New Virginia Battleground in War on Gas

The northern part of the Header Improvement Project. Source: VNG Application at SCC. You can see the full project map here.

By Steve Haner

First published this morning in the Fredericksburg Free Lance-Star.

To the modern environmental movement, natural gas is the Devil’s own breath. It must be opposed in every form on every front.

This explains the existential battle being fought over what would otherwise be considered fairly minor capital enhancements to an existing gas pipeline connecting Northern Virginia and Hampton Roads. Virginia Natural Gas is seeking to increase the capacity of that line with a 6-mile extension to connect to the Transco pipeline near Quantico.

Those six miles are the only new section of pipeline in the Header Improvement Project. Elsewhere, the existing pipeline will see three miles of parallel pipe added to increase capacity in Fauquier County and 14 miles more north and east of Richmond. Three compressor stations are also proposed, one each at the northern and southern ends and one in the middle of the route near Ladysmith. The whole project is priced in at about $345 million.

The objections display hypocrisy. Opponents of the proposed multi-billion dollar Atlantic Coast and Mountain Valley natural gas pipelines have often pointed to the actual or potential capacity of the state’s existing lines. Those are sufficient for Virginia’s needs, they say. The minor proposed improvements strengthen that argument, and logically should be embraced by those opposed to the mega-projects to the south.

Yet VNG’s proposal is drawing the same level of heated opposition as the major projects, with their hundreds of miles of new construction. Even a six-mile extension of an old pipeline is a path to perdition.

Planned parallels to existing VNG pipeline northeast of Richmond. Source: SCC

One reason, of course, is that some of the new capacity is proposed to serve a new natural gas electricity plant planned for Charles City County, just east of Richmond. The merchant generator, not owned by Dominion Energy Virginia, will sell power into the regional electricity market. That, of course, would put it in competition with Dominion’s hugely expensive electricity from off-shore wind and far-less reliable electricity from solar panels.

The dispute sparked a May 11 letter to the State Corporation Commission, which is considering the pipeline expansion application, from a dozen virtue-signaling Democratic state legislators, complaining of “inherent risk to human health, the environment, and ratepayers.” They cite fears that with the project in place, seas will rise, droughts will increase, heavy rains will surge (no contradiction noted) and fisheries will disappear.

Their silliest complaint? Because of COVID-19, there is now too much economic uncertainty, they write. This would be the economic uncertainty caused by the panicked economic lockdown, an economic calamity which they want continued.

The usual suspects are in the case as participants, citing similar concerns: The Southern Environmental Law Center, Sierra Club, Chesapeake Climate Action Network, and the Chesapeake Bay Foundation. Governor Ralph Northam’s Department of Environmental Quality has also weighed in with a series of demands it wants the SCC to impose on Virginia Natural Gas. There appear to be more than 1,000 public comments already on the record, in support and opposition.

Far too many electricity generation assets are held by monopoly utilities. Environmental activists want the maximum opportunity for private individuals or entities to make their own renewable energy, for their own use or for sale.  Agreed. Yet, the idea that private enterprise would move forward with an independent fossil fuel plant on the same basis, undeterred by the new carbon taxes the General Assembly has approved, appalls them. This is more hypocrisy.

The real problem here is the key role natural gas will and must play in Virginia’s energy future, whether the environmental purists can accept it or not. The same people exploded earlier this month when Dominion Energy Virginia filed an integrated resource plan which stated the obvious: Wind and solar generation will not power our economy by themselves, ever. Dominion also needs to keep its nuclear and natural gas fleets running into the foreseeable future or must import such power from some other state.

Rational Virginians need to cheer that admission from the utility unless they relish periods of cold and dark in their future. The environmental movement, according to Michael Moore’s latest film “Planet of the Humans,” is funded these days by the investors behind the wind and solar industries. They must fight the gas alternative to the bitter end. The only way to make wind and solar truly viable choices is to denigrate and shut down the cheaper and better alternatives.

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30 responses to “New Virginia Battleground in War on Gas

  1. In related news, Dominion’s two offshore wind test turbines are in the process of being transported here, and will be installed in May or June. Should operational by year end 2020. According to the article, this is just a stepping stone to the offshore wind “empire” Dominion plans for Virginia. Not sure whats going on with the NJ and NY offshore projects.

