Dominion executive speaks up on climate change. That turns out to be a bad thing.

Photo courtesy of Chesapeake Climate Action Network

Photo courtesy of Chesapeake Climate Action Network

In guest blogger Seth Heald’s last post here, he discussed the strange fact that top executives at Dominion Power don’t talk about climate disruption, even though it is a major driver of the tectonic shifts underway in the nation’s power sector. Many of us assumed the climate silence at Dominion means its executives want to avoid a subject that can be politically divisive.  Turns out some of them are talking–but not in a good way. Heald brings us the story.

As I’ve written elsewhere, senior Dominion executives and other electric utility officials tend to avoid mentioning climate change in their public discussions. Dominion Virginia Power president Bob Blue avoided that unpleasant topic in his keynote luncheon speech at a recent Virginia resiliency conference, a forum where one has to work to avoid mentioning climate change. That sort of climate silence at the corporate top leaves the public wondering what Dominion executives really think, or whether they think much at all, about climate change.

It may also leave other Dominion executives in doubt about where their company stands. Last month a curious letter to the editor appeared in the Richmond Times-Dispatch headlined “Actually scientists disagree about climate.” At first glance the letter seemed ordinary—reciting misguided climate-science denial arguments for not acting to reduce greenhouse-gas emissions. It complained about “alarmists” who (the letter claimed) refuse to acknowledge benefits of climate change. And it suggested that Americans devote “our limited dollars” to adapting to climate change rather than slowing it by reducing greenhouse-gas emissions.

Letters of this ilk appear with depressing regularity in the Times-Dispatch and many newspapers. They misrepresent the state of climate science, reciting talking points that can be found on any of a number of denialist websites, or heard at conferences sponsored by fossil-fuel funded groups such as the American Legislative Exchange Council (ALEC). That’s sad, but not unusual.

But this climate-science denial letter was different in one key respect—it was written by David Shuford, a vice president and deputy general counsel at Dominion Resources Inc., Virginia’s largest energy company and the commonwealth’s biggest emitter of climate-disrupting carbon dioxide. (Shuford’s letter did not note his Dominion connection).

Now that is noteworthy.

What’s more, the Times-Dispatch published a similar Shuford letter earlier this year in which he complained about climate change “warmists” who are “watermelons” (“green on the outside, red on the inside”).

As Dave Barry would say, I am not making this up—a senior Dominion executive really is making these arguments in the press.

A few years ago Shuford served as “Vice President – Policy and Business Evaluation, Alternative Energy Solutions” at Dominion. According to Dominion’s Citizenship & Sustainability Report, the company’s Alternative Energy group “drives innovation by researching and evaluating renewable and emerging energy technologies to assess their commercial viability and potential for building a more sustainable economy.” Virginia lags neighboring states in deploying clean energy such as solar and wind, in no small part because Dominion has opposed measures of the sort that have helped other states ramp up clean energy.

That makes Shuford’s letters all the more noteworthy.

I phoned Shuford at his Dominion office to be sure he had really written the recent letter. He confirmed he had, but was quick to emphasize that he wrote it on his own, that he did not purport to speak for Dominion, and that no one at Dominion had reviewed the letter before he sent it. The letter, he said, reflects his personal views.

In an odd sense, Shuford’s going public with his views is refreshing—we know where this Dominion executive stands on climate change. His views are ill-informed and dangerous for his industry, our commonwealth, our country, and our world, but at least we know what he thinks. Which Dominion executives disagree with Shuford? Are any of them willing to publicly refute his arguments and accurately inform the public about climate change?

Is Shuford an outlier at Dominion, or do his views perhaps align with what other company executives think? Dominion acknowledges on its website that climate change is a concern, but in the same paragraph notes its plans to use greenhouse-gas emitting coal and natural gas far into the future. The company’s website says it wants a national climate change policy to “be developed legislatively,” yet Dominion also financially supports ALEC, which has worked for years to misinform legislators about climate change and block efforts to reduce greenhouse-gas emissions. Many large corporations have left ALEC for that reason, including Virginia’s other big electric utility, AEP. But Dominion has stuck with ALEC.

What’s most offensive and cruel about Shuford’s recent letter is his suggestion that we focus solely on climate adaptation rather than reducing greenhouse-gas emissions. He seems unaware of the analyses showing that reducing emissions now is highly cost effective compared to the astronomical costs of adaptation without emission reductions. And I doubt that the adapting he’s thinking of includes helping poor people in the third world adapt to sea-level rise, floods, drought, disappearing glaciers, or extreme weather caused in large part by the developed world’s greenhouse-gas emissions. Nor does he seem aware that relying on adaptation alone essentially writes off the entire Hampton Roads region, where many Dominion customers live.

Dominion claims that ethics is one of its four core values. Top executives at an ethical company would feel compelled to respond promptly, forcefully, and publicly to a published letter from a company vice president suggesting that we ought not to reduce greenhouse-gas emissions because people can simply adapt to climate change.

Dominion’s board should require the company to conduct training for executives and board members on climate-change ethics, and for that matter on climate science too.

Seth Heald is chair of the Sierra Club Virginia Chapter. He is a student in the Master of Science in Energy Policy and Climate program at Johns Hopkins University.


For curious readers, reprinted below is Mr. Shuford’s letter, as published in the Times-Dispatch. That is followed by an annotated version that provides Seth Heald’s responses to Mr. Shuford’s points (in italics), with citations to sources with accurate information.

Actually, scientists disagree about climate

Editor, Times-Dispatch:

Can we please stop the nonsense about science-supported climate change believers and science-denying climate change skeptics?

We are constantly told that “the science” is settled, that 97 percent of scientists agree on “the science,” and that the benighted few who disagree must be shunned or even prosecuted. In truth, the debate is far more real — even in the scientific community — than these armchair experts apparently realize.

