Tag Archives: Dominion Power

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Why standby charges are bogus

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Utilities want solar owners to pay for grid access. Photo credit: NREL.

Utilities want solar owners to pay for grid access. Photo credit: NREL.

Rooftop solar energy makes up a tiny fraction of the total electricity produced in America, but already utilities worry about a day when large numbers of their customers won’t need them any more. As renewable energy costs continue to tumble and the technology of battery storage improves, many residents and businesses may abandon their power utility to go it alone or form microgrids within their communities to control their own power.

Some utilities understand that this is the future and are looking for ways to turn these trends to their advantage. Others are doing everything they can to protect their turf, and progress (and the environment) be damned. They figure they can’t wind up on the wrong side of history if they stop history from happening.

Hence the attempt to throttle solar while it’s still little. Caps on system sizes, caps on total amounts of distributed generation, prohibitions against third-party power purchase agreements, restrictions on net metering: all of these are efforts to keep solar too small to matter, and too small to achieve the economies of scale that could lead to an upending of the central utility model.

The latest effort to squelch solar is through standby charges: fees imposed on net metering customers that compensate the utility for “standing by,” ready to sell grid-produced energy at night and on cloudy days. In 2012 in Virginia, Dominion Virginia Power won the right to charge customers with large residential systems (10-20 kilowatts) up to $60 per month—a charge that destroyed this market segment. This summer Dominion pressed its advantage, indicating in a submission to regulators that it will likely seek more standby charges on a broader class of solar customers.

Note that Virginia has less than 15 megawatts (MW) of solar installed across the state. Dominion Power alone has around 19,000 MW of coal, gas and nuclear. So the notion that net metering by solar customers has any perceptible effect on the grid or other customers is silly. The point of Dominion’s stand-by charges is to stifle the solar market, not cover costs.

This same debate played out this year in Arizona, which saw its solar industry install 719 MW in 2012—still a tiny percentage of that state’s total energy supply, but one that is growing fast enough to warrant the discussion. Last week the public utilities commission agreed to allow Arizona Public Service Company (APS) to charge its residential solar customers an average of $5 per month. The utility treated the ruling as a win, and indeed the charges might eventually add up to enough to cover APS’s attorney fees in the case. That’s more than can be said about Dominion’s standby charges.

Meanwhile the conservative American Legislative Exchange Council (ALEC) has gotten into the act, drafting a model resolution insisting that net metering customers should have to pay their “fair share” of utility costs through measures like standby charges. Not incidentally, Dominion Power is a member of ALEC and sits on the energy and environment task force next to the fossil fuel shills from Heartland Institute.

But the “fair share” argument is bogus. Utilities weren’t set up to ensure Americans all paid their “fair share” of the costs of the electric grid. If they were, there would still be mountain communities without power today. Residents of cities and towns subsidized the cost of running power lines to far-flung rural homes inhabited by people who could never have afforded their “fair share” of this infrastructure.

Even today, city dwellers pay more than their “fair share” of transmission costs to subsidize people like me who live in leafy, sprawling suburbs and less-populated parts of the state. Anybody voting for an ALEC-style resolution about “fair shares” had better be willing to stick it to suburban and rural consumers.

There are other ways electricity rates aren’t “fair.” Dominion’s residential rates are structured so people who use less electricity pay more per kilowatt hour than those who use more—again, making it roughly a transfer of wealth from urban apartment dwellers to those with larger or less efficient homes elsewhere. The utility’s goal is to encourage the use of electricity, and compete more effectively with the gas company for heating. People paying their “fair share” just doesn’t enter into it.

And while we’re at it, if we were serious about subsidies we’d slap a tax on electricity made from fossil fuels to reflect the costs they impose on society. Asthma, heart disease, mercury poisoning, groundwater contamination, and of course, the dumping of carbon into the atmosphere—these are all costs of fossil fuel that ought to be included in power bills to make sure everyone is paying their “fair share.” People who install solar panels deserve a thank-you for their service to society, not standby charges based on bogus “fair share” claims.

The argument for standby charges is, pure and simple, an attempt by entrenched monopolies to block competition. The “fair share” argument is a red herring from utilities that don’t want a fair fight. And with good reason: they’re going to lose.

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From Massachusetts to New York, offshore wind energy now ready to deliver

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Interior Secretary Sally Jewell addresses a packed ballroom

Interior Secretary Sally Jewell addresses a packed ballroom at the American Wind Energy Association offshore wind conference

The long-awaited Cape Wind offshore wind farm will finally begin construction off the coast of Massachusetts in 2014. So, too, will the much smaller Block Island Wind Farm off Rhode Island. When completed, Cape Wind’s 130 wind turbines will supply almost 75% of the power needs of Cape Cod, Martha’s Vineyard and Nantucket, while the 5-turbine Block Island Farm will supply enough clean energy to power over 17,000 homes.

2014 also seems likely to see a power purchase agreement for some of the energy to be generated by a 900 MW wind farm off the tip of Long Island that would feed power to a growing and hungry New York market, at a cost that’s economic now.

And with a second round of grants from the Department of Energy expected next spring, demonstration projects of 12-25 MW will also go forward in three more locations, producing power in 2017 and helping set the stage for rapid growth in the industry. The first-round grants went to projects in Oregon, Texas, Ohio, Maine, New Jersey and Virginia.

These were a few of the highlights from the American Wind Energy Association 2013 offshore wind conference, held October 22 and 23 in Providence, Rhode Island. More than 700 attendees packed a ballroom to hear Secretary of Interior Sally Jewell, Rhode Island Governor Lincoln Chafee, U.S. Senator Sheldon Whitehouse and others make the case for why offshore wind energy will play a growing role in the U.S., starting in the Northeast.

