Tag Archives: State Corporation Commission

To be or not to be a clean energy state, that is the question

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For the third year in a row, a tug-of-war is going on in the General Assembly over whether Virginia stays the course of the energy transition laid out in 2020 and 2021, or rolls it back hard.

Democrats remain committed to a renewable energy future to address pollution, high electricity costs and the causes of catastrophic climate change. Gov. Glenn Youngkin and most Republican legislators cling to the familiar (dis)comfort of fossil fuels. Republicans are still lobbing grenades at the Virginia Clean Economy Act (VCEA) and the Clean Car Standard; Democrats are holding the line on those advances.

Last year House Republicans used small subcommittees to kill Democrats’ energy bills, even those that passed the Senate on a bipartisan basis. This year the Democrats’ slim majority in both chambers will let more bills get to the governor’s desk. But with the threat of a veto tempering expectations, the party of clean energy is not running big, ambitious bills, but is instead focused on solving problems that have popped up along the march to zero carbon.

Committees have already begun work on the hundreds of energy bills filed in past days. That’s too many for even the Mercury’s dedicated readers to review without more caffeine than is good for you, so let’s focus on just some that would have the most consequence for the clean energy transition.

To be: Democrats work to further the clean economy

Many of the Democratic bills contain small fixes to existing law that add up to big gains for clean energy. One of these is HB 638, from Del. Rip Sullivan, D-Fairfax, and SB 230, from Sen. Ghazala Hashmi, D-Richmond. Most of its provisions are tweaks to the VCEA. Among them are increasing from 1% to 5% the percentage of Dominion Energy Virginia and Appalachian Power’s renewable energy purchasing that must come from small projects like rooftop solar; streamlining the State Corporation Commission’s review of energy efficiency programs by creating a single cost-effectiveness test; and supporting competition in the development of renewable energy and energy storage facilities by specifying that “at least”35% of projects must come from third-party developers, instead of the simple 35% number currently in the law. 

The bill also contains a provision that goes beyond the VCEA. It states that the SCC has an “affirmative duty” to implement the Commonwealth Energy Policy at “lowest reasonable cost.” (Two other bills, one from Sen. Jennifer Carroll Foy, D-Fairfax, and the other from Del. Phil Hernandez, D-Norfolk, contain only this provision.) The energy policy is separate from the VCEA, and it sets ambitious goals for the decarbonization of Virginia’s whole economy, including a faster timeline for achieving net zero in the electricity sector. The catch is that the policy does not have teeth, and for that reason it is routinely ignored. Requiring the SCC not just to take account of it, but also to implement it, is a step towards broader decarbonization, though it is not clear how it would actually play out at the SCC. 

Legislation from Sen. Scott Surovell, D-Fairfax and Sullivan would resolve problems with the shared solar program in Dominion territory (including putting restraints on the minimum bill that the utility can charge) and expand it to Appalachian Power territory. 

SB 79, from Sen. Barbara Favola, D-Arlington, would save taxpayers money by requiring new or substantially renovated (over 50%) public buildings to have solar-ready roofs or, if solar is deemed impractical, to meet one of two high-efficiency alternatives. New or substantially renovated schools would have to be designed and built to net-zero energy standards, unless the locality determines that to be impractical or the school is a historic building. 

Sullivan and Sen. Suhas Subramanyam, D-Loudoun, have introduced legislation to resolve the interconnection problem that has stalled commercial solar projects across Dominion territory. The House and Senate bills specify that customers are responsible for costs on their side of the meter, while the utility pays for costs on its side, including upgrades to the distribution grid. 

A few bills seek to break through the local-level gridlock that has bedeviled utility-scale solar and wind projects. The most significant of these is HB 636from Sullivan and SB 567 from Sen. Creigh Deeds, D-Charlottesville, which provides an alternative permitting process for larger utility solar (50 MW or more), wind (100 MW or more) and renewable energy storage projects (at least 50 MW nameplate and discharge capacity of 200 MWh or more) that go through the local permitting process but end up without permits. Developers get a second chance at the SCC if they meet a list of requirements. These include safeguards for farmland protection, stormwater, setbacks, wetlands, wildlife corridors, etc. Applicants are also charged $75,000 to cover the locality’s cost of participating in the SCC proceeding. (There is some irony here that small projects, which have less impact, are left at the mercy of local whims, while the most impactful projects have what amounts to a right of appeal.) 