There has never been 97 percent scientific agreement on the questions that matter with climate change. Simply repeating it doesn’t make it true. No one disagrees with the fact that the climate is changing. And most everyone agrees with the so-called greenhouse theory — that carbon dioxide causes the atmosphere to warm and that man has contributed to its concentration in the atmosphere.

The real debate in and outside the scientific community is over questions that flow from that theory, including the following:

(1) How much of global warming is due to mankind and how much is natural?

(2) Are there forces that counteract the greenhouse effect that aren’t being considered in the climate alarmists’ computer models (which might explain how their computer models have proven so inaccurate)?

(3) Does the absence of warming over the past 15 years disprove the alarmists’ theories about catastrophic global warming and, if not, why not?

(4) Will warming in the next century really be catastrophic, or could it actually be beneficial in ways the alarmists won’t concede?

(5) Given that the celebrated Paris Climate Agreement will have negligible effect on global temperatures even if every country complied, would our limited dollars be better spent on adapting to a warmer climate than on trying to prevent it?

So enough with the trope about the 97 percent versus “deniers.” There simply is no scientific consensus on the questions that will drive public policy on this issue.

David Shuford.

Richmond.

Mr. Shuford’s letter, with annotated response 

Editor, Times-Dispatch: Can we please stop the nonsense about science-supported climate change believers and science-denying climate change skeptics?

We are constantly told that “the science” is settled, that 97 percent of scientists agree on “the science,” and that the benighted few who disagree must be shunned or even prosecuted. In truth, the debate is far more real — even in the scientific community — than these armchair experts apparently realize.

There has never been 97 percent scientific agreement on the questions that matter with climate change. Simply repeating it doesn’t make it true.

See this 2016 paper confirming that there is a high degree of consensus about human-caused climate change among climate-science experts. See also this 2004 paper by (now) Harvard Professor Naomi Oreskes, published in Science, the journal of the American Association for the Advancement of Science. Also well worth reading is Merchants of Doubt, by Oreskes and Erik Conway, which details efforts by corporations to mislead and create confusion about the science concerning cigarette smoking and climate change.

No one disagrees with the fact that the climate is changing.

In fact a large number of people have attempted to argue that climate change is a hoax, and many still do, including a number of the candidates in the recent Republican presidential primary contest, such as Ted Cruz and Donald Trump, to name just a couple. But it is true that some of the fossil-fuel funded groups that formerly argued that there is no global warming have reacted to criticism by changing their argument to “the climate is always changing,” as if that somehow disproves the scientific consensus that human greenhouse-gas emissions are causing dangerous warming. A good example of the changing arguments of fossil-fuel-supported climate misinformers is ALEC—the American Legislative Exchange Council, which Dominion Resources belongs to and supports financially.

And most everyone agrees with the so-called greenhouse theory — that carbon dioxide causes the atmosphere to warm and that man has contributed to its concentration in the atmosphere.

Not true. Those, like Donald Trump, who say global warming is a hoax certainly don’t agree with this. Nor does Ted Cruz, who last year agreed that his climate position is “full out denial.” Some climate change deniers make statements like “carbon dioxide is harmless, you’re breathing it now,” as if that somehow disproved the disturbing warming effects that scientists have found. And of course Senator James Inhofe famously brought a snowball into the senate in winter in an effort to show that global warming is a hoax.

The real debate in and outside the scientific community is over questions that flow from that theory, including the following:

  • How much of global warming is due to mankind and how much is natural?

False. There is no real debate in the peer-reviewed scientific literature over the fact that the unusual, accelerating global warming seen since the 19th Century is attributable to the increase of greenhouse gases, primarily carbon dioxide, in the atmosphere due to burning fossil fuels. An excellent book to read on this is The History of Global Warming, by Spencer Weart (2d ed. Harvard Univ. Press 2008). It’s a scholarly book that is clear and approachable for lay readers. See also the links below to reports by several prestigious scientific bodies.

  • Are there forces that counteract the greenhouse effect that aren’t being considered in the climate alarmists’ computer models (which might explain how their computer models have proven so inaccurate)?

What are these unnamed “forces”? Shuford doesn’t say. What is Shuford’s evidence that climate models have “proven so inaccurate”? In fact climate models have proven to be generally accurate in predicting the warming that has occurred. The fact that they are not perfect is hardly surprising. Moreover, our knowledge of global warming is informed not only by models, but studies of the Earth’s warming and cooling over millions of years, which have shown a direct link between high atmospheric concentrations of carbon dioxide and higher global temperatures.

  • Does the absence of warming over the past 15 years disprove the alarmists’ theories about catastrophic global warming and, if not, why not?

There hasn’t been an absence of global warming in the past 15 years. In fact 2014 and 2015 set new records for average global temperatures. Shuford’s claim, which is promoted by a number of fossil-fuel supported interests is demonstrably false. Scientific American published a good summary of the issue earlier this year.

  • Will warming in the next century really be catastrophic, or could it actually be beneficial in ways the alarmists won’t concede?

This claim is not only absurd, but unethical and cruel in its disregard for the world’s poorest people who are threatened in this century and next by sea-level rise, storm surges, disappearing glaciers, flooding, drought, and mass species extinctions. There may well be a small number of people who will benefit during their lifetimes from warmer temperatures and a changed climate, but that is dwarfed by the number of people who will suffer by losing their property, their livelihoods, their health, and their lives due to climate change. Our species evolved to live in the stable climate we’ve had for thousands of years, and people settled in places suitable for the climate we have. The Hampton Roads area, which is served by Dominion Virginia Power, is particularly susceptible to future inundation, which will affect rich and poor Virginians, with the poor harmed disproportionately and least able to recover quickly from their losses.

