Tag Archives: Dominion

Irony: Clean Money Group Donates More than Power Company

Posted on July 30, 2018 by | 13 comments


The Virginia Public Access Project has updated its list of largest campaign donors in Virginia, and the results making good reading.

My money is cleaner than yours. Perhaps the most fascinating tidbit is that Charlottesville-based Michael Bills, founder of Clean Virginia and scourge of Dominion Energy Virginia’s influence on state politics, has injected more money into the political system than Dominion has so far in 2018-2019. Bills donated $245,000 while Dominion contributed $190,940. (The Dominion number does not include personal contributions by Dominion executives. CEO Thomas Farrell, for example, has given $7,500 so far. Dominion executives Paul Koonce and William Murray chipped in $5,000 and $4,500 respectively. Still, Bills managed to give more than Dominion’s PAC and executives combined.)

Clean Virginia’s mantra: “In Virginia, corruption is legal, and it is time for that to end.” Clean Virginia’s solution: The organization out-bids its sworn enemy for the loyalty of Virginia legislators.

To my mind, the most fascinating untold story in Virginia politics today is the rise of Charlottesville’s landed aristocracy as a bankroller of liberal and Democratic Party causes. Virginia’s horse country gentry helped lefty Tom Periello nearly unseat moderate Ralph Northam in the 2017 Democratic Party nomination for governor. I view Bills’ Clean Virginia initiative as a continuation of that momentum.

Speaking of big money… Democratic PACs and allied groups totally dominate the list of largest donors. These include the Stronger Together PAC, which raised money for Northam’s campaign; the Laborer’s District Council, which gave heavily to the Northam campaign; and the Commonwealth Victory Fund and the Legislative Majority PAC, two Democratic Party-aligned groups.

The biggest GOP-leaning donor was William B. Holzman, a Shenandoah Valley oil and gas distributor. Collectively speaking, Virginia’s big businesses — Dominion, Comcast, Verizon, Altria, and the Realtors and Bankers associations — lean to the GOP but they spread their money between both parties. If political power in the General Assembly shifts to the Democrats, the corporate money likely will follow.

How will the media cover this story? As far as I can tell, only David Ress with the Daily Press has reported on the latest VPAP numbers. His focus, unsurprisingly, was Dominion — although he took a man-bites-dog angle on the story, noting that the utility is not the biggest campaign contributor this year. I’m waiting for the media to start showing the same level of interest in the other big-money players as it does in Dominion. And don’t get me started about all the “dark money” sloshing around the system. I’ll save that for another day.

Postscript: By the way, U.S. Senator Tim Kaine is out-raising Republican Corey Stewart by a ratio of about 17 to one. Clearly, Virginia’s moneyed class is avoiding the Trumpier-than-Trump candidate like the Ebola virus. Worse for Stewart, he’s even losing the small-donation race (less than $200) by a margin of about three-to-one. This race will be a wash-out. The Virginia GOP looks like it’s in huuuge trouble.

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What a Tangled Analysis We Weave

Posted on July 29, 2018 by | 14 comments

Dominion Energy Virginia does not want state regulators to require a formal cost-benefit analysis of its plan to spend $3 billion on grid modernization over the next decade, reports the Richmond Times-Dispatch.

“I do not believe it would be appropriate to impose such a requirement for its approval,” said Edward H. Baine, senior vice president of distribution for Dominion Energy’s power delivery group. In testimony filed with the State Corporation Commission. He urged the commission to consider “the many qualitative or otherwise unquantifiable benefits” of the plan.

At first blush Baine’s remarks sound like Dominion is asking for a blank check –“Give us permission to spend a bunch of money, but don’t look too closely at how we spend it.” Predictably, Dominion’s critics of all stripes have been quick with criticisms. Some say the grid modernization sacrifices the interests of rate payers with unnecessary spending, others that the plan is insufficiently transformative of the electric grid. In today’s political environment, Dominion makes an easy target. In the T-D article, even the utility’s friends had qualms about the company’s wish to avoid a traditional cost benefit-analysis.

My intention in this post is not to defend the plan, the details of which I have yet to see. As a general rule, I am a huge proponent of conducting cost-benefit analyses for any public expenditures (or in Dominion’s case, expenditures that require public approval). Indeed, some criticism may be justified. As Steve Haner has pointed out, some of the tap-lines in the proposed undergrounding project sound absurdly expensive. And as Walton Shepherd with the National Resources Defense Council has blogged, the strategic thrust of the $3 billion spending plan, a grab bag of initiatives, could use sharpening.

So, by all means, let’s have a vigorous public debate over Dominion’s grid modernization plan. But let’s have a better debate than the one that seems to be shaping up. To start, let’s admit that some benefits to Dominion’s plan are, in fact, difficult or impossible to quantify. Then, permit me to introduce two critical concepts — (1) risk and (2) the time value of money — without which we cannot have an intelligent discussion.

