Energy Bacon Bits: VNG Case, LED, APCo’s Grid

LED Street Lights

The State Corporation Commission has approved a challenged natural gas contract between Virginia Natural Gas and an affiliated asset management firm, but the next request for proposal process will start this coming summer with substantially greater oversight.  The March 15 opinion is here.

As reported on Bacon’s Rebellion a few weeks ago, losing bidders for the contract to serve the Hampton Roads region gas distributor had complained that the RFP process they went through was not fair, a complaint that drew some support from an SCC hearing examiner.  VNG’s existing contract with Sequent Energy Management was about to run out, so the hearing examiner suggested a one-year approval followed by a re-do.   

The commission granted two years, but that will allow more than a year for the SCC itself to review the next RFP process.  In the meantime, the order includes a long list of requirements – 26 in all – demanding information and issuing directives to VNG and Sequent over how the work will proceed.

Virginia Natural Gas and Sequent are both owned by Southern Company Gas, and because they are affiliates, the SCC must approve any contractual relationship to make sure it is fair to the utility’s customers.  After a long sole source relationship between the companies, it was the SCC which ordered the first RFP process for this latest contract period.

Sequent sells the excess capacity VNG has under contract with the pipeline companies, and the profits on those transactions should flow to VNG ratepayers.  Among those challenging this new contract were large industrial customers, and when they raise a red flag, other consumers should pay attention.  Money is on the table.

Energy Efficiency Without Mandates, Incentives or Strife?

Dominion Energy Virginia has petitioned the SCC for creation of a new rate schedule to provide outdoor light fixtures for homes, apartments, clubhouses, churches and businesses using LED (light emitting diode) bulbs instead of the HPS (high pressure sodium) vapor lighting provided in its current program.  The program for HPS lighting would be closed to new customers.

The short petition includes an estimate that if every existing outdoor lighting customer using older technology converted to LED they would save a combined $2.8 to $4.2 million annually.  It’s not a large program, serving a limited number of customers, but the energy and maintenance savings are significant with the new lamps.  The HPS lamps are getting harder and harder to obtain, Dominion reports.

A cursory review shows no indication that the company is seeking any payment for lost revenue on this move toward energy efficiency, nor it is seeking to induce customers to sign up with cash incentive payments.  It is just marketplace forces moving everybody to something better and cheaper.

Appalachian Power’s Grid Transformation Also On Hold

While I like to call it the Ratepayer Bill Transformation Act, that oft-mentioned 2018 Act of Assembly did require the state’s two major electric utilities to submit plans for enhancements and investments in their distribution networks, incorporating the latest technology.

The smaller utility, Appalachian Power, got its plan in just under the wire in December, but has now received SCC permission to drop it and file again.  It has read what the SCC decided about Dominion Virginia Energy’s plan, approving some of the security and communication elements but rejecting most of what it sought to do.  In light of that, the APCo petition states:

“A future Petition will be better aligned with the standards established in the Dominion Order, and the Company will be better prepared to respond to the types of inquiries that it has received from Staff and respondents through discovery. That is, allowing the Company to withdraw this Petition and re-file at a future date will allow for a better-quality petition, enabling a more efficient review by Staff and respondents, which will in turn create a more robust record upon which the Commission could base its decision on such petition.”

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14 responses to “Energy Bacon Bits: VNG Case, LED, APCo’s Grid

  1. re: ” … Sequent sells the excess capacity VNG has under contract with the pipeline companies, ”

    I thought there was a shortage of natural gas and that’s part of the justification for the ACP… going so far east past the gas-turbine electric generation plants.

    but also curious – who is it that would be buying the “excess” capacity from Sequent … you’d think if there was existing demand – there would be no excess and in fact, supply and demand forces would be in play.

  2. re: ” Dominion Energy Virginia has petitioned the SCC for creation of a new rate schedule to provide outdoor light fixtures for homes, apartments, clubhouses, churches and businesses using LED (light emitting diode) bulbs instead of the HPS (high pressure sodium) vapor lighting provided in its current program. ”

    I’m totally AGOG! There has to be a government approval process to go to more efficient bulbs?

    YOW!

    And Bacon goes on and on about useless “licensing” rules … and the current rules basically have a formal rate structure for the TYPE of lighting bulb?

    Good LORD! Now I’m on the side of the GOP that wants to get the SCC… we’re paying real taxpayer dollars for these folks to push this paper… with real employees being paid real money!!!

