Tag Archives: Dominion

Whoah! Virginia Offshore Wind Now to Cost $8 Billion!

by James A. Bacon

Dominion Energy estimates that the cost of developing a proposed off-shore wind farm in Virginia waters will cost up to $8 billion, The Virginia Mercury reports today, although utility officials do say they “will work hard to bring that number down” as the offshore-wind supply chain develops over time. Dominion’s previous cost estimate for Virginia offshore wind (current only two months ago) was “up to $1.1 billion.”

The Dominion website says that the offshore wind farm will be built in three phases of about 880 megawatts each, for a total of about 2,640 megawatts. That comes out to about $3 million per megawatt. For purposes of comparison, the utility’s newest combined-cycle natural gas-generating facility in Greensville County cost $1.3 billion for a capacity of 1.588 megawatts, or about $820,000 per megawat — roughly a quarter the cost. Continue reading

Orsted Drops Projected OSW Capacity Factors

Orsted’s Hornsea 1 wind farm off the coast of England. Source: Orsted

By Steve Haner

The company that will partner with Dominion Energy Virginia to build a massive offshore wind farm off our coast has just cut the energy production forecasts for its own facilities, sufficient to lower its profit margins and drop its stock values.

“Our models weren’t sophisticated enough,” Orsted’s chief financial officer is quoted in one energy industry outletBloomberg’s article, one of many based on the company’s open discussion of the issue yesterday, described the problem this way:

The tests show that the company’s current production forecasts underestimate the negative impact from the so-called blockage effect, which arises when the wind slows down as it approaches turbines. It also underestimated the negative effect of the so-called wake effect, in which wind speeds drop between wind parks, it said.

The change will drop what’s called the lifetime load factor to 48%, down from a range of 48%-50%. That figure represents an estimate of how much electricity the machines produce divided by the potential capacity of the turbines. Since the wind doesn’t always blow strongly enough to turn the wind turbine blades, the load factor is always lower than capacity.

The number seems small, but for a giant windfarm like Orsted’s Hornsea One off the east coast of England, a change could shift income by 10s of millions of dollars every year, according to an analysis by BloombergNEF.

“2% is a big deal,” said Tom Edwards, an analyst at Cornwall Insight. “Over the lifetime that’s a lot of energy.”

Continue reading

Dominion Goes Whole Hog for Waste-to-Energy

Hog waste farm: from methane polluter to renewable energy source.

by James A. Bacon

Dominion Energy and Smithfield Foods are investing a half billion dollars to capture methane from hog farms and convert it to “renewable natural gas.” The partnership aims to become the “largest renewable natural gas supplier in the U.S.,” according to a press release issued Wednesday.

A few days ago, I noted how Dominion had sold a $2 billion stake in its Cove Point liquefied natural gas project as part of a larger restructuring of the company away from businesses exposed to market forces in favor of regulated businesses like electric utilities and gas distribution companies. I wondered if Dominion now sees its competitive advantage as its ability to manipulate the regulatory and legislative process.

This new venture, Align Renewable Natural Gas, suggests that Dominion hasn’t abandoned risk-taking ventures entirely. Dominion is making a $250 million bet that a “waste-to-energy” model, demonstrated only in pilot projects, can be implemented nationally. I don’t recall the company having taken a risk of this magnitude to create an entirely new business model before. Continue reading

Northam Opposes Coming Retail Choice Bill?

By Steve Haner

Governor Ralph Northam is quoted in a Standard and Poor’s Market Intelligence news article Friday as opposing any efforts to change Virginia’s electricity regulations, which presumably would include the 2020 retail choice proposal gathering steam in the background.

Reporter Michael Copley wrote about Friday’s state solar and wind power purchase agreements and added this near the bottom, under the heading “No changes seen to Va. utility regulation”:

To advance its clean energy initiatives, the Northam administration is partnering with a utility company (Dominion Energy Virginia) that is facing a backlash over perceptions that it uses political donations to wield outsized influence in Virginia. In August, Virginia utility regulators said Dominion Energy Virginia earned $277.3 million above its authorized return on equity in 2018.

Some lawmakers in the Southeast U.S. have called for breaking up monopoly utility businesses such as Dominion’s, arguing that customers would benefit from more competition.

Northam said he does not plan to overhaul utility regulation in Virginia. “I think right now as we move forward, we’re going to work with the system that we have,” he told S&P Global Market Intelligence. “That doesn’t mean it’s a perfect system, but it is a system that we can work with.”

Continue reading

Dominion Refinances Capital Structure, and What It Means to Virginia

by James A. Bacon

Dominion Energy Inc. will sell a 25% interest in its Cove Point  liquid natural gas-exporting facility to Brookfield Super-Core Infrastructure Partners, an infrastructure fund, for $2 billion, the company announced this morning. Said Dominion CEO Thomas F. Farrell II: “The agreement highlights the compelling intrinsic value of Cove Point and allows us to efficiently redeploy capital toward our robust regulated growth capital programs.”