  • Given that the celebrated Paris Climate Agreement will have negligible effect on global temperatures even if every country complied,

Shuford’s boss at Dominion, Thomas Farrell, II, has refused to talk publicly about the Paris Climate Agreement, which will dramatically affect his and Shuford’s company. Perhaps this sort of silence at the corporate top leads to Shuford feeling comfortable to mock (and attempt to minimize the effect of) the Paris Agreement in Dominion’s hometown daily newspaper. Virtually every nation in the world worked to negotiate the Paris Agreement. What does Shuford mean by “have neglible effect”? In fact the Paris accord will help a great deal. Yes, the world still needs to do more, but that means we should be calling for faster and sharper greenhouse-gas reductions.

would our limited dollars be better spent on adapting to a warmer climate than on trying to prevent it?

This again is cruel, particularly to the world’s poor, who have done so little to cause global warming, and who are and will be suffering disproportionately from it. It is unlikely that Shuford is calling for our “limited dollars” to go to helping people in Bangladesh adapt to sea level rise, or people in Nepal, Pakistan or Bolivia adapt to a word where glaciers that they depend on for subsistence agriculture have disappeared. The type of adaptation Shuford is perhaps unwittingly calling for would involve mass migrations by tens of millions of poor people around the globe. Shuford also appears to be unaware of or ignores the strong economic arguments for reducing carbon emissions now, rather than later. These are set forth in detail in two recent books The Climate Casino (2013 Yale Univ. Press), by Yale economist William Nordberg, and Why Are We Waiting? (2015 MIT Press) by Nicholas Stern, a professor of economics and government at the London School of Economics. Both are scholarly books rather than page-turners, but they’re sufficiently clear and approachable to be readable by non-specialists. Do any executives or board members at Dominion read books like these, which provide key insights on the future of Dominion’s business? Perhaps if they did they’d be more likely to talk about climate change at work and in their public speeches.

So enough with the trope about the 97 percent versus “deniers.” There simply is no scientific consensus on the questions that will drive public policy on this issue.

Wrong again. Good explanations can be found in this publication from the American Academy for the Advancement of Science, and this one published jointly by the U.S. National Academy of Sciences and the British Royal Society. Also, Inside Climate News recently described a new study published in Science about how fossil-fuel funded climate-science deniers disingenuously shift their arguments and use normal scientific uncertainties to deflect attention from the overwhelming scientific consensus on climate change and argue for no action to reduce greenhouse-gas emissions. That’s what we see in Shuford’s letter. That’s not to say necessarily that Shuford personally is disingenuous. Perhaps he really doesn’t know better (although a man in his position certainly ought to know better), and has just repeated what he saw on a fossil-fuel funded denial group’s website, or heard at an ALEC conference.

 

Yay, Dominion is building solar! Just not for you.

solar installation public domainThis week’s news of an 18 megawatt solar facility to be installed at Naval Station Oceana in Newport News marks the latest in a string of announcements of new solar projects to be built in Virginia. The Commonwealth had only about 22 megawatts of solar installed as of the end of 2015, but by the end of this year, we should be comfortably into the triple digits. That’s still trivial compared to neighboring North Carolina, which added over 1,000 megawatts last year alone, but it’s grounds for celebration here in the “dark state.”

How is this happening? Customer demand, coupled with falling costs, finally wrought a change of attitude at Dominion Virginia Power. The state’s largest utility dragged its feet on solar for years until announcing, in early 2015, plans to spend $700 million on 400 megawatts of solar power in Virginia by 2020.

The welcome change comes with a caveat: while these new projects will supply solar to important and influential customers like Microsoft, Amazon, and even the state government itself, Dominion offers no programs to supply solar to ordinary Virginians. And indeed, even where ratepayers are footing the bill for projects, our regulators insist that the renewable energy certificates—the right to say it’s solar power—should be sold to someone else.

Dominion’s early adventures in solar were not altogether encouraging. In 2012 the General Assembly authorized the utility to “study” solar by building up to 30 megawatts of distributed (mostly rooftop) projects. The SCC approved $80 million for the “Solar Partnership Program” the following year, with the stipulation that Dominion should sell the renewable energy certificates to reduce the cost to ratepayers. A steep learning curve made for slow and expensive going, and while a number of schools, universities and commercial businesses signed up to host projects, they weren’t permitted to purchase the solar energy being produced right on their property.

In 2013, Dominion created a special tariff “Schedule RG” especially to allow commercial customers to buy renewable energy. Cumbersome, limited and expensive, it never attracted any takers. Dominion spokesman David Botkins suggested to reporters last May the problem was Dominion’s low rates. As in, who wants renewable energy when dirty power is so cheap?

That was one month before Amazon Web Services announced it had contracted for the output of an 80 megawatt solar farm to be built in Accomack County. The project sidestepped Dominion’s limitations by feeding power directly into the Delmarva Power grid in Maryland. Dominion promptly bought the project.

Schedule RG was clearly a failure, but just as clearly, there was money to be made on solar. Dominion just needed to figure out how.

The utility was already trying. In January of 2015 Dominion proposed to build a 20 megawatt solar farm near Remington, Virginia. The State Corporation Commission (SCC) originally rejected Dominion’s proposal, saying the company had not considered third-party alternatives that might be cheaper for ratepayers. (They were proved right when it turned out the Amazon project was slated to deliver power at a cost that was 25% less.)

Dominion didn’t give up on Remington, nor was it willing to turn the project over to a private developer. Instead, it got to work rejiggering the deal into what, this spring, became a public-private partnership. Governor McAuliffe arranged to have the state government, rather than ratepayers, buy the power output from Dominion, while Microsoft agreed to buy the renewable energy certificates (RECs) to meet its corporate commitment to buying renewable energy. (In every solar deal, watch what happens to the RECs.*)

Although I wondered at the time if the state might be taking a financial hit to make the deal work, more recent information suggests the opposite. According to Dominion’s website, “the construction and deployment of this solar asset will lower the cost of the energy purchased by the Commonwealth. The Commonwealth is projected to save $500,000 to $1M in energy costs over the lifetime of the project.”

This tells us two things: one, obviously, we should sell more solar to Microsoft. And two, either the website omits key details about the financing, or the cost of energy produced by solar panels is now pretty darn competitive.