Five years have passed since the American Wind Energy Association, the University of Delaware and the Sierra Club brought together researchers and wind developers for America’s first-ever conference on offshore wind energy, in Dover, Delaware. Since then, the conference has grown in scope and attendance, but the only wind turbine to make it to U.S. waters is a one-eighth-scale test model off the coast of Maine.

While Europe surged ahead and now has more than fifty offshore wind farms, the U.S. has been hampered by a slow federal leasing process, uncertainty about tax credits, and a political process ill-suited to the long-range planning and regional cooperation needed to realize the potential of this industry.

But as this year’s conference showed, the industry is moving ahead. The Obama Administration and several states identify offshore wind as a critical part of the response to climate change, as well as an opportunity to develop jobs. As many speakers explained, there is also a strong business case to be made for it. Given the price spikes that have plagued natural gas in New England and elsewhere, it makes sense to diversify power sources. In addition to providing price stability, wind energy has been shown to suppress wholesale energy prices, saving consumers money.

Perhaps most significantly, offshore wind power is likely to be the least-cost option in locations where demand is high, energy is expensive, and alternatives are few. This describes much of the Northeast, especially the densely populated area from northern New Jersey up to Massachusetts.

An analysis from AWS Truepower showed several factors that make offshore wind energy a good option in these areas:

  • A growing demand for power, driven in part by new data centers;
  • An already-congested transmission grid, coupled with the difficulty of either building new generation close to the load center or adding new transmission lines to bring in power from outside the area;
  • The proximity of offshore wind energy areas to these load centers along the coast;
  • High localized marginal prices for electricity, making offshore wind competitively priced; and
  • The ability of offshore wind to provide power when demand is greatest.

This last element is especially compelling for utilities, which have to meet a demand for power that changes throughout the day. Unlike onshore wind, which blows most strongly at night, and solar energy, which peaks in the middle of the day, offshore wind picks up in the late morning and continues through the evening hours, matching times of highest demand. According to Bruce Bailey, CEO of AWS Truepower, this fact means that in the New York market, the revenues from offshore wind energy will be about two and a half times that of onshore wind energy.

Whitney Wilson, the engineer who conducted the analysis for AWS Truepower, told me that when they looked at all the factors and then at the potential locations for offshore wind farms, one location stood out: a tract of ocean thirty miles off the coast of Montauk Point on Long Island, within the southern section of the Massachusetts/Rhode Island Wind Energy Area. Building wind farms there, her analysis showed, would provide the biggest bang for the buck.

Developer Deepwater Wind, LLC, won the right to develop the lease area last summer in the U.S.’s first-ever offshore wind lease auction. One likely customer may be the Long Island Power Authority, which put out an RFP for 280 MW of renewable energy, specifically mentioning offshore wind.

Lisa Dix, a Senior Campaign Representative with the Sierra Club’s Beyond Coal Campaign in New York who was also at the conference, says offshore wind makes perfect sense for Long Island, and complements the Long Island utility’s recent approval of a feed-in tariff for solar energy.

Other utilities seem likely to follow suit as they assess the benefits of offshore wind for their own customers. A greater understanding of these benefits will lead to the full buildout of the RI/MA area and the soon-to-be-leased New Jersey area.

The experience of Deepwater, Cape Wind, and the developers of the DOE-funded demonstration projects will help build the industry supply chain and workforce, and will produce the kind of learning that leads to lower prices for future projects. One such project involves the 2000 MW of the Virginia Wind Energy Area, which Dominion Power now holds the right to develop. While the economics are not currently as compelling in the cheap-energy South, this would change if the early movers achieve the cost reductions they are aiming for.

If states work together, these cost reductions and the development of a robust, domestic supply chain and workforce will happen better, sooner and smarter. Coordinated regional planning will support rapid growth in the industry while driving down costs in a virtuous cycle.

Given the urgency of climate change and the need to move the electric grid beyond fossil fuels as quickly as possible, Congress also has to make the growth of the offshore wind industry a national priority. Passing a long-term extension of the investment tax credit is a critical first step to support the tremendous renewable resource just off our coast.

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What’s wrong with Dominion’s Green Power Program

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Better than Green Power: installing a solar system yourself. Photo credit: NREL

Better than Green Power: installing a solar system yourself. Photo credit: NREL

Renewable energy advocates in Virginia were astonished to learn a few weeks ago that the U.S. Environmental Protection Agency has given Dominion Virginia Power an award for its Green Power Program.

Dominion’s program is not, to put it mildly, a good one. Half of the money its customers contribute is siphoned off for overhead and “education.” The rest goes to buy renewable energy certificates from out of state. Over the years Dominion has collected millions of dollars in these voluntary contributions without building a single wind or solar facility to supply the program. Surely the only green award this merits is one for greenwashing.

So I called the EPA to find out what criteria they use in determining who gets an award. It turns out the agency only measures the growth of a green power program, and Dominion has signed up more customers than other utility programs have.

I had to laugh. Customers of utilities in most other states have real options to buy wind and solar. If you can buy wind energy from an alternative supplier or participate in a community solar project, or if your utility is aggressively incorporating renewables into its power supply, you don’t need a green power program.

But Dominion has never built more than token amounts of renewable energy, and it continues to use its monopoly position to erect barriers to competition from others. The utility has signed up 19,000 Green Power participants only because it has effectively denied its Virginia customers any meaningful way of participating in the renewable energy market.

