SCC: Clean Energy Conversion’s Customer Cost

By Steve Haner

In the first ten years, Governor Ralph Northam’s signature zero carbon electricity legislation will add almost 20%, about $280 per year, to typical Dominion Energy Virginia residential bills. That was the low-ball estimate Sunday from a State Corporation Commission expert who quickly discovered that shooting the messenger is the normal General Assembly response to bad news.

Senate Commerce and Labor Committee Chairman Richard Saslaw, D-Fairfax, visibly scoffed as Kim Pate, the SCC’s director of utility accounting and finance, explained the SCC had no position on Senate Bill 851. She was there to talk about the likely consumer cost, just as she had earlier Sunday on other bills dealing with Dominion Energy Virginia’s massive offshore wind proposal. The last time this was in committee, no legislator even asked about cost. 

“You can’t do this stuff for free. Everybody says we have a climate problem,” Saslaw complained at one point. During the earlier discussion on separate offshore wind legislation, which is replicated in the omnibus bill, he accused the SCC of hostility toward environmental progress. “Everybody wants renewables, but you don’t want anybody to pay for it.”

At least twice during the meeting, a visibly angry Saslaw repeated his favorite story about how the SCC blocked his first attempt to allow Dominion to bury tens of thousands of existing residential tap lines underground. The SCC balked at the cost, and a subsequent bill made it a direct order. “You told us that was going to cost $5 to $6 a month on customer bills,” he complained. It is on track to do that, Pate quietly answered. (Bacon’s Rebellion has previously discussed Rider U which currently adds $1.40 per 1,000 kilowatt hours to every Dominion residential bill.)

Sen. Scott Surovell, also a Fairfax Democrat, complained that Pate’s estimate didn’t include the cost of all the cancers and asthma cases resulting from carbon dioxide, or the cost to the economy when Norfolk sinks below rising seas.  No, Pate responded, the SCC is only equipped to measure the utility costs and rate impacts.  A more valid pushback came from Senator John Bell, D-Loudoun, who noted the SCC sheet did not subtract any fuel cost savings from such a massive switch to wind and solar.

Pate’s information, and criticism of the bill from the Office of the Attorney General and other opponents, failed to slow its passage on a 12-3 party line vote.  As amended Sunday, it is nearly identical to the version of House Bill 1526 approved Thursday night in committee and now pending on the House floor.  A few more tweaks were made with line amendments Sunday, and the same changes will likely be added to the House bill tomorrow.

“This will be a work in progress all the way to the Governor’s signature,” Saslaw predicted.

About half of the cost impact, the SCC expects, will come from the construction and financing costs of 2,600 megawatts of offshore wind off Virginia Beach, with the largest share of the rest from building solar generation up to 16,100 megawatts. Membership in the Regional Greenhouse Gas Initiative and the construction of new energy storage facilities will add another $2.50 or more per month by 2030.

The $23, 20% rate impact is the low end of a range she showed the committee with a handout. The high end on the elements she estimated was $31 per month, over $370 per year and a 25% overall increase to residential ratepayers by 2030.

That is just a start. The handout shows several additional elements of this proposal – major elements such as a new subsidy for low income customers — where the SCC did not estimate a dollar impact, but merely indicated whether they would raise or lower costs. The only utility cost marked as clearly going down was tax revenues to local governments. One probable reason, though she didn’t mention it, is that solar developments are granted major breaks from local property taxes which fossil fuel plants must pay. The wind farm miles offshore won’t pay any local taxes.

The revised offshore wind section must still be considered a mandate on the SCC to approve that $8 billion project. Meade Browder, senior assistant attorney general in the consumer advocacy division, said it has been improved over the introduced version. But if it meets certain conditions, Dominion’s costs to build and connect the offshore turbines are pre-approved as “reasonable and prudent.”

The bill is sprinkled with examples of new activities or expenses designated as “in the public interest” or accompanied by other wording intended to tie the hands of the State Corporation Commission. Just how completely this bill remakes Virginia’s energy economy still begs a more detailed post down the line.

Brett Vassey, president of the Virginia Manufacturers Association, complained about the coming impact on industrial rates. There are several things in the bill that impose costs on large industrial customers that were previously subject to exemptions or limits. Even industrial customers who have moved to energy suppliers other than Dominion must pay a surcharge for the offshore wind, for example.

A spokesman for the data center industry had a similar complaint. Several of them have made direct deals with Dominion or others for zero-carbon electricity, but this bill could pile additional costs on them.

But it was an environmental critic who broke the code on these bills, saying they “stink to high heaven” and decrying them as creating “a rigged system, one that is helpful to the utilities.” Jorge Aguilar, of Food and Water Watch, repeated some of the same points they had made in a statement after the House version passed committee:

“It’s become clear throughout the session that Governor Northam and his leadership have designed an industry-friendly energy package riddled with giveaways to the oil, gas, and monopolistic utilities, and moving Virginia to 100% renewable energy only on their timeframe.”

