Tag Archives: environment

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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.

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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.

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Renewable energy makes small gains in Virginia’s 2013 legislative session

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The Virginia General Assembly will soon wrap up its work on the 2013 legislative session. Renewable energy advocates began the session with high hopes for a series of bills that promised to reform our renewable energy law, expand net-metering, and open up new opportunities for financing solar systems and small wind turbines.

So how did we do? Well, this is Virginia. Progress is slow, the utilities are powerful, and half the legislature doesn’t believe in climate change. On the other hand, they do believe in business. Under the circumstances, we did okay.

Renewable Portfolio Standards: bye-bye, bonuses

Readers of this blog already know the long, miserable tale of Virginia’s weak and ineffective, voluntary renewable portfolio standard (RPS), which has enriched utilities with tens of millions of dollars in incentives without bringing any new renewable energy projects to Virginia. This year the legislature went halfway to fixing the problem. Legislation negotiated between the office of the Attorney General and the utilities will deprive utilities of future ill-gotten gains for meeting the RPS law, but won’t change the pathetic nature of the law itself.

Stripping out the RPS incentives was only part of a bigger, more complex bill that sweetens the deal for utilities in other ways, so it’s hard to judge whether the legislation as a whole marks a victory for consumers. Skeptics will note that Dominion’s stock price has actually gone up several percentage points since the deal was announced, which you wouldn’t expect if the AG were correct that the bill will save consumers close to a billion dollars over time.

What is clear is that the RPS remains as voluntary and as crummy as it ever was, but the utilities can no longer use it to rip off ratepayers while pretending to be good citizens. Some environmental groups consider stripping out the incentives a bad thing, on the theory that only by giving utilities a bonus can we expect them to meet the goals. Other groups (including the Sierra Club) believe Dominion, at least, will want to maintain its greenwashed public image by continuing to meet the RPS goals, and that ending the consumer rip-off is worth celebrating.

Sure, if the goals had brought wind and solar to Virginia, the Sierra Club would have considered the incentives a tolerable price to pay. As it happened, Dominion and the other utilities continuously rebuffed efforts over the years to improve the RPS. Had Dominion approached the RPS as an opportunity to bring real renewable energy to Virginia rather than as a cash cow to be milked for its own advantage, the company would have saved itself a public relations fiasco and likely kept its bonuses, too. Surely, someone at HQ should be out of a job right now.

Taking the long view, it is also worth noting that getting rid of the free money is a necessary first step towards a mandatory RPS in Virginia, which would unleash market forces for renewable energy that don’t emerge with a voluntary law. Utilities would oppose such a move more vigorously if they still had incentives to protect that were available only under the voluntary program.

. . . but reform efforts fail again

These views all assume the legislature will someday pass a bill to improve the goals and bring wind and solar projects to Virginia, without which the RPS is meaningless anyway. Surely legislators must recognize how pointless it is to have an RPS that can be met with out-of-state, pre-World War II hydro, plus some trash and wood-burning and a few assorted projects that put no power on the grid. (Even without the performance incentives, utilities remain entitled to pass along to customers the cost of meeting the RPS goals.)

Bills to improve the goals should have passed the legislature this year as part of the reform package. HB 1946 (Lopez) and SB 1269  (McEachin) even received the support of Dominion Power for provisions that would limit most future purchases for the RPS to high-quality projects like wind and solar. What killed the bills seems to have been a combination of opposition from vested interests and sheer cussedness on the part of some Republicans, who were engaged in partisan maneuvers that had nothing at all to do with renewable energy.

As usual, we are left hoping for better luck next year.  Meanwhile, however, a couple of other RPS bills made incremental progress. Most notably, HB 1917 (Surovell) adds solar thermal energy to the definition of renewable energy; as of this writing it has passed the House and is on the Senate floor.

A loss for more honest competition among fuels

There are more ways to support renewable energy than through an RPS, of course. One of my favorite bills would have required utilities and the State Corporation Commission to consider the long-term price stability of fuels used in electric power generation. HB 1943 (Lopez) would have helped price-stable wind and solar compete against notoriously price-volatile natural gas. It’s an idea that should appeal to fair-minded conservatives, so it’s a shame it hasn’t gained traction since first being introduced in 2012. However, it died in committee in the face of opposition from Dominion Power, which doesn’t want any interference with its plans for new natural gas plants.

Power Purchase Agreements get a “pilot”

Two bills passed the legislature to allow some third-party power purchase agreements (PPAs) for wind and solar within Dominion’s territory. Under a PPA, an installer retains ownership of the solar equipment, with the customer buying the electricity that is generated. This arrangement has two primary advantages: the customer can “go solar” with no money down and no responsibility for the equipment; and in the case of a tax-exempt entity like a church or a university, it provides a way to access federal tax credits worth 30% of the system cost.