The projects have started coming in more quickly in recent months. In February of this year, Dominion announced it would buy the output of a 20 megawatt solar farm in Chesapeake through a power purchase agreement (PPA) with a North Carolina developer. Other PPAs are said to be under consideration.

Then, on June 30, the SCC gave Dominion approval to move forward on building three new projects totaling 56 megawatts in Powhatan, Louisa, and Isle of Wight counties. The 800 local jobs associated with the projects sparked news stories across the state.

That brings us to this week’s announcement of the deal with the Commonwealth and the Department of the Navy at Oceana. According to Dominion’s press release, Dominion Virginia Power will own and operate the facility, and the Commonwealth will buy the electricity, with Dominion retiring the RECs on the Commonwealth’s behalf.

Deputy Secretary of Commerce Hayes Framme confirmed to me this deal is the first step toward satisfying Governor McAuliffe’s commitment to having the state government get 8% of its power from solar by the time he leaves office, an amount equal to roughly 110 megawatts. That should mean there will be more announcements to come.

The Navy’s role here is especially interesting. Although some news outlets reported the Navy would buy the electricity, this appears to be a misreading of the Navy’s press release. Naval Station Oceana will instead receive “in-kind consideration in the form of electrical infrastructure upgrades” for hosting the project on its land. But the press release dwells mainly on the benefit to the regional grid that serves the naval station:

“Renewable energy projects, like the one at NAS Oceana and others throughout the Mid-Atlantic Region, are win-win-win collaborations. They’re good for the utility companies, good for our installations and good for the communities surrounding our installations,” said Rear Adm. Jack Scorby, Jr., commander, Navy Region Mid-Atlantic. “These projects increase the energy security, energy diversity and energy resiliency of our bases. Energy security, or having assured access to reliable supplies of energy and the ability to protect and deliver sufficient energy to meet mission-essential requirements, is critical to our installations’ roles to support the Fleet.”

The reference to “energy security, energy diversity and energy resiliency” is key here. The Navy will benefit from having a large renewable generation source onsite, one that can be protected from attack and that is not susceptible to fuel supply disruptions.

Come to think of it, “energy security, energy diversity and energy resiliency” are three of the prime reasons we need more solar projects all across the state, and why the benefits shouldn’t be limited to large, influential customers. So yay, Dominion, for getting rolling on all these solar projects! Now please stop blocking the way for the rest of us.


*RECs were invented as a way to identify units of electricity generated by wind, solar and other sources, since the electrons themselves can’t be dyed green. But RECs don’t have to just follow electrons around; they can also be bought and sold separately from the underlying electricity. When the RECs associated with a solar project are sold separately (in the case of the Remington solar project, to Microsoft), the electricity loses its green quality, and the buyer (in this case, the Commonwealth) can’t claim to be buying solar energy. For a fuller explanation of RECs, see this earlier post on the subject.

Basic change in utility business and regulation is inevitable: Advanced energy is coming to all utilities, like it or not.

Photo credit: Sierra Club

Photo credit: Sierra Club

Occasionally I ask other people to write for this blog, not merely because I am lazy, but also because energy policy is such a broad topic that I sometimes overlook new developments and perspectives. This week guest blogger Jane Twitmyer takes a step back from the battle over our energy future to point out that the battlefield itself is shifting under our feet—a fact which, if ignored, could cost utility customers dearly.  –I.M.

A favorite utility narrative holds that the federal Clean Power Plan is the reason we must upgrade our electric utility system and reduce emissions from fossil fuels. Without it, we could continue to run our big coal and gas plants and leave unchanged the transmission grid that has served us so well. But the truth is, the EPA as ‘bully’ is a myth. A new report from the North American Electric Reliability Corporation (NERC) concludes “significant changes are occurring” in the way we generate and use electricity regardless of whether or not the Clean Power Plan, still under court challenge, is implemented. One change: NERC has tripled the amount of new renewable energy generation it predicts for next year.

NERC is just catching up with analysts and investment banks, who have been documenting the changes for several years. The Rocky Mountain Institute warns that grid-connected, solar-plus-battery-storage systems “will be economic within the next 10-15 years for many customers in many parts of the country,” undercutting utility sales and turning electricity markets “upside down.”

Investment analysts agree. CitiGroup predicts utilities could suffer a “50%+ decline in their addressable market.” Elon Musk, CEO of Tesla, just made an offer to buy SolarCity because he believes on-site generation will eventually supply a third of our total electricity, and will be accompanied by huge amounts of battery storage like Tesla’s Powerpack.

Musk believes electric cars will increase demand for electricity, but other analysts see energy efficiency lowering demand. Efficient buildings are given a central place in the new energy mix in the NERC report.

Using less energy, or increasing our energy intensity, will reduce demand significantly without creating the economic disaster we have been warned will occur. Minnesota found the state’s efficiency program returned $4 for every $1 invested, helping to create almost $6 billion in new economic output. One of Warren Buffet’s utilities expects to reduce demand enough to close a couple of old coal plants and still not need any new generation until 2028. The utility is financing those retrofits for its customers’ buildings.

E-Lab, a group at the Rocky Mountain Institute that works with all industry stakeholders to chart our electricity systems, also sees changes in grid management systems making delivery of electricity more efficient. Pilot projects using new technology with grid-regulating software and designed with a variety of regulatory changes and financing models are being tested all around the country.

Each kilowatt-hour supplied by a rooftop solar panel, stored in an on-site battery, or saved by an efficient building, means one less kilowatt-hour utilities must generate. This inevitable reduction in central grid demand is why the future isn’t just about switching resources, like burning gas instead of coal, or even building solar and wind farms. The future is about a re-imagined system that allows and encourages you and me and our local mall to make our own electricity on-site, feeding some of what we make into storage and some onto the grid, and allowing us to draw on the grid when we need to.