Vehicle electrification would also get support from Democratic legislation. One bill of particular interest is Sullivan’s HB 118, which requires Dominion and Appalachian Power to take charge of upgrades to the distribution grid needed to support EV charging by non-residential customers. The utilities are also tasked with filing detailed plans to “accelerate widespread transportation electrification across the Commonwealth in a manner designed to lower total ratepayer costs.” 

Regardless of the fate of these bills, Virginia’s efforts to transition to a zero-carbon economy will be swamped by new demand from the fast-growing data center industry, unless the industry itself can be made part of the solution. A dozen or so bills seek to put conditions on the industry in one way or another, but one takes on the energy demand directly. HB116, from Sullivan, and SB192, from Subramanyam, condition data center operators’ receipt of tax credits on demonstrating compliance with minimum standards for energy efficiency and renewable energy procurement, as well as not using diesel generators for backup power. 

Not to be: Republicans try out arguments against the energy transition 

Many of the Republican anti-clean energy transition bills are blunt instruments that are more about campaigning in Trump country than low-cost energy. For example, HB 397, from freshman Del. Tim Griffin, R-Bedford, would repeal most of the important provisions of the VCEA, while declaring that development of new nuclear is “in the public interest” (a phrase that pretty much means “watch your wallet”). 

Similarly, five bills seek to repeal outright the Advanced Clean Cars law passed in 2021, which effectively put Virginia among the states that follow California’s path to vehicle electrification. The law does not kick in until 2025, but trying to repeal it has become a Republican standby. A more subtle bill from Del. Lee Ware, R-Powhatan, would condition repeal on the Virginia Automobile Dealers certifying that Virginia is not meeting its annual EV sales targets. 

Some anti-EV bills are merely performative. One non-starter, from Griffin again, would provide a tax credit for purchases of vehicles with internal combustion engines. A bill from Sen. William Stanley, R-Franklin, would require any business selling an EV or any EV component to a public body to provide a sworn declaration that there was no child labor involved not just in the manufacturing but at any point anywhere along the supply chain, starting with mining minerals abroad. 

If Stanley were truly concerned about child labor violations, of course, he would seek to apply this sworn declaration requirement to all industries. He could start with the domestic meatpacking industry, where child labor violations are rife, including in Virginia. Ah, if only that were the point. 

It’s not just state-level decarbonization that comes in for a brute-force attack. A bill from another new delegate, Eric Zehr, R-Lynchburg, makes its target any federal regulations that “may threaten the production or supply of affordable, reliable, and secure energy within the Commonwealth.” If alerted to such a threat by a utility or the SCC, the Attorney General’s office would be required to intervene. This sort of bill is not intended to survive its first committee hearing, if it even gets a hearing. Its only purpose is to show off the patron’s hard right bona-fides.

To be fair, there are Republicans who are actually trying to solve real problems in the energy sector. As one example, take SB562 from Sen. Travis Hackworth, R-Tazewell. His bill would create a ratepayer-funded pilot program for utilities to figure out a way to use coalbed methane for electricity without burning it (perhaps with fuel cells?). The problem is, he proposes to make this electricity eligible for Virginia’s renewable portfolio standard (RPS). It’s a creative, if expensive-sounding, response to the real climate problem of methane leaking from old and often abandoned coal mines, part of the true cost of coal. But calling fossil methane renewable is, shall we say, counterfactual. Some problems are more effectively tackled head-on, using tax dollars or tax credits, rather than being used to undermine the integrity of the RPS.

To be: somewhere else entirely

The reality of renewable energy is that we have to build a great many wind, solar and storage projects, each one taking months or years of design, permitting and construction work and requiring acreage we would rather use for something else. Yes, it means economic activity, investment and jobs, but it’s also something of a slog. Wouldn’t it be nice if we had a magic solution that could just provide carbon-free electricity without all that bother?

That’s the dream that continues to attract both Democrats and Republicans to nuclear energy. Opinion is divided on whether small modular reactors (SMRs) could hold the answer to all our energy woes, or are just the latest con from an industry looking to attract a new set of deep-pocketed suckers. 

 Three things are clear at this point. One, SMRs are still many years away from commercialization, coming too late to solve the climate problem that is here and now. Second, SMRs are going to cost a lot. Not only is there no free nuclear lunch, there isn’t even a low-priced breakfast. And third, Dominion is frothing at the bit to build an SMR – but only if customers have to pay for it. 

