Rage, Ruin, And You Pay The Bill In Full

I hear hurricanes a blowin’
And I know the end is coming soon
I fear rivers overflowing
I hear the voice for rage and ruin

Bad Moon Rising, Credence Clearwater Revival

The acronym we all must learn for the 2019 General Assembly session is “CCR,” but it doesn’t stand for Credence Clearwater Revival.  Coal combustion residuals – coal ash – are the environmental poster child of the moment, with the apocalyptic vision a hurricane or other event flooding the material into rivers.  John Fogerty, the prophet.

Legislation dealing with the issue will probably get good coverage in the standard news media, and Senator Scott Surovell’s Senate Bill 1533 may get through to Governor Ralph Northam for signature.  What is not mentioned in his or the other CCR bills, and not being reported, is who will pay for this process if the General Assembly orders the ash moved or recycled or both.

In the classic hide the-pea-game so common at the Assembly, two other bills which have not yet drawn attention outline a payment method which is highly favorable to the utility, perhaps in more ways than one. (So far only Dominion–owned landfills are targets of the legislation, but environmentalist won’t stop there.)

House Bill 2786 was filed only Friday, the deadline for bills, but the identical Senate Bill 1355 has been in the hopper for a while.  Here is the key paragraph contained in both (and the bills are only two paragraphs long.)

  • 2. Costs associated with any permit issued by the Department for the closure of a CCR surface impoundment located within the Chesapeake Bay watershed, as well as any permit issued by the Department for the purpose of capping in place, removing, or beneficially reusing any CCR from the site of any current electric generation unit as of January 1, 2018, or any former electric generation unit permanently retired or placed into cold reserve prior to January 1, 2018, shall be deemed in the public interest and recoverable in accordance with the provisions of subdivision A 5 of § 56-585.1 of the Code of Virginia. Any such costs shall be fully allocated to all customers as a non-bypassable distribution charge, irrespective of the generation supplier of any such customer.

“Shall be deemed in the public interest…” is the General Assembly once again making policy that otherwise might fall to the State Corporation Commission.  The good news is the bills do not override the Commission’s authority to determine what is reasonable and prudent.  Not yet.

“…and recoverable in accordance with the provisions of subdivision A 5 of § 56-585.1 of the Code of Virginia”  means that the utility can recover all of the costs through a rate adjustment clause (RAC), a stand-alone separate charge on everybody’s bill lasting years and years.  Dominion is in the process of establishing a new rate adjustment clause for environmental costs.

But here’s the key: “Any such costs shall be fully allocated to all customers as a non-bypassable distribution charge, irrespective of the generation supplier of any such customer.” All customers inside Dominion territory, connected to Dominion distribution lines, will pay for the coal ash removal even if they have a third-party supplier or generate most of their own power.

Does layering on this charge change the economic incentive for a large user to seek a competitive supplier? For a homeowner to seek an outside renewable energy supplier?  Maybe not.  But there are other bills pending at the Assembly creating other barriers to third-party suppliers, and the effects may be cumulative.  Stomping competition is this year’s grid mod.

Every customer will pay if this passes and becomes part of the directive to the SCC.  But if the cost is “fully allocated” to customers, does that mean none of the cost will be paid by the companies’ shareholders?   It seems to.  None of the costs will be spread more broadly through the economy by using tax money?  Is the General Assembly about to stick only customers with this bill?

Secretary of Natural Resources Matt Strickler said Monday the Governor is “agnostic” on how to pay for the coal ash disposal or recycling.  He made the comment during a meeting of legislators and renewable energy advocates, where Michael Town of the Virginia League of Conservation Voters later chimed in that its only fair that ratepayers get the full bill.

Past sessions have demonstrated that introduced bills change drastically as the legislative process moves.  Miss committee meetings at your peril.

What appears undisputed is that the steps being demanded in the Surovell and the other CCR bills go beyond what the federal Environmental Protection Agency now requires.  In yet another step away from the conservative approach of past years, Virginia may opt for regulatory requirements way beyond national standards.  The marginal cost is not a regulatory mandate,  but a political one.

The bill patrons will cheer when the ash is buried in somebody else’s district, and the financial consequences will be buried on your electric bill.  The distinction between utility ratepayer and Virginia taxpayer continues to disappear.  The General Assembly is equally willing to pile costs on Virginians both ways.