And why should 2020 be any different than 2018, 2015 or 2014?

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29 responses to “SCC: Clean Energy Conversion’s Customer Cost

  1. re: ” A more valid pushback came from Senator John Bell, D-Loudoun, who noted the SCC sheet did not subtract any fuel cost savings from such a massive switch to wind and solar.”

    that’s a pretty glaring omission – coming from the SCC who is supposed to be fairly careful about analyses.

    Makes me wonder about their analyses in general.

  2. I don’t object to paying more for clean energy. I do object to giving Dominion carte blanche on expenditures that can be recovered from me.

  3. “At least twice during the meeting, a visibly angry Saslaw repeated his favorite story…”

    Meawhile,

    ‘Senator Scott Surovell, also a Fairfax Democrat, complained that Pate’s estimate didn’t include the cost of all the cancers and asthma cases resulting from carbon dioxide.”

    Meanwhile:

    Saslaw and Surovell preside over one of the largest man made environmental disasters in modern US history, wall to wall regional traffic gridlock caused by Fairfax’s gross negligence that has spewed carbon dioxide skyward 14 hours a day 7 days a week for several decades, as it also steals from commuters from all over the region some 2 to 6 hours of their lives spent sitting in the spewing mess, away from their families.

    Imagine the hypocrisy of this pair. Wonder who is paying them?

    • No, no – with the transportation carbon tax, all of those will soon be electric cars! (Still probably standing still often.)

      The Virginia Mercury reporter saw this clash over costs as the best story from that meeting, too. https://www.virginiamercury.com/2020/02/09/at-senate-panel-a-clash-over-the-costs-of-shifting-away-from-carbon/

    • First of all, Saslaw and Surovell have nothing to do with the gridlock in Fairfax. It is the Board of Supervisors that makes decisions on subdivision development, not the members of the GA. Second of all, those who know the history of the land-use development in Fairfax County will remember that the Board of Supervisors tried to manage the growth, but were stymied by the Virginia courts who consistently ruled in favor of property owners and their right to do whatever they wanted to with their land.

      If there could be one person “credited” with the gridlock in No. Va. today, it would be Til Hazel, the zoning lawyer and later developer. Here is one description of how he was viewed:

      “Whenever the board [of supervisors] tried to slow or regulate growth–with sewer moratoriums, denials of building permits, refusals to hear rezoning cases–Hazel and a few other zoning attorneys would walk over to the courthouse and get the controls tossed out.

      Hazel’s critics, such as Supervisor Moore, say his lawsuits ensured irrational, costly growth. Hazel says he was defending property owners’ rights against the arbitrary, political incursions of the reform board–which said ‘orderly growth’ but meant ‘no growth.” https://www.washingtonpost.com/archive/politics/1983/04/18/hazel-saw-land-of-opportunity-in-fairfax/fe5a12f7-fb66-4208-86a5-2b090bec0540/

      • Wow! Who wouldn’t thunk it.

        What is it about you Dem. Gov. guys. Always lookin’ for somebody else to blame for your own incompetence. No, I was there from The Creation, now past 75 years. And it was all the WaPo’s fault, along with their Fairfax Dems. allies, who been abusing commuters constantly since the late 1940’s, screwing ’em all 4 Ways to Sunday, right up to today with bone crushing gridlock, tolls, taxes, and fees, hittin’ hard working men and women, moms and dads, boys and girls, again and again, going and coming for generations, including this new Dem. Gov. crew making it ever worse, worse every time ya turn around, or just seat there stuck worse, or rattle around even. The jigs up, Dick. You’ll cooked.

        • Well, let’s look at the partisan divide on the Fairfax Co. Board of Supervisors during the go-go 80s. In 1975, Jack Herrity, a Republican, was elected the chairman (at large). After 1984, Republicans had a majority. After the 1991 election, the Republicans again were in the majority. So much for the Democrats being solely responsible for all the gridlock and taxes.

          • Reed Fawell 3rd

            Yeah its the Virginia way, land speculators Fairfax style swing both ways, the art of slick, no one does it better than a Fairfax gentleman no matter his politics. You learn that very early on or you lose your shirt quick, its deep and thick in the blood in old time Virginia horse country.

  4. “Makes me wonder about their analyses in general.”

    That’s your standard response when you don’t like what the SCC says. Agreed, this is a back of the envelope estimate, but done by somebody who does this full time. These are multi billion dollar building programs. Also missing were costs expected if/when Dominion extends the licenses for its nuclear reactors. There is some fiddling with that in this bill, which I need to try to unravel. As far as I can tell, the plan is to keep the nukes for that needed baseload….but if they can’t run another 30, 40 years, then what? The offshore wind in that harsh environment won’t last long either. As usual, these fools are trying to dictate the economy 25, 30 years out. Even the old Soviet Union didn’t attempt that.

    • in terms of analysis and the longevity of nukes and offshore – there are data for both – characterized as levelized costs.

      Already known – but Virginia’s experience might be different.