We have the technology to create the new system, and regardless of any new EPA rules, this is the right time to replace the old technology. In 2010, 70% of our coal plants and all of our nuclear facilities were more than 30 years old. Recently SNL Energy identified 21,357 MW of coal, gas and nuclear generation “at risk” of early closure through 2020, plants that are inefficient and no longer economic to run.

Here in Virginia, our utilities don’t seem to be getting the message. Dominion Virginia Power has chosen to put most of its new investment dollars into large-scale natural gas plants, not renewable energy. Five or six years ago natural gas was believed to be the ‘transition’ fuel that could take us from coal to renewables-based electricity. We now understand that methane, released when extracting and distributing gas, is 86 times more potent as a greenhouse gas than CO2 while it is in the atmosphere. In addition, methane emissions have been both underreported and inaccurately measured, raising concerns that the climate impact of natural gas may be far greater than originally thought. New methane rules are being developed that should give us a better picture of actual emission levels, but it is already clear that if natural gas is a bridge fuel, the bridge must be a short one.

With analysts predicting the transition to renewable energy will happen sooner rather than later, investing heavily in new gas plants carries a significant economic risk as well as a climate risk. Investors like UBS Bank believe too many large plants will be “structural losers,” assets whose use is diminished before they are paid for. Going forward, we will still need to use some measure of natural gas, but natural gas can no longer be labeled the ‘transition’ fuel.

Our utility systems are at a crossroad. One road requires our utilities, our regulators and our legislators to re-imagine our electricity system, rethinking the old monopoly rate regulations that reward centralized fossil fuel generation. This reimagined system will require a grid that is no longer the rigid one-directional distributer of electricity, but rather one that finds value in resources that generate and store electricity where it is used. If we fail to take that road, the alternative path will lead to ‘grid defection’: customers choosing to leave the grid and provide their own electricity by installing solar with batteries and retrofitting their buildings to use less. One thing is certain: a top down, monopolistic, state-regulated system is NOT the future.

As NERC concluded, changes to the energy mix, and to the level of demand, are happening with or without the Clean Power Plan. They are happening because it is time to rebuild our aging energy infrastructure. They are happening because the technology is now available to create an energy system that protects our air and our water as well as our atmosphere. And the changes are happening because a rebuilt system, designed as an interactive network, not a one directional, top-down grid, will actually be a cheaper system. It will be a system that is more reliable and more resilient, as well as more secure from storms and attack. That rebuilt system will serve Virginia’s electricity customers better without risk to our air, our water or our climate.

Jane Twitmyer is a renewable energy consultant and advocate.

 

Sierra Club scorecard plumbs divisions among Virginia legislators

SC ScorecardBy and large, Virginia Republicans are still locked in a fossil fuel echo chamber, where “all of the above” and “war on coal” guide their votes. Virginia Democrats mostly acknowledge the damage climate change is doing to the commonwealth and around the planet and support a course correction. And regardless of ideology, large majorities from both parties vote for whatever Dominion Power wants.

These are the major takeaways from this year’s legislative session and the 2016 Climate and Energy Scorecard, just released by the Virginia Chapter of the Sierra Club. Constituents and clean energy advocates will want to look at not just the raw grades of individual legislators, but also the discussion provided in the report, to understand the dynamics of our General Assembly.

Twenty-eight Democrats earned perfect scores. All but a handful of Republicans earned failing grades. Sierra Club gave extra credit to legislators who introduced bills that advanced clean energy. This included several Republicans highlighted in the scorecard, but their bad votes on other bills dragged down their overall scores.

This is really a shame, since some Republicans have worked hard to advance clean energy legislation. Leesburg Delegate Randy Minchew comes to mind here for his dogged efforts on behalf of distributed solar energy, something you might not guess from his overall grade of D.

Often, it seems, reform-minded Republicans go along with their party’s more retrograde positions where they are pressured to do so by their party leaders, or where the votes are so lopsided that there is nothing to gain from breaking with the majority.

If party leaders have an outsize influence on voting, so too does Dominion Power. In fact, if you want to know who the true champions of the people are, don’t look at party affiliation. Look for the few legislators who will stand up to the most powerful political force in Richmond.

That assumes you can find votes to examine. In the introduction to the Sierra Club scorecard, Legislative Chair Susan Stillman noted with frustration this year’s paucity of recorded votes available to score:

The challenges of producing a fair and even scorecard are growing, as are the opportunities for Virginia citizens to have a clear and accurate picture of their elected representative’s voting record. Transparency in the General Assembly sunk to a new low this year: 95% of the bills defeated in the House of Delegates were done so on an unrecorded vote or no vote at all. This is not business-as-usual: just over a decade ago, nearly every bill that passed through the House received a recorded vote.

An ongoing problem, both for scorecard referees and for clean energy advocates, is that most bills that would advance the cause of renewable energy and energy efficiency never make it out of committee; in the House, the bills are heard in a tiny subcommittee. Not only do votes go unrecorded, but this approach deprives most of our elected representatives of the opportunity to vote on some of the most important energy policy issues facing Virginia.

And then there was this year, in which even the subcommittee members never got a chance to vote. A dozen or so of the most promising clean energy bills were never heard at all, but were sent to a newly-formed interim study subcommittee, ostensibly for the purpose of giving these bills the benefit of greater deliberation. The effect was to kill them quietly for the year.

As Stillman notes, all these unrecorded votes make it hard to know where the vast majority of legislators stand:

Without a recorded vote, the public is deprived of the full measure of his or her elected official’s voting history. And the problem of unrecorded votes is growing worse. This year’s unprecedented rate of unrecorded votes in the House is up from 76% in 2015—a 25% jump in one year. Virginia legislators are killing more bills than ever without accountability for their actions. This practice is wrong, and it’s dangerous for our democracy.

Stillman gives a shout-out to the founding members of the new, bipartisan Transparency Caucus for its efforts to make all votes public and ensure every bill gets a hearing.

These would be modest reforms, but welcome. If sunlight is the best disinfectant, there’s a big, dirty House (and Senate) in Richmond that need cleaning.

