You May Pay A North Carolinian’s Coal Ash Costs

An illustration of the coal ash de-watering and treatment process at Bremo Bluff power station, which is now out of favor. Source: DEQ website.

The cost to Dominion Energy Virginia customers for recycling coal ash or moving it into more secure landfills is growing, because the proposed bill now recognizes that Dominion’s North Carolina electricity customers cannot be forced to pay by the Virginia General Assembly or the State Corporation Commission.

This phrase has been added to the current substitutes for House Bill 2786 and Senate Bill 1355: (v) any such costs that are allocated to the utility’s system customers outside of the Commonwealth that are not actually recovered from such customers shall be included for cost recovery from jurisdictional customers in the Commonwealth through the rate adjustment clause.  

Dominion Energy North Carolina’s customers in the northeastern part of that state depend on Virginia-based generation, including those coal plants, but the General Assembly so far seems fine with billing us for their share of these costs.  Why?  Absent that the company’s shareholders might have to pay it.  

The text of the bill, which will be considered in the Senate Commerce and Labor Committee this afternoon, has also lost the promise that the impact on a “typical” residential customer would not exceed $5 per month.  It does retain the annual limit of $225 million that Dominion can recover for its coal ash projects, with no limit however on the number of years.

The costs will not start to show up on customer bills until July 2021, per the legislature’s direction.  But costs can begin to accrue July 1 of this year, and rest assured the ratepayers will pay the carrying charge.

Just what this is going to cost, with or without the North Carolinians’ share, remains unknown.  Neither bill has been the subject of a formal fiscal impact statement, leaving customers to rely on company news releases or politicians’ wishful thinking on the question of total cost.  Whatever the estimate might be, the cost may grow once the process starts.

The SCC is prohibited by the bill from considering the closure in place methods Dominion is now using as an option.  More important, the SCC is prohibited from comparing the cost of that option when considering if the more expensive approach is reasonable and prudent.

As few as two of the four existing coal ash deposits near waterways feeding the Chesapeake Bay may become sources for the 6.8 million cubic yards of ash to be recycled.  The utility will instead be building new on-site landfills, meeting the demanded tighter standards, using its own capital and thus adding to the capital rate base which generates its profit margin.

That will be the solution at the Chesterfield plant, where more than half of the coal ash in dispute is stored.  Speaker of the House Kirk Cox sought and received assurance that his district would not be the one subjected to years and years of truck traffic moving the ash, as reported last week in the Richmond Times-Dispatch.

In fact, its not clear if ash will be trucked out of any location.  Both bills include:  § 2. Nothing in this act shall be construed to require additional beneficial reuse of CCR at any active coal-fired electric generation facility if such additional beneficial reuse results in a net increase in truck traffic on the public roads of the locality in which the facility is located as compared to such traffic during calendar year 2018.

The Senate bill includes a provision lacking from the House version so far, not yet considered  by the House:  3. The Commonwealth shall not authorize any cost recovery by an owner or operator subject to the provisions of this act for any fines or civil penalties resulting from violations of federal and state law or regulation. 

The Senate version also differs from the House on language dealing with delayed recovery of the balances which will build up because of the annual $225 million cap on recovery.  The House version will probably be carrying that language when it leaves the Senate Committee later today.  It seems to provide stronger protection to Dominion stockholders.

Managing two complicated bills moving in parallel tracks through the House and Senate, seeking to end with versions which are identical, is one reason Dominion has such a large lobbying operation.  But not the primary reason.  Getting the bills to read the way it wants is the real goal.

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16 responses to “You May Pay A North Carolinian’s Coal Ash Costs”

  1. LarrytheG Avatar

    re: “trucking”. Every one of those plants got their coal via train – not truck. So why can’t they move the ash out the same way they brought that coal in?

    This is why you do not want Dominion involved in this. They’re going to pick the most expensive way to deal with the issue – as a way to make excuses for not dealing with it.

