The cover page that declares we the ratepayers cannot see how Dominion Energy Virginia has calculated the levelized cost of energy for its $10 billion offshore wind project. The SCC should break this seal and open this document.
by Steve Haner
When an applicant at the State Corporation Commission claims certain information is proprietary, or extraordinarily sensitive, a reader not privy to the full document can at least get an idea what is missing.
What is missing from the application Dominion Energy Virginia recently filed at the SCC, a document so dense and complex it was broken into eleven volumes, with 61 separate documents (here)? (That is not counting the tables of contents.) Here are some of the topics masked from view that turned up in a cursory review (in the order they appear in the documents):
- The cost of foreign currency hedges the utility proposes to buy (with ratepayer money), because about $4 billion of its planned capital and service purchases will actually be in Euros or Danish Krone and subject to exchange rate risk.
- Information on how it calculated its claimed 97% “availability factor” for the turbines. That predicts how often turbines will be down for maintenance or some other issue over the predicted 30 years of useful life.
- An entire appendix to the generation portion of the application, “which contains the Company’s analysis of the levelized cost of energy.” That is the key financial consideration. Under the Virginia Clean Economy Act, a LCOE determination which is too high would give the SCC the ability to reject the application. (Expect another post on this issue.)
Illustration of Dominion’s wind project from its Bureau of Ocean Energy Management documentation.
by Steve Haner
Customers of Dominion Energy Virginia will begin to pay for its planned 176 wind turbines off the coast of Virginia Beach next September, years before the first electricity is produced, if the company’s request for initial project funding is approved by the State Corporation Commission.
As with all such projects now, the bill will be paid through a specific addition to monthly bills, a rate adjustment clause or RAC. The cost for residential customers will work out to $1.45 per 1,000 kilowatt hours, but that is just for the first rate year beginning in 2022. In a news release Friday, the company claimed eventually the “net” cost to residential users would be $4 per 1,000 kWh, but that includes assumptions about future tax benefits and future costs of the alternatives abandoned.
The gross cost to consumers may be buried somewhere in the mound of Dominion documents that now constitute the full application. Or it may be among the items of data which the company seeks to withhold from public view.
On Friday, the record of the case was just a few cover letters and the company’s motion asking the SCC to let it keep much of the key information confidential. Monday up to 40 (40!) additional documents were posted on the SCC’s case file, full of some details, but reviewing a table of contents one can see example after example of information redacted, in anticipation of SCC approval of the motion for secrecy. Continue reading
Attorney General Mark R. Herring
An open letter to Virginia Attorney General Mark Herring:
Dear General Herring:
As was reported by the Richmond Times-Dispatch, Dominion Energy Virginia filed on Friday its application for approval to build offshore wind turbines with a nameplate capacity of 2,600 megawatts. The very first motion made to the State Corporation Commission was a request to keep all the important financial and engineering information confidential, away from public inspection.
I write as a Dominion customer and write to you in your statutory role as the representative for consumers before the SCC. You are my lawyer.
Please do everything in your power to persuade the SCC to reject that motion for secrecy. On behalf of the people of Virginia, break that seal. I hope other likely parties in the case will join you, but you should take the lead. There is no justification for hiding all the reams of information which will be produced in the coming review, and which will have a direct impact on the cost and reliability of our electricity for decades to come.
Waiting until the smoke had cleared from the recent election, in which the company embarrassed itself, the announcement included an admission that the price of the proposed project has already risen more than 20% to almost $10 billion.
There has long been too much secrecy in the SCC’s cases, a complaint I have aired several times in various forums. This has been accompanied by a reduction in the amount of attention given to these matters in the traditional news media, with the most active news source these days hardly objective but instead a cheerleader for this unreliable, intermittent electricity source. Continue reading
by James A. Bacon
Dominion Energy’s CEO Bob Blue acknowledged yesterday that the cost of the power company’s Coastal Virginia Offshore Wind project will cost $9.8 billion — $2 billion more than previously stated.
During an investor conference call, Blue blamed the 25% jump on “commodity and general cost pressures” as well as completion of design plans for transmitting electricity from the wind farm through populated areas in Virginia Beach to a substation where it can plug into the grid.
Blue said the impact on ratepayers — an extra $4 per month for an average residential customer — has not changed because the company is projecting that the wind farm will be more productive than originally thought, reports the Virginia Mercury.
Where have Virginians heard this before? Oh, I remember, this sounds reminiscent of the Silver Line extension of the Washington Metro to Dulles International Airport, which has encountered revised cost estimate after revised cost estimate. We can only hope that Dominion won’t encounter the same delays as the Northern Virginia commuter rail project, the second phase of which is now running about two years behind schedule. Continue reading
SCC Commissioner Angela Navarro, whose term ends January 31, 2022.
by Steve Haner
Does Tuesday’s election result mean Virginia is going to move back towards a rational energy policy? Watch two key personnel decisions, both entirely matters for the next legislature to decide.