There are currently no comments highlighted.

23 responses to “Rage, Ruin, And You Pay The Bill In Full

  1. Great post, Steve. I really like the clever introduction. I wish I were as creative.

    I really don’t understand why the administration and environmentalists are not more concerned about how the costs will be allocated. Your “hide-the-pea” analogy is apt. It looks as if Dominion, resigned to the political reality of having to do something about the coal ash, is quietly figuring out a way of not having their stockholders pay for it.

    Your allusion to the ash “being buried in someone else’s district” echoes an earlier question of mine: Where are you going to put this stuff?

    A final puzzlement: The legislation refers to coal ash dumps in the Chesapeake Bay watershed. What about those not in that watershed, such as the one in Clover in Halifax County?

  2. I guess I don’t see this the same way. First, I don’t see such clean-ups the purview of the SCC. As far as I know they play no role in other pollution issues.

    And second – people who use electricity are the legitimate payers to clean it up just as folks who use water/sewer are the ones who will pay for combined sewer overflow facilities.

    Or stormwater where fees would be levied on those who have rooftops and other impervious surfaces.

    The argument about how much cleanup to do and how much it costs is not an argument about who pays… in my view but it often is the predicate in delays in going forward.

    Let me give another example. When you buy a tire these days, you pay a disposal fee. PART of that money actually goes into a fund that is used to
    clean up old tire dumps… Old fuel oil tanks are remediated from similar fees and/or incorporated into the price of the product. In the end, superfund sites are also paid for, in part, by taxpayers.

    As long as Dominion was complying with the laws when these coal piles were generated – such later decisions to clean up are really not their fault – but they are legitimately the responsibility of everyone who used/uses electricity.

    If you do not do this – then you end up with a tragedy of the commons problem for things done in ignorance in the past.

    Besides these clean-ups provide JOBS and add to the GDP!

    You could put a provision in the law that requires preferential hiring displaced rural Virginia workers! It would be like a mini New-Deal program!

    Each cleanup site has a significant grid connection and could be retro-fitted with solar also!

    what’s the problem! When you get lemons, make lemonade!

    • Larry,

      You make some legitimate points. This issue is new to me and I am enjoying being educated.

      I do not think the analogy to water/sewer and combined sewer overflow is apt in this context. For the most part, water/sewer operations are owned by local governments–they have no stockholders who benefit from their revenues.

      In the larger, and somewhat simplistic, context, Dominion is a regulated monopoly with a guaranteed rate of return or profit, from which its stockholders benefit. The General Assembly has passed legislation locking in rates, which, by all reports, result in a profit larger than the one that Dominion is guaranteed. Since those stockholders are benefiting from this legislative intervention in the regulatory framework, shouldn’t the stockholders have to bear some of the burden of the costs of the coal ash remediation?

  3. ” (the meeting)… where Michael Town of the Virginia League of Conservation Voters later chimed in that its only fair that ratepayers get the full bill.”

    What a wonderful attitude. My virtue at your cost.

  4. Here is a good article about coal ash. It does not say lined landfills are needed. It does say moving from one place to another may just relocate the problem. Does sound like Duke is committing $5 billion…

    https://insideclimatenews.org/news/16012019/coal-ash-groundwater-contamination-map-arsenic-power-plant-utility-reports

    • And here is some more … just researched the issue
      So …”Michael Town of the Virginia League of Conservation Voters later chimed in that its only fair that ratepayers get the full bill.” OK…So how about paying for the coal ash fix with those overcharge monies you didn’t return?

      It might seem fair that the clean-up cost should be allocated. Cheaper coal electricity was a customer benefit for years, but Dominion’s bad decision to not follow ‘best practices’, as Tom told us, has left them with very expensive re-construction of their coal ash storage. 35-40 years ago ‘best practice’ meant lining the bottom of these ponds, then capping them as sections were closed. To me that choice means the company and its shareholders bear a major part of the responsibility for their ‘cheaper is better’ decision.

      AND yesterday’s ‘best practices” will turned into today’s regulations. The EPA is working on what the Court told them they had to do last August when a case was brought to stiffen the regs that Obama passed was decided. The Court agreed that Obama 2015-6 regulations were justified, and that they did not go far enough in only requiring leaking ponds to be lined, and exempting legacy ponds altogether.