    They’ve made that argument all along – that it’s way too expensive to do and then they generate analysis that “confirm” it.

    We need to have a totally independent 3rd party chosen by someone other than Dominion nor any of it’s supporters.. to do an independent analysis that provides OPTIONS of various different ways to do it – INCLUDING using rail to move the ash.

    There are abandoned coal mines in Western Va far below the water table where that ash could be entombed forever – actually back where it came from. how much would that cost?

    Could it be mixed with asphalt and used for roads?

    Most Virginians KNOW that leaving it in a pile next to a river bank is a gamble and they do not want it. But they DO want a cost-effective approach to mitigation and they want to see the options and costs not some conclusion from Dominion or the recipients of their money in the GA… get this in the hands of a 3rd party that has no connection to Dominion nor their supporters in the GA.

    1. Good ideas. Most of the cost of removing this coal ash is the cost of digging it up and loading and unloading into whatever containers will be used to haul it — the distance hauled is not a big factor. Once you’ve got it loaded into rail cars, take it to WV right to the mouth of an abandoned deep mine, where you could revive one of those rusting coal tipples and run the conveyor belts backwards to haul the ash away right from the rail siding.

  2. TooManyTaxes Avatar

    The General Assembly has no jurisdiction over retail services in North Carolina nor can it force Virginia ratepayers to cover costs incurred to provide electricity in the Tar Heel State. Where’s the Attorney General? Oh, he’s dealing with his formerly hidden past.

    1. The GA cannot force Virginia ratepayers to cover costs incurred to provide electricity in NC? I’m less confident where as here the cost is imposed by Virginia on Virginians. But as a matter of regulatory comity, there’s plenty of legal precedent out there for allocating the costs and the rate responsibility of a multi-jurisdictional utility to every jurisdiction fairly — unless the cost was imposed by a jurisdiction in such an egregious manner, contrary to precedent, that the other jurisdiction is comfortable in rejecting it. The costs of rate-based generation including clean-up costs incurred even after the units are retired are near-universally allocated among multiple retail electric jurisdictions in proportion to test-year energy consumption and customer demand factors.

      1. TooManyTaxes Avatar

        And there is no right in the first state for the utility to make up any losses incurred in the second state. For example, California had a non-standard way for addressing the amortization of federal investment tax credits. The FCC and most states used a balanced approach between ratepayers and investors. California’s didn’t and gave investors less.

        Neither the FCC nor any state PUC of which I’m aware ever considered allowing the Bell System a way to become whole because of the California approach. Nationally, the investors got less than was fair.

  3. Steve, regarding your headline… “You May Pay North Carolina’s Coal Ash Costs, Too”…

    That implies that we might be on the hook for Duke Energy’s cleanup costs.

    Wouldn’t it be more accurate to say, “You May Pay North Carolina’s Share of Virginia’s Coal Ash Clean up”?

    1. Yes.

  4. When it comes to rate regulation of a multi-jurisdictional electric utility, this is absolutely a terrible precedent. Anyone familiar with this field of regulatory law knows that Jurisdiction B causing a gap in rate recovery by refusing to recognize its fair share of a legitimate cost imposed by Jurisdiction A’s environmental regulation is akin to a declaration of inter-state regulatory warfare. There is no end to where such a tit-for-tat can lead. The fundamental principle is: the utility incurs all its costs for all its jurisdictions — period; and most state courts adhere to this principle out of comity as well as decades of precedent. Here, I see a terribly shortsighted attempt by Dominion to force the SCC to cover Dominion’s short-run financial fanny in a way that disdains to trust the SCC to do right by Virginia customers and practically invites the NCUC to refuse to pay NC’s share of these costs. It’s an absurdly condescending regulatory tactic for Dominion to force the SCC’s hand in this way, and it’s likely to create hugely counterproductive precedent for the regulation of Dominion’s interjurisdictional affairs, especially in NC, in the long run.

  5. Reed Fawell 3rd Avatar
    Reed Fawell 3rd

    Another insightful, informative post, this one by Steve Haner.