Writing in the Commentary section of the Times-Dispatch today, Robert M. Blue, CEO of the Dominion Energy Power Delivery Group, discusses the benefits of the plan’s priorities — investment in renewable energy and energy-efficiency; resilience in the face of sabotage, cyber threats and natural disasters; more assistance to lower-income Virginians — without offering a cost-benefit justification.

In his SCC testimony, Baine has said the plan will save the company more than $2 billion over 20 years. In other words, $3 billion invested over 10 years will save only $2 billion over 20 years. On its face, that seems like an indefensible assault on the rate payers. But, as he made clear, the numbers exclude “unquantifiable benefits.”

Let’s take the undergrounding program as an example. In March Dominion filed to recover $284 million to bury 660 miles of its most outage-prone tap lines. Those lines accounted for 9,368 outages over the past 10 years. Dominion should be able to quantify the estimated cost of continuing to repair these tap lines over the next 10 years. I don’t know what the cost is, but it’s certainly in the tens of millions of dollars, perhaps in the hundreds of millions of dollars. What Dominion cannot quantify is the value to customers of having their electric service restore more quickly. When your power goes out, how much is it worth to get it back on? The loss of an hour or two is a minimal hardship. But the loss of electricity for three, four, or five days — I’ve had mine go out for 10 days — spikes as food spoils, working at home is impossible, or as extreme cold or heat makes houses uninhabitable.

Alternatively, let us consider investments in hardening infrastructure against the sabotage of physical facilities or corruption of IT systems. These may be investments for which we never see a benefit. Dominion can spend tens of millions of dollars upgrading its IT computers and communications and never come under cyber attack. Without making the investment, however, there is an increased risk of system-wide collapse. How much will Dominion decrease the risk of catastrophe by making those investments? That’s impossible to measure. What would the cost be if the grid experienced an extended blackout? Also impossible to measure.

While the risk of sabotage on an electric sub-station, a cyber-attack on grid IT systems, or a Category 3 hurricane overwhelming coastal infrastructure may be remote, it would be irresponsible not to guard against them. How much should Dominion spend to protect against them? There is no measure. The decision requires a judgment call.

Next, let’s address the time value of money.

In his T-D article Michael Martz makes the following statement:

The company plans to spend $2 billion on the Strategic Undergrounding Project, which the SCC estimates will cost $6 billion over the life of the buried lines, including the financing expense and utility profit.

I am seeing this total-cost number — initial cost + profit + financing costs — quite often. The purpose, of course, is to make the cost to rate payers look as large and frightening as possible. We never see this with other types of infrastructure expenditure, as in, to make up an example, “The Virginia Department of Transportation plans to spend $2 billion to build Superhighway X, which will cost $6 billion after operations, maintenance and interest expense on bonds are taken into account.”

When a private-sector company examines its capital-expenditure alternatives, it looks not only at the up-front cost, it looks at the time value of money. The basic principle is that a dollar spent today has greater economic value than a dollar spent twenty years from now. Why? Because a dollar put to work today will have twenty years of compounded returns compared to a dollar invested two decades from now. In simplified terms, a dollar spent today is worth two dollars spent twenty years from now.

To compare the value of projects with long expected finance costs and financial payback, financial people calculate what they call net present value. To include the financing expense of the Strategic Undergrounding Project (or any other project) without taking into account the time value of money is highly deceptive.

Do these qualifiers mean that Dominion’s proposed $3 billion grid-modernization investment is totally justified? Not at all. The SCC needs to give each component a good, hard look. But it is fair to say that any analysis of costs and benefits is meaningless without taking into account unquantifiable benefits, risk and the time value of money.

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AP’s Latest Hit Piece: Journalism or Polemic?

Posted on July 12, 2018 by | 6 comments

Here we go again. The Associated Press’ Alan Suderman has popped out another context-free article making an issue of Dominion Energy’s tenfold increase in lobbying expenses over the past year to more than $1 million. That spending, writes Suderman, “came during a period when the company successfully pushed through legislation that could lead to substantial increases to electric bills.”

It is a legitimate exercise in journalism to report the lobbying expenditures of the state’s largest investor-owned utility, especially when it is as politically influential as Dominion and when the utility backed controversial and far-reaching legislation. But it’s not legitimate to strip the story of highly relevant context such as… oh, I don’t know… maybe, how much other stakeholders spent on lobbying, advertising, education and outreach.

If Dominion were alone in increasing its investment in influencing legislators, that would be one story. If, given the magnitude of the stakes involved, the utility’s spending was matched by the spending of other interest groups, that would be a very different story. Suderman did not raise the latter possibility in his article, thus creating a highly negative impression of Dominion — an impression he reinforced by quoting Clean Virginia, a group formed to counter Dominion’s political influence:

“It’s unfortunate that at a time when refusing monopoly money has become a hallmark of good governance, Dominion is doubling down on its political spending in an attempt to rig the rules in Richmond and mislead Virginians about the cost of their corruption,” said Brennan Gilmore, executive director of Clean Virginia.