Some legislators are happy to oblige, even with all these drawbacks. The most concerning of the bills are HB 1323 from Del. Danny Marshall, R-Danville, and SB 454 from Sen. David Marsden, D-Fairfax. The legislation would allow Dominion or Appalachian Power to charge ratepayers “at any time” to recover development costs of a small modular nuclear reactor, defined as a nuclear reactor not larger than 500 MW. Not only is that not small, but by the language of the bill it need not even be modular or use advanced technology. Heck, it doesn’t even have to be in Virginia. Dominion could build any kind of nuclear plant, anywhere it chooses, and satisfy the terms of the bill. 

But it’s that “at any time” language that should be a red flag for lawmakers. Charging customers for a nuclear plant before and during construction, including cost overruns and with no guarantee of completion, is precisely how residents of South Carolina got stuck paying billions of dollars for a hole in the ground. 

That amount of money buys a lot of low-cost renewable energy and storage, right in the here and now. Virginia needs to be a clean energy state for the sake of ratepayers, the economy and the climate, and there is no time to waste.

This article was first published on January 21, 2024 in the VIrginia Mercury.

If Dominion’s plan is so bad, is there a better one? (Spoiler alert: yes, there is.)

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Courtesy of Lowell Feld, Blue Virginia

In my last column I took Dominion’s Integrated Resource Plan (semi-) seriously, giving the utility the benefit of the doubt in its projections for data center growth and the alleged need for more fossil fuels to keep up with the power demands of that ravenous industry. But as I also noted, Dominion doesn’t deserve to be taken seriously with this document.

Under Virginia law, an Integrated Resource Plan (IRP) is supposed to explain how the utility expects to meet demand reliably and at low cost within the constraints of the law. In this IRP, however, Dominion asked a different question: how to make Gov. Glenn Youngkin happy by keeping fossil fuels dominant regardless of both law and cost. 

Coming up with a favorable answer required Dominion to ignore the Virginia Clean Economy Act (VCEA), create arbitrary limits on solar deployment, use wishful thinking instead of facts and, for good measure, do basic math wrong. They also assume the Youngkin administration will succeed in pulling Virginia out of the carbon-cutting Regional Greenhouse Gas Initiative (RGGI), a move that is being challenged in court. This makes Dominion’s IRP, with its plan to double carbon emissions, a sort of evil twin to a plan from any RGGI state. 

Sure enough, the governor loves it. Elsewhere, however, this evil twin found a cold reception. Experts retained by environmental, consumer and industry groups all agree that this IRP should be chucked in the trash bin and Dominion told to start over.

It’s worth taking a look at the testimony from these groups to understand where Dominion went so badly wrong, and what a better plan might look like. 

It’s all about the data centers

Northern Virginia data centers are the driving force behind Dominion’s plans to burn more coal and gas, but there is some disagreement whether their growth will be absolutely off-the-charts crazy, or merely eye-poppingly huge. Dominion’s IRP projects the data center industry’s power use in its territory will quadruple over the next 15 years, rising from 2,767 megawatts (MW) in 2022 to more than 11,000 MW in 2038. At that point it would represent close to 40% of Dominion’s load. 

Experts testifying in the IRP case believe data center demand won’t reach the dizzying heights Dominion projects. They question whether Virginia communities will accept so much new data center development, given the pushback already evident in localities like Prince William and Fauquier Counties. Their thinking is essentially that if things can’t go on this way, they probably won’t.

They also suggest that some of the demand Dominion expects may also be reflected in the plans of other utilities serving Northern Virginia’s Data Center Alley, leading to double-counting. A load forecast published by grid operator PJM shows that Northern Virginia Electric Cooperative (NOVEC) projects its data center demand to rise from about 400 MW in 2022 to 4,000 by 2028 and 8,000 by 2034. Two other cooperatives project a combined 3,000 MW of data center development in the same time period. 

Aside from data centers, demand for electricity in Dominion territory is flat or declining over the next fifteen years; presumably this is due to the increased efficiency of homes and businesses offsetting the increased demand from electric vehicles and building electrification. 

If you were already experiencing vertigo over Dominion’s data center numbers, and you are now hearing for the first time that Dominion’s numbers represent only half of the total projected data center load coming to Virginia, maybe you won’t find it all that cheering that some of that added demand could be illusory. Still, it is a reasonable point. If you reduce demand by a few thousand megawatts here and there, pretty soon you might not “need” a new gas plant.