News of this award will surely lure more people in. Yet even if every one of Dominion’s customers signed up for the program, it wouldn’t shrink Virginia’s carbon footprint. Instead, Dominion’s latest integrated resource plan reveals plans for more fossil fuel generation and increasing greenhouse gas emissions over the next fifteen years.

And it’s worse than that. As of this year, Dominion is actually using the Green Power Program to bankroll an attack on renewable energy—one the State Corporation Commission shamefully endorsed when it approved the company’s 3-megawatt “solar purchase program.”

In this charade, Dominion buys solar power from homeowners and businesses to resell to the Green Power Program. The deal nets sellers a few cents over the retail price of electricity, but costs the Green Power Program almost three times as much. This overcharging of the Green Power Program would be bad enough. But the more insidious problem lies in Dominion’s justification for the high charge. It claims that rooftop solar energy is no more valuable than power from fossil fuels that it can buy at wholesale.

Dominion’s position flies in the face of recent studies demonstrating the benefits of solar energy to the grid, including generating power where demand is, providing power during peak hours when energy is most expensive, avoiding the need for transmission upgrades, eliminating line losses, and reducing the need for new generation.

It also runs counter to trends in states like Georgia, where Georgia Power has put a higher–than-retail value on the solar distributed generation it plans to buy, and says that paying the extra won’t put upward pressure on rates.

This makes it especially difficult to understand why Virginia’s State Corporation Commission approved Dominion’s Green Power rip-off. And predictably, Dominion has followed up its win with a deeply flawed study it plans to use as a basis for a new round of standby charges on customers who net meter. (The case is PUE-2012-00064, available on the SCC web site.)

So what is a dedicated renewable energy advocate to do?

There are options. If you are determined to buy RECs, you don’t have to go through Dominion. Buy from another source. But better yet, install solar yourself if you can. The price of solar panels has dropped so precipitously over the past few years (down 60% since the start of 2011) that you may find it worth taking out a home equity loan.

If you don’t have a sunny roof yourself or can’t afford the whole upfront cost, you can work with your school, community center or place of worship to install solar panels in your neighborhood. Interest in solar is very high among Virginia faith congregations, driving large turnouts for presentations on the topic given by Sierra Club and others in cooperation with the solar industry.

Or you can take the money you were spending on Dominion’s program and give it to a charity that will use it to install renewable energy here in Virginia; this may even get you a tax deduction. Low-income housing providers like Richmond’s Better Housing Coalition now put solar panels on many of their facilities, and will accept donations specifically for that purpose.

The Virginia Center for Wind Energy at James Madison University accepts donations to its Wind for Schools program, which helps public schools across the commonwealth install wind turbines for educational purposes.

A new non-profit, Three Birds Foundation, is working to put solar on public schools that serve low-income children in Virginia and elsewhere.

All these charities are committed to doing what Dominion, apparently, doesn’t want to do: install solar and wind energy in Virginia.

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Dominion wins Virginia offshore wind lease: well, duh

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And the winner is . . . Dominion Power!

Okay, you knew that. Dominion had the deck so stacked in its favor for Wednesday’s Virginia offshore wind lease auction that the question everyone was asking at the end wasn’t “who won?” but “who bid against Dominion, and why did they bother?”

The answer to the first question proved to be Charlottesville-based Apex Energy, a far more experienced player in the wind industry—but one without Dominion’s lock on the Virginia power market.

There was much to criticize about the auction format and the process that led inevitably to Dominion’s win, but this historic step is still hugely exciting for offshore wind advocates. If Dominion follows through on the commitment it just made to develop offshore wind, Virginia will be a winner, too.

That “if” has a lot of people worried, given that Dominion is both a participant in the offshore wind industry and one of its loudest detractors. Company executives talk about their desire to develop the lease area, and also their opinion that offshore wind energy is way too expensive to succeed. Often they make both points in the same conversation.

Observers can’t help wondering why a company would pour money into a venture if it doesn’t believe it can sell its own product. Two possible reasons come to mind: one, because it is willing to gamble on political and market changes that will make its venture successful after all; or two, because by spending the money to win the lease, the company prevents any competitor from occupying the space. One is gutsy, the other is evil. It is possible for both to be true.

So what did Dominion win? The lease area, a 112,800-acre swath of ocean beginning more than 23 miles off Virginia Beach, is expected to support at least 2,000 megawatts of wind turbines—enough to power about 700,000 homes. It’s the second Wind Energy Area to be auctioned off in the U.S.; the first lies off Rhode Island and Massachusetts, and was auctioned off in August.

Under rules set by the Bureau of Ocean Energy Management (BOEM), the entire Virginia area was treated as one tract (a bad idea, in the view of advocates and industry members who aren’t Dominion, because it further reduced competition). Dominion won with a high bid of $1.6 million.

A formal announcement of the winning bid is expected in October, following federal antitrust review. As the winning bidder, Dominion will have five years to conduct the studies required for development of the area, with interim deadlines including submission of a Site Assessment Plan next summer.

After the five years is up, Dominion could decide not to proceed, releasing the area for BOEM to offer in a new auction. That result would be an unqualified disaster for Virginia’s ability to develop an offshore wind industry here. With states to the north proceeding, we would lose not just construction jobs, but the entire supply chain, and likely the marine services as well. Many thousands of jobs now ride on Dominion following through.