Southeastern electric utilities find their way to higher profits through gas pipelines and captive consumers

Charlie Strickler of Harrisonburg, Virginia, was one of a dozen activists who fasted last September in protest of FERC's role in approving natural gas pipelines, citing their contribution to climate change and harm to communities in their path. Photo by Ivy Main.

Charlie Strickler of Harrisonburg, Virginia, was one of a dozen activists who fasted last September in protest of FERC’s role in approving natural gas pipelines, citing their contribution to climate change and harm to communities in their path. Photo by Ivy Main.

Duke Energy, Southern Company, NextEra Energy and Dominion Resources—four of the largest investor-owned utilities in the U.S., all headquartered in the Southeast—have simultaneously adopted a growth strategy reliant on large volumes of fracked gas. With the nation’s energy sector turning decisively away from coal and nuclear energy, these companies are betting natural gas will be the dominant fuel for at least the next several decades. All four are investing billions of dollars in gas pipelines and other gas infrastructure to profit from the fracking boom.

Pipelines are attractive investments because they are typically allowed rates of return of around 14%, compared with the average regulated utility return allowed by public utility commissions of about 10%.

For the southeastern utilities, however, that rate of return is only part of the attraction. In a strategy that ought to concern regulators and electricity consumers, Duke, Dominion and NextEra all plan to use their regulated electric power subsidiaries to guarantee demand for the pipelines they’re building. The subsidiaries will build natural gas generating plants, paid for by electricity consumers, to be supplied with gas carried through the pipelines owned by their sister companies.

Southern is also investing in pipelines, but it currently doesn’t need new generation beyond the coal and nuclear plants it is struggling to complete—themselves object lessons in why coal and nuclear are kaput.

Southern just announced completion of its $12 billion acquisition of AGL Resources, a natural gas pipeline and distribution company. The move makes Southern Company “the nation’s second-largest combined gas and electric utility by customer base,” according to Utility Dive.

Dominion Resources was already heavily invested in the natural gas sector before it announced a $4.4 billion purchase of Questar Corp. News reports say the acquisition will bring Dominion an additional 27,500 miles of gas distribution pipelines, 3,400 miles of gas transmission pipeline and 56 billion cubic feet of working gas storage.

Duke Energy is making a $4.9 billion purchase of Piedmont Natural Gas, a natural gas transmission and distribution company. And NextEra recently spent $2.1 billion to acquire Texas-based NET Midstream through the limited partnership it formed, NextEra Partners, LLC.

Moody’s Investor Services issued a report in March criticizing Dominion, Southern and Duke for their natural gas transmission buys, saying the added financial risks offset the benefits of diversifying their businesses.

Moody’s may not have known how the utilities plan to use electricity customers as a hedge for at least two planned pipelines, the Atlantic Coast Pipeline (ACP) and Sabal Trail.

Using electricity customers to pay for pipelines

Companies owned by Duke, Southern and Dominion are partners in the 550-mile ACP, which will carry fracked gas from West Virginia through Virginia to the North Carolina coast. Duke and NextEra are partners in Sabal Trail, a 515-mile pipeline proposed to run from an existing pipeline in Alabama through Georgia to Florida, where Duke says it will fuel gas plants owned by Duke Energy Florida and Florida Power and Light, a subsidiary of NextEra.

ACP and Sabal Trail are only two of 15 new pipelines proposed on the East Coast competing to carry fracked gas flowing out of the Marcellus shale in Pennsylvania and West Virginia. So many pipelines are in development that analysts say there simply isn’t enough gas to fill them all. At the 2016 Marcellus-Utica Midstream Conference in February, attendees were warned that pipeline capacity “will be largely overbuilt by the 2016-2017 timeframe.”

But the ACP and Sabal Trail have an advantage most of the competition lacks. The utility partners all own electric power subsidiaries that use fracked gas to generate electricity. If the subsidiaries build new gas plants, these pipelines will be guaranteed a customer base. That means they can be profitable for their investors even when other pipelines struggle to find customers.

Indeed, Duke and Dominion’s electricity subsidiaries are making the kinds of investments you’d expect to see if the success of the pipelines were their top priority. Dominion Virginia Power is in the middle of a three-plant, 4,300 MW gas generation build-out. In the ACP’s application to the Federal Energy Regulatory Commission (FERC), Dominion Resources justifies the ACP in part by saying it will supply the newer of these plants. And the utility is just getting started with new gas generation; Dominion Virginia Power told Virginia officials last fall it expects to build another 9,000 MW of gas plants by 2040.

Meanwhile, Duke’s regulated subsidiaries, Duke Energy Carolinas and Duke Energy Progress, filed integrated resource plans in North and South Carolina that call for up to nine new natural gas generating units, totaling 8,300 MW. In February of this year, Duke received approval to build two 280 MW gas units in Asheville, NC, and sought approval for a third.

Bigger investments, greater risks

Linking pipelines to captive customers should prove a profitable arrangement for the utilities. For the customers who bear the costs and risks, it’s much more problematic. But state law gives them no say in the matter. In these southern states, the electric power subsidiaries hold legal monopolies in their designated territories. Once federal regulators approve the pipelines and state regulators approve the gas plants, the captive customers bear the loss if the bet turns sour.

Any one of several scenarios would make the gas investments a bad bet. The age of plentiful shale gas could end almost as quickly as it started, as some analysts predict, or gas prices could resume their historic volatility for other reasons. The U.S. could adopt newer, tighter carbon rules to meet international climate obligations, or enact a carbon tax that increases the cost of fossil fuels. Alternatives like wind, solar and energy storage seem likely to continue their astonishing march towards domination of the electric sector. As they become increasingly competitive, much new gas infrastructure is destined to become stranded investments.