Suderman notes in passing that Clean Virginia is a “newly formed group.” Ironically, Clean Virginia does not yet appear in the Virginia Public Access Project (VPAP) database as a campaign donor, even though the organization has pledged to back General Assembly candidates who refuse Dominion money, nor as a registered lobbyist, even though the group is actively involved in influencing public opinion. Come to think of it, the Clean Virginia website does not say where its money comes from either. One guess is that some, if not all, of its funding comes from its founder and chairman, Michael Bills, a wealthy investment manager (founder of Bluestem Asset Management) from the Charlottesville area. But there is no way for members of the public to find out — Clean Virginia’s 990 filings have yet to show up in the ProPublica database of nonprofit companies.

While Clean Virginia is a cipher, Dominion details precisely how much money it contributes to political campaigns, whom it has hired as a lobbyist, how much it has contributed in gifts and entertainment, and (through other reports) how much, and to whom, its nonprofit foundation donates money.

There’s a real asymmetry at work: Dominion scrupulously documents its lobbying activities but other players in the burgeoning renewable-energy and energy-efficiency fields, not to mention some of the company’s most relentless critics, do not. Suderman calls out Dominion for its spike in lobbying-related activity but cares not a whit what others are spending or their refusal, for whatever reason, to be fully transparent about their activity.

Actually, there’s an even bigger asymmetry at work. While Dominion exercises its influence largely through campaign donations and lobbying, the company’s critics make their power felt by devoting resources P.R., education and outreach to influence public opinion — expenditures that aren’t captured in any database.

If it were possible to compile all the information needed to make a valid comparison, perhaps we would find that Dominion’s bolstered its spending by many times more than others did — although that would raise a different set of issues. (Dominion spokesman David Botkins argues that the spending surge was necessary to “break through the fake news and propaganda perpetuated by anti-energy groups like Clean Virginia and their ilk.”) Alternatively, perhaps we would find that Dominion’s spending increase was matched by others. We don’t know what we’d find until someone does the digging. But it is patently unreasonable to skewer Dominion for its spending surge without (a) comparing the increase to that of other stakeholders, and (b) acknowledging that Dominion is being more transparent than many of its critics.

Biased journalism such as Suderman’s is what causes many Virginians to mentally discount whatever they read. “What is this reporter not telling me?” readers wonder. “Is this just a hit piece?”

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State Solicits Input from Solar, Wind Stakeholders

News - Posted on July 10, 2018 by | 17 comments

A nonprofit company specializing in addressing complex public policy issues has begun holding a series of meetings to solicit input from solar and wind energy stakeholders that will be used to formulate the Northam administration’s update to the Virginia Energy Plan.

Discussion topics will address community solar, corporate procurement of clean energy, state/local barriers to the deployment of renewable energy projects, and net metering (connecting rooftop solar panels to the electric grid).

The nonprofit, Washington, D.C.-based Meridian Institute is organizing the sessions under contract with Dominion Energy, as provided for under the Grid Transformation and Security Act enacted earlier this year. Meridian will publish a compilation of comments around the end of August. The feedback from this and other stakeholder groups addressing energy efficiency, electric vehicles and battery storage will provide input into the Northam administration’s development of the state’s energy plan. The previous plan, written by the McAuliffe administration, was published in 2014.

The inaugural session was not organized to collect input on the designated topics but to discuss the way Meridian had organized and framed the issues. Stakeholders will have a chance to make specific comments in hearings scheduled in July and August.

Given the preliminary nature of discussions, no strong points of contention emerged at the meeting, which was held at Virginia Commonwealth University in Richmond earlier today.

A few members of the roughly 60 people in attendance did wonder if Meridian might suffer from a conflict of interest due to its engagement by Dominion. Tim Mealey, a Meridian managing director, responded that his group is committed to openness, transparency, and reflecting the voices of all stakeholders. Meridian will not be issuing a report or making policy recommendations — its work product will be a summary of the participants’ views. Dominion will not review or approve the summary.

Several others questioned the way Meridian framed issues relating to the siting of solar and wind projects: What is Virginia doing right regarding the siting of renewable energy projects, and do stakeholders believe there are impediments to siting renewable energy projects in the Commonwealth?

Adam Gillenwater with the American Battlefield Trust said members of his group do not see the preservation of battlefields as an “impediment” to solar farms but rather as a competing good to be taken into consideration in siting decisions.

Others noted that the problems encountered by utility-scale solar and wind projects are different from the obstacles experienced by small power producers generating electricity at the rooftop level. Perhaps Meridian would consider conducting separate discussions for utility-scale and rooftop-scale issues, suggested Katharine Bond, Dominion senior policy adviser.