That raises an interesting question: What does Farrell mean by “regulated growth capital”? Does this mean Dominion is redeploying capital from competitive, lightly regulated business enterprises such as natural gas exports toward heavily regulated enterprises such as electric utilities, as evidenced by its acquisition of SCANA in South Carolina?

In a word, the answer is, “yes.”

An article in S&P Global Marketing Intelligence sheds light on Dominion’s strategic thinking and capital spending plans. In March 2019 the company unveiled a $26 billion “growth capital plan” for 2019 through 2023. The first three years will be financed by $7 billion in operating cash flow, the issuance of debt, and the cobbling together of capital from other sources. Continue reading

Dominion Vies to Become Sustainability Leader — at What Cost?

by James A. Bacon

Dominion Energy is aggressively positioning itself as a leader among U.S. electric utilities in renewable energy and environmental stewardship. Whether the shift in strategic direction will win it any friends among Democrats and environmentalists who increasingly dominate Virginia politics is an open question. The environmental wing of the Democratic Party of Virginia continues to move the goal posts, now embracing the goal of a zero-carbon (and likely a zero-nuclear) electric grid for Virginia by 2050, a vision that is irreconcilable with Dominion’s commitment to nuclear and natural gas for the foreseeable future.

Regardless, like most other electric utilities, Dominion sees the direction the country is heading and is running to catch up. The company has detailed its move toward a renewable energy future in its just-issued Sustainability & Corporate Responsibility Report.

“The people of Dominion Energy are leading the country’s transition to clean energy,” said CEO Thomas F. Farrell, II, in a statement accompany the release of the report. “We are transforming everything we do to build a more sustainable future for our customers, the planet and our company. … We intend to become one of the most sustainable companies in the United States.”

The report highlights the following: Continue reading

Dominion Has Lost the Dems. What’s Next?

Susan Swecker, chair of the Democratic Party of Virginia. Photo credit: Richmond Times-Dispatch

Dominion Energy is fast losing the Democratic Party. Following the lead of dozens of Democratic candidates and elected officials, the Democratic Party of Virginia has declared that it will no long accept political contributions from the electric utility. Reports the Richmond Times-Dispatch:

Party Chairwoman Susan Swecker said Dominion’s contributions are a “very contentious issue with a lot of folks all across the commonwealth, and we thought it was time for us to just step up and say this is where we are,” according to an interview published on the left-leaning blog Blue Virginia.

Party spokesman Jake Rubenstein confirmed the decision but would not comment further. DPVA’s pledge also includes Appalachian Power, the state’s other electric monopoly.

The House Democratic Caucus and Gov. Ralph Northam’s political arm The Way Ahead are still accepting Dominion money, but it’s clear which way the party is heading. Virginia Democrats increasingly embrace a progressive/left ideology along with an apocalyptic view of climate change and a thorough-going hostility toward fossil fuels. Although Dominion is moving aggressively toward renewable energy, including a just-announced $7.8 billion offshore wind project as well as billions of dollars in solar projects, the utility still remains committed to natural gas, as highlighted by its Atlantic Coast Pipeline project, and nuclear power, which is also unpopular with the Left, as supplementary energy sources. Continue reading

Dominion’s Move Against Green Competitors Fails

by Steve Haner

The verdict is in and green energy virtue in Virginia’s electricity market remains available in monthly increments. You do not need to be green twenty-four hours a day, seven days a week, tracking every change of demand.

That was the requirement demanded by Dominion Energy Virginia in its recent effort to block competitive service providers who are taking away customers who want 100% renewable power. In a 22-page opinion issued today (here), the State Corporation Commission rejected every Dominion assertion across the board. It said the two companies, Calpine Energy Solutions and Direct Energy Business, are operating within Virginia law.  Continue reading

More Restrictions Proposed for Culpeper Solar Farms

Off limits to utility-scale solar? Civil War battlefield locations in Virginia.

by James A. Bacon

Culpeper County prohibits construction of solar farms on Civil War battlefields. Now a proposal under consideration by the Board of Supervisors would discourage large solar projects adjacent to battlefield land held in historic easement, reports the Culpeper Star-Exponent. And that restriction is just one of many changes to the county’s Utility Scale Solar Facility Development Policy under review by the board.

Last year the board approved the 1,000-acre Greenwood Solar project over local opposition. Since then resistance to the land-consuming facilities has gotten more organized. One group, Citizens for Responsible Solar,  has actively pursued a policy of delay and encumber to restrict development of large-scale solar farms. Last month Cricket Solar pulled a proposal for a 1,600-acre solar farm in the county. Meanwhile, local opposition has stalled progress on utility-scale projects in other counties.

On the state level, it is the policy of the Northam administration, the General Assembly, the environmental community, and Dominion Energy to boost the contribution of solar power to Virginia’s energy mix. People may disagree about how far and how fast to go, but just about everyone agrees on the desirability of having more solar than we have now. But opposition at the local level has emerged as a significant barrier to large-scale deployment of solar. Continue reading

Tweet First, Check Your Notes Later

by Steve Haner

It doesn’t matter what you say, only what they say you said. This was demonstrated once again this morning as the State Corporation Commission’s hearing on Dominion Energy Virginia’s profit margin unfolded in Richmond courtroom.