  2. Truly dispiriting. The Virginia environmental movement simply opposes fossil fuels as an energy source under any and all circumstances. There is no compromise with these people.

    I have always assumed that the environmentalists were motivated by sincere, if misguided, motives. I have not watched the Moore movie, and I don’t trust him to provide an honest presentation of the facts, but I suppose I’ll have to break down and watch “Planet of the Humans” to see if there is any substance to the idea that the people who are funding the anti-fossil fuel movement are heavily invested in wind and solar.

    • You should watch Planet of the Humans, but I would say the main theme is that the so-called green technology is not really greener. It almost goes without saying that renewable advocates, especially those hoping to profit from the business aspects/stocks/etc, are among the more vocal opponents of fossil fuels. Ethanol lobby for example.

      The hidden “trick” of the movie, in my mind, I have always contended much of the fight is not actually about climate change. US liberals have extreme hate for the US fossil fuel industry will no longer tolerate its existence, in any case.

      • “US liberals have extreme hate for the US fossil fuel industry will no longer tolerate its existence, in any case.”

        Truer words were never spoken. This “extreme hate” has continue unabated since the early 1970s. I know this from deep personal experience, in part because I am a serious environmentalist and always have been.

  3. Excellent article. BR at its best. Thanks.

  4. It’s an interesting case, and deserves a real story. The SCC staff has raised concerns about the economics if that big Charles City County plant does not materialize, and there is also a second one planned with different investors. But the new source of supply would be of value to all customers served by that utility (disclaimer, including the shipyard). I listened briefly to a hearing on it last week, only to hear an opposing lawyer ask a utility witness if the project is really needed given the coming Atlantic Coast Pipeline! Seriously! Shameless.

    FYI here’s Virginia Mercury’s take, written after but posted before this…https://www.virginiamercury.com/2020/05/19/with-new-energy-regime-only-months-away-regulators-grapple-with-gas-expansion-proposal/

  5. @James A. Bacon; I completely agree with TBill. The Planet of the Humans is a very important piece to observe. It is multifaceted and provides an important insight into a splinter of the green movement. I could rant on it for quite a bit of text, but that would be defeating. Besides, we all know that nuclear power is the optimum solution anyway… 🙂

  6. You actually listened to a hearing and did real reporting and fact-finding rather than watch twitter feeds? God Bless You!

  7. Don’t get this graph:”
    The merchant generator, not owned by Dominion Energy Virginia, will sell power into the regional electricity market. That, of course, would put it in competition with Dominion’s hugely expensive electricity from off-shore wind and far-less reliable electricity from solar panels.”

    Ok, sure, there could be some competition from offshore, but wouldn’t there also be competition from nukes,hydro and so on? Why single out Dominion’s “hugely expensive” renewables? North Carolina has lots more renewable solar as well. Wouldn’t they be able to compete regionally, too? This argument could be much too narrowly focussed,.

  8. I would not classify the opponents as THE “environmental movement”. These folks are clearly on the fringe and it’s wrong to tar all environmentalists with this.

    Here’s the thing – we’re not likely to burn more gas that electricity needed – minus the other generation, nukes, solar, wind.

    If we use less and less electricity – we’ll burn less and less gas – no matter how many pipelines are built.

    I too would question the economics of it though… If you’re not likely to sell more gas – then how do you pay for it?

  9. Steve,
    You are a former journalist and a respected voice in Virginia. Unfortunately, your reporting was not completely accurate.

    The Virginia Natural Gas (VNG) project requires 24.1 miles of new 30-inch diameter pipeline rather than just the 6-mile extension that you reference. Later in your article you reference the other segments, but make it sound like the new construction on new right-of-way required for these segments is somehow considerably different than the 6-mile connection to Transco.

    The arguments against the VNG project are very similar to the arguments against the Atlantic Coast Pipeline. In my experience as an executive for electric and gas utilities in other states, the permitting process for a new project begins with proof of the need for it. The VNG project fails in this regard, just as the Atlantic Coast Pipeline (ACP) has failed to show that it is needed.