As an aside, one Virginia utility stands out for apparently not expecting much in the way of new data centers in its territory. Appalachian Power, which serves customers in Southwest Virginia, West Virginia and Tennessee, has experienced declining demand for years, and rural Virginia leaders would dearly love to see data centers come there. Yet the PJM forecast shows Appalachian Power’s parent company, American Electric Power (AEP), told grid operators it expected only about another 200 MW on top of the 500 MW of data center load it serves across its entire 11-state territory. AEP seems to regard this as quite a lot, which, when compared with what is happening in Northern Virginia, seems rather sweet.

I can’t help but wonder how Gov. Youngkin managed to make a deal with Amazon to bring $35 billion worth of new data centers to Virginia without securing a guarantee that many of the facilities would be located in a part of the state that actually has surplus energy capacity and desperately needs new economic development. Southwest Virginia voters may have put Youngkin in office; you’d think he’d be looking out for them.

Instead of real investment today, Youngkin promises the area a little nuclear plant a decade from now, when and if small modular reactors (SMRs) prove viable. Local leaders must be muttering, “Gee, thanks.”

And this leads to another point raised by several of the experts in the IRP case: All of the load growth Dominion projects is due to a single industry in Northern Virginia; elsewhere, demand is decreasing. Yet, instead of crafting a solution specific to the industry and region experiencing runaway growth, Dominion proposes to build a fossil fuel plant 140 miles away in Chesterfield and a nuclear plant 300 miles away in another utility’s territory.

Gregory Abbott, a former SCC Deputy Director, offers a particularly withering assessment of the IRP in his testimony on behalf of environmental advocacy group Appalachian Voices. Dominion’s computer model, he says, “is proposing supply-side solutions that are not focused on solving the actual problem, are likely unnecessary, and driving costs higher than they should be.”

Although Dominion insists this IRP represents just a “snapshot in time,” Abbott says that’s misleading: The IRP “sets the stage for multi-billion-dollar investments that Dominion’s customers will pay for decades to come. If a future snapshot in time changes, based on new public policy goals or market dynamics, ratepayers are stuck with paying for these sunk costs.” 

Garbage in, garbage out

Abbott and others also note that unlike factories or other high consumers of energy, data center operators can shift some functions to other data centers elsewhere for short periods of time. Dominion could save money and reduce the need for new investments by capitalizing on this capability to develop demand-response programs tailored specifically to this industry. 

Instead, Dominion treated the surge in demand as if it were statewide and spread across all its customers; then it used a computer model to figure out how to meet the soaring demand. 

An expert for the Sierra Club, Devi Glick of Synapse Energy Economics, noted several problems with Dominion’s approach. Among them: the company told its computer model that it couldn’t select energy efficiency as a resource; it had to include gas combustion turbines in 2028; it had to adhere to artificial limits on solar, wind and battery storage; and it had to assume prices for solar that were “substantially higher than industry projections.” Dominion also did not instruct the model to account for proposed (and since finalized) new federal pollution limits that will raise the cost of burning fossil fuels, and miscalculated — by a billion dollars — the penalties associated with failure to meet the VCEA’s renewable energy requirements. 

As they say, garbage in, garbage out. The model did what it was told, and produced plans that limited solar and battery storage, called for new gas combustion turbines and/or SMRs, and kept uneconomic coal plants running past their previously-planned retirement dates. Accordingly, none of the modeled scenarios complied with Virginia law and all would be unnecessarily expensive for customers.

Synapse ran its own computer model that kept most of Dominion’s load and cost assumptions but corrected for the company’s errors and artificial constraints. The results, not surprisingly, show that building more solar and storage and retiring coal plants earlier than Dominion wants to will lower carbon emissions and “reduce costs for Dominion’s ratepayers by between $4.1 and $9.0 billion over the 25-year study period.”  

When Synapse then tweaked the model to reflect the new federal pollution rules and prices for solar and battery storage in line with industry projections, the results saw solar and battery investments soaring, while the “need” for firm capacity such as a new gas plant disappeared altogether during the planning period.  

Clean energy, vindicated

So finally, we begin to see a path forward founded on real data and not constrained by political expediency. With none of its plans meeting the basic requirements of Virginia law, Dominion should be ordered to go back to the drawing board. The company should reexamine its data center load projections and design a demand-response program tailored to that industry. Then it should re-run its computer model with energy efficiency allowed as a resource, with no artificial constraints on battery storage and renewable energy,with federal and state compliance costs associated with fossil fuels fully included and with cost estimates for solar and storage consistent with industry norms.   