If Dominion decides to proceed, it will have to submit a Construction and Operations Plan at least six months before the expiration of the five-year site assessment period—that is, by the summer of 2018. BOEM will then evaluate the plan in accordance with the National Environmental Policy Act, producing an Environmental Impact Statement in 18-24 months, before construction can begin. That timeline puts construction underway no later than 2020, with electricity from the first turbines flowing by 2022.

The process doesn’t have to take as long as this; Deepwater Wind, which won the two leases in the Rhode Island/Massachusetts area last month, says construction there “could begin as early as 2017, with commercial operations by 2018.”

But Dominion had previously indicated its preference for the slowest possible approach. The company’s original idea was to build some wind turbines, think about it for a while, and five years later start all over again. Then five years later, round three. Another five years, round four. So 20 years on, if Dominion liked what it saw each time, Virginia would finally have its 2,000 megawatts.

In accordance with this plan, Dominion’s surrogate, the Virginia government, asked BOEM to make the lease term for Virginia’s Wind Energy Area 45 years instead of 25.

Other developers and the environmental community cried foul, pointing out that such an approach would mean a generation would be born, grow up and go off to college before we had all our wind turbines—hardly the way to build an industry or stave off climate change.

BOEM conceded half a loaf and agreed to a 33-year term that allows time for a phased approach, but a faster one. The agency expects the construction plan will consist of four, two-year phases, ensuring completion of the build-out in 8 years—or by 2028, to be followed by 25 years of operation.

We can only hope that BOEM’s confidence is not misplaced. Dominion employees have said candidly that right now, under current market conditions, the company has no intention of actually building offshore wind turbines.

What will it take to change its mind? The company talks about costs and the difficulty of getting approval from Virginia regulators. It seems likely that the company will follow through with construction only if some combination of events happens in the next few years:

  • Continuing advancements in technology bring the cost of offshore wind energy down. Already the latest cost estimates put offshore wind power well below the sky-high figures Dominion cites.
  • Congress or the EPA tackles climate change through incentives for renewable energy (or disincentives for fossil fuels);
  • The Virginia government passes legislation to create a market in Virginia for offshore wind power;
  • Virginia’s State Corporation Commission (SCC), which regulates utilities, alters the way it views renewable energy.

Of these contingencies, the last might be the hardest. The SCC seems to believe the public interest is served only by providing the cheapest possible electricity available today. It shows no interest in climate change, or the pollution costs of fossil fuels, or long-term price stability, or job creation, or asthma rates. Ignoring the actual language of the Virginia Code, it declared this summer that Virginia law doesn’t require it to consider the environment in evaluating a new electric generation facility.

But the offshore wind industry is now off and running in the U.S., and the only question is whether Virginia wants to be part of it. On that answer depend thousands of jobs for our residents, an abundant source of stably-priced energy, and Virginia’s ability to move beyond fossil fuels in the face of climate change.

Virginians overwhelmingly want to move forward on offshore wind; now our challenge will be to make it happen.

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Dominion’s giant concrete paperweight

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Fracking_Site_in_Warren_Center,_PA_04

A natural gas fracking site in Warren Center, PA. Photo credit: Ostroff Law

The State Corporation Commission has approved Dominion Virginia Power’s proposal for a new gas-fired power plant in Brunswick County, rejecting arguments from the Sierra Club and others that ratepayers would be better served by a combination of low-cost energy efficiency and price-stable renewable energy.

The decision in the case (PUE-2012-00128) reflects the same discouraging themes we have seen from our regulators before: a tendency to believe everything Dominion tells them, coupled with an absolute refusal to acknowledge the climate crisis bearing down upon us and the changes in the energy market that make fossil fuels increasingly risky.

As the SCC put it in its order, “The relevant statutes… do not require the Commission to find any particular level of environmental benefit, or an absence of environmental harm, as a precondition to approval.” (Note to legislators: How about fixing that?)

The SCC’s state of denial is not just about the future. Since at least the 1980s, Dominion has consistently overestimated future demand growth.

A little skepticism might be in order when Dominion projects the same level of demand growth that keeps not materializing.

But the SCC is not skeptical. Its order declares Dominion’s load forecasts “reasonable.”

Evidently one can be both reasonable and wrong. Demonstrating this in real time, only a few days after the SCC issued its order in early August, Dominion CEO Tom Farrell had to explain to shareholders why electricity demand has not grown this year in line with company predictions.

Amnesia was also in evidence at the public hearing on the case, where proponents of the gas plant – everyone from Dominion employees to the SCC staff – kept insisting on the environmental advantages of natural gas.

But congratulating each other that at least it wasn’t a coal plant seemed odd to those of us who recall the fanfare surrounding the opening of Dominion’s newest Virginia coal plant, all of one year ago.

My, how quickly things change. No one is proposing to build coal plants any more. Now that natural gas costs half what coal does, people have suddenly noticed that burning dirty black rocks to make electricity is a terrible idea. “Look at all that pollution!” they say in wonderment. “How last century!”

Hydraulic_Fracturing_Marcellus_Shale USGS

A natural gas fracking operation in the Marcellus Shale. Photo credit: U.S. Geologic Survey

But in this century, natural gas is already wearing out its welcome – and not just among unhappy landowners who say fracking has spoiled their drinking water. Scientists measuring methane escaping from extraction wells warn that high levels of “fugitive emissions” may make natural gas a major contributor to climate change.

The SCC takes no notice of climate change, but it ought to consider that others do, presenting a financial risk for any fossil fuel plant. A national plan to reduce carbon emissions could make gas very expensive.