Mealey did not indicate what changes he might make to the discussion format. It is a “very unusual arrangement” to have an electric utility pay and contract for policy discussions mandated by a piece of legislation, he said. But he did not see that as a problem. His charge is to address the topics enumerated in the Grid Transformation and Security Act without being “unduly constrained” by the wording of the act.

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Eat My (Coal) Dust!

Commentary - Posted on July 9, 2018 by | 8 comments

Possum Point coal ash ponds

In a possible early-warning sign of what may be in store for Virginia electricity consumers, North Carolina regulators have decided that Duke Energy could charge their Tarheel rate payers the first $778 million chunk of an estimated $5 billion in coal-ash cleanup costs. The sum does not include $100 million in two mismanagement penalties for practices that “resulted in cost increases greater than those necessary to adequately maintain and operate its facilities,” reports the Associated Press.

Dominion Energy Virginia will likely incur coal-ash disposals costs in the $1 billion to $4 billion range, although no firm figure will be available until the state issues solid-waste permits for a disposal plan. Dominion says that de-watering the coal ash, consolidating the material in a single pit at each power plant, and covering it with a synthetic liner will protect the public at a fraction of the cost of the alternative, favored by activist groups, of hauling the ash to landfills with greater environmental protections.

North Carolina’s Attorney General said he would go to court to stop Duke from passing along its disposal costs to rate payers. “This case will ultimately be decided by the North Carolina Supreme Court,” he said.

The coal-ash disputes in North Carolina could prefigure in part what happens in Virginia. State regulators must approve disposal plans for millions of tons of coal ash that accumulated legally over the decades at Dominion’s Bremo, Possum Point, Chesterfield, and Chesapeake power plants. Presumably, Dominion will file with the State Corporation Commission (SCC) to pass along as much of that cost as possible to ratepayers.

What makes Dominion’s situation different from Duke’s is that Dominion’s base electric rates were frozen between 2015 and 2018, and Dominion has already written off a portion of disposal costs incurred during that period. Also, under terms of recently enacted grid-modernization legislation, Dominion now will plow surplus earnings into renewable-energy, energy-efficiency and grid-upgrade projects. The public has not yet been informed how multi-billion charges for coal ash-disposal costs would be treated from an accounting viewpoint, what impact they would have on Dominion profits, or how the costs would ripple through to grid modernization.

I cannot foresee any circumstances in which the SCC would dun Dominion for mismanagement penalties. The company has complied with state and federal laws and regulations as well as judicial rulings throughout the process.

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Posted in Commentary, Environment

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Virginia’s Political Class Isn’t Doing Much to Reduce CO2 Emissions — And It’s Working Out Just Fine

Posted on July 2, 2018 by | 25 comments

Source: “California, Greenhouse Gas Regulation, and Climate Change”

As faithful readers know well, I remain unpersuaded that the world is facing global-warming Armageddon or that we need to force a restructuring of the global energy economy to avert it. But as long as there’s even a remote chance that the emission of greenhouse gases (primarily CO2) might be driving cataclysmic climate change, I suppose, it’s good to see CO2 emissions heading down.

Unlike some holier-than-thou nations I could name, the United States actually is making progress in reducing its CO2 emissions. And Virginia looks pretty good by comparison to other states, which suggests that Virginia is looking pretty good by global standards. Arguably, the most useful measure of carbon intensity is the number of metric tons of CO2 emitted per million dollars of Gross Domestic Product. The lower the number, the more carbon-efficient the economy. As can be seen in the chart above, Virginia is the 13th most carbon-efficient state in the country. Somehow, despite all the caterwauling, we must be doing something right.

Source: Environmental Protection Agency

The debate over Virginia’s energy policy over the past few years has focused almost entirely upon the electric power sector. But electricity accounts for only 28% of the nation’s greenhouse gas emissions, according to the Environmental Protection Agency. An equal proportion comes from the transportation sector, which receives scant attention in the Old Dominion these days. Major contributions come also from industry, commercial & residential, and agriculture, which also goes largely ignored.

Market forces are driving the push to renewable energy in the electricity sector, and we would be seeing more solar power regardless of what the activists and politicians were doing. The reason: Solar’s time has come. Solar is an economically competitive power source, and an increasing number of major corporations are demanding it. As a consequence, Virginia’s largest electric utility, Dominion Energy Virginia, has done a remarkable about-face over the past two years, as can be seen by comparing the narratives of successive Integrated Resource Plans. As Dominion plots its energy future, it foresees a continued shift away from CO2-intensive coal to zero-carbon solar, using natural gas combustion-turbine engines to counter the inevitable variability in solar production.

