by Steve Haner
Legislation to increase the size of the State Corporation Commission from three to five judges, giving majority Democrats a chance to pack the panel with their appointees, may provide the first real test of how much things have changed in New Blue Virginia.
Freshman Delegate Dan Helmer, D-Fairfax, introduced House Bill 1297, which is on the docket for the full meeting of the House Labor and Commerce meeting Thursday afternoon. One of the three existing SCC judges, Patricia West, could be re-elected this session and is not expected to be, giving the new majority one seat to fill by March. As introduced, Helmer’s bill creates two more seats to be filled at some future special or regular session.
Energy issues, and the SCC’s perceived hesitance to charge forward and save the planet from climate catastrophe, are front of mind with many of the new (and some of the old) legislators. But a reconstituted SCC could also change direction on insurance, banking, corporate governance, pipelines and other areas of regulation under its purview. Its key role on those is often overlooked.
Once the full committee rises, in a meeting of the newly constituted energy subcommittee of House Labor and Commerce, more than twenty energy bills will face their first hearing. The meeting will probably start late and run long, but Friday’s dawn may mark a new green energy age, at least in the House of Delegates. Continue reading
By Steve Haner
Sinners! The hour of redemption is at hand! For years now some of you have deprived your fellow Virginians of a fair hearing in front of the judges set above them. To deny justice is among the worst of abominations, but a chance for salvation has appeared.
Yes, I am talking to the many Virginia legislators who helped protect the profits of the state’s dominant electric utility from proper review and adjustment. You have corrupted the law with “this is in the public interest” and “refunds shall not be ordered unless” and “rates may not be reduced until” and “this shall be deemed reasonable and prudent.” The judges you have fettered with these phrases sit on the State Corporation Commission
Some of you fell from grace in this way in 2013, 2014, 2015 and then again in 2018. One correct vote in 2020 can wipe the slate clean, returning your political souls to purity.
With passage and implementation of House Bill 969, all will be forgiven. Even this author of countless energy Jeremiads will praise your return to the fold. But woe unto you who fail to heed this final trumpet and abandon the people again. The day of decision is here. Continue reading
by Steve Haner
If Bacon’s Rebellion at times has been “Dominion Pravda,” providing a window into that corporate giant’s C suite, our friends at the Virginia Mercury sometimes take the opposite role of “Environmental People’s Daily.”
Its story today is a good example, for what it includes and what it does not. The long, detailed and worthwhile summary of energy and environment issues coming to the 2020 General Assembly has a glaring omission. It makes no reference to the Transportation and Climate Initiative. If anybody could get a straight answer out of the Northam Administration, you’d think it would be Virginia Mercury. The silence is deafening and perhaps significant.
At some point soon somebody has to say something, wouldn’t you think? In others states in the proposed interstate compact, governors are being pinned down, actual TCI bills are pending, legislators are taking positions, coalitions are forming. This will have to happen in Virginia soon if the organizers of TCI want their proposed memorandum of understanding signed by enough states to actually impose the carbon caps and taxes by 2022. Continue reading
by Steve Haner
The Virginia Secretary of Natural Resources will be the sugar daddy for the carbon tax dollars raised from electricity customers, according to pending legislation to fully enroll Virginia in the Regional Greenhouse Gas Initiative (RGGI) next year.
House Bill 20, sponsored by Norfolk Democrat Joe Lindsey, is similar (with some changes) to 2019 legislation which died on a partisan vote when Republicans controlled the General Assembly. Now that power has shifted the bill’s chances of passage are excellent. It has several unusual provisions and may hint at how the related Transportation and Climate Initiative will be implemented in Virginia. Continue reading
Dominion Virginia Power’s gas-burning plant in Brunswick County.
By Peter Galuszka
International financial analysis firm S&P Global has issued a scathing report criticizing Dominion Energy Virginia for over emphasizing future electricity demand and proposing unneeded natural gas-fired generating plants.
According to S&P: “An examination of State Corporation Commission, or SCC, records; Dominion’s past integrated resource plans, or IRPs; campaign finance documents; and independent reports, along with interviews with utility analysts and environmental advocates and statements from Dominion officials, shows that the company has consistently over-forecast electricity demand to justify building new capacity, primarily natural gas plants with dubious economics that will ultimately be paid for by ratepayers.”