      Where does the rewrite stand? It is hard to find out what the EPA is up to on their website so I sent an email and was informed they are working on the new, more comprehensive regulations for the Spring. Not waiting for the new EPA regs, South Carolina has decided to remove all ash from unlined coal pits to protected sites.

      The proposed legislation the Governor supports will require ponds in the Chesapeake watershed to be lined. The EPA will go further with their new regs. All coal ash will have to be stored in lined ponds or landfills … and they don’t have to be in another district … just lined and not so full. Some are 50ft. high!

  5. Hurricanes in Virginia are far from an apocalyptic long shot. If you doubt that I can arrange for a very angry lady named Isabel to convince you. She hasn’t been seen since 2003 but everyone knows that one of her brothers or sisters is sure to return.

  6. It’s exactly 226 years since Louis XVI was beheaded, with his Queen to follow. You know, the one alleged to have said when told the peasants had no bread, “Let them eat cake.”

    The spiritual descendants of Louis and Marie Antoinette are in Davos, Switzerland, very concerned about climate change. The fact that they are there safe and sound proves the existence of a merciful God. A just God would open the earth and swallow them all into Hellfire.

    https://www.france24.com/en/20190122-never-mind-climate-change-davos-prefers-private-jets

  7. It’s not like we don’t have an more than ample history of fooling ourselves on what risks are when it comes to the environment.

    Look around you.

    Do we have damage to the Chesapeake Bay from pollution? Do we have storm water runoff problems? Do we have tire dumps and other Ad Hoc dumps? do we have folks poisoned by chemicals and bad drugs?

    The point is we almost always poo-poo things until later on they come back to bite us in the butt.

    We have a long and rich history of this.

    We CAN “cover” piles of stuff that we don’t want rainwater seeping through – but can we stop the rain from going into rivers when it comes in 500 year or 1000 year storms?

    So a really simple question here.

    In all the analysis that has been done – did the do an analysis on what size flood it would take to wash away a coal ash pile? If they did and it was something like a 10,000 year flood, I would think differently than say a 500 year flood… that might make a difference in my view.

    Of course we also have folks who say that once it’s in the river ..it’s “okay” because it’s not polluting in their view… no science needed apparently.

    If we back up a bit here – I’d like to also bring up the issue of biosolids – which we DO spread on the landscape and rain DOES wash it back into rivers. AND it too has nasty things like heavy metals and other toxic stuff in it to include drugs/hormones…

    In a way POOP is like Coal Ash. Both of them are products of humans and both get into the environment and both need some level of honest risk assessment to determine how much we should risk and how much we just need to go ahead and pay for to keep them out of the environment.

  8. Potential damage from coal ash is so far down on the list of Chesapeake Bay pollution sources, they probably forgot to list it at all. If someone really wants to help to environment, let’s spend $5 Billion on Chesapeake Bay protection from runoff.

    We are just talking NIMBY on steroids here it sounds like to me, and I hope the cost estimate includes $100 million in host community benefits for each new town expected to take on the burden of storing this toxic waste product.

  9. The United States is becoming devoid of cost-benefit analysis. Emotion tends to rule.

    • Back in the early to mid-1970s and while still in college and law school, I worked for the Minnesota Department of Natural Resources. One of the matters I worked on was helping to write the Environmental Impact Statement for replacing the practice of dumping taconite tailings, which contained asbestos-like fibers, in Lake Superior to creating, for want of a better word, on-land tailings basins. Any EIS has to have alternatives. There was cost-benefit analysis done for the various options. Perfect. By no means. But there was an effort to balance cost and benefit.

      The judge ordered Reserve Mining to stop operating until it could deposit tailings on land but the 8th Circuit reversed that decision. The Company was given a reasonable time to change its operations even though there was evidence that asbestos causes cancer. The Company went bankrupt later. Its successor is still using the on-land disposal site.

    • What is the environmental impact of a full breach of Dominion’s planned coal ash disposal plan resulting in all the coal ash going into the water? I really don’t know. It would suck for a year then dissipate? It would kill all the fish in the bay? Where are we? What would happen?

      Hurricanes hit Virginia. North Carolina (and other places) have suffered significant coal ash dumps into waterways. This is not some hugely speculative concern. Leaving the coal ash buried next to waterways in the Chesapeake Bay watershed is a very risky idea.