By contrast, public policy is central to shaping the carbon intensity of the transportation sector — not by setting miles-per-gallon standards for vehicles as much as by shaping land use patterns that determine how frequently people drive their cars and how far they drive. Once upon a time, Virginia environmental groups kept these issues in the spotlight. For whatever reason, they have faded from view. But look what’s going on:

This graph, based on Virginia Department of Transportation data, shows how the average daily vehicle miles traveled dipped after the 2008 recession, leveled off for five years, and then began climbing again in recent years. (2010 numbers were not available from the data source I consulted.) Increased VMT translates directly into increased CO2 emissions. Curiously, the recent increase seems not to have set off any alarm bells. Needless to say, staff-shriveled Virginia news outlets aren’t writing about it. Even environmental groups, absorbed by the dramas of Mountain Valley Pipeline and Atlantic Coast Pipeline construction, seem to be ignoring it.

One long-term solution to rising VMT is building more Walkable Urbanism — compact, pedestrian-friendly, mixed-use development — that enables people to conduct their daily business with fewer and shorter car trips. Another long-term solution is figuring how out to harness the fast-approaching transportation revolutions of self-driving cars and Transportation as a Service. Public policy discussions are occurring behind the scenes — I understand that the Northam administration wants to make its mark in transportation policy by emphasizing innovation — but so far the rubber has yet to meet the road.

Then there’s the other 44% of CO2 emissions from the manufacturing, agriculture, commercial and residential sectors. I have seen next-to-zero attention paid to these economic sectors. One way to reduce the carbon intensity of Virginia’s economy would be to encourage the conversion of grassland and cropland to forest, thus sequestering carbon in trees — the reverse of the clear-cutting of Amazonian rain forest. This is happening on its own, without state government prodding. Perhaps it’s best to leave a good thing alone. But I’m surprised that we’re not hearing more about ways to accelerate the process.

There is tremendous potential, too, in building automation to conserve energy for heating, cooling, and lighting. While individual property owners are investing in energy efficiency, the next frontier is in collaborative projects across office parks and downtown business districts. Virginia state and local government have been totally AWOL.

In sum, If Virginia is one of the more carbon-efficient states in the U.S., it is hard to give any credit to the political class. The General Assembly has ratified a large-scale commitment to solar energy and grid modernization that likely would have occurred if left to normal market and regulatory processes. Meanwhile, nothing substantive is being done about CO2 emissions in transportation, manufacturing and the built environment. Perhaps that’s just as well. All things considered, Virginia is doing just fine. There’s a good chance that the politicians would just screw it up.

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Visual Impacts and Transmission Lines

Posted on May 29, 2018 by | 4 comments

Will the Surry-Skiffes Creek transmission line look like this….

Last week the U.S District Court for the District of Columbia rejected a last-ditch appeal by the National Parks Conservation Association and allied groups to block  construction of the controversial high-voltage transmission line across the James River near Jamestown. Dominion Energy Virginia had embarked upon preliminary construction in February after winning a U.S. Army Corps of Engineers permit, and the ruling clears the utility to complete the project by the summer of 2019.

Apparently, a favorable ruling was not a foregone conclusion. At the preliminary injunction phase, wrote Judge Royce C. Lamberth, the plaintiffs made “a powerful argument on the merits” that the Corps had issued the permit improperly. However, he added, “now that the Court has dug into the administrative record and relevant case law it is evident that the Corps made a “fully informed and well-considered decision.”

Lamberth made clear that he was not saying that the Corps made the correct decision; rather, it met all relevant standards and criteria for issuing the permit. 

… or like this?

For those interested in the controversy, the guts of the ruling shed new light into aspects of the seemingly interminable Corps decision-making process.

Perhaps the most contentious issue was the visual impact of the 500 kV Surry-Skiffes Creek transmission line upon a relatively pristine stretch of the James River associated with Jamestown and the English settlement of Virginia. Early in the controversy Dominion prepared visualizations showing the transmission-line towers as barely visible on the horizon when viewed from Jamestown Island. Power line foes disputed the accuracy of the renderings.

The Corps studied the visual impact in detail, creating a 400-page visual effects assessment, entitled the Cultural Resources Effects Assessment (CREA). Employing various vantage points and line-of-sight analyses, expert consultant Truescape created photo simulations demonstrating how the river crossing would appear to the human eye.

After the Corps made the document public, opposition groups criticized the Truescape methodology, noting that the analysis failed to analyze how the project would impact a visitor traveling on the river in close proximity to where the power line would cross the Captain John Smith Chesapeake National Historical Trail. “In other words,” summarized Lamberth, “while the CREA’s visual analysis captured what the electrical line would look like from historical vantage points on land, it would not capture the impact to a visitor traveling by boat on the river. He continued:

In response, the PhotoSimulation Overview was updated in June 2016 to include nearly 80 pages of additional reference photographs and visual simulations depicting views from the river. … Moreover, the PhotoSimulation Overview was updated again in August 2016 to include additional simulations based on a second round of photographs taken from the river.

