run.

    If we design it correctly, our new energy system will allow the utilities to earn their keep by doing things that serve the customers, such as developing a modern grid that provides a two-flow of energy and information; developing a grid that is more reliable and resilient, perhaps designed around a network of nested microgrids to keep essential services going during outages and improve overall grid reliability; developing a grid that makes it easy and reliable to incorporate customer-sited generation and storage; developing a grid that creates a platform for the integration of third-party generation and energy services. All these things and more have value to customers and independent service providers. This increases innovation, creates jobs, lowers energy costs, and increases customers’ choices.

    These services have value and can add to the revenue stream for utilities that want to help create a prosperous future for themselves and the rest of Virginia.

  13. […] witness to whom Dominion Energy Virginia had vehemently objected, Gregory Lander of a company called Skipping Stone, had his time on the stand anyway at the State […]

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