The bills were designed to prevent a recurrence of a dispute that erupted in 2011 when a Staunton-based solar company, Secure Futures, installed a large solar system at Washington & Lee University under a PPA. Dominion issued “cease and desist” letters insisting that only it could sell electricity in its assigned territory. Although Virginia law is unclear on this point, the university and the solar company capitulated in the face of massive litigation costs. Since then Dominion’s army of lawyers has proven as effective as any statute in stopping further efforts to use PPAs in Virginia.

This year’s bills, SB 1023 (Edwards) and HB 2334 (Yancey), were originally written to allow third-party PPAs wherever customers can currently install renewable energy systems that they own themselves. They were significantly scaled back to win acceptance from Dominion Power. (AEP and the coops wouldn’t play at all, so legal ambiguity remains the rule in their territories.)

The bills allow up to 50 megawatts’ worth of solar and wind installations using PPAs, in Dominion territory only, as a pilot program.  Whether net-metered or not, they will be counted against the current net-metering cap of 1% of the utility’s generation. Tax-exempt entities can have a facility of any size up to 1 megawatt (500 kW if they net meter); taxable entities must have a minimum size of at least 50 kW (so no homeowner need apply). PPAs that do not meet the requirements are expressly prohibited in Dominion territory.

Agricultural net metering, yes; community net metering, no

A bill to allow agricultural net metering also passed this year. HB 1695 (Minchew) allows the electricity from a single solar, wind, or digester gas facility to be attributed to two or more electricity meters as long as they are all on the same property and have the same owner. Thus, for example, a farmhouse, barn and other out-buildings can all share in the benefits of solar panels on one of the buildings, even if each building is separately metered.

Originally the bill would also have enabled community net metering, sometimes known as solar gardens, but the utilities opposed it. Bowing to political reality, Delegate Minchew scaled it back. The bill is notable, however, for making progress without including any provisions that seem capable of doing mischief.

A note about all the bills: In Virginia, the governor can sign a bill, veto it, or send it back to the legislature with amendments of his own, so none of these bills are final as of this writing.

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For electric power generation, the end of fossil fuels is in sight

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The rap on renewable energy is that it’s too variable to meet society’s demand for a constant supply of electricity. The answer to the problem turns out to be: More renewables.

111022-N-OH262-322Climate change is acting like an ever-tightening vise on our energy options. Each year that passes without dramatic decreases in our use of carbon-emitting fuels means the cuts we have to make simply get more drastic. By 2030, say experts, we must entirely replace coal with efficiency and renewable energy, or fry. Even the most intrepid environmentalists wonder if it can be done without huge price hikes and wholesale changes in how we live and use energy–changes that society may not accept.

A new study out of the University of Delaware shows it is possible to power the grid 99.9% of the time with only solar and wind energy, at a cost comparable to what we are paying today. This counters the conventional wisdom that we will always need large amounts of fossil fuel as a backup when the wind doesn’t blow and the sun doesn’t shine. It also means the goal of getting largely beyond fossil fuels by 2030 is not just achievable, but practical.

The study focused on a regional transmission grid known as PJM, which encompasses parts or all of fourteen states, mostly in the Mid-Atlantic. Researchers ran 28 billion computer simulations to find the most cost-effective combinations of wind and solar that could power the entire grid, at the least possible cost and with minimal amounts of energy storage. The winning combination relied on natural gas turbines for backup on only five days out of the four years modeled.

The study authors looked for the least cost taking account of carbon and other external costs of fossil fuels, which are not being accounted for today, but they also assumed no technology improvements over time, making their cost estimates conservative overall. All the least-cost combinations used much more storage than we have today, but needed it for only 9 to 72 hours to get through the entire four years modeled.

The secret to dealing with the inherent variability of wind and solar, it turns out, is to build even more wind and solar. One wind turbine is unreliable, but tens of thousands spread across a dozen states greatly reduces the variability problem, and tens of thousands of wind turbines balanced with millions of solar panels is better still. To get to 99.9% renewables, you keep adding wind turbines and solar panels until you are producing three times the electricity that you actually need to meet demand. To power the grid with renewables just 90% of the time, you would have to produce “only” 1.8 times the electricity needed. (And yes, we have the windy sites and the sunny places to support all those projects.)

While it may sound strange to build more generation than you need, that is already the way grid operators ensure reliability. To take one example, if you were in Virginia when the “Big One” struck in 2011, you will recall that the earthquake caused the North Anna nuclear plant to shut down for four months. Nuclear energy provides a third of the electricity in Dominion Virginia Power’s service territory, and yet the lights stayed on. That’s because the grid wizards at PJM simply called on other power sources that had been idle or that had spare capacity.