Moreover, from a process perspective, the Corps held discussions with [the National Park Service] regarding its its methodological concerns and received an NPS guidance document on how to evaluate visual impact assessments. … The Corps forwarded the document to Dominion, asking them to address whether the methods used were comparable and what the plan would be going forward. … Dominion demonstrated that the methodology used followed NPS guidance and provide[d] reliable simulations of how the Project would look. Upon considering the methodological concerns raised by NPS and reviewing Dominion’s updated analysis, the Corps concluded:

“Dominion’s simulations provided enough accuracy to sufficiently analyze effects to both historic properties and a visitor’s experience. … While there are various methods for predicting visual impact it is not likely that employing further methods will result in substantively different views or information.”

In the ruling Lamberth also alluded to the involvement of Secretary of the Interior Ryan Zinke in the controversy.

NPS sent a detailed letter in January 2017, in which it pointed to “fundamental flaws” with the decision-making process that “remain unresolved.” NPS specifically noted the flawed visual analysis. Although the Corps was not required to accept NPS’s critique, Lamberth wrote, senior staff met with Interior Department officials to discuss the comments.

In March 2017, the new Secretary of the Interior Zinkie (sic), who ultimately presides over NPS, stated that the information that had been provided by the Corps reflected “thoughtful and thorough consideration of the issues raised by my predecessor. …”

Secretary Zinkie’s letter effectively withdrew the Department of Interior’s previous stance that an [Environmental Impact Statement] was required. “As we all know, elections have consequences” and the Interior Department’s shift in position demonstrates to the Court that there is no longer active disagreement between the Interior Department and the Corps.”

As it happened, Lamberth agreed with the Corps that the visual impact would not be significant. Boaters traveling the James, he wrote, already are exposed to views of de-commissioned Navy ships comprising the Ghost Fleet, the water tower at Fort Eustis, the Surry nuclear power station, several large, modern houses on the shoreline, barges and other commercial vessels, and recreational boaters and water skiers from Kingsmill Resort.

“The Corps did enough,” concluded Lamberth. “It engaged in reasoned analysis, consulted experts, responded to criticisms of both its methodologies and conclusions, took a hard look at the potential impacts, and concluded that the impact of the Project would be ‘moderate at most.'”

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Posted in Courts and law, Energy, Environment, Infrastructure

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Virginia’s Date with RGGI

Posted on May 24, 2018 by | 41 comments

RGGI states: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont

There’s a good chance that Virginia will participate in the Regional Greenhouse Gas Initiative (RGGI) to cut utility CO2 emissions. The impact of the cap-and-trade system would be mostly symbolic.

Barring litigation, Virginia could start participating later this year in the Regional Greenhouse Gas Initiative (RGGI, pronounced Reggie), a cap-and-trade program designed to reduce CO2 emissions of electric utilities and large industrial customers by 30% over a 10-year period. All it will take is for the State Air Pollution Control Board to approve regulations, now undergoing public comment, that have been drafted by the Department of Environmental Quality (DEQ).

Cap-and-trade programs have proven highly cost effective at bringing down emissions in sulfur dioxide and nitrous oxide, and proponents say that a similar approach could work just as well for carbon-dioxide, widely held to be the primary driver of global warming. Cap-and-trade, they say, avoids the inefficiencies of bureaucratic command-and-control regulations. Instead, the auction arrangement steers power output to entities that can reduce CO2 emissions the most cost effectively. Not only will RGGI cut emissions, they contend, it will flatten electric rate increases, lower electric bills, and stimulate economic growth.

There’s just one problem. Virginia’s largest electric utility, Dominion Energy Virginia, doesn’t believe it. In fact, in its 2018 Integrated Resource Plan, the utility fired a broadside against the regulatory initiative. The company maintains the following:

  • The program could impose $530 million in additional costs on Virginia customers between 2020 and 2030.
  • In effect, Virginia will subsidize other RGGI states through lower compliance costs to the tune of $876 million over the decade.
  • Virginia’s linkage to RGGI will not reduce CO2 emissions. To the contrary, the auctions will increase CO2 output by 5.7% more than it would have been otherwise.

PJM service territory

A big reason RGGI proponent’s optimistic forecasts won’t pan out, Dominion says, is that there is a geographic mismatch between the RGGI states and PJM Interconnection, the wholesale market of which Virginia is a part. The nine RGGI states are concentrated in the Northeast; the 14 states of PJM are located in the Mid-Atlantic and the Midwest. The only overlap between the two are Virginia, Maryland, and Delaware. Because Dominion, Appalachian Power Co., and other electricity producers don’t control which power sources are dispatched to meet electric demand — PJM does — generators in Virginia would suffer a cost disadvantage compared to competitors in neighboring states not subject to RGGI, such as North Carolina and West Virginia.

