Dominion's Curious Power Plan

The North Anna nuclear plant
The North Anna nuclear plant

Peter Galuszka

Dominion Virginia Power is taking a tepid approach towards planning its future generating units, as evidenced by its submission this week of its 2015 integrated resource plan to the State Corporation Commission.

As such, it claims it is in a “transitory” phase that will rely on natural gas as a “stop gap” measures as it waits to see what will happen with proposed U.S. Environmental Protection Agency rules on reducing carbon dioxide emissions.

To that end, it plans on building a new $1.3 billion natural gas plant in the Greensville County area and rely on shifting coal units at Chesterfield Power Station (the state’s largest single air polluter) to gas and also at a few other spots. The new gas plant will generate 1,600 megawatts.

The other news in the submission is that wind is out as far as Dominion is concerned. It has dumped a small prototype project off of Virginia Beach claiming that cost estimates came in at double the original $230 million or so for 12 megawatts of power.

Solar gets more respect – such as adding up to 4,000 of solar-based megawatts for about $4.3 billion.

What’s truly puzzling is that Dominion apparently says that a third nuclear unit at North Anna would run $7.2 billion. It is the first time, I’ve ever seen any figure from them and it seems very much low-balled. The Sierras Club puts its price as higher than $10 billion.

A case in point is Southern Company’s Vogtle plant in Georgia, which is adding two nukes to two existing ones. It has had cost overruns of about $4billion. The early estimates were about $7 billion each for the two reactor units. So, what will North Anna Three really cost?

And, by the way, for all penny-pinching conservatives out there who believe that government handouts are totally wrong, they only give you a fraction of the story. The federal government is putting up $6.5 billion on loan guarantees for the project. This would be on top of the billions over billions of dollars the feds have put into nuke power since the days of the Manhattan Project. One hears much whining on this blog about how it is utterly foolish to subsidize renewables in any way.

A couple of last points.

Dominion is hot-to-trot to build its controversial $5 billion Atlantic Coast Pipeline. Yet the new Greensville gas plant can easily be served by the existing Transco pipeline. If that’s true, why is it so urgent for an entirely new pipeline that will run past in the general area? Dominion insists this is not the case, but I can’t get the idea out of my head that ACP gas is for exports. If so, why are we mucking up bucolic Nelson County so some multi-nationals can scarf up some bucks or Euros or yuan or yen so Mumbai had have more power?

Also, I haven’t gone through the Dominion report line by line, but it seems that it is devoid of any emotional hysteria that one often sees from opponents of renewable power.

If so, then why was it so absolutely urgent in the last General Assembly for Dominion to ram through a bill that relieves them from SCC audits for five years? I still cannot figure what that was all about.

Industrial groups, supported by Dominion, made a boogy man of the EPA’s Clean Power Plan, which, in truth, is just a draft. We should know later this year what the real rules will be.

Where’s the hysteria now? And remember, folks, when you read this, remember that I am free of any monetary sponsorship by Dominion.

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  1. LarrytheG Avatar

    Peter sure knows how to get to issues in a different way than Jim does. It’s a complementary perspective that this blog benefits from.

    I sure hope we’re not looking at a “fool me once, fool me twice” deal coming from Dominion.

    We need two breakthroughs to happen while we are using gas as a “bridge”:

    1. solar – both panels and storage.

    2. nukes – they need to be smaller and not disasters waiting to happen either from natural disasters or terrorists.

    I think both will happen.. and I’m perfectly fine with an all-nuclear world if we can get them beyond the point of being ticking time bombs.

    I’m also fine with solar – and solar has a huge advantaged in that it is not a single point failure.

    And solar is going to go forward no matter what Dominion does about it’s “variability”. One breakthrough in storage technology is going to rock Dominon’s world and in turn all of it’s ratepayers and at that point – we may
    see Dominion going to the GA and asking that every Virginia pay for a stranded investment fee if you are are the grid matter how little you use.

    The grid is going to be turned into a quivering mess if solar propagates widely – so Dominion’s job is not to deny – but accept – that eventual reality…and get down to work… on dealing with it.

  2. Steve Haner Avatar
    Steve Haner

    Yes, this is the first time a cost estimate on North Anna 3 has been published. The information about it last year’s IRP was redacted. I cannot argue against skepticism about that price, but it is also true that the projects now underway are “first in class” and the first in 30 years and thus future reactors built with similar designs should benefit from lessons learned. But if and when Dominion applies to build it, cost will be a major focus of the battle.

    As to the pipeline, I don’t think Dominion has ever argued it needed the Atlantic Coast Pipeline for its current generation. Its market it further south, except for the spur to Hampton Roads. I do think there is demand within the southeastern states that it will serve, but the supply-demand process for that product is a worldwide process. If American gas from the Marcellus region is eventually being shipped around the world, it will have a positive price impact for everybody.