State Corporation Commissioner Angela Navarro was elected by the 2021 General Assembly to fill the unexpired term of Mark Christie, who moved to the Federal Energy Regulatory Commission. His SCC term was expiring January 31, 2022, so hers does too, putting her up for reconsideration immediately.
A former staff lawyer for the Southern Environmental Law Center, she was an architect and advocate for the 2020 Virginia Clean Economy Act. Key decisions on that are beginning to fill the SCC docket, the largest being the next Dominion integrated resource plan and the first tranche of offshore wind development.
Will the new Republican majority in the House of Delegates deny Navarro a full term and choose another judge less associated with that bill? Well, the oldest rule in the legislature is “what goes around comes around.” When the Democrats took full control of the Assembly in the 2020 session, former Commissioner Patricia West was seeking an extension on her partial SCC term that began in 2019.
She was denied that extension, and instead replaced by Jehmal T. Hudson, who had been serving at FERC in a staff position. Continue reading
by James A. Bacon
Steve Haner likes to yank my chain every so often, and he did so this morning — digging up my 2019 prognostication that Dominion Energy had lost the Democratic Party in Virginia. At the time Dominion was still committed to natural gas and the Atlantic Coast Pipeline, and opposition to the proposed gas pipeline had become a Democratic Party rallying cry. The Clean Virginia advocacy group was extracting promises left and right from progressive Democrats to reject Dominion campaign donations.
Well, the ACP is history, Dominion pivoted hard and embraced renewable energy, and now the power company is favoring Democrats with its donations to electoral campaigns and Political Action Committees. As Steve recently highlighted here, Democrats are happily taking the money.
So, is it time now to write the headline, “Dominion Has Lost the GOP. What’s Next?” Continue reading
by James A. Bacon
At last — a serious discussion has occurred about the reliability of Virginia’s electric grid as the state moves toward zero-carbon electricity generation by 2050 (and 2045 in the Dominion Energy service territory).
Reliability was a prime topic of conversation at the third Virginia Clean Energy Summit Tuesday. A panel discussion — “Can Texas Happen in Virginia?” — focused on an issue that has gone long ignored in Virginia. (I base my commentary upon the article posted by Virginia Mercury reporter Sarah Vogelsong who attended the event.)
What happened in Texas during a deep freeze in February most likely would not happen here, panelists agreed. Virginia is different. First, its electric utilities are more tightly regulated. Second, Virginia belongs to a regional transmission organization, PJM, which would allow the state’s power companies to import electricity from outside the state should the need arise.
Some of the arguments presented are valid. Virginia has backstops that Texas did not. But Texas may not be the most valid point of comparison. Perhaps we should be looking at the calamity that is California, which also has a tightly regulated electric power industry and also imports electricity from outside the state. Indeed, when Republican gubernatorial candidate Glenn Younkin has warned about blackouts and brownouts in Virginia’s energy future, he was alluding to the example not of Texas but California. Continue reading
Former Sen. John Watkins, R-Powhatan
by Steve Haner
In 2020, according to documents filed with the State Corporation Commission, Dominion Energy Virginia paid former state Senator John Watkins $92,297 for lobbying services. At the end of the reporting period, it officially claimed spending only $1,641 for him to influence the legislative process.
In a similar manner, former Fairfax Delegate John Rust was retained over four years for a combined $265,000. But for his services in 2020, the year of the massive Virginia Clean Economy Act, Dominion’s lobbying expense disclosure listed his fee at $7,679.
The full payments to both former Republican legislators, all perfectly legal, are the subject of an online article on the Richmond Times Dispatch website, probably awaiting print publication. It also focuses on large payments made to a Hampton Roads journalist and former Democratic gubernatorial aide, which Dominion never had to disclose on any state report since buying friendly editorials isn’t covered by disclosure laws.
Add up the reported payments to all the other outside law and lobbying firms Dominion hired, compare them to the official disclosures, and a similar pattern of under reporting will be evident. The reporter missed the best part of this story — that information gap.
What do we learn here? Anything we didn’t know? Continue reading
Virginia’s “Lewis and Clark” energy future calls for an adaptable energy policy responsive to new information as it is gathered.
by Bill O’Keefe
Politicians are not known for engaging in reflection or looking back on legislation, but they should. The experience that Europe is having with its version of the Virginia Clean Economy Act is the reason why. Presently, Europe is experiencing energy shortages and surging prices. Some of this turmoil is due to global forces but some is due to energy decisions that European nations have made, in particular the decision to move rapidly to renewables and eliminate coal, nuclear and natural gas as major sources of electricity.