Dominion plans on adding at least eight gas plants with a generating capacity of 3,700 megawatts by 2033, S&P reports. An update to its 2018 IRP plan would add three alternatives that would add 2,425 megawatts of gas capacity by 2044. Continue reading
Coal ash at Dominion’s Chesterfield power station. Photo credit: Richmond Times-Dispatch
by James A. Bacon
The cost of cleaning up coal ash at Dominion Energy’s old coal-fired power plants will run between $2.4 billion and $5.7 billion, the company said at a presentation to the State Water Control Board yesterday. Disposal costs could add $5 to the monthly bill of typical households over the next 15 to 20 years, reports the Richmond Times-Dispatch.
Dominion’s original plan called for consolidating and capping coal ash on site at its coal-generating plants. Environmental groups criticized the plan on the grounds that underground water migrating through the coal ash would pick up contaminants and pollute public waters. Under orders from the General Assembly, the power company now is looking at a combination of strategies that include recycling, on-site landfilling and off-site landfilling.
We are getting a clearer idea of how much the General Assembly’s coal ash mandate will cost, but I have yet to see an analysis of how much benefit will come from exceeding Environmental Protection Agency (EPA) disposal standards. Continue reading
by James A. Bacon
More blue on blue: Hedge-fund manager Michael Bills, the money meister behind Clean Virginia, worked behind the scenes to oppose the elevation of Del. Eileen Filler-Corn, D-Fairfax Station, to Speaker of the House. So alleged Senate Majority Leader Richard Saslaw, D-Fairfax, in an interview on the John Fredericks radio show last week.
“I had heard that they or they representatives had made phone calls to get people to vote against Eileen,” Saslaw said. “You know, quite frankly, you’re getting awfully close to that quid pro quo line when you’re doing stuff like that. I don’t take, nor does our caucus… we don’t take any contributions that come with any conditions. To me, you’re getting into dangerous territory when you accept a deal like that.”
Bills and wife Sonjia Smith spent nearly $2 million in donations that came from them personally or funneled through Clean Virginia to candidates who pledged not to take contributions from Dominion Energy.
The story, if true, suggests that a schism exists between the establishment wing of Virginia’s Democratic Party and the militant environmentalist wing of the party. Militant environmentalists deem Dominion Energy to be a fount of political corruption and, due to the utility’s continued advocacy of natural gas, an impediment to the goal of achieving a 100% renewable electric grid. However, as long as Dominion can patch together a coalition of Republican and pragmatic Democratic lawmakers, it will likely continue to prevail in the General Assembly. Continue reading
Crying All The Way To The Bank
By Steve Haner
After a long, expensive and contentious legal battle producing a huge case record, the State Corporation Commission left Dominion Energy Virginia’s authorized profit margin unchanged Thursday. The return on equity figure did not go higher, as the utility demanded, and did not go lower, as just about everybody else involved in case demanded.
The SCC order is here.
You will see report after report in news media now that the authorized return is 9.2%, such as this one. This is wrong. The authorized return, because of Virginia’s uniquely pro-stockholder state law, is really 9.9%. The law allows the utility to keep 100 percent of the first 70 basis points of excess profit above the stated allowed profit. With the large amounts involved over multiple years, that extra 70 basis points is real money out of your pockets. Continue reading
Virginia City Hybrid Energy Center in St. Paul, which burns both coal and wood biomass. It is the centerpiece of Dominion’s proposed 100% renewable service, infuriating environmental opponents. Dominion photo.
By Steve Haner
Is Governor Ralph Northam now on both sides of the electricity retail choice issue? Having sent a strong signal weeks ago that he would oppose 2020 legislation creating competition for all customers, his administration has now intervened in a regulatory dispute asking to protect competitive choice for 100% renewable electricity. You are only free to choose if you choose green?
In order to stop other companies from selling so-called 100% renewable electricity in the Dominion Energy Virginia territory, the utility needs its own version of this shell game approved by the State Corporation Commission. The next hurdle in that long road is a hearing at the SCC Thursday.
When we visited this saga in August, Dominion’s application for what it calls Rider TRG had been filed but few of the likely opponents had responded. A long list of complaints about the idea is now part of the case record, including objections from the Northam Administration filed Friday in the name of the Department of Mines, Minerals and Energy.
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’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 outlet. Bloomberg’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.”
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
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.”
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
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