    Virginia Natural Gas initiated the project when a privately-owned power plant project, C4GT, requested service for its proposed project in Charles City County. This plant was approved by the SCC in May, 2017. It has been unable to receive the financing it needs to move forward and requested an extension of its SCC approval. C4GT recently asked VNG for a delay until the end of 2020 to obtain its financing.

    I have asked the SCC to suspend its review process of the VNG pipeline project until the end of the year when C4GT can prove whether it will be able to build its long-delayed project. It does not make sense for VNG to spend hundreds of millions of dollars for a pipeline designed for a customer that might not exist.

    C4GT is facing significant headwinds. Electricity usage has dropped considerably as a result of the economic shutdown due to Covid-19 and might take many years to recover. Electricity demand dropped during the last recession, rose somewhat as the economy recovered but stayed flat for a decade while the economy roared forward. C4GT does not make a guaranteed profit as Dominion’s generating plants do. They have to compete in a marketplace that will have 35% excess generating capacity in 2023 growing to a 60% surplus by 2027. The C4GT project can choose not to go into service or retire at any time, leaving VNG and its customers holding the bag for a significant investment.

    VNG has attracted other potential customers, but none have proven their need for it either.

    Dominion Energy Virginia, through their subsidiary VPSE, has also requested service from VNG. This is puzzling because Dominion just petitioned the SCC to avoid discussing new gas-fired plants in its new 15-year plan because it felt that developing new gas-fired units in Virginia was “no longer viable.” A new generating plant would be the only reason that Dominion might need the VNG pipeline. The SCC ruled last year that Dominion has sufficient long-term contracts with existing pipelines to serve its current generating fleet.

    Dominion has a 20-year contract with the ACP to reserve capacity far in excess of what it intends to reserve from VNG. Based on current costs for the ACP, the utility will be required to pay more than $6 billion over 20 years to the ACP, regardless of how much of the reserved capacity is actually used. Why should it pay VNG for more capacity when the utility has far more than it needs?

    There is no reason for VNG to invest in a new pipeline to serve Dominion until a new power plant has been approved by the SCC that would require service from VNG.

    The portions of the new VNG pipeline reserved by Columbia Gas and VNG itself are also unsubstantiated. VNG has also reserved a significant amount of capacity from the ACP, which is scheduled to be in service before the VNG pipeline. It was never shown why VNG needed the amount from the ACP. Why does it need more?

    VNG proposed a 70-year financial life for its new pipeline. But the Virginia Clean Energy Act requires all of Dominion’s carbon-emitting power plants to close down by the end of 2045. C4GT would be required to close by 2050. The primary paying customers for the VNG pipeline would be gone 23-28 years after it began operation. The SCC calculated that after the first 20-year agreements have elapsed, 43% of the pipeline would remain unpaid. Who pays for it then? Columbia Gas and VNG don’t have enough usage to sustain it.

    Do you see why people in Virginia are upset about this? The project will disrupt wetlands, perhaps endangered species, conservation areas, and a scenic stretch of river. New compressor additions that can emit over 70 different chemicals associated with a variety of health effects will expose children in a school across from one, or those in a nearby park, or many close by in an environmental justice community surrounding the Gidley compressor station in Chesapeake.

    All of this disruption would be caused by another pipeline company trying to add to their profits by building a project based on “pipe dreams” rather than demonstrated demand. Is it so difficult to ask VNG to prove that its potential customers are fully approved to construct their projects before rushing forth to build a pipeline that could prove hazardous, environmentally and financially?

    • Tom, I had you most in mind when I cited people who have argued against the ACP and MVP because of the existing infrastructure, and now arguing against any enhancements of the existing infrastructure. I do not think it intellectually honest. You just want it all gone, for whatever reason you can cite, because you think the CO2 is basically poison. The war on coal being over, the war on gas has begun.

  10. Wow, Steve. I didn’t expect that.

    I have been entirely consistent for decades saying that energy projects should not be certified by regulators until they can prove that the project is needed. This is written into all regulators’ requirements. It is just not always followed, as in the case of FERC.

    Please show me how the C4GT plant has made a valid request for service when it does not have the financial backing to proceed. The company that is behind some of the financing and is the developer of the Chickahominy plant located one mile away from the C4GT project does not even list its plant on the backlog of projects for financial reporting.