“The effect of RGGI-equivalent reduction requirements in Virginia is likely to limit the dispatch of highly-efficient and lower-emitting [natural gas combined-cycle] facilities in Virginia and to encourage the dispatch of higher-emitting resources and increased emissions in neighboring states outside of the RGGI region,” states the IRP.

But environmentalists insist the cap-and-trade program will be beneficial. “Carbon pollution is a big contributor to climate change. Cap-and-trade is a market-based way of dealing with that environmental problem,” says Will Cleveland, an attorney with the Southern Environmental Law Center.

“We think this is a really good opportunity,” says Harry Godfrey, Virginia director of Advanced Energy Economy. “To the extent that there are still older, coal-fired plants online, we foresee … less utilization of those assets in the future. But we see less utilization anyway. All of our analysis shows a coal-to-gas shift. … Our analysis shows that you can limit cost impacts, and even reduce rates in the process.”

How RGGI works

In 2009 ten Northeastern and Mid-Atlantic states accounting for one-eighth of the U.S. population and one-seventh of its economic activity created the Regional Greenhouse Gas Initiative as an interstate cap-and-trade program. Broadening the geographic scope of the trading system beyond the boundaries of a single state, it was thought, would create a bigger pool of CO2-cutting opportunities.

Under RGGI’s “direct” auction trading system, RGGI sets a regional limit on the total amount of CO2 that power plants in member states are allowed to emit. Owners of fossil fuel power plants with capacity greater than 25 megawatts are assigned an allowance to release a certain amount of CO2. Then they are required to purchase pollution permits at quarterly auctions sufficient to meet that output. The plan is for RGGI to ratchet the CO2 allowances by 3% each year over a decade. Utilities and big industrial producers who can’t find ways internally to cut their CO2 emissions can go to the auctions to buy extra allowances. Power generators who can find ways to cut emissions economically can sell their excess allowances to those who need them.

In the first auctions between 2009 and 2011, RGGI sold 395 million tons worth of CO2 allowances. The cap was a generous one, so the auction price for allowances was low — ranging between $1.86 and $3.35 per ton — according to the Center for Climate and Energy Solutions. As the CO2 allowances tightened, prices increased, reaching a high of $7.50 per ton in 2015. Prices fell after the Trump administration nixed the Clean Power Plan but the next round of CO2 emissions cuts — 30% by 2030 — likely will push the price back up. Continue reading →

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The Logperch Veto

Posted on May 17, 2018 by | 9 comments

The Roanoke logperch

Virginia has its very own snail darter — the Roanoke logperch, a threatened species of fish, the existence of which could delay or even obstruct a multibillion-dollar infrastructure project.

The snail darter became a cause celebre for endangered species in 1973 when concerns arose that the habitat of the endangered fish would be obliterated by construction of the Tellico Dam on the Little Tennessee River. Although the dam ultimately was built, the controversy over the snail darter’s fate held up the project through years of legal appeals and eventually required a literal act of Congress to override a U.S. Supreme Court ruling.

The Roanoke logperch is one of six endangered or threatened species whose habitat will be crossed by the Atlantic Coast Pipeline (ACP), according to the Richmond Times-Dispatch. The ACP won’t obliterate the habitats of the logperch, the Indiana bat, the Northern long-eared bat, the Madison Cave isopod, the rusty patched bumblebee, or the clubshell mussel in the way that the Tellico Dam did the homeland of the snail darter. But the pipeline will cross these species’ habitats, subjecting them to additional stress, and perhaps killing some individuals. A federal appeals court ruled that the U.S. Fish and Wildlife Service had set unacceptably vague criteria for monitoring and complying with the Endangered Species Act. Pipeline foes regard the threat to the species as sufficient grounds to shut down construction.

A question unasked by the media in coverage of the ruling is just how threatened are these species? What impact might pipeline construction have on their habitat? Could the pipeline precipitate their extinction or will the effect be marginal? But alert reader D.J. Rippert raised the issue in a comment to an earlier article on the topic. According to the International Union for Conservation of Nature (IUCM) Red List, he wrote, “the Roanoke Logperch is one notch above endangered. The key question is whether the pipeline would push it from vulnerable to endangered.”

Good point, Don. Let’s see what IUCM has to say about the six species in question. But first some nomenclature: A “vulnerable” species is one that is likely to become endangered unless the circumstances threatening its survival and reproduction improve. The next steps up the ladder towards extinction are a “endangered” and then “critically endangered.” The term “threatened” applies to any species “likely to become an endangered species within the foreseeable future throughout all or a significant portion of its range.”

Roanoke logperch. Precina Rex is listed as “vulnerable.” Its range extends through the upper Roanoke, upper Dan, and upper Chowan river systems. Eight populations are separated by wide river gaps or dams. The fish resides in riffles, runs, and pools with sandy to boulder-strewn bottoms. Despite the ongoing threats of urbanization, industrial development, flood control projects, and agricultural runoff, the population is believed to be increasing. However, siltation from agricultural “and other human activities” remains a concern.