The other component of reliability is the ability to match demand for power, which rises and falls with the time of day, weather, and other factors. So-called “baseload” plants like nuclear, coal, and some natural gas turbines don’t offer that flexibility and must be supplemented with other sources or stored energy. PJM currently uses more than 1,300 different generating sources, as well as about 4% storage in the form of pumped hydro. The right combination of other sources can replace baseload plants entirely.

wind turbine-wikimedia

Pairing wind and solar improves their ability to meet demand reliably. Onshore wind tends to blow most strongly at night, while solar energy provides power during the peak demand times of the day. Offshore wind power is also expected to match demand well. Combining them all reduces the need for back-up power.

But until now policy makers have assumed that solar and wind won’t be able to power the grid reliably, even when combined and spread out over PJM’s more than 200,000 square miles, and with the addition of wind farms off the coast. Critics have insisted that renewable energy requires lots of back-up generating capacity, especially from some natural gas turbines that can ramp up and down quickly. New gas turbines have even been designed specifically to integrate with renewables in anticipation of increasing amounts of wind and solar coming onto the grid.

This makes the work of the U. Delaware researchers a game-changer by showing that wind and solar can be backed up primarily by more wind and solar. And so we can begin planning for a future entirely without fossil fuels, knowing that when we get there, the lights will still be on.

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Greenwashing Virginia’s renewable energy law, part 3: you can’t clean ugly

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If you’ve been following the woeful tale of Virginia’s renewable portfolio standard, by now you know it hasn’t produced a single electron of wind or solar power in the commonwealth, nor is it ever likely to. Fellow citizens, what is to be done?

Let’s review what happened in last year’s legislative session, when word got out that Dominion Power was meeting the state’s renewable energy goals by buying cheap renewable energy certificates from decades-old projects involving dams, trash and wood—and collecting tens of millions of dollars annually as a “bonus” for doing so. Outraged environmentalists pushed for a reform bill that would let utilities collect this bonus from their customers only if they invest in new, Virginia-made wind and solar projects—essentially, what we thought the law was about in the first place.

It was a well-crafted, solid, common-sense bill. It died without even a hearing.

But meanwhile, Governor McDonnell got two bills passed that actually made the law worse. The first one said that in addition to energy from old dams, trash and wood, utilities can meet our goals by purchasing renewable energy certificates generated by universities showing they’ve done some research into renewable energy.

Research is an admirable activity. Most of us approve of research. We approve of universities, too. But even when you put universities and research together, not a single electron of energy flows into anyone’s home. Under what possible theory does it qualify as renewable energy?

Also newly qualifying, thanks to the governor, are certificates representing an industrial process used by a Virginia corporation called MeadWestvaco. This also won’t put energy on the grid, but it creates a brand-new income stream for MeadWestvaco, paid for by utility customers—though not by large industrial users like MeadWestvaco itself, which got themselves exempted from paying for the added cost to utilities of renewable energy.

Lobbyists, my friends, are worth every dime of their inflated paychecks.

No doubt this clever bill will stimulate the creative juices of other corporations to figure out how they, too, can feed at the renewable energy trough. As a service to anyone wondering how to get their ideas into law, I note that MeadWestvaco gave $75,000 to Bob McDonnell’s campaign for governor and his inaugural committee. This is what we call the Virginia Way.

After these two bills passed, Governor McDonnell announced he had taken important steps to promote renewable energy. Advocates of renewable energy promptly asked him not to do us any more favors. Heading into the next session, we’re gravely concerned that he wasn’t listening.

Attorney General Ken Cuccinelli offered a different approach: repeal the RPS law, or at least repeal the bonus utilities get. Mr. Cuccinelli is more famous for attacking the credibility of climate scientists than for embracing renewable energy, but with the environmentalists’ reform bill dead, the Sierra Club ended up supporting the AG’s bill rather than see the consumer rip-off continue.

But that bill failed, too, though it got several votes from Cuccinelli allies in the House, some of whom are pretty sure that if renewable energy succeeds, the United States will become a failed socialist state occupied by blue-helmeted U.N. troops. (If you think I am making that up, check out some Virginia Tea Party websites.) It is safe to conclude that votes for the AG’s bill were not votes for renewable energy.

Cuccinelli’s bill shared the same fatal flaw as the reform bill: Dominion Power opposed it. In case you haven’t caught on by now, Dominion almost always gets its way in the legislature, and it sure isn’t going to allow either the AG or the Sierra Club to take away its free money.