      I don’t think the “harsh” environment for offshore is not accounted for in levelized costs – no more or less than similar issues with Nukes or even gas, and solar. None of them are without life-cycle O&M costs.

      Why don’t we show that calculation when the SCC does their analyses?

      If you don’t calculate fuel savings from wind/solar , are we also not calculating it for energy conservation technology and programs?

      Seems like a lot of this stuff is being characterized as “costs” to be born by the ratepayers, not savings to them also.

    • The SCC has informed estimates as to the cost to build and to finance the off-shore wind; those are “knowns.”

      What no one has, not even Dominion, is a good guess as to how the units will perform. There are not any existing comparables as yet. Will they run 25% of the time? 40%? 66%? Also, will the production come at peak hours or at off-peak? In what proportions? Will there need to be a battery component to maximize the energy output if it happens to fall during the off-peak hours? Or, God forbid, will some or much or all of that off-peak power from the Atlantic need to be shipped out to Kilgore’s district for his erstwhile pumped storage project? These are some of the “known unknowns.”

      Without reliable estimates on production, the offset to fuel costs cannot really be accurately estimated either.

  5. The plundering of the middle class continues apace. Remarkably, the middle class is too obtuse to notice. Perhaps that’s because only Bacon’s Rebellion and Virginia Mercury covered this story (and the Mercury buried the lede). Once upon a time, a rate increase of this magnitude would have been front page news across the state.

    • the plundering of the middle class through Dominion keeping their overcharges, not giving the tax rebate back, getting a profit on the coal ash cleanup, etc, etc…

      isn’t that the same as a tax increase also?

    • A great deal of the current middle class of Virginia has only arrived in the last 30 years. Perhaps they have it too good to notice? Maybe they are overstimulated and easily distracted?

      • Should they have gone to modern American college or university, particularly an elite American university, they most likely are particularly clueless and ineffective, plus deeply in debt.

  6. This bill might be a greater giveaway to the utilities than the 2018 GTSA.

    The new energy technologies are clean and cheap. This bill promotes the clean in a way that is anything but cheap.

    The part that nobody has mentioned is that it does not have to be this way. Allowing an experienced offshore wind developer to build the offshore wind facilities and sell the output at a fixed cost would produce decades of electricity priced about 5-6 cents per kWh. This is cheaper than the output of any electricity from the conventional utility plants (factoring in the RACs as well as the operating costs).

    The proposed bill considers the cost of a Dominion-built offshore wind project to be “prudent” if it comes in below 1.6 times the cost of energy from a peaking unit. Lazard says the all-in costs of a new peaking unit produces energy at an average of 17.5 cents/kWh. So this bill says it is “in the public interest” if a Dominion wind project produces electricity at up to 28 cents per kWh.

    Independent 6 cents/kWh
    Dominion up to 28 cents/kWh

    Who wins – the shareholders. Who loses – the ratepayers (again).
    And the SCC gets cut out of the conversation.

    Solar built by the utility gets overpriced in the same way by getting put in the ratebase instead, compared to allowing an independent producer to sell electricity at a fixed price to the utility.

    This bill distorts the next 30 years of clean energy development in Virginia at a great cost to customers. It would be a huge setback for Virginia.

    Other states have figured out how to do this in a way that works for everyone. Why are the citizens of Virginia so willing to giveaway their future?

  7. CO2 is almost completely non-toxic…although it is a greenhouse gas.

    The misunderstanding I think comes from the Obama EPA who decided toxicity from other contaminants could be added in. In particular, EPA assigns a very high toxicity rate to fine particulates. So many of the EPA toxicity ratings eg; for CO2 and mercury, are based on assuming particulates are associated (eg; from coal). Not that I like mercury pollution, but EPA has no data for that as extreme as their rating for extreme toxicity of particulates assumption. I do not mind cutting particulates either, but nat gas is not a big particulate generator.

    I am reacting to Scott Surovell’s quote above (if it is accurate) and he is my hero for getting rid of the hybrid car penalty we briefly had. But not just Scott, I hear that misinformation time and time again.

  8. “CO2 is almost completely non-toxic…although it is a greenhouse gas. The misunderstanding I think comes from the Obama EPA …”

    This is why we are all taxed, tolled, and charged by Democrats every time we turn around, sit down, stand up, lay back and/or breath or drive, or it rains outside.

    • you can see why there was some push back on the Mercury regs, probably because the risk assessment had little to do with mercury. I actually feel mercury should be controlled, but I can see why it is probably hard to pinpoint the local cost of mercury pollution.

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  10. “Sen. Scott Surovell, also a Fairfax Democrat, complained that Pate’s estimate didn’t include the cost of all the cancers and asthma cases resulting from carbon dioxide..”

    So now Carbon Dioxide causes cancer? Really?

  11. ““This will be a work in progress all the way to the Governor’s signature,” Saslaw predicted.”

    I’m sure it will be, Mr. Saslaw. After all, you’re still looking for ways to make it cost us even more money, aren’t you?

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