      I agree that agricultural runoff is a major problem for the bay. Pennsylvania, by far and away, is the worst runoff offender but Virginia could do better. And the runoff, unlike a coal ash breach, is guaranteed to happen – every year.

      So, rather than tell me how unlikely it is that the coal ash hits the water (it’s not all that unlikely) … tell me what we do if the coal ash does hit the water. Then tell me how $5b could help reduce pollution in the bay from runoff.

      • The EPA required tests of all lined ponds late last year …
        Dominion’s test well near the Potomac River found “elevated levels of arsenic, beryllium, cobalt, and lithium,” confirming leakage from a nearby storage site.

        Coal ash can also leak radium, boron, molybdenum, and sulfate, all significant toxics.

        Here is the inventory of Dominion ponds …30 ponds 8 of Dominion’s 30 ponds are considered “significant hazards”, 13 are unlined, and Dominion’s test well results show toxic ground water contamination occurring at the Bremo Power Station, Possum Point Power Station, and the Chesterfield Power Station.

  10. Yes, agree fully with TBill and TooManyTaxes.

    Plus, far too often, and likely in this instance, its public emotions driven the myths and fears stoked by irresponsible environmental groups chasing ever more contributions of money, and the power that goes along with money and the show boating it finances. 5+ Billion of ratepayer money to fix this is absurd best I can discern based on proofs and explanations to date. Best explanation of this I have seen to date is the argument that ratepayers are being forced to pay for payoffs given in return for campaign contributions.

  11. Why doesn’t the AG’s Office file a petition for declaratory judgment asking the VSCC to rule that ratepayers are not responsible for the costs of any remediation of the coal ash?

  12. I have written previously that it was considered best practice in the northeast over 35 years ago to line the bottom of the ponds to prevent groundwater contamination, treat the effluent to appropriate water quality standards, then cap it when the facility was retired. If this had been done in Virginia, much of what we are talking about would have been avoided and the costs would have been borne by those who benefited from the generation of electricity. It seems too easy to push our burdens on to the next generation.

    I do not know why the standard practice in one part of the country was ignored or considered unnecessary in another location. If utility executives at the time influenced the “watering-down” of the full implementation of water quality regulations in Virginia (as is happening today with the new pipelines) in order to increase profits, then the shareholders should bear at least a portion of the burden. Although, I don’t know if it could be proved that such an arrangement was made.

    Perhaps the SCC could limit the recovery to all or a portion of the total costs, without allowing any rate of return (usually about twice the cost of the project). It seems inappropriate to allow a company to make a profit, because they made a mess. Providing only cost recovery does not harm the utility, but it doesn’t reward them either.

    • Tom as far as I know, Virginia utilities have done standard practice with the coal ponds. I am not saying that was a good practice, but I am not aware of any state doing a better job in the same situation. If you read the article I posted above about 22 states with coal ash sites, it seems to say all of the states are in the same boat. There is no reference to Virginia being the only state not using lined disposal sites. Actually Virginia seems to be lucky we do not have the big coal ash dams that have ruptured in the other states like North Carolina….that’s where the catastrophic problem is…the earthen dams of waste water.

      • Would a less expensive but still good solution be to shore up the earthen dams? Maybe make concrete with some of the coal ash. Of course, the radical enviros will not accept anything that is cost-effective. Hopefully some of the moderate environmental groups will look for find a cost-effective solution.

        • No the earthen dams are unacceptable, but we do not have any that I am aware of in Virginia. We have drained areas, that according to Obama EPA should be capped in place with clay barrier. The issue we have is non-acceptance the EPA guidance, wanting the waste outhauled somewhere else or “recycled” in to concrete. But remind me not to buy that concrete.

          • Reed Fawell 3rd

            So why then, TBill, do you think that the Obama EPA guidance of capping drained areas in place is rejected today in favor of a far more expensive alleged remedy?

          • Reed- If we were being scientific, we would do a risk assessment to define risks at each site. Are contaminants still leaching out? If so what is the impact on human/eco systems? Can the risk be largely solved by capping? or is it a highly sensitive area getting into municipal water supplies and harming wildlife?

            But we have gotten into political position saying Dominion was bad for dumping this stuff and we demand they move it elsewhere. End of discussion.

Leave a Reply