The upcoming session could be interesting. Mr. Cuccinelli is running for governor next year, which makes him the leading Republican in the state, with all due respect to Bob “Lame Duck” McDonnell. This fall Cuccinelli issued a report critical of Virginia’s appalling RPS, and has signaled he plans to go after the bonuses again.

Which is more powerful for Republicans, political allegiance or Dominion’s campaign cash? Which matters more to Democrats, renewable energy or Dominion’s campaign cash? Which matters more to Governor McDonnell, his party or his tight relationship with Dominion’s CEO (not to mention the campaign cash)? Not surprisingly, legislators are begging Dominion and the AG’s office to work something out together so they won’t have to pick sides.

Concerned that a “compromise” may serve political ends but leave the public out in the cold, environmental groups plan to bring their own citizen’s army to Richmond in support of reform. They’d like to see a compromise that lets Dominion keep its bonus payments by earning them with Virginia-made wind and solar. It’s so little to ask–yet, based on past years’ experience, it may still be too much to hope for.

Which brings us to the third option for outraged citizens. Buy Dominion stock. Seriously, if the company is going to wind up on top every time, you may as well get in on the profits.

Maybe you can use your dividends to buy solar panels.

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Greenwashing Virginia’s renewable energy law, part 1: Honey, I shrank the goals!

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Criticism of Dominion Virginia Power has been steadily mounting over the $76 million dollars the company has been awarded as a “bonus” for complying with Virginia’s voluntary renewable energy law. Last week Attorney General Ken Cuccinelli weighed in with a report echoing the charges environmentalists have been making for the past year: Dominion has succeeded in meeting the letter of the law, and collecting bonus money from its customers, without investing in any new renewable energy projects.

The AG’s office exonerates Dominion, claiming the real failure is the legislature’s for passing a law that allowed this to happen. Silly Mr. Cuccinelli: this is Virginia. Dominion wrote the law.

But it’s worse than you know. The money-for-nothing issue is partly a result of the statute’s failure to require new investments in high-value projects like wind and solar energy as a condition of earning the bonus, but it is also a function of the extremely modest targets set by the statute itself. Virginia’s renewable energy goal is usually stated as 15% renewable energy by 2025, but when 2025 rolls around, the goal will be met with less than half this percentage, possibly much less.

The greenwash works like this: the statute sets a 2025 target for renewable energy to make up 15% of “total electric energy sold.” You probably think you know what “total electric energy sold” means. You don’t. Only if you are whiling away an idle afternoon reading the definitions section of the statute do you learn that “total electric energy sold” is defined as the total amount of electricity sold, minus the amount provided by nuclear power. In the case of Dominion Power, nuclear is about a third of the total. So for Dominion, 15% of “total electric energy sold” actually means only 10% of its electricity sales.

You will rarely see Dominion acknowledge this, though until recently its executives worded their statements carefully so they could not be accused of actually lying to anyone. Lately, however, the company has grown careless with the truth. A press release dated October 4, 2012 includes this fun quiz question and answer: “Is Dominion investing in renewable power sources? (A) Yes, in Virginia Dominion has committed to getting 15 percent of its power from renewable sources by 2025.”

Yet even if this statement said Dominion would get 15% of its “non-nuclear power” from renewable energy by 2025, it would still be wrong. When 2025 arrives, meeting the goal won’t require Dominion to achieve anywhere near 15% of its non-nuclear sales (10% of total) from renewable energy. That’s because the target percentage is measured against 2007 sales, not 2025 sales, and Virginia is growing. Assuming sales increase a little under 2% per year as Dominion projects, by the time 2025 rolls around, meeting the goal will require only about 7% renewables. If Dominion builds the new nuclear plant it wants, that number will shrink further.

Conceivably the number could go even lower. Since 2007, Virginia politicians have twice demonstrated how much they love renewable energy by watering the goal down even further, but doing it in a way that makes it sound awesome. They passed bills that say utilities will get double credit for any wind and solar they use to meet the goal. In fact—what the heck—if they build offshore wind farms, we’ll give them triple credit!

Wow, triple credit! That’s great! Isn’t it?

Come to think of it, no. Combine that with the other sleights-of-hand, and now Dominion could satisfy Virginia’s entire 15% renewable portfolio goal with about 3.5% of our electricity coming from solar energy or wind farms on land. For offshore wind, less than two and a half percent would do it. And that’s thirteen years from now.

Chances are, this doubling and tripling will never matter. Dominion “earned” its $76 million bonus for meeting the letter of the law with electricity from old dams and biomass (i.e., wood-burning), and by buying cheap credits from out of state. Dominion can get enough of this cheap renewable energy that it will be able to meet the goals through 2025 without investing in wind and solar.

Given Dominion’s approach to meeting the goals, it might be just as well that the target is so low. But then you have to wonder: $76 million for that?