Yet building the Brunswick plant commits Dominion ratepayers to paying whatever the market price is for natural gas for the next three decades. Worse, it’s effectively a baseload plant, designed to burn gas 24/7; it can’t ramp up and down quickly to supply power when needed on a short-term basis, such as to fill in around the power supplied by wind and solar.

Analysts predict wind and solar will increasingly become the first choice for new generation, as these renewables get steadily cheaper and offer long-term price stability as well as environmental benefits.

Indeed, wind turbines beat out natural gas plants as the largest source of new generating capacity nationwide last year. Companies are designing natural gas turbines now that integrate with renewable energy, allowing utilities to hedge their bets on gas.

Well before the end of its 36-year life, a 24/7 baseload plant like Brunswick may be reduced to a giant concrete paperweight.

It would seem wise to hold off on building this gas plant, and we could. Investments in energy efficiency would more than meet the demand the Brunswick plant is supposed to serve, at a lower cost.

The SCC brushed aside this argument, pointing out that it consistently swats down good energy efficiency proposals – and intends to continue doing it.

So Virginia ratepayers, prepare yourselves: You’ve already been stuck with one of the last coal plants to be built in America. Now get ready for 30 years of paying for a natural gas plant. As for your dreams of wind and solar, keep dreaming.

Originally published in the Hampton Roads Virginian-Pilot on August 29, 2013. 

Unknown's avatar

Nuclear power: lessons from Japan (and Murphy)

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Dominion Virginia Power said Monday that it intends to move forward with plans for a third reactor at its North Anna Power Station as the international nuclear energy industry reels from the disaster at the Dai-ichi nuclear plant in Japan.—WSLS10, March 15, 2011

The operator of Japan’s tsunami-hit nuclear power plant sounded the alarm on the gravity of the deepening crisis of containment at the coastal site on Friday, saying that there are more than 200,000 tons of radioactive water in makeshift tanks vulnerable to leaks, with no reliable way to check on them or anywhere to transfer the water. –The New York Times, August 23, 2013

A friend asked me recently whether I thought the ongoing disaster at the Fukishima nuclear plant in Japan would have repercussions here in Virginia, where Dominion Power operates four nuclear reactors at two plants and wants to build another. I feel pretty sure the answer is no. Economics will kill Dominion’s nuclear dream, but not risk. We just don’t think that way.

We think like this: Fukishima was taken out by a tsunami. There are no tsunamis in central Virginia. Ergo, there is no risk to Virginia’s nuclear plants from a tsunami, so Japan’s sudden revulsion against nuclear power shouldn’t put us off our feed half a world away.

So why did countries like Germany, which also has no tsunamis, freak out and swear off nuclear for good?

They drew an entirely different lesson: Japan is a smart, technologically-advanced nation. Japan did not anticipate the disaster that destroyed Fukishima. Ergo, unanticipated disasters happen even in smart, technologically-advanced nations.

Or put another way: Murphy’s Law also applies to nuclear plants. We ignore Murphy at our peril.

But ignore him we do. We had our own brush with nuclear disaster two years ago, when a rare, magnitude 5.8 earthquake shook central Virginia and led to a months-long shutdown of the two North Anna nuclear reactors. No one expected an earthquake of this strength there, least of all the plants’ designers. Fortunately, the reactors survived intact, but I don’t know of anyone who wants to repeat the experiment. Presumably Dominion intends the “next” North Anna reactor to be designed to withstand stronger earthquakes. Do you feel better about nuclear now, or worse?

Murphy’s Law operates with ferocity across the energy sector. An industry expert told me the BP oil spill in the Gulf happened in spite of four different safeguards in place on the drilling rig, each of which should have stopped the blowout from happening. And that spill was not an isolated incident; only the year before, a similar blowout off the coast of Australia created a 2,300 square mile oil slick—about the size of Delaware. U.S. papers largely ignored it. Spills are so common in oil drilling that they rarely warrant a headline. Yet somehow those who support offshore oil drilling off the coast of Virginia feel sure it won’t happen here.

Or take mountaintop removal coal mining (please). Right now powerful explosives are blasting away the tops of mountains in southwest Virginia and across Appalachia. The rubble is being dumped into stream valleys, while huge machines scrape off the thin seams of coal. Federal law provides that no streams should be harmed, and the mountains should afterwards be restored—requirements so fanciful that neither mining companies nor state officials take them seriously. So it’s not surprising that streams and rivers are polluted, species disappear, building foundations crack, and residents die young. That’s not the plan going wrong, it’s the plan.

In the past most Americans participated in an unspoken agreement to ignore the risks involved in producing energy, because we had no intention of stopping what we were doing. If it’s a choice between risky energy and no energy, we will go with risky every time. Denying the risks is a coping mechanism that lets us sleep at night. Not incidentally, this is also the strategy used by fossil fuel interests to keep the public from demanding action on climate change.

But the widespread availability of cleaner alternatives gives us energy options we didn’t feel we had before. Increases in energy efficiency and tumbling prices for wind and solar mean we can afford to look more honestly at the damage we do and the risks we run by powering our 21st century economy with 20th century fuels.

I like to think the Virginia legislature’s decision to maintain the ban on uranium mining—for now—shows that our ability to ignore risks has its limits. Mining anything hazardous is inherently risky in a climate like Virginia’s, where rainfall continually recharges the water table. Put nasty stuff between the rain and the water table, and you will find contamination downstream. The idea that water can be kept out of millions of tons of radioactive mine tailings for thousands of years strains credulity. The idea that this might be accomplished by a mining company whose sole purpose is to make money shatters credulity altogether.