    An investor would be foolish to put up a billion dollars to build a merchant generator in our current uncertain environment. Even though FERC’s ruling has caused PJM to tilt the capacity auction greatly in favor of gas-fired plants.

    Can you show me the permit that Dominion has for a new power plant that might use the VNG pipeline?

    I spent years getting new utility projects approved when it was clear that our customers needed them. The need for the VNG project is anything but clear.

    I am very surprised what you have inferred about my opinion from anything that I have written on this blog or in comments to regulators. Your assertion bears no resemblance to what I have put on the record.

    I thought we were in agreement that it is inappropriate for energy companies to build unnecessary projects just to extract more profits from their customers.

    It’s my opinion that VNG’s rush to build this project is to create a new stream of cash to pay for their parent company’s needs to finance the over-budget, behind-schedule Vogtle nuclear plant.

    VNG has admitted in testimony that it is willing to put its shareholders in harm’s way at some time in the future in order to get this project going now. As a former utility guy, I don’t think this is responsible behavior.

    I am disappointed that we cannot have a dialogue about this on BR without others misrepresenting what we say.

    • I honestly only care if the ratepayers lose. If the stockholders lose, that bothers me less. It’s a better argument with the ACP and MVP which are plowing hundreds of miles of new territory, as opposed to this project which covers only six miles of new ground. I view the parallel expansions as a slice off a cut loaf (think Breaker Morant…) Hard to have this back and forth with long comments that frankly nobody reads.

      • Where would America and its citizens be without the fracking revolution and its abundant cheap gas? Broke and dead in the water, security wise, energy wise, and carbon wise. Some hate it all. And want to compound result by wiping out carbon free nuclear energy that along with gas makes green energy possible.

  11. Tom has made some excellent fact-based points in explaining why the project under discussion is not needed. Without addressing any of his points, you simply accuse him of intellectual dishonesty and with one broad unsupported stroke, paint all opposing the overbuilding of natural gas pipelines in our region as extremists. Many of us who have opposed specific projects like the ACP, have put years of study into the analysis of these project and their supposed documentation of need. We found, just as a number of courts have found, that the submissions by Dominion to gain approval for the ACP were lacking. It is appropriate for any of us that could be impacted by a pipeline forced on to our land or near our schools by eminent domain, to investigate whether these projects actually serve the public’s need or whether these projects are simply a corporate overreach for the high net return on investment provided to builders. Why should any of us as electric ratepayers be charged unnecessary higher rates than the rates when we currently pay utilizing existing pipelines like the Williams Transco pipeline that has already been built and paid for by ratepayers.
    I look forward to engaging with some of you here in BR when more have viewed Michael Moore’s movie. Like many arguments against the implementation of renewable energy, Moore’s data on solar is over 10 years old and no longer applicable. It is clear that we will have a gradual transition from currently needed fossil fuels to cleaner energy generation, but the cost of developing and generating solar and wind have dropped with technical innovation and now the market itself, including customer demand, is driving the move by Dominion, Duke, and other energy/utility corporations to the profitable and cleaner renewable energy solutions. Thanks to Steve Haner for the posting and the group here for the discussion.

  12. J abbate, thanks for this.
    TomH. Sorry a true pro like you had to go through this.
    Steve H. Was this article prepared as part of your Thomas Jefferson institute stipend? If so, don’t we deserve a “full disclosure?” If not, please accept my apology.

  13. yeah, I think Steve came across pretty harsh…and Tom of all people did not deserve it…

    gets pretty rough here in BR these days……..

    • Perhaps, and I highly respect Tom. He is also a participant on this case, having filed testimony against it with the SCC. He’s not a neutral observer. As to full disclosure, I’m paid a bit by TJI but I decide when and what to write (and they are happy to circulate it under their logo.) All opinions, biases, etc. were pre-existing. Years on the shipyard payroll probably had more impact in this area! But if you want to include me now as a fll-fledged member of the Vast Right Wing Conspiracy, I have admitted before – I now have a user name and password (the modern equivalent of the secret handshake…)

  14. Steve and Tom,
    Your exchanges on this Blog are an example of the Comments section at its best for those following BR to better understand issues important to Virginians. This layman who knows nothing about this topic has indeed read your “long” postings with great interest. Thank you.