    WHERE is all that “conservative” outrage!

  3. You need to be on Blue Virginia, Larry. Your depth of understanding and partisan reactions would fit better there….

    VNG has to have enough capacity under contract on the upstream pipeline to serve its highest possible demand days. On other days, it has excess capacity under contract which can be sold to another user….Big industrial users for example, who intervened in the case, might want to buy outside VNG. The supply of gas commodity and supply of pipeline space are two different things.

    DEV being a regulated MONOPOLY has to go to the SCC for approval when it creates one new rate schedule and closes another rate schedule. Absent oversight it could charge monopoly prices. There is a rate schedule for mercury vapor bulbs, for HPS bulbs and now there will be one for LED bulbs, which then will be the only choice for new customers. If five other companies could do this, competition would regulate the market. But it’s a MONOPOLY. So a decision to regulate has bipartisan support.

  4. Steve –

    Has the balance of Virginia’s state government gone into hiding?

  5. So is the relationship between Dom and it’s ACP subsidiary also coming to be treated like the Virginia Natural Gas and Sequent relationship?

    On the “bipartisan” Monopoly – that seems to include all things right down to the light bulbs.

    Come on.. guy… that’s nuts – and yes.. talk about waste in Govt. We’re paying people to create paper, store records, conduct hearings, etc over whether or not Dominion can replace bulbs?

    Jesus H. KEEERISTT – that’s not a “Blue” Virginia issue. If ANYTHING, you’d think it would be a prime example of what most Conservatives RAIL about!!!

    Just imagine if VDOT had to do a public process to replace traffic light bulb with LEDs… how ridiculous would that be? They’d be the laughing stock of a whole bunch of people and the rightful target of folks on the right pointing out why govt is sloth and waste!

    The ONLY REASON this foolishness goes on with Dom and the SCC is that it’s out of the sight of the public. Like I said – if this was a VDOT issue – all heck would break loose in the media but down in the dark bowels of the SCC – this is gravy for the worker bees, LORD!

  6. The SCC does not regulate interstate pipelines, Larry. That’s the job of the Federal Energy Regulatory Commission.

    Further, you really should try reading these petitions before you start commenting on them. The petitions establish the RATE at which DVP can sell POWER to unmetered outside lights. The current rate schedule applies to sodium vapor lighting only; the new petition sets a rate at which DVP will sell to customers using LEDs. The new petition requests that the Commission close the sodium vapor schedule so that no new customers will be able to get serviceto this outdated source of lighting. DVP does not sell or install the bulbs.

    Plus, it’s a public filing and hardly “out of sight of the public” or “down in the bowels of the SCC.” If anyone thinks the proposed rate is unfair, they can let the Commission know.

    • The SCC does not regulate interstate pipelines – so what is the SCC doing with VNG ?

      If Dom is going to buy gas from providers – is it the business of the SCC to regulate who they buy it from and at what price?

      In terms of the sodium bulbs – I’d ask WHY does it matter what kind of bulbs if Dom does not provide them? Why are we deciding the price of power based on what is being powered?

      If I decide to use LED lights in my house, should that entitle me to a different electric rate?

      And finally – yes – the problem here is that the questions I’ve asked above are ones that you would expect from the public and no the public should not have to go read SCC filings to understand these issues. That’s how you don’t get real “transparency?. You provide the info but you do so in a tortured and inconvenient form that discourages all but those who make their living playing in those swamps.

      I think the SCC was created for an earlier time and world and that has changed and people are entitled to plain language explanations of how the SCC “works”. The longer we do not do that – the more we have what amounts to stealth-like actions by various players in these issues.

      Years ago, it might have made sense for Dominion to have a separate rate for outside lighting that is premised on what kind of bulb is used. Lord! how much sense does that make today? A special rate depending on what kind of light bulb? geeze…

      • VNG is a gas local distribution company, not a pipeline. LDCs are regulated by state commissions.

        The SCC does not dictate who DVP purchases gas from, but it does regulate what they are able to charge their customers for this gas.

        You can use LED lights in your house; you’ll still pay the residential rate for that metered electricity, but you may lower your bill by using less electricity for those bulbs. The tariff that Steve reported about is for sales to UNMETERED OUTSIDE LIGHTING FIXTURES. See the difference here?