The fact that a good many of Virginia’s politicians lined up on the side of the mining company anyway is not necessarily evidence of their capacity for ignoring risk. More likely, it simply demonstrates how extreme is the corrupting power of money in Virginia politics. Unfortunately, that shows no signs of changing.

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Non-profits can go solar, save money under new Virginia law

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photo credit Dietrich Krieger

A church in Germany displays both its faith and its solar panels. Photo credit Dietrich Krieger.

Faith communities, colleges, schools, local governments and non-profits will find it easier to “go solar” under a law that takes effect in Virginia on July 1. Eligible customers will be able to install solar panels or wind turbines with little or no upfront cost, paying only for the electricity the systems provide. This arrangement, known as a third-party power purchase agreement (PPA), has been the driver for most of the solar projects in the U.S. in recent years, but prior to this year utilities had blocked its use in most of Virginia.

The new law creates a two-year pilot program allowing customers of Dominion Virginia Power to install projects as large as 1 megawatt (1,000 kilowatts) using PPAs financed by private companies. Projects must have a minimum size of 50 kilowatts, so the program can be used by many commercial customers but excludes homeowners, whose solar PV systems more typically fall in the 4-to-8 kilowatt size.

Importantly, however, the 50-kilowatt minimum does not apply to tax-exempt entities. PPAs are one of the only ways available for tax-exempt entities to benefit from the federal 30% tax credit for renewable energy systems; a tax-paying investor actually owns the system and uses the credits, passing along the savings to the customer. Thus the program could open up a new solar market in Virginia focused on what might be considered a natural vanguard for renewable energy: houses of worship, colleges, schools and nonprofits.

PPAs also offer an advantage over buying solar panels outright: even though the solar system is on the customer’s roof, someone else actually installs, owns and maintains it. That means less hassle for the customer and no upfront capital cost. The customer only has to pay for the solar power that’s produced. With prices for solar systems having fallen dramatically in recent years, customers will generally be able to buy solar energy under a PPA for no more than they now pay for power from non-renewable sources.

In states with incentive programs, including Maryland and DC, customers actually save money on their utility bills with solar PPAs. Virginia customers may not save money at first. Depending on the contract terms, however, customers may save money in future years, and can end up owning the solar system outright eventually, which will allow them to save quite a bit of money on electricity in the long run.

PPAs are the most common financing method for rooftop solar systems across the country. Companies like Solar City and Sungevity have created a profitable business model around financing and owning solar systems on customers’ property. Given the lack of state incentives in Virginia, Solar City isn’t expected to enter the market here. Financing PPAs in Virginia can still be profitable, but it presents challenges. Still, for people with cash sitting in CDs and bank accounts earning less than 1% interest, financing a solar project at their neighborhood church or school can be rewarding financially as well as spiritually.

One of the few companies with experience in Virginia PPAs is Secure Futures, LLC of Staunton, Virginia. CEO Tony Smith says his company’s business model is to “work with tax exempt entities to met their environmental, educational and thought leadership goals through solar installations that we own and operate in ways that deliver immediate operational savings and solid long term returns.”

The new law will involve rulemaking by Virginia’s regulatory body, the State Corporation Commission, to settle the details–including how the pilot program is tracked and how a qualifying customer applies for the limited kilowatts available over the two-year period. The SCC should be issuing a docket for a public hearing in the near future.  Since many customers need months of lead-time, it’s not too soon to start the planning process.

Free workshops will offer information about solar PPAs beginning in June

On June 23 at 7 p.m., Greater Washington Interfaith Power and Light (GWIPL) and the Sierra Club will hold a free workshop for faith congregations at Mount Vernon Unitarian Church in Alexandria, one of the first Virginia churches to install solar panels. Representatives of solar companies including Secure Futures and Abakus Solar of Richmond, Virginia will be on hand to answer questions.

GWIPL has worked extensively with DC and Maryland congregations on similar solar projects and has compiled an informative booklet that can be downloaded from the gwipl.org website.

The Virginia Chapter of the Sierra Club supported the solar industry in its quest to open up the Virginia market for solar PPAs and believes churches and other faith communities can play a big role in making the benefits of renewable energy available to everyone.

Sierra Club and Virginia Interfaith Power and Light are also planning a June workshop for Richmond-area congregations. Similarly, Sierra Club and National Wildlife Federation, which has been working with community colleges on “green campus” projects, are planning a workshop designed especially for colleges and universities.

In addition to their target audiences, all workshops will be open to anyone who wants to learn more about the solar opportunity. For information, contact corrinabeall@sierraclub.org.

New law an imperfect compromise

The PPA legislation was a compromise between the solar industry and Dominion Power, which had sparred over the question of whether PPAs are legal in Virginia. When Secure Futures tried to install a system at Washington & Lee University in 2011 under a PPA, Dominion sent cease and desist letters claiming the arrangement was illegal. Eventually Secure Futures and the university used a different financing approach so the project could move forward.

Dominion also blocked a 2012 bill in the General Assembly that would have expressly allowed PPAs; that bill would have included private homes and smaller commercial systems. The issue was popular with legislators and the public and became a priority for many local governments during the 2013 legislative session.

Eventually this year Dominion agreed to a narrower bill as a temporary pilot project. In exchange, the bill gives Dominion legal certainty by prohibiting PPAs in its territory that fall outside the pilot project.

Other Virginia utilities refused to participate in the pilot program. As a result, the program and its rules apply only in Dominion Virginia Power’s service territory.