Indiana bat. Myotis soldalis is listed as “near threatened.” The bat has an extensive range across the eastern United States but the range and population have shrunk in recent years.  The most significant threats to the species are habitat loss, forest fragmentation, winter disturbance and environmental contaminants. Half the bats are believed to hibernate in Indiana (hence the name); other major population centers are located in Kentucky and Missouri. Virginia is a minor and peripheral part of the bat’s range.

Madison cave isopod. Antrolana lira is classified as “vulnerable.” This tiny critter is an eyeless, unpigmented freshwater crustacean that lives in flooded limestone caves in the northern Shenandoah Valley, with documented population centers around Staunton and Harrisonburg. The ICUN database contains little information about the isopod. Contamination of underground water is the major threat to the creature’s habitat — definitely an issue in the karst terrain in Virginia mountain terrain.

Rusty patched bumble bee. IUCM does not have this species of bumble bee in its database. But Fish & Wildlife does refer to it as “endangered.” “Rusty patched bumble bees once occupied grasslands and tall grass prairies of the Upper Midwest and Northeast, but most grasslands and prairies have been lost, degraded, or fragmented by conversion to other uses,” states the endangered species website. The range has constricted to 13 states, of which Virginia is one, plus one Canadian province. The biggest threat comes from intensive farming and the use of pesticides.

Clubshell mussel. Also not included in the IUCM database, the clubshell mussel is described by Fish & Wildlife as an “endangered” species. The bivalve, which lives in small to medium rivers and streams, once was found from Michigan to Alabama, Illinois to West Virginia — Virginia does not warrant mention as part of its range — and now is relegated to “portions of only 13 streams.” The major threats listed are pollution from agricultural run-off, industrial wastes, and extensive impoundments for navigation, all compounded by competition with the Zebra mussel.

Northern long-eared bat. The Northern long-eared bat does not appear in the IUCN’s red list but it is listed as “threatened” by Fish & Wildlife. The bat’s range extends throughout most of the Eastern U.S. and parts of Canada. Its population decline has been caused by the “white-nosed syndrome,” a fungal disease. The disease has spread to bats in Virginia.

Bacon’s bottom line: This is a superficial survey, and I welcome the input of anyone who has more detailed and authoritative knowledge. But it seems reasonable to draw several conclusions.

First, none of these species are “critically endangered.” Only two are listed as “endangered.” The other four are classified as “threatened” or “vulnerable.” Continue reading →

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Pipeline Runs Afoul of Endangered Species

Posted on May 16, 2018 by | 8 comments

Atlantic Coast Pipeline foes won a significant legal victory yesterday when the Richmond-based U.S. Circuit Court of Appeals invalidated a Fish and Wildlife Service Review of pipeline construction. Limits set by the federal agency for the protection of endangered species were “so indeterminate” that they rendered enforcement of the Endangered Species Act meaningless.

“This puts a stop to any work that could threaten rare and endangered species and that’s much of the pipeline route,” the Richmond Times-Dispatch quoted D.J. Gerken, the Southern Environmental Law Center attorney who argued the case, as saying.

Dominion officials said they would push ahead with the project. “We will fully comply as required while we continue to construct the project,” said company spokesperson Jen Kostyniuk. “Although we disagree with the outcome of the court’s decisions, an are evaluating our options, we are committed to working with the agency to address the concerns raised by the court’s order.”

According to Gerken, the Fish and Wildlife Service’s review allowed for a “small percent” of endangered species to be killed during construction, but did not define what constituted a small percent. “A small percent would never get triggered because nobody knows what it is,” he said.

The project will cross the habitats of eight endangered or threatened species, including the Roanoke logperch, the Indiana and long-eared bats, the Madison Cave isopod, the rusty patched bumblebee, and the clubshell mussel.

Bacon’s bottom line: The ruling gives a moral victory to pipeline foes but I doubt it will be a significant blow to the project. Dominion Energy, the ACP’s managing partner, will argue with pipeline foes over how to define what constitutes a “small percent” of loss to the endangered species and what kind of protections are needed. The Fish and Wildlife Service will develop more specific criteria. Unless Dominion appeals the case, it will buckle under and spend whatever money it takes to comply. The company is so deeply committed to the project that it cannot afford to back out.

Update: Dominion issued a statement this morning: “”We remain confident in the project approvals and the Atlantic Coast Pipeline will continue to move forward with construction as scheduled. This decision only impacts activities directly covered by the Incidental Take Statement in certain defined areas along the route. We will fully comply as required while we continue to construct the project. Although we disagree with the outcome of the court’s decision, and are evaluating our options, we are committed to working with the agency to address the concerns raised by the court’s order.”

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