        Keep asking and I’ll try to keep answering. I’ll try to use plain words.

  7. The SCC does not regulate interstate pipelines, Larry. That’s the job of the Federal Energy Regulatory Commission.

    Further, you really should try reading these petitions before you start commenting on them. The petitions establish the RATE at which DVP can sell POWER to unmetered outside lights. The current rate schedule applies to sodium vapor lighting only; the new petition sets a rate at which DVP will sell to customers using LEDs. The new petition requests that the Commission close the sodium vapor schedule so that no new customers will be able to get serviceto this outdated source of lighting. DVP does not sell or install the bulbs.

    Plus, it’s a public filing and hardly “out of sight of the public” or “down in the bowels of the SCC.” If anyone thinks the proposed rate is unfair, they can let the Commission know.

    • I realize the SCC does not regulate pipelines. I was asking about the gas and in particular the gas at issue with VNG and asking if gas coming from the ACP would be also under the purview of the SCC in terms of it’s cost.

      The “filings”of the SCC are deep in the weeds for the average person.

      “public” does not make them readable or understandable from a lay persons perspective.

      The folks who read and understand the SCC processes are not ordinary citizens.. it’s a totally different world – and we easily get that perspective here from reading Steve’s tomes.

      Not one person in a 100 would understand the issue with Dom and the Sodium Bulbs.. it makes zero sense in the modern world. It’s an artifact of an earlier time and earlier thinking about how Dom’s monopoly should work.

      sorry – I’m just not buying the idea that average people can understand the SCC – it’s uber inside baseball.

      • Well, you do have a point–the regulation of utilities IS a complicated business–that’s why governments across the world established regulatory commissions. The integrated electric grid has been called the world’s most complicated machine. Utilities have special accounting and are subject to complex tax and environmental laws and regulations. Commissions even in “deregulated” states employ engineers, economists, accountants and attorneys dedicated to this work.

        But this work (at the regulatory commission level) is conducted in open proceedings. The process is open to all. You can come down to Richmond and watch any hearing you want. Sometimes proprietary information is presented and the general public may have to leave the courtroom, but all parties to the case remain to hear and question it. It ain’t like the drafting of legislation, where the guy with the biggest bankroll gets the most access….

  8. Sorry for the double post; the editing process snagged on me.

  9. At some time, the SCC might have to deal with the ACP issue.

    Virginia Power Energy Services is a subsidiary of VEPCO (Dominion Energy Virginia) that handles all of the contracts for pipeline capacity and purchases of gas for the utility and others. This is similar to the relationship between the Southern Company affiliates.

    Based on published rates, the cost of the contract that VPSE signed with the ACP will cost more than $4 billion over the 20-year term of the contract.

    DEV does not need any of that capacity. All of its combined cycle units are served by long-term contracts with existing pipelines that transport gas at a fraction of the price of the ACP. Possible new peaking units are projected late in the 2020s. If built, they will likely be located near the demand centers which are served by existing pipelines.

    So Dominion does not need the ACP capacity. The published rate can be increased shortly after commercial operation. Current estimates to finish the pipeline show at least a 50% increase in cost.

    Dominion knows how expensive this pipeline is. They have avoided putting its cost into any document filed with the SCC. In the latest update to the IRP, Dominion used Transco’s transportation price, rather than put the price of transportation using the ACP on the record.

    At most, just 20% of the ACP capacity would be used by local gas distribution companies, until at least 2025 or later when the first new power plant is proposed in North Carolina. Duke’s forecasts are overinflated and no new unit has been approved by regulators.

    Dominion told FERC that all of Duke Energy’s reservation on the ACP could be supplied by Transco (nearly 60% of the ACP capacity).

    There is no evidence that the ACP will have value that justifies the $20 billion that utilities in VA and NC are on the hook for to the ACP over the next 20 years. The contracts must be paid in full regardless of how much of the reserved capacity is used.

    The SCC will definitely have to deal with the VPSE/VEPCO issue if the pipeline is completed as proposed and Dominion requests that some or all of the contract is passed through to ratepayers.

  10. Not only will they have the issue but the average person in Virginia will be largely clueless as to the issue itself… and even if they went to the SCC site to “read” about it – the mother-lode of legal and regulatory jargon would not help them understand the issue or help them understand how they could participate in the process. It’s all inside baseball among folks who specialize in that esoteric world.

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