    Larry — ditto on the smaller nukes, the Small Modular Reactors. Still a very promising idea.

    I never shared the hysteria about the EPA Clean Power Plan. I believe the General Assembly should have waited. I suspect there will be a cost impact, higher than I would like but far lower than Dominion allowed everybody to think six months ago.

    1. LarrytheG Avatar

      Steve – is a gas plant planned in Hampton?

  3. Peter Galuszka Avatar
    Peter Galuszka

    I think one of the partners of the ACP has a line going to the Portsmouth or Chesapeake area (can’t remember which ) on the Elizabeth River. They have retail-business customers there. But wouldn’t it make for a very nice LNG export facility – that is — if the natural gas low price craze holds?

    Let’s not forget that zillion years ago, Vepco, now Dominion, imported a lot of cheap Middle Eastern oil for its generating plants and then had to switch to coal pronto because of the Yom Kippur War.

    Ditto 1979. 100 coal ships were at anchor at Hampton Roads to load coal because the Iranian crisis had jumped oil prices. The Europeans sudddenyl needed coal.

    So what’s the next deal? Is America’s fracking gas bonanza hold? The comments on this blog suggest it will, but check out Texas or Oklahoma and see how many companies have gone bust.

    If one deals with the energy industry, one realizes how it turns on a dime.

    There is always a big lag in what is really happening and popular perception. But one thing is damned sure, some of our guys really think they have the Confederacy straight!

    In other words, we’re not talking 15 months behind the curve. We’re talking 150 YEARS behind the curve!

    1. LarrytheG Avatar

      Thanks Peter –

      I still do not think energy companies should have the right of eminent domain to export… natural resources …

      exporting will not only reduce the length of time we have that resource available but it will inevitably make it more expensive …

      but if they are closing down the coal plant in Hampton – and they are apparently going to re-route base load from Surry.. how will they handle peak loads? or is there already something there for peak loads?

  4. Steve Haner Avatar
    Steve Haner

    Red Herring Alert. No one is putting an LNG export facility in highly populated Hampton Roads. That spur has plenty of industrial and residential users to use the new supply. I don’t see the Navy accepting LNG tankers into the waters around Norfolk Navy Base. There are much better locations. But I still don’t think export is the goal of that particular pipeline. Another power plant in Hampton Roads might be.

    The other, less discussed pipeline proposed for Virginia will be open to industrial and residential users all along its route and there are parts of rural VA that will love having access to natural gas for the first time ever.

    I’m not an expert on Dominion’s plans (still need to skim this new one) but the power line from Surry nuclear plant to the Peninsula will cover lost load from the closed Yorktown plant. They have a plan. Trust me, they know (by now) EXACTLY what EPA is going to do and how they can meet future demand.

    1. Reed Fawell 3rd Avatar
      Reed Fawell 3rd

      Thanks for your insights. It’s good to have someone aboard who has a clear and logical head on relative to what he is talking about.

    2. LarrytheG Avatar

      You know , my perception of Frack gas is that they are essentially scavenging out the residual gas after having already extracted the easily accessible and it strikes me as not a permanent and long lasting supply and on a per well basis – you get the last bit and then have to move to another location to get the last bit…etc…

      when I try to research using key words like “proven reserves” – there is variability from different folks including EIA and estimates seem to vary from 12 years to 100 years.

      But apparently – Dominion and others believe there is enough to justify billions for a pipeline and billions more for several gas-fired plants.

      But that’s what is worrisome about potential plans to export it.

      when it’s gone – it will be gone and what is the power generation plan – when it is gone?

      Will, in our lifetime – will we see something similar to what happened when the US (and Alaska) conventional oil wells played out?

      The presumption must be that by the time it plays out – we will have discovered , and made practical and affordable – some follow-on source of energy…. and I guess NUKEs are the default fall-back if nothing else develops.

      The problem is NUKEs today – are like coal – they cannot ramp up or down in minutes as gas-fired plants can and today’s Nukes cannot coexist on the same grid with fluctuating wind/solar inputs.

      so the future looks a little fuzzy from this guys uninformed perspective.

      anyone from Jim to Peter to others willing to take this issue on and write about it? Perhaps Dominion or someone fairly knowledgeable from Dominion might be willing to pen a piece.

      My continuing belief is that dialogue has value – for all of us – if it results in more of us being better informed – it tamps down the controversies and smooths out the rants from agenda-driven folk…

      Most folks just want affordable power and there is certainly no benefit in demonizing Dominion who has – for decades – provided us with ample and affordable power – without brownouts and rolling blackouts and to Dominion’s credit – they have not made that specter a central part of their public dialogue .