And finally, the demand for natural gas, and for the pipelines themselves, may simply not be there; Americans are using less electricity, and generating more of it themselves through rooftop solar systems. The vertically-integrated, monopoly utility model that prevails in the Southeast relies on ever-increasing sales, which means it doesn’t require much of a change in consumer behavior to turn black ink red.

So while environmentalists are enraged by the recklessness of the southeastern utilities’ natural gas strategy in an age of climate change, customers who only care about the bottom line on their utility bills have reason to be just as upset. Capitalism is supposed to ensure that corporate shareholders bear the costs as well as receive the benefits of risky bets. With the risks of their gas gamble shifted onto captive customers, the utilities won’t be punished for not choosing clean energy instead.

Bucking the trend towards renewables and efficiency

It’s worth noting that the plans of Dominion, Duke and their fellow monopoly utilities run counter to the expressed desires of their customers. Natural gas companies work to brand their product as “clean,” but polls show Americans overwhelmingly believe the U.S. should emphasize wind and solar over oil and gas production, and oppose the use of fracking to extract oil and gas. Major corporations now threaten to vote with their feet, refusing to locate where they can’t access electricity from renewable sources.

It is not a coincidence that Duke and Dominion fall near the bottom of a just-released survey conducted by Ceres that ranks major utilities by their performance on energy efficiency and renewable energy. NextEra and Southern do no better. NextEra’s electricity subsidiary, Florida Power and Light, came in dead last for renewable energy sales. Ceres says it was unable to include Southern this year because it did not respond to requests for data, but in 2014 Southern ranked 31 out of 32 on renewable energy sales.

The southeastern utilities stand in marked contrast to utilities like Berkshire Hathaway’s Mid-American, which has announced a goal of meeting 85% of its customers’ needs with wind power. Even Dominion’s Virginia rival, Appalachian Power Company, filed an integrated resource plan last year with more new wind and solar generation projected than new natural gas. Perhaps that’s because neither Appalachian Power nor its parent company, American Electric Power, own any gas pipelines.

Effects on competition and consumers trigger an antitrust complaint

Customers may be the biggest losers when utilities use their electricity subsidiaries to guarantee the success of their gas subsidiaries, but the arrangement also harms other business interests. These include pipeline operators who don’t have the same self-dealing opportunity; non-utility electricity generators who can’t sell their product to utilities because the utilities now prefer to build their own gas generation; and companies that build wind and solar projects, who find themselves boxed out.

Already one non-utility generator is crying foul: Columbia Energy LLC, an operator of a 523 MW independent combined cycle gas generating plant that wants to sell electricity to Duke Power but finds itself left out in the cold. Columbia is challenging both Duke’s application for approval of a new gas plant in Ashville and the merger of Duke with Piedmont Natural Gas, another partner in the Atlantic Coast Pipeline.

The potential of the ACP to harm consumers and competition led to the filing in May of a complaint with the Federal Trade Commission (FTC). The complainant, retired Department of Justice antitrust lawyer Michael Hirrel, believes the utilities’ abuse of their legitimate monopoly power violates federal antitrust laws, and he is urging the FTC to investigate.

The Virginia Chapter of the Sierra Club, which opposes both the ACP and Dominion’s gas build-out, followed up with its own letter delving more deeply into the facts of Duke and Dominion’s self-dealing. (The letter and supporting documents, including Hirrel’s complaint, can be found at http://wp.vasierraclub.org/LetterInFull.pdf. Note that it’s a big file and may take time to load.) Hirrel has added both documents to the FERC file on the ACP application.

(Full disclosure: I led the team compiling the information for the Sierra Club submission. I’ve never met Mr. Hirrel and only learned about his complaint weeks after it was filed. However, I had been doing my own complaining—though evidently not to the proper authorities—about the utilities’ conflict of interest.)

But is anyone listening?

Aside from the FTC filing, opponents of the gas plants have pinned their hopes on state public utility commissions, while pipeline opponents are focused on the Federal Energy Regulatory Commission (FERC). Neither venue offers grounds for optimism. Virginia’s State Corporation Commission (SCC) has approved three of Dominion’s new gas plants in a row over the objections of environmental advocates, and North Carolina’s Utility Commission recently approved Duke’s new gas units in Asheville (though for now it has turned down a request for a third).

FERC poses its own challenge. Activists want FERC to review gas transmission proposals collectively instead of singly, to avoid overbuilding and the unnecessary damage to the environment and local communities that would result. This would be a departure for the agency, which traditionally reviews proposals individually, and has approved nearly every pipeline proposal that has come before it.

So far FERC has resisted arguments of this nature, as well as objections based on climate concerns. But in a possible sign that the agency recognizes times are changing, it has recently slowed the approval process for some proposed new pipelines, apparently to conduct more thorough environmental reviews.

There is no sign yet that the public utility commissions and FERC are communicating with each other or with the FTC. That leaves anti-pipeline groups and environmental activists in a difficult position. They can make a strong case the utilities are taking unfair advantage of captive ratepayers for a purpose that harms both the environment and the public. But is anyone listening?

Northern Virginia activists are ready for 100% renewable energy future

 

Ready for 100 Community Outreach Coordinator Taylor Bennett, Mount Vernon Group of the Sierra Club Chair Dean Amel, and Virginia Chapter Sierra Club Chair Seth Heald.

Ready for 100 Community Outreach Coordinator Taylor Bennett, Mount Vernon Group of the Sierra Club Chair Dean Amel, and Virginia Chapter Sierra Club Chair Seth Heald at Alexandria’s Earth Day celebration in April.

Clean energy advocates in Virginia know we are engaged in a steep uphill climb, and are still so far from the top that we have only a general idea of what it will look like. But activists in Arlington and Alexandria believe it’s time for bold leadership. They are calling on their communities to set a goal of 100% clean and renewable electricity by 2035.

The Ready for 100 Campaign launched today as part of a push by the Sierra Club to show that a future without fossil fuels is achievable. Sierra Club volunteers are working with community groups and other leaders to promote the benefits of clean energy locally. According to Seth Heald, Chair of the Virginia Chapter of the Sierra Club, fifteen U.S. cities, including San Diego, CA, Georgetown, TX, and Columbia, MD, have already committed to 100% clean energy.