While Dominion’s lead attorney droned on in his opening statement, Sarah Vogelsong of Virginia Mercury – doing running commentary on Twitter – posted this: “He also seems to be taking a swipe at “half the Democrats in the General Assembly” and what they think about utility rates, which seems unusually political for these hearings.”    Continue reading

Just Pretending To Protect Ratepayers Won’t Cut It

by Steve Haner

If you have nothing substantive to offer, try some meaningless virtue signaling. That’s the only way to interpret a claim from 36 General Assembly Democrats that they are taking steps to oppose “Dominion raising Virginian’s energy bills by $147 million,” to quote a Blue Virginia headline today.

The story reports on a letter to the State Corporation Commission signed by three state senators and 33 delegates, asking the SCC to support a lower authorized return on equity for Dominion Energy Virginia for 2019 and 2020.  Here is the “so what” paragraph:  Continue reading

“De-Risking” Offshore Wind

Ørsted’s Hayes Framme. Photo credit: Philip Shucet

by James A. Bacon

In its original incarnation a few years back, the two-turbine wind project Dominion Energy proposed to build off the Virginia Beach coast was billed as a “research” project. In the hope of winning a $40 million federal research grant, Dominion wanted to see how well the two wind turbines held up in hurricane conditions of the mid-Atlantic before committing to a large-scale wind farm.

That grant never materialized, but the project lives on. According to the latest project time-line, if all goes according to schedule, the two turbines will be complete by August 2020. Now Dominion and its contractor, Ørsted Energy, are calling the $300 million investment in Virginia’s renewable energy future a “demonstration” project.

The Coastal Virginia Offshore Wind (CVOW) project will have no new technology and little new engineering. The turbines will collect data that might be useful when planning the final configuration of far bigger wind farm proposed by Dominion. But there is no assurance that the turbines will encounter hurricane conditions before Dominion builds the wind farm. Subject to regulatory approvals, the utility says it ” plans to invest up to $1.1 billion in offshore wind” by 2023.

What, then, is the purpose of the two turbines, which will produce the most expensive electricity on a cost-per-kilowatt basis in the entire Dominion system? I posed that question to Dominion a month ago and got this response, which contained the answer but, for lack of context, I did not appreciate. Accordingly, when invited to chat with Hayes Framme, an aide to former Governor Terry McAuliffe who now handles government relations and communications for Ørsted, I jumped at the opportunity to ask the question anew. Continue reading

Dominion: Two Reports, Four Predictions

Dominion Energy Virginia bill breakdown, for 1,000 kWh of residential service. Base rates were recently reduced by the federal tax cuts, and fuel fluctuates, but rate adjustment clauses (RACs) proliferate and grow, with more to come. Source: SCC

by Steve Haner

There is no sign, nine weeks out from the big General Assembly election, that the arcane and obscure field of electricity regulation is going to change any votes or win any elections in Virginia in 2019. There is plenty to debate if anybody wanted to in two recent reports now public at the SCC and linked below.

The State Corporation Commission just issued yet another report that Dominion Energy Virginia is reaping massive excess profits, more than half a billion dollars in 2017 and 2018 combined. There is very little chance that the company’s 2.45 million customer accounts (about two thirds of Virginia customers) will see any refunds or price reductions as a result. Prediction number one: The company keeps it all come the 2021 review and base rates do not change.   Continue reading

Dominion Must Move Customers To Competitors

by Steve Haner

The State Corporation Commission Wednesday granted motions by two competitive service providers and ordered Dominion Energy Virginia to hand over various customers.  The two companies, Direct Energy Business LLC and Calpine Energy Solutions LLC, offer a 100 percent renewable energy option in the monopoly utility’s territory.

“The Commission has found that: (a) absent the instant order, Direct Energy and Calpine will suffer irreparable harm; (b) Direct Energy and Calpine have no adequate remedy at law; and (c) the Commission is satisfied of Direct Energy’s and Calpine’s equity,” reads a footnote in the order (here). Continue reading

Fungible (and Vintage?) Green Virtue, For A Fee

Renewable energy certificates can have a vintage? Some might prefer fresh solar or wind power.

by Steve Haner

Like most major electric utilities now, Dominion Energy Virginia has a certain amount of energy generated by processes now designated “renewable.”  Hydro power has been around for a long time, and now that is supplemented by a growing number of solar generators – owned by the company or under contract to it.

All Dominion customers are getting some of their electricity from those sources.  Everyone is a little bit green.  But for an extra $4.21 per 1,000 kilowatt hours, some other customer can take away your green power and leave you less green or totally not green, at least on paper.  Overall the utility’s output stays the same, but it might pick up a few more dollars per month from up to 50,000 of its customers.  Continue reading