The pilot project will run for two years, after which Virginia regulators will evaluate it to determine whether it should be continued and expanded. The total size of all the systems installed under the legislation is capped at 50 megawatts. Although this is a tiny amount compared to states like New Jersey, which already has more than 1,000 megawatts of solar installed, it would mark a significant step forward for Virginia, which to date has installed less than 10 megawatts.

In addition to the 50 megawatts that can be installed under PPAs, another 30 megawatts of solar will be installed by Dominion itself under a program it refers to, somewhat confusingly, as “community solar.” Under that program, the utility plans to install and own solar systems on leased rooftops in select locations. The program includes no provision for selling the solar output to the building owners.

Wind systems also covered

The pilot project includes wind turbines as well as solar systems. Dominion’s service territory includes relatively few areas with wind resources good enough to make wind power economically attractive, but the Virginia Wind Center at James Madison University has been evaluating the possibilities under the pilot program and believes it may be useful for some customers interested in installing wind turbines.

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Virginia doesn’t need another gas plant

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On April 24, Virginia’s State Corporation Commission (SCC) will consider a proposal from Dominion Virginia Power to build a new natural gas-fueled generating plant, the second of three it wants to add to its holdings. Its first plant, now under construction in Warren County, generated little opposition because it will replace old coal boilers that Dominion needs to retire.

But the latest proposal for a plant in Brunswick has come in for fierce criticism, and for good reason: we don’t need another gas plant. Dominion has exaggerated the growth in demand that it says justifies the plant, and the company could more cheaply meet its actual needs with energy efficiency and renewable energy.

Moreover, the world is changing, and the energy model of big utilities running big baseload power plants is becoming outdated. If Dominion builds another of these, Virginia could end up stuck with a giant concrete paperweight.  The SCC owes it to customers not to let this happen.

Every year Dominion tells regulators it expects demand to increase by 1.5% to 2% per year indefinitely, but its actual energy sales have been essentially flat since 2006. Sure, the recent recession threw everyone a curveball, but Dominion’s tendency to overstate future demand goes back decades. The company seems not to have anticipated widespread changes like more efficient appliances and better building codes that let consumers use less electricity even while we’re buying more gadgets.

With a little effort, we could save even more energy. Virginia ranks in the bottom half of states for energy efficiency, and Dominion is not on track to meet even the modest efficiency goals of the Virginia Energy Plan. Some of the fault for this lies with the SCC itself, which has often rejected energy efficiency programs. But nor has Dominion tried very hard. Even their rate structure is designed to encourage energy use. Greater efficiency would mean lower electricity sales, and who wants that? Not a company that makes its money building plants and selling electricity.

And this is a shame, because the cheapest energy is the energy that isn’t used. Virginians use 20% more electricity per person as our neighbors in Maryland, so we have a lot of low-hanging fruit we should pick before we build another power plant.

Even if we needed more power, though, building another baseload natural gas plant is a bad plan. A “baseload” plant is one designed to run continuously, unlike a “peaker” plant that fills in when needed. The price of natural gas fluctuates wildly, so building a baseload plant means committing customers to paying whatever the going rate happens to be, all day, every day, for the 30-year life of a gas plant. With about a third of Dominion’s power mix already coming from natural gas, surely adding more baseload gas is a reckless gamble when alternatives are available. Even Dominion CEO Tom Farrell has warned against an over-reliance on natural gas for this very reason.

It used to be that alternatives to fossil fuels weren’t much available, so a 30-year gamble was normal, and regulators didn’t trouble themselves by asking what the world would be like in 20 years. Wind and solar have changed that. When you build a wind farm or a solar facility, you know exactly what you will be paying for energy 20 years down the road, because your “fuel” is free. Building wind or solar is like locking in a fixed-rate mortgage instead of gambling on an adjustable rate mortgage with a low teaser rate. With that as an option, why should Virginians commit themselves to 30 years of buying gas at whatever the market decides is the price?

With prices dropping rapidly, wind and solar are today’s fastest growing energy technologies, and wind is second only to gas as a source of new electric generation. Of course, Virginia can’t boast a single wind farm today, and the smattering of solar across the state totals less than 1% of what New Jersey has. But even here, time and economics are on the side of renewable energy. Citigroup recently issued a report projecting that renewable energy will reach grid parity across the U.S. within the next few years and will gradually relegate all other fuels to back-up status.

This makes it an even worse idea for Dominion to invest in a plant that cannot easily adjust its output when the wind picks up or the sun comes out. Other options exist. Gas turbines are now being designed to integrate with renewable energy, combining high efficiency with the ability to ramp up and down quickly. Companies like General Electric are making big bets that this is the future of gas turbines.

Dominion, meanwhile, seems to be looking at the future as if we were back in the 20th century, and without even taking advantage of hindsight. Its plan is a bad deal for its customers, and the State Corporation Commission should reject it.

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Tom Farrell’s nuclear fantasy

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Tom Farrell doesn’t get it. Dominion Power, the utility of which he is CEO, has been all about building natural gas plants for the past couple of years, as it rushes to take advantage of cheap fracked gas. Out with the aging coal plants that had been its first love, in with the next cheap thing, and never mind the pollution! Then suddenly two weeks ago, faced with a question about climate change, Farrell told reporters the answer is more nuclear plants.

Mother Earth to Tom Farrell: The correct answer is “renewable energy.”

Most of the rest of the country gets this. Wind supplied more new electric generation than natural gas did in 2012. More people work in solar energy than in coal mining. Renewable energy has overtaken nuclear worldwide. Almost no one is building nuclear plants, partly because—here’s an inconvenient truth for you, Tom—they cost too much. Almost three years ago a Duke University study found that power from new nuclear plants is more expensive than solar energy, and the cost of solar has only gone down since then.