    After reading these recent posts in BR, and pondering their cumulative message and impact, one is forced by logic alone to conclude that Virginia’s state government, all of its constituent parts, most prominently the sitting Governor, his cabinet, and the General Assembly, spend the great bulk of their time:

    1/ wasting taxpayer monies,
    2/stealing monies otherwise due Va. citizens under Federal tax reduction laws,
    3/ increasing state spending constantly so as to impose ever higher taxes and heavier tariffs on Virginia taxpayers, and,
    4/ shifting ever more energy costs on to Virginia ratepayers, to pay off Democratic political Campaign funders, and/or protect shareholders.

    And that, when not engaged in these policies that negatively impact those in Virginia who work for living, pay taxes, and/or use electricity to live, the current ruling class in Virginia deploy a constant race baiting and virtue signaling campaign to earn the requisite 80% of the black vote in Virginia so as to maintain themselves in power, and continue such policies.

    Meanwhile, no one in this dysfunctional government, is responsible or accountable for anything to anyone, much less the enormous mess Virginia and its citizens find themselves in today.

    Meanwhile the Governor reads Roots, and studies up on Reparations opportunities so as to solve problems.

  6. Jane Twitmyer Avatar
    Jane Twitmyer

    I ask the same question I asked before … Since utililty ‘best practices’ 35 years ago said pond should be lined and capped when closed … and since Dominion chose to take a chance on the way they built their ponds … doesn’t that make the company and the shareholders responsible?

    This coal ash bill is only a start … Dominion has 11 unlined ponds that the Court ordered new EPA regs will require moved to lined new ponds or landfills. South Carolina has stepped up to reconstruct all their unlined ponds while we have 8 ponds labeled ‘significant hazards’ and 3 that Dominion’s own tests have shown to be contaminating groundwater today.

    Now, customer’s will be charged to fix the bad decision while the unreturned overcharged rate monies is designated for other things. What a mess!

  7. TomH advises me the West Virginia coal plants that make power solely for Virginia are considerd Virginia’s CO2 burden, while the Virginia power plants making elec for North Carolina are considered NC’s CO2 burden for RGGI purposes. So we tend to break even? Not sure the relative sizes of the plants.

    Confusing what the plan is for Dominion, creating new landfills in new locations, or what?

  8. Jane Twitmyer Avatar
    Jane Twitmyer

    TBill …. I believe those W VA coal plants that make electricity considered as VA electricity are the Mt. Storm plants only. There are 3 plants with a little over 1600 MWs capacity and a very small ‘peaker’ plant that uses light fuel oil. The Mt Storm complex was built in the 60’s and the 70’s and is basically located on the state line. Maybe the plants are “Virginia’s” because of the way the plants are connected to the VA grid, I do not know.

    About the landfills … I just know that lined landfills can replace ponds and and will in some states. The landfills can be on the plant’s property but
    I guess that depends on what land is available.

    1. Dominion’s ratebased generating plants are not assigned plant by plant to Dominion’s individual retail jurisdictions. Rather, the total cost responsibility for all such generation, regardless of where it is located, is allocated across all of Dominion’s retail and wholesale customers in proportion to their energy consumption from Dominion and their peak demands on Dominion. There is no such thing as “Virginia electricity” on the Grid — the electrons do not carry labels.

      1. Jane Twitmyer Avatar
        Jane Twitmyer

        So does that mean that the NC plants that are listed as VEPCO owned, about 500MWs, would be part of the carbon count? Based on company ownership?

        1. Jane Twitmyer Avatar
          Jane Twitmyer

          PS…NC plants listed on VEPCOs list are hydro so carbon and coal ash don’t figure into this equation.

  9. vaconsumeradvocate Avatar

    Shareholders should pay for the NC costs if NC doesn’t. Rate payers should not have to pay for them! Also need to prohibit company from earning any rate of return on this. Just pay what it costs. No more.

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