    Steve has shown himself to be one of the best reporters contributing to this Blog, deeply committed to accuracy and fairness. And, supportive of Steve’s statements, these activist groups have de-legitimatized themselves with their reflexive opposition to everything and, in the case of the SPLC, devolution into hate groups.

    However, it appears Tom has some excellent challenges to Steve’s presentation regarding the need issue. I hope Steve and Tom will continue to explore this together for those of us rendered glassy eyed by the complexity and detail of the issue but knowing we should be informed about what our utilities are authorized to do.

    • I try to be careful with my facts, but these days its mostly opinion pieces. You are getting mainly reprints from newspaper op-ed columns. The recent piece that listed all the big and little tax changes was rejected by an editorial page for having too little bite!

    • SGillispie –

      For perspective on your own comment regarding your eagerness to explore this issue in more detail go to comments section of Dashboard, and type in TomH.

  15. Why would anyone think that builders and operators of renewable energy sources are less manipulative than Dominion? Anytime we gather a pot of other people’s money, be it from taxpayers or ratepayers, the vultures circle.

  16. re: “manipulation”.

    well.. probably fair to say that most any business with a profit motive is going to play the game whatever way they are allowed to – to see if they can get what they want.

    Some have high profiles and some less so – but in the end – if you have a business and it wants to make money – then you get in the game.

    I’m still not quite understanding this particular issue if – we understood before that there was already “enough” gas in the existing pipeline network… then what is this additional about?

    Perhaps thats an area that Tom and Steve can further educate.

  17. I agree with TMT. Wherever there is big money (and often taxpayer’s or ratepayer’s money) there is the opportunity for manipulation by people, politicians, or corporations. I also see no reason to criticize investors or companies that seek to make a profit in needed energy projects for the public good unless that profit is unjustifiable, contrary to established law, or at the harm of the citizenry. As renewable energy projects become more profitable for the companies that must build them at scale, and clean energy generation becomes more efficient and effective, the Market will drive the transition to deliver the clean energy to the public that wants it and is willing to pay for it.

  18. re: ” I also see no reason to criticize investors or companies that seek to make a profit in needed energy projects for the public good unless that profit is unjustifiable, contrary to established law, or at the harm of the citizenry. ”

    I agree.

    I don’t know exactly where to put Dominion but I’d certainly have my TV/internet provider right up there with “outrageous”. Every year, we have to go do battle with them. Ditto with the Free Lance Star that used to be something like $17 a month and now is over $400 a year – MORE than I pay for other newspapers!

    So.. I’m sure TMT won’t agree, but I have no problem for the solar folks to make a profit… although it does appear there might be a double standard on how much profit – i.e. the profit that Dominion will make on solar is “unacceptable” even though it seems to be not that different from the profit it makes on other generation… All thing equal and they never are – I’d rather get solar than fossil fuel is the price is the same.

  19. TMT,

    You have hit on an important issue. If an independent solar developer built a project and sold its output to a customer, the customer would buy it only if it saved them money. The utility would get paid for the use of its wires.

    When Dominion builds a solar project and puts it in its ratebase, the cost of electricity to all customers goes up because of a Rate Adjustment Clause.

    Our utilities are currently incentivized to spend more because that’s how they get paid. Given that old regulatory scheme, it is essential to determine if a project is necessary to serve the public interest or whether it is just a profit-making scheme on the part of the utility.

    Non-regulated businesses must provide higher quality, lower costs, or both, to continue to get your business. Virginia utilities are on the path of perpetual cost increases. This is unsustainable and detrimental to the people and businesses in our state.

  20. Yes, many. But to my knowledge, most of those states do not allow utilities to put solar in the ratebase. Utilities can build solar, but on an equal footing with the independents. Ratepayers do not guarantee them a profit just for building a facility, as is the case in Virginia.

    Many of those states also are exploring performance-based rates. This decouples a utility’s earnings from investing more and rewards them for providing more value to their customers. Something like that is the way ahead for keeping costs in check while maintaining a reliable supply of energy.

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