But Farrell is convinced wind and solar can’t provide reliable electricity to power the whole grid. You’d think he’d been reading propaganda from the Koch Brothers and had come to believe that if there are solar panels somewhere and a cloud crosses the sun, the whole grid crashes.

Can I just point out here that Dominion’s own North Anna nuclear reactors shut down suddenly in 2011 following an earthquake in Virginia, and the grid did not crash? Even though nuclear is one-third of Dominion’s Virginia portfolio, and North Anna represents more than half of that? And even though, while weather forecasters are pretty good at predicting regional cloud cover, no one can yet predict an earthquake?

The reason the grid didn’t crash is that grid operators make sure there is enough surplus generation available to keep supplying power even at times of catastrophic failure. And note that the nuclear plants didn’t come back online when the clouds cleared off, either. They were down for four months.

If nuclear power is more expensive than renewables, and it has to be backed up 100% with other forms of energy, for much longer time periods, where is the place for new nuclear?

As the CEO of a utility, Tom Farrell should know better. He should also know about the new study demonstrating that renewable energy alone—onshore wind, offshore wind, and solar energy—can power the entire grid 99.9% of the time. The study authors show that doing this would actually cost less than conventional sources of electricity, assuming you include in the price the “external” cost society pays for the use of fossil fuels. That is, if you factor in the cost of climate change, it’s cheaper to build renewable energy than new fossil fuel plants.

Climate aside, there’s other evidence for the superior value of renewable energy in providing price stability for customers and a whole range of benefits for the grid. And of course, for meeting demand at the cheapest possible cost, you can’t beat energy efficiency.

It’s time to face reality, Tom Farrell. If all you care about is making money for Dominion today, your natural gas strategy probably makes sense. But if you care about tomorrow—or even about the big picture today—it doesn’t. Either way, there’s no room in the picture for expensive new nuclear plants.

And if you’re sincerely concerned about climate change, now would be a good time for Dominion to invest in energy efficiency, wind and solar.

*    *    *

Note to readers: Willett Kempton, one of the authors of the study cited above on powering the grid with renewable energy, will be speaking at a townhall meeting sponsored by Sierra Club and Environment America this Wednesday, March 13, at the MetroStage Theatre, 1201 North Royal St., Alexandria, VA. The meeting is open to the public (Tom Farrell is especially invited). To RSVP, contact Phillip Ellis at phillip.ellis@sierraclub.org or 571-970-0275.

 

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Dominion takes the wrong way on solar

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On February 12, Virginia’s State Corporation Commission held a public hearing to decide whether to approve Dominion Virginia Power’s plan to buy 3 megawatts of solar power from Virginia residents and businesses to sell to the company’s voluntary Green Power Program. Sound like a good idea? It’s not.

Yes, Virginians want solar power. Investing in solar means stably priced electricity, cleaner air and lower greenhouse gas emissions. Solar power is now cost-effective in Virginia even in the absence of state incentives, thanks to federal tax credits and a steep decline in the price of solar panels. But a high upfront cost still limits who can afford to install it.

Utilities and the SCC have a role to play in bringing new solar power onto the grid. Dominion’s program to install 30 megawatts of solar on leased rooftops, which the SCC approved this fall, provides an example of how utilities can strengthen the grid, diversify their power sources, supply valuable peak-demand electricity, and contribute to their own learning curve on integrating renewable energy, all while meeting a portion of their customers’ demand for clean power.

The 3-megawatt program, on the other hand, gets nothing right. Under the program, customers who have solar panels would sell all their solar power to Dominion for 15 cents per kilowatt-hour (kWh), and buy regular fossil-fuel electricity (known as “brown power”) from Dominion at the normal retail rate of about 11 cents. Cost to Dominion: 4 cents/kWh.

Dominion would then resell the solar power to the participants in its Green Power Program, not for the 4 cents it costs the company, but for 11 cents. Dominion would keep 7 cents/kWh.

Dominion tells us that the 7 cents would go to its rate base, not its own bottom line. But it’s clear who loses. The do-gooders who pay extra on their utility bills for the Green Power Program would pay 11 cents for something Dominion bought for 4 cents. They are being played for chumps.

Last year the Green Power Program bought Virginia solar power directly for 4 cents/kWh through the purchase of renewable energy certificates. So why should the program pay 11 cents for something it can get for 4?

Since Dominion administers the program, it will be up to the SCC to prevent this misuse of its funds.

This is only part of the problem. The reason Dominion wants to shift the cost of the solar purchase onto the Green Power Program is its insistence that the value of solar energy isn’t the retail rate of electricity, but is the utility’s “avoided cost”—roughly, the price at which it can buy brown power on the wholesale market, which is around 4 cents/kWh.

Of course, if the current wholesale price were the only thing that mattered, you’d have to question why Dominion ever builds its own electric generation, including its new coal-fired plant that delivers power at 9.3 cents/kWh.

The SCC allows Dominion to build its own generation in Virginia for a host of other reasons, all of which apply equally to Virginia solar. Rooftop solar also provides significant additional benefits to the utility and the electric grid that utility-supplied brown power does not. A number of recent studies have quantified these benefits to prove that net-metered solar (where customers sell solar power to the grid at the retail rate) lowers costs for everyone.

Yet Dominion wants to shift costs onto a voluntary program, while keeping the benefits. This is bad for the Green Power Program, and it sets a terrible precedent for valuing solar that could retard its growth in Virginia. And that would be bad for all of us.