Arlington County already has a reputation for its leadership in the energy sector, with a commitment to reduce its greenhouse gas emissions by 80% by 2050 and a number of innovative programs to reduce energy consumption. Now, says Heald, it is time for Arlington to take the next step to “eliminate the fossil-fuel generated pollution that comes from electricity production and is damaging our health and undermining our quality of life.”

Arlingtonians for a Clean Environment (ACE) has signed on as a partner in the effort. “Arlington County has already set a high bar for Virginia, but we can do even better,” said Executive Director Elenor Hodges. “I think this is an effort many residents will get behind.”

Copy of Copy of 1168 ReadyFor100_Logo_Color“Our current dependence on fossil fuels means that my generation will be dealing with the impact of climate change for our entire lives,” said Helene Turvene a junior at Washington-Lee High School. “A commitment now to 100% renewable energy not only will help to begin reversing those impacts, but it will position our community for a more sustainable future. Students want to know that local leaders are acting with us, and future generations, in mind.”

Alexandria residents are also behind the effort. Samantha Adhoot is an Alexandria-based pediatrician who has often sounded the alarm about the effects of climate change and fossil fuel pollution on children’s health. “By transitioning to 100% clean energy, our city could prevent thousands of asthma attacks and dozens of premature deaths every year,” she said. “This would be a big step in the right direction toward allowing our kids to breathe easier.”

Although the 2035 goal is long-term, the campaign’s benefits could be immediate. The solar industry now employs over 200,000 people nationwide, and with fewer than 1% of them in Virginia, we have tremendous room for growth. And of course, investments in energy efficiency mean savings on utility bills that keep adding up. Stanford scientists say the transition to 100% renewable energy will save the average American family $260 dollars per year in energy costs, and another $1,500 per year in health care costs.

Taylor Bennett, Community Outreach Coordinator for the Ready for 100 Campaign, is hoping to hear from others who want to join the effort. She can be reached at Taylor.Bennett@SierraClub.org.

Complaint: utilities’ role in Atlantic Coast Pipeline violates antitrust laws

pipelinemadnessDominion Resources’ plan to use the captive ratepayers of its electricity subsidiary to guarantee a customer base for its Atlantic Coast Pipeline venture has caused critics—including me—to complain that the scheme presents a clear conflict of interest. According to a complaint filed with the Federal Trade Commission (FTC), it’s also a violation of federal antitrust laws.

Lawyer Michael Hirrel, who retired last year from the Antitrust Division of the U.S. Department of Justice, has asked the FTC to investigate “whether ACP’s project constitutes a prohibited monopolization by Dominion, Duke and Piedmont, under Section 2 of the Sherman Act, and an unfair method of competition, under Section 5 of the Federal Trade Commission Act.”

Dominion Virginia Power is currently engaged in an aggressive build-out of natural gas generating plants, with three new units representing 4,300 megawatts of generating capacity, coming online between 2014 and 2019. The company’s latest integrated resource plan and presentations to stakeholders reveal plans for over 9,000 megawatts more. By comparison, the company has promised a mere 400 megawatts of solar.

Where there are gas plants, there must be gas, and this massive build-out means a guaranteed stream of income for the lucky owners of gas transmission pipelines. The fact that one such pipeline is partly owned by Dominion Virginia Power’s parent corporation is clearly a conflict of interest. Because Dominion holds a monopoly on electricity sales, its customers will be stuck paying for gas—and guaranteeing a revenue stream for pipeline owners—for decades to come.

This is a bad deal for customers and the climate, but according to Hirrel, it is also anticompetitive and warps the normal decision-making of the companies involved.

(In addition to Dominion Resources, the other owners of the Atlantic Coast Pipeline are Duke Energy, Piedmont Natural Gas and AGL Resources. AGL is being acquired by Southern Company, meaning three of the four partners own electricity subsidiaries that are regulated monopolies that can stick ratepayers with the cost of paying for gas. As for the fourth partner, Piedmont is a regulated monopoly distributor of natural gas. Just to make things even more cozy, Piedmont is being acquired by Duke.)

Hirrel’s complaint notes: “If Dominion, Duke and Piedmont were to acquire their gas and its transportation, plus electricity generation, in competitive markets, they would, the Commission must suppose, engage in a very different decision making process. But that process will be rendered moot when they acquire and transport their own natural gas, and generate their own electricity. They will distribute the electricity and gas to their own monopoly retail customers, who have no alternative. Those customers must pay the costs of Dominion, Duke and Piedmont’s decisions, whether the costs were efficiently assumed or not.”

Hirrel also points out that in a truly competitive market, Dominion and Duke might not pursue a natural gas strategy at all, because of the economic risks involved. They might, for example, consider whether investments in wind and solar would be more economical and avoid the potential for stranded investments.

“But in the present universe,” he concludes, “the one in which Dominion, Duke and Piedmont propose to become the monopoly suppliers of the inputs for their own monopoly customers, they need not engage in any such economically efficient decision making process. If they make bad decisions, they will not suffer. The costs of those bad decisions will be borne by the monopoly customers of their retail electricity and natural gas distribution systems.”

I called Mr. Hirrel to ask what action he expects the FTC to take. He says the Commission typically takes anywhere from two weeks to two months to determine whether to open an investigation when it receives a complaint like this. If it chooses to investigate, it may also ask the Federal Energy Regulatory Commission (FERC) to delay its approval process for the ACP pending conclusion of the FTC investigation.

Hirrel copied FERC on his complaint, making it a public document within the ACP docket (CP15-554).

Update: on June 23, the Virginia Chapter of the Sierra Club submitted a letter to the FTC providing further information supporting the antitrust complaint. The letter and supporting documents can be found at http://wp.vasierraclub.org/LetterInFull.pdf.