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Offshore oil drilling in Virginia: undead and ugly

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Photo: U.S. Coast Guard

Drilling for oil off Virginia’s coast is once again a possibility, popping up like a zombie when we thought it was dead (again). As the New York Times reported, “Efforts are focusing on Virginia because the public, politicians in both parties and energy companies all favor opening the waters to drilling.”

It will be news to many members of the Virginia public that we favor drilling off our coast, but there’s no doubt that oil companies are itching to open the Atlantic coast to drilling rigs, and plenty of Virginia politicians make it a talking point. Senators Warner and Webb are on board, as is Senator-elect Tim Kaine. Most famously, Governor McDonnell came into office dreaming of the highways he would build when his tanker ship came in.

For oil companies, Virginia is the thin edge of the wedge. Our share of federal waters is quite small because of the odd way that boundary lines are drawn. Virginia is targeted mainly as a means of cracking the line of resistance created by other eastern states. It’s a shame so many of our politicians are eager to help in the cracking.

It used to be that when Democrats and Republicans agreed on something, that improved the odds of it being a good idea. These days, it often just means they are taking money from the same corporations. Money alone may not buy a politician’s votes, but it most certainly buys lobbyists access to politicians, and access has a way of producing votes. So perhaps the surprise is not how many politicians have jumped on the drill-baby-drill bandwagon, but how many have not.

Some naysayers, including Congressman Gerry Connolly (D-Fairfax), point out that drilling off our coast is opposed by the U.S. Navy, which uses most of Virginia’s leasing area for its operations. These include testing air and surface missiles and bombs, which traditionally don’t pair well with oil rigs and tankers. (On the other hand, the Navy supports offshore wind farms, which would be located away from operations.)

Other legislators, like Congressman Bobby Scott (D-Newport News) oppose drilling because of the environmental hazards, and the danger posed to fishing and tourism.

Of course, no politician will admit to being unconcerned about the environment, including the ones who are very obviously unconcerned about the environment. This is why they say they support “environmentally safe offshore oil drilling.” The phrase is so familiar that we have come to take it for granted, but it actually bears some thinking about. Saying he supports “safe oil drilling” suggests a politician has in mind another kind of oil drilling–the unsafe kind–that he would not support.

But you’d be hard-pressed to find any restrictions on the drilling industry that the drill-baby-drill crowd supports. These politicians considered offshore drilling “environmentally safe” right up to the day millions of barrels of oil began gushing into the Gulf of Mexico and causing billions of dollars’ worth of damage. Drilling methods haven’t changed since the Deepwater Horizon disaster, and oil spills have continued to occur in the Gulf and elsewhere.

So let’s put in a plug for Truth in Advertising. Politicians, if you think extra American oil is worth the occasional catastrophic oil spill, then say so. Pretending there will never again be another Deepwater Horizon makes you look out of touch with reality, and the fact that a significant proportion of the voters are also out of touch with reality is not an excuse.

If you’re okay with drilling, tell us your Plan B for Virginia: how you would deal with the effects of a spill that fouls our coastline, kills wildlife, and contaminates everything that lives in the ocean, over an area that could be hundreds or thousands of square miles. If winds and tides spread the contamination onto Assateague Island or into the Chesapeake Bay, what’s your plan?

The folks in our commercial and fishing industries, and all the people who live and work in beach towns, should hear you talk about how confident you are in their ability to get by for a season on government handouts; if there’s longer-lasting damage, how maybe they can move to Northern Virginia and work in retail. I’m sure you can make it sound appealing.

And if you can’t, then maybe it’s time to kill the drilling zombie for good. You may be taking money from oil companies, but your job is to look out for Virginia.

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Mother Nature to be sued for copyright infringement

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Hurricane Sandy, in an image clearly copied from “The Day After Tomorrow”

To: Mother Nature, d/b/a “Hurricane Sandy”

Re: Copyright infringement

Dear Ms. Nature,

It has come to our attention that you and/or your agents have made unauthorized use of certain intellectual property belonging to our client, Twentieth Century Fox Film Corporation (“Fox”), including images, illustrations, plotlines, audio and video unlawfully appropriated from “The Day After Tomorrow,” a motion picture owned by Fox. This letter is to notify you that we believe your actions constitute a violation of U.S. copyright law, 17 U.S.C. § 101 et seq.

It is clear that the plotline of Hurricane Sandy has been substantially copied from portions of “The Day After Tomorrow.” The motion picture is a dramatization in which a storm of epic proportions bears down on the eastern United States, causing massive destruction and widespread flooding, including in Manhattan. Scientists in the movie say human-induced climate change is the reason for the storm’s unusual size and damaging force.