      I still worry that with 10,000 islands in the world – most without native fossil fuels , and prices near 50 cents a killowatt hour that there is more than sufficient motivation to continue pursuit of more efficient appliances as well as solar and power storage technologies.

      One only needs to ask – what happens to Dominion’s current strategy if an affordable storage module that can carry a home overnight is developed – in the next few years. Dominion (and ratepayers) will face something far more serious than “variability” of solar and wind if dramatically less grid power is consumed …needed….

    3. LifeOnTheFallLine Avatar

      Just like the Navy would put a stop to residencies being built in the flight paths of its air station to prevent jets from crashing into apartment buildings…

      1. LarrytheG Avatar

        sliding off the topic .. but if you want to see real functionality – go to Stafford who built a “reliever” airport because 90% federal funding was available..

        fast forward 10 years to where developers are proposing subdivisions in and around the airport – and cries of taking away property owners rights are bandied about.

        A committee was formed to draw lines… no one likes the lines.. so it continues.

  5. LarrytheG Avatar

    Let me add on a couple additional –

    1. disruptive technologies have savaged long-standing business models in the age of computerization and big data – are we so sure that the electric power is really that immune?

    2. Companies have survived – like IBM and HP and others by moving into services… instead of making computers – they now sell “systems” that utilize not only computers and hardware but engineering and integrating.

    Is there some reason why Dominion cannot do something similar by actually getting into the business of similar services for more than just supplying energy but the use of it?

    It seems that a business model that is basically based on how much electricity you sell – in an age of rapidly evolving technologies is more at risk for lowering demand than profitability from increasing demand.

    Is Per Capita Electricity Use Permanently Flat in the U.S.?

    Energy-Pinching Americans Pose Threat to Power Grid
    Sluggish Sales Could Deprive Utilities of Revenues to Maintain Vast Network of Generating Plants and High-Voltage Lines


  6. Peter Galuszka Avatar
    Peter Galuszka

    Did i say an lng export facility would necessarily be on the elizabeth river? The acp goes all the way to north carolina

    And reed, smartass, have you ever been on the grounds of an lng facility? I have.

  7. Peter Galuszka Avatar
    Peter Galuszka

    Whoops i did say the elizabeth river. Sorry my bad. But there could be sites in nc

  8. Peter Galuszka Avatar
    Peter Galuszka

    One more thing. There was a very serious proposal to put an oil refinery on the elizabeth river in the 1970s just a few miles from the naval base

    1. LarrytheG Avatar

      I’d be strongly in favor of the pipeline if Dominion committed to never exporting .. that would reassure quite a few of us as to their intentions.

      1. TooManyTaxes Avatar

        I agree there should be no power of eminent domain in the event the pipeline is used for non-utility purposes – e.g., exporting LNG.

        1. LarrytheG Avatar

          that ought to be the primary strategy of the opponents…

          and force Dominion to make the promise or agree to willing seller-willing buyer acquisitions.

          I actually think people forget the principles behind these things –

          Certificate of Public Convenience and Necessity

          as well as the Public Accommodation Laws for that matter.

          they not only don’t remember or never knew – they don’t understand the concept that underpins them.

  9. Steve Haner Avatar
    Steve Haner

    First, it didn’t happen, did it? Second, an oil refinery fire down on the Elizabeth River is a very different thing than an LNG tanker blowing up in the channel a half mile from the piers where the Navy parks all those ships. But I agree, you were only HINTING that an LNG terminal might be the plan for that gas line spur into Hampton Roads.

    Larry, Dominion (the power company, at least) doesn’t make money based on how much electricity it sells. It makes money based on how much capital it has invested (equity) in generation and transmission assets. But I agree that the business model is at risk for some major changes due to technology, and the first big disruptor will be better battery storage technology. If the utility owns and operates the storage facilities, of course, they still make money. If everybody has one in their back yard, hooked up to a turbine or a solar panel, however, the model starts to fail.

  10. LarrytheG Avatar

    re: ” Dominion (the power company, at least) doesn’t make money based on how much electricity it sells. It makes money based on how much capital it has invested (equity) in generation and transmission assets.”

    ummm…. what good is investment if there is no return on it? Ultimately doesn’t Dominion have to take in enough revenue to pay for capital investment as well as return to shareholders their money plus a profit?

    how do they do that if they sell less electricity than they based their capital facility projections on?

    isn’t this classically how industries are affected by disruptive technology?

  11. Peter Galuszka Avatar
    Peter Galuszka

    I covered the refinery matter back in the day. I don’t recall the Navy ever weighing in against it. The Army did, however. The local district chief, a colonel with the Corps of Engineers that had to decide the permit, bravely complained about interference by Virginia politicians in favor of the project.

  12. John B Avatar

    Peter, VEPCO is still VEPCO: see 10K “000-55337 VIRGINIA ELECTRIC AND POWER COMPANY 54-0418825”.

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