Green ideology blinded Germany and other European countries to the fact that wind and solar don’t provide around-the-clock reliable sources of energy. This summer there have been extended periods of low or no wind. Last winter, European nations experienced colder-than-normal temperatures which had the effect of reducing both solar and wind power and leading to steep price increases. Without reliable and commercially viable electric storage systems, renewables are vulnerable to cloud and snow cover and periods of low wind.
The General Assembly and Dominion Energy would do well to take a close look at Europe’s experience and determine how Virginia can avoid a similar fate. One important lesson is that major transitions are complex and beset with many uncertainties. Another is that government has at best a mixed record when it comes to industrial policy. Continue reading
Dominion’s Scott Solar Facility.
by James A. Bacon
Kevin Hennessy, Dominion Energy’s senior director of state affairs, expresses confidence that the electric power company can meet the Northam administration’s goal of creating a zero-carbon electric grid in its service territory by 2045. It does take a leap of faith that electric batteries or some other energy storage system will make great strides in efficiency, he admits. Also, he caveats, it’s essential to continue generating nuclear power. Further, he acknowledges, costs and rates will go up. But the job can be done.
Ask Hennessy about gubernatorial candidate Terry McAuliffe’s plan to accelerate the shift to a zero-carbon grid by 2035 — a decade earlier — and you get a very different response. The Dominion exec professes not to know much about the proposal, which appears in McAuliffe’s plan for fighting climate change, and did not address it directly. But he does observe that Dominion’s internal projections show consumption of natural gas through 2035 — even as solar and wind generation surge. Continue reading
2020 SCC staff projection of monthly residential bill increases by 2030 for Dominion Energy Virginia customers, mainly tied to a rapid retreat from fossil fuels.
by Steve Haner
When a State Corporation Commission staff analysis warned last year of $808 annual increases in Dominion Energy Virginia residential bills by 2030, that 58% increase was based on the existing deadlines set for Dominion’s conversion away from using fossil fuels.
Change the deadlines, change the cost. Shorten the deadlines by half, as Democratic gubernatorial nominee Terry McAuliffe is promising to do, and 2030 electricity costs will grow even higher. Continue reading
by James A. Bacon
Last week Dominion Energy announced a slew of new solar and energy-storage projects, which it describes as a “significant step” toward achieving the net-zero carbon goals for Virginia’s electric grid under the Virginia Clean Energy Act.
The proposed investments include 11 utility-scale projects, two small-scale distributed solar projects, one combined solar and energy-storage project, and one stand-alone energy storage project. Aside from receiving State Corporation Commission approval, the projects will require state environmental permits and local zoning approval.
Once in operation, the projects will be able to provide 1,000 megawatts of electricity, or roughly enough to power 250,000 homes at peak output. Dominion said the package of projects would add $1.13 to the typical residential customer’s monthly bill.
Dominion’s announcement raises questions. If utility-scale solar is the most economical form of electricity generation, how come rates will be going up? Continue reading
SCC Staff summary showing how $1.14 billion in Dominion Energy Virginia excess profits get whittled down to only a possible $312 million refund. Step one, not shown, is the law allows the company to keep the first 70 basis points of excess profit no questions asked. Click for larger view.
by Steve Haner
Customers of Dominion Energy Virginia are due a refund of $312 million and the company’s future base rates should be reduced by another $50 million annually, the utility accounting staff at the State Corporation Commission concluded in testimony filed September 17.
Patrick W. Carr, deputy director of the division of utility accounting and finance, was joined in filing testimony by ten other members of that staff, but he provided the baseline result in his opening summary.
In the staff’s opinion, Dominion earned $1.143 billion of profit in excess of its allowed 9.2% return on equity during the four year period it reviewed, 2017 through 2020. The company will vigorously dispute those claims in rebuttal testimony, it is safe to predict.
The State Corporation Commission is entering the key phase of its so-called “triennial review,” which in Dominion’s case covers an extra year because that is what it asked of the Virginia General Assembly, and the Assembly seldom declines DEV’s requests. This is the first full audit of the company’s finances since 2015, which covered the two prior years of 2013 and 2014. Continue reading
Source: Bureau of Ocean Energy Management
by Steve Haner
First published this morning by the Thomas Jefferson Institute for Public Policy.
A group of Nantucket Island, Massachusetts residents have filed suit challenging the pre-construction environmental review on a massive offshore wind complex planned off its shores. The issues raised may have a direct impact on the similar wind energy project planned off Virginia Beach, which is only now beginning its environmental impact process. Continue reading
100% electric, baby!
by James A. Bacon
In pursuit of its goal to achieve net-zero carbon-dioxide and methane emissions, Dominion Energy will transform its fleet of more than 8,600 vehicles across 16 states. After 2030, all new vehicles purchased, from passenger cars to heavy-duty vehicles, will be powered either by electricity or alternative fuels, the company announced today.
No word on how much the initiative will cost, or what impact there will be on Virginia ratepayers. Continue reading