Your agent, Hurricane Sandy, was a storm of epic proportions that bore down on the eastern United States, causing massive destruction and widespread flooding, including in Manhattan. Scientists in real life say human-induced climate change is the reason for the storm’s unusual size and damaging force.

Certain scenes from Hurricane Sandy appear to be copied directly from portions of the motion picture. Photographs taken during and after your storm depict waves swamping buildings, taxicabs in floodwaters up to the windows, lower Manhattan completely dark, and a flooded subway system—images closely replicating events in “The Day After Tomorrow.” We believe this demonstrates a clear infringement of our client’s copyright.

Moreover, we feel it is incumbent on us to point out that your actions in turning a fictional and hypothetical entertainment into actual fact violate the expectations of the public that climate change is and will remain a matter of mere speculation concerning events that are firmly in the future. The American audience expects the continued burning of fossil fuels to produce entertaining epics like “The Day After Tomorrow,” while having no actual effect whatsoever on their lives. Your insistence on demonstrating that a warming ocean will produce larger and more damaging hurricanes is, frankly, in poor taste.

This letter will serve as notice of our intent to pursue any and all remedies available to our client under applicable law, including an injunction against further infringing activities.

Yours truly,

I.M. Cole

Law Offices of Cole & Oyle, LLC

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Coal and the big lie

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Hurricane Sandy swept into town this week, reminding Americans that climate change may be the Issue That Cannot Be Talked About, but that doesn’t mean it has gone away. Suddenly the fact that the two presidential candidates have been trying to outdo each other in professing their love for coal comes across as unseemly, if not downright perverse. Surely this would be a good time to acknowledge the impossibility of preventing the catastrophic effects of increasing carbon emissions if we are unwilling to stop burning the things that emit carbon—chief among them, coal.

So a war on coal might be a good idea, although the idea that the Obama Administration has been waging one is nonsense. The reasons for the decline of the coal industry are primarily the flood of cheap natural gas, which is out-competing coal as a fuel for electric generation, and the increasing cost of coal, especially in Appalachia.

Indeed, the Appalachian coal industry has been on the decline for years. The richest and most easily-reached coal has been mined, leaving thin seams that take more effort and expense to extract, pushing the price of Central Appalachian coal well above that of coal from the Powder River Basin further west.

From 1990 to 2006–before the recession, before the Obama presidency, and before the price of natural gas collapsed–Virginia coal mining declined from about 10,000 workers to about 4,500.  The U.S. Energy Information Agency projects that Virginia coal production will continue to decline through the rest of this decade.

But coal executives prefer to lie to workers than admit they can’t compete in the free market, and the politicians who’ve taken hundreds of thousands of dollars from the coal companies would rather parrot their lies than admit they have failed their constituents. Coal companies and their political bedfellows have been exploiting coal miners for two centuries; it’s no surprise to see them using these workers now as pawns in the presidential campaign.

But fingering the real culprits for coalworkers’ distress is the easy part; what’s harder is helping the residents of the coalfields areas find new jobs to replace the ones that are never coming back.

Ironically, in Virginia it has been environmental groups like the Sierra Club and Appalachian Voices that have championed a plan to do just that. For several years they have been urging an end to the approximately $45 million annually in state taxpayer subsidies that currently go to enrich coal companies, and replacing them with incentives to support new jobs in tourism, technology, clean energy and other industries.

This proposal should have gotten traction last year, when a report by the state’s Joint Legislative Audit and Review Commission (JLARC) concluded that the subsidies do not achieve their goal of supporting coal employment, and indeed that  “changes in coal mining activity appear unaffected by the credits.”

One would have thought that Republicans especially might have jumped at the chance to cut $45 million per year of wasteful spending, or that Governor “Bob-for-Jobs” McDonnell would have gladly seized the opportunity to build a jobs program that did not add a new line-item to the budget.

Following the release of the JLARC study, the legislature and the Governor did act—to extend the coal company subsidies for several more years. The message to the residents of southwest Virginia could not have been any clearer: it’s the coal company executives and their money we care about, not the miners and their families.

The presidential election will be over in a few days. Regardless of who wins, the Virginia coal industry will continue its decline. The only question left is how long the miners will accept being lied to.

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What the heck is a REC? Renewable Electricity Certificates, Renewable Portfolio Standards, and why it all matters anyway

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More than 30 states have Renewable Portfolio Standards (RPS) to increase the amount of renewable energy their residents use. Renewable energy does not always cost more than conventional energy, but when it does, renewable energy certificates (RECs) may provide the means for making up the cost difference. Whether RPS laws work well, or whether they cost their residents money without providing a value, depends on how well the laws are written. Policy makers, industry watchdogs, and the public all need a basic understanding of how RPS laws and the REC markets work to ensure that the laws are actually serving the public.