The General Assembly has a role to play, too, in ensuring the data center industry does not shift costs onto other customers and cause Virginia to fall short of its carbon reduction goals. Data centers should be required to meet energy efficiency targets and to secure an increasing percentage of renewable energy on their own as a condition of obtaining generous state tax subsidies. Likewise, the State Corporation Commission should be required to ensure that data centers pay for the transmission upgrades they need. Finally, the General Assembly should pass the data center study bill adopted by the Senate this year before being killed in the House.

Finally, it’s clear that the computer models will select as much low-cost solar as they are allowed to, so the General Assembly should make it easier to build solar projects at competitive rates. They can do this by further opening the market to third-party developers, who are currently constrained by an interpretation of the VCEA that caps their share of the solar Dominion procures at 35%.

The SCC will hold a hearing on the IRP beginning September 18.

An earlier version of this article appeared in the Virginia Mercury on September 5, 2023.

Why are Dominion Energy’s customers footing the bill for Virginia’s data center buildout?

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Dominion Energy headquarters, Richmond, VA


Virginia’s embrace of the data center industry produced new fallout this spring when Dominion Energy Virginia released its latest Integrated Resource Plan (IRP). With data center growth the “key driver,” Dominion projects a massive increase in the demand for electricity. As a result, the utility claims the state-mandated transition to clean energy is now impossible to achieve. 

Jettisoning its commitment to the Virginia Clean Economy Act (VCEA), Dominion proposes to keep running uneconomic coal and biomass plants that were previously slated for closure, build a new fossil gas plant and pay penalties instead of meeting state renewable energy targets, all of which mean higher costs for customers.

As I said at the time, this IRP is primarily a political document aimed at currying favor with a gas-loving governor. It is not a serious plan. For example, a Sierra Club filing with the State Corporation Commission describes how Dominion put artificial constraints into its computer modeling (including limits on new solar) to ensure the plan came out fossil-friendly. Moreover, Dominion’s demand projections are inflated, according to the clean energy industry group Advanced Energy United.

But for the sake of discussion, let’s take the IRP at face value. And in that case, I have some questions. How did Dominion let itself get blindsided by the data center growth spurt? Why are the rest of us expected to pay for infrastructure that’s only needed for data centers? Does the Governor understand that his deal to bring another $35 billion worth of new Amazon data centers to Virginia  is driving up energy rates for everyone else? 

Oh, and while I’m at it, are tech company commitments to sourcing renewable energy just a pack of lies?

Virginia’s data center problem is well known. Northern Virginia has the largest concentration of data centers in the world, by far. Data centers are Dominion’s single largest category of commercial power users, already consuming more than 21% of total electricity supply and slated to hit 50% by 2038. In addition to the new generation that will be required, data centers need grid upgrades including new transmission lines, transformers and breakers, with the costs spread to all ratepayers. 

Residents are not happy. Controversy around data centers’ diesel generators, their water use, noise and visual impacts have spread outward from Loudoun County into Prince William, Fauquier, and even other parts of Virginia as massive new developments are proposed. 

Data center developers don’t build without assurance they will have access to the huge amount of electricity they need for their operations, so they have to start discussions with their utility early. Yet in July of 2022, Dominion stunned the data center industry by warning it would not be able to meet new demand in Loudoun County until 2025 or 2026. The utility said, however, that the problem was not generating capacity, but transmission. So, what gives?

Not that it would be better if Dominion anticipated the oncoming tsunami but kept it secret until this spring. You have to wonder whether the General Assembly would have approved hundreds of millions of dollars in grants and tax subsidies for new Amazon data centers in February if legislators understood the effect would be to upend the VCEA and drive up energy costs for residents. 

Some Republicans are no doubt pleased that Dominion’s IRP undermines the VCEA, but they shouldn’t be. Dominion proposes keeping coal plants open not for economic reasons, but in spite of them. These plants were slated for closure in previous IRPs because they were costing ratepayers too much money. Now Dominion says it needs more generating capacity and can’t (or rather, won’t) build enough low-cost solar to keep up with new data center demand.