So what the heck is a REC?

“REC” stands for “renewable energy certificate.” A REC is a way to monetize the environmental attributes of energy from a renewable resource, so the extra value can be bought and sold independent of the electrons that form the energy itself.

We’ll use an example to make it easier to understand. Say you want to put solar panels on your roof, but you can’t because your house is shaded by tall trees. So you go to your neighbor with the sunny location next door and tell her that if she will put solar panels on her roof, you will buy the electricity from her. You work out a deal, call a solar installer, and soon she’s got a solar array that produces, on average, exactly the amount of electricity your house uses. [1]

As it happens, though, you can’t buy the actual solar energy her panels are producing. That electricity is powering her house, and any excess electricity is feeding into the grid through her meter. Once power is in the grid, it’s all just electrons. The electrons don’t look different whether they come from a coal plant or a wind farm or a solar array. So there is no way to identify and claim the specific electrons that come on the grid from specific solar panels.

What you can buy from your neighbor is the right to say you’re running your house on solar energy, up to whatever amount of power her solar panels produce. This is the essence of a renewable energy certificate. A REC doesn’t represent electricity, but rather the extra value to society of that electricity having been produced by solar panels. So you continue to buy your electricity off the grid from your utility, and then you pay your neighbor something extra for the RECs. You are not actually using solar power, but you are paying for the right to say you are.

Chances are, there won’t be any actual paper certificates involved. You will simply have a contract with your neighbor that states how much you’re paying her per kilowatt-hour. Your contract would also prevent her from making the same deal with any other neighbor, double-dipping by selling the RECs twice.

It is a short step from there to creating a whole market for RECs as a commodity. If you were to stop buying your neighbor’s RECs, she could sell them to someone else, perhaps a “green” business that wanted to say it was running its store on solar power. The price would depend on supply and demand for renewable energy in your area.

What’s a REC got to do with an RPS?

Now let’s scale up our example and add utilities to the story. Your state, it turns out, has a Renewable Portfolio Standard (RPS), a law that tells utilities that they must obtain a certain percentage of their power from renewable sources. Utilities that own their own generation sources may choose to invest in wind, solar, biomass, or other renewable generation facilities, depending on what the law defines as renewable. Utilities that don’t own their own generation, or that can’t produce enough renewable electricity, have to buy that power from others.

This is where RECs come in. When the utility offers to buy renewable power from someone who is generating it, it will want to buy the RECs as well. Buying the RECs allows the utility to demonstrate its compliance with RPS targets. Indeed, in some states, RECs are the only measure of compliance.

If the utility has to go beyond its own service area to find enough renewable energy, the RECs can take on a life of their own as they get bought and sold independently of the power generated. If the state RPS law allows it, a utility could even buy RECs from a renewable power facility that isn’t part of the same regional transmission grid. In that case, the facility sells the power to its local utility, and sells the RECs to the utility that needs them for its RPS obligations. There is no longer any connection between the electricity and its renewable attributes.

The problem with separating RECs from the energy itself

The REC market is important for making an RPS work, and it makes sense when the power generated is within the state that sets the RPS. But when a utility goes beyond the borders of a state, or even of its own service area, to buy RECs, the usefulness of the program to ratepayers declines, and the likelihood of double-counting and confusion increases.

Let’s go back to our example of the two houses. You have a contract with your neighbor to buy the RECs from her solar panels. Buying the RECs gives you the right to say you are powering your home with solar power. But here’s the rub: now that you’ve bought her RECs, she doesn’t have the right to say she is powering her home with solar, even though the panels are on her house. After all, you can’t both claim the same solar power, right?

You can see how easy it would be for double-counting to occur. She has the solar panels, you have the RECs, but there’s only one house’s worth of solar being produced.

Now let’s scale up again to the utility level, where it can get really weird. No two states have the same RPS laws. Some states have strict requirements for what counts as renewable, some have looser requirements, and some have no RPS at all. Utilities want to spend as little as possible to meet their requirements, so they may buy and sell RECs to make sure that the most expensive RECs (usually from solar power) are being used to meet only the toughest standards. If a state doesn’t have a minimum requirement for solar, the utility will try to sell any solar RECs it’s holding to a utility in another state that requires solar, and then buy cheaper RECs (perhaps from landfill gas or older hydroelectric projects) to satisfy its own state’s less-stringent requirements.

The result is just like the example of the two houses: a utility might own a big wind farm or a giant solar array, but if the state has no RPS or only a weak one, it will sell the RECs from that wind or solar facility to utilities in states that do have strong RPS laws. The utility that buys the RECs buys the right to claim that it is providing its customers with renewable energy. The utility that sells the RECs has sold the right to make that same claim. It may own a wind farm, and power from it may flow through its wires, but legally, it’s just selling electrons.

This is not just a theoretical problem. Dominion Virginia Power does precisely this when it advertises its West Virginia wind farms as producing power for Virginia. In fact, it sells the RECs to utilities in other states that have tougher RPS laws than Virginia’s. In this case, Virginia is getting neither the benefit of the wind jobs nor the right to say it is using renewable energy.  Meanwhile, the ratepayers in the state with the tougher RPS, who pay for those RECs, are getting the bragging rights and paying the bill, but they are not seeing the clean energy jobs that the RPS incentivizes. Only West Virginia gets those jobs, along with the actual wind farms.

The ratepayers are like the owners of the two houses. People in the state where the renewable energy is produced may think they are getting renewable energy, but so do the people in the state whose utility is buying the RECs. Customers in the state with the tough RPS are paying for the renewable energy to be produced, but the benefits—jobs, economic development and cleaner air—go to the state where the project is. They are told they are buying renewable energy, but if they understand what is happening, they might well feel like chumps.

What does a good RPS look like?

The problem we just described is why a well-crafted RPS will limit out-of-state RECs purchased separately from the power itself.[2] It is in the interest of ratepayers to create a market for renewable energy in their own area, so jobs are created close to home, and so nearby dirty energy sources are displaced by clean energy, resulting in healthier air and cleaner streams and rivers.

An effective RPS will also include “carve-outs” (minimum levels) for higher-value types of renewable energy like wind and solar that may cost more to produce than biomass, landfill gas, or hydro. Creating demand for wind and solar supports higher prices and can make a project economically feasible when it wouldn’t be otherwise. Again, stimulating these investments means jobs and economic development in the state as well as cleaner air and water when older, dirtier facilities are shut down.

The worst RPS laws are ones that allow RECs from energy that isn’t really renewable (like coal-bed methane), from projects that don’t actually produce energy (like research and development), or that would be produced anyway (like energy from facilities that pre-date the RPS law). Giving credit for these kinds of power devalues the RECs from new and truly renewable projects and undercuts the economic incentives that can make new investments in renewable energy possible.

What does this mean for policy-makers and the public?

There are two main lessons from all this:

  1. Don’t be fooled by appearances. If your state’s RPS can be met with out-of-state RECs from old hydro plants, don’t assume it’s being met with energy from that new wind farm or utility-scale solar array you’ve been reading about here in your state. Those RECs are being sold somewhere else. The only way to find out what you’re paying for in your state’s RPS is to require your utilities to disclose the sources it is using—and then check.
  1. Looser requirements are not better. A kitchen-sink approach to what qualifies as renewable energy ends up being counter-productive because the cheapest sources will always be chosen over higher-quality projects.

Mandatory vs. voluntary RPS lawsIn most states, the RPS is mandatory; utilities that don’t meet the targets are fined by means of an “alternative compliance payment.” In Virginia, which has a “voluntary” RPS, utilities are free to decide whether they want to participate in the program. There is no fine for failing to meet the goals; instead, utilities are rewarded for meeting them, by being allowed to earn a significantly greater profit on their sales of electricity. Since this means charging ratepayers more, this voluntary RPS will cost ratepayers more than a mandatory RPS for the same amount of renewable energy incentivized.

Virginia’s all-carrot, no-stick approach ensures that no utility declines to participate because it costs them nothing to do so (all the costs of compliance are passed through to the consumers), while generating bonus money. The “voluntary” nature of the program is therefore meaningless—and after all, it is mandatory for the ratepayers.

Conclusion: Caveat ratepayer!

Mandatory RPS laws, requirements that the energy be produced in state or that RECs come “bundled” with the energy they represent, stricter standards for what counts as renewable, and carve-outs for wind and solar all produce the most value for the residents who are paying the bills.

Done right, RPS laws and RECs can lead to more renewable energy, job growth, economic development, and a healthier environment for all. But poorly-crafted laws do a disservice to ratepayers and fail at their central purpose. Policy-makers and the public must act like smart consume

[1] Your neighbor will likely enter into a “net-metering” arrangement with your utility, under which she feeds extra power into the grid on sunny days but draws electricity off the grid at night and on cloudy days. Most states now have laws allowing net-metering, but details differ.

[2] Although states are increasingly limiting their RPS programs to in-state RECs, there is some question whether doing so, at least for mandatory programs, could violate the Commerce Clause of the U.S. Constitution. See, e.g., Elefant and Holt, “The Commerce Clause and Implications for State Renewable Portfolio Standard Programs.” Clean Energy States Alliance, March 2011.