Dominion also proposes to build a new methane gas combustion “peaker” plant that wasn’t in its last IRP, and again the company points to data center growth as the reason. Peaker plants are an expensive way to generate power; on average, the cost of energy from gas combustion is about double that of a solar/storage combination, or even triple once you factor in federal clean energy incentives.

Keeping the fossil fuel party going instead of embracing more solar isn’t the only way this IRP drives rates higher for customers. Limiting its solar investments means Dominion expects to miss the VCEA’s renewable energy percentage targets by a mile. The shortfall would subject Dominion to significant penalties. The kicker is, Dominion can pass the cost of those penalties  on to ratepayers, too. 

Regardless of your political persuasion, then, this IRP is bad news for Virginia consumers. 

It’s also concerning that the driver of all these higher costs and carbon emissions is the high-tech industry that is so eager to be seen as a leader in sustainability. If these tech companies were meeting their power needs with renewable energy, Dominion wouldn’t be able to claim a “need” to keep its old coal plants belching away.  

Amazon, the number one beneficiary of state data center largesse, says it is the leading corporate purchaser of renewable energy globally. Its website claims the company is “on a path to powering our operations with 100% renewable energy by 2025.” A map shows it has developed around 16 solar projects in Virginia, adding up to over 1,100 megawatts. That’s great, but the company’s Virginia data centers are such energy hogs that they would need many times as much solar, plus a huge amount of battery storage to meet their 24/7 demand. And of course, Amazon’s demand will skyrocket with that next $35 billion in new data centers.

That same map, by the way, shows that Amazon has on-site solar at warehouses and Whole Foods stores all over the Northeast, but none in Virginia. Northeastern states have higher commercial power rates than Virginia does, so on-site solar means bigger bill savings in those states. One cannot help but suspect that Amazon’s commitment to renewable energy is really just a commitment to cheap energy.  

The Data Center Coalition’s filing in the IRP case does nothing to reassure us otherwise. Instead of chiding Dominion for reneging on its clean energy commitments, the Coalition’s Josh Levi essentially argues data centers are so important it doesn’t matter. 

I have no beef with data centers as a general proposition. They are an integral component of today’s economy, and the developments that now drive their explosive growth — machine learning and artificial intelligence — will also help us achieve a zero-carbon future.  

I just think data centers should try a little harder to be part of the solution instead of part of the problem.  

This article was first published in the Virginia Mercury on August 16, 2023.

Law? What law? Pandering to the governor, Dominion’s new plan ignores Virginia’s climate law

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Dominion Energy headquarters, Richmond, VA

Last December, Dominion Energy produced a remarkable document: a climate report predicting that by 2040 its electricity supply will be dominated by renewable energy. Coal will be gone by 2030, and methane gas will hang around in ever-smaller amounts, just to fill in the energy gaps. Small modular nuclear reactors (SMRs) probably won’t play a role for at least 15 years, during which time solar will become the mainstay of the electricity supply. According to the report, this strategy will allow Dominion to meet its goal of becoming carbon-neutral by 2050.  

Fast forward a few months, and the same company, using the same information, projects a future full of new methane-burning plants and SMRs. Dominion Energy Virginia’s 2023 Integrated Resource Plan (IRP), released May 1, now insists that the phenomenal growth of the data center industry and, to a lesser degree, the adoption of electric vehicles require so much energy that it can’t possibly meet legally-mandated climate goals. Accordingly, the plan doesn’t even try.

Instead of decarbonizing in accordance with Virginia’s role in the Regional Greenhouse Gas Initiative (RGGI) and the requirements of the Virginia Clean Economy Act (VCEA), Dominion now says it must build new methane-burning plants and keep old, expensive coal plants running “beyond statutory retirement deadlines established in the VCEA.”  All the alternatives examined in the IRP “assume that Virginia exits the Regional Greenhouse Gas Initiative (‘RGGI’) before January 1, 2024,” in violation of Virginia law. Most of the alternatives include the same SMRs its Climate Report recognized as unready. Compared to Dominion’s 2022 IRP update (filed just last September!), now costs have ballooned and CO2 emissions will skyrocket. 

What could possibly have happened in the course of a few months to produce this about-face? The astounding growth projections for the data center industry may be news to many Virginians, but not to the utility that provides their power. Vehicle electrification is hardly a surprise either. SMRs did not achieve any breakthroughs in technology or economics this winter, nor did anyone suddenly discover a way for new gas plants to make sense for the climate or ratepayers. Dominion makes a big deal out of the Christmas cold snap, but you have to try pretty hard to believe that requires upending all previous planning.

What did happen was the 2023 General Assembly session, in which Gov. Glenn Youngkin played a decisive role in handing Dominion a major – and unaccustomed – defeat. With Dominion Energy holding its shareholder meeting today, the company badly needs to show it is back in the governor’s good graces. And the governor, as we know, is not a fan of the energy transition. 

In other words, the IRP is a political document, not a serious approach to meeting Virginia’s electricity needs, at a time when climate change is accelerating and fossil fuels are giving way to superior renewable energy technologies.  

Market watchers will recall that Dominion’s stock price tanked in the fall of 2022, losing more than 30% of its value from August to November. So the company came up with a bill that would have increased the profit margin for its Virginia utility from 9.35% to 10.77%. This number was calculated to improve Dominion’s standing on Wall Street but would cost consumers an extra $4 billion, according to the State Corporation Commission’s estimate. The company also expected to be able to defeat pro-consumer legislation that would return more authority over rates to the SCC.

Dominion’s bill was widely panned, but that hardly made it a non-starter. In past years, the company has gotten what it wanted more often than not, thanks to powerful friends like Senate Majority Leader Dick Saslaw, D-Fairfax, and House Majority Leader Terry Kilgore, R-Scott. This is the beauty of doing business in a state that allows corporations, even public utilities, to supply unlimited campaign donations to elected officials. Over the years, Dominion’s contributions to Republican Kilgore nearly match its contributions to Democrat Saslaw. Most other General Assembly members get contributions from Dominion, too, helping to cement bipartisan support for the company’s priorities.

As the patrons of this year’s money bill, Saslaw and Kilgore should have been able to deliver enough votes from members of both parties to ensure a profitable outcome for their biggest campaign donor. They were not counting on the governor poking holes in the plan. 

Dominion’s beating this year grew from seeds it sowed in 2021. That year, Dominion made a bad bet on Democrat Terry MacAuliffe to win the governorship, secretly funding a dark money group to run ads attacking Youngkin. 

This year, Youngkin took his revenge. As a Wall Street guy himself, he knows how to hit a corporation where it hurts. 

Youngkin forced Dominion to accept changes to the bill that increase the company’s return on equity modestly (and only temporarily), but take away other avenues of profit. Adding insult to injury, the General Assembly also adopted the pro-consumer legislation that allows the SCC to set “fair and reasonable” rates in the future. 

Dominion declared itself satisfied with the result, but Wall Street judged otherwise. The company’s stock, which had started to rally in January, reached a ten-year low this spring. 

Aside from punishing Dominion, the governor achieved none of his energy goals in the legislative session. Rolling back the VCEA, exiting RGGI through legislation, reversing the Clean Car Standard — none of that happened. And as long as the Democrats keep control of at least one chamber in the General Assembly in this fall’s election, none of that is likely to happen. 

So Dominion’s IRP violates Virginia’s laws and the public’s trust (such as it is), makes a mockery of its own climate plan and proposes “solutions” that will drive up both costs and carbon emissions. As a plan, it can’t be taken seriously.  

All that, however, is beside the point. It makes the governor happy. And what makes the governor happy, Dominion hopes, will make its shareholders happy. 

That assumes the shareholders don’t care about climate change, or that they hold values that are as malleable as those of Dominion CEO Bob Blue and the rest of the company’s leadership. 

Climate change? What climate change?

An earlier version of this article was published in the Virginia Mercury on May 10, 2023.

The other shoe drops: APCo follows Dominion in seeking rate increase due to high fossil fuel costs

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Virginia residents who buy electricity from Appalachian Power will see a rate increase of almost 16% this year if the State Corporation Commission approves the utility’s request to recover more than $361 million it has spent on higher-than-expected coal and natural gas prices. APCo proposes to recover the excess over two years, meaning rates will remain elevated even if fossil fuel prices drop. According to the filing, a customer who uses 1,000 kWh per month would see an increase of $20.17.

The SCC is likely to approve the request because it has little room to do otherwise. Virginia law allows utilities to recover their spending on fuel dollar-for-dollar, though they cannot tack on a profit for themselves. Last month, the SCC approved Dominion’s request to increase rates by an average of nearly $15 per month for the next three years to cover past excess fuel costs. 

The good news, says APCo, is that Virginia customers will see lower bills in the future because the utility is investing in renewable energy. “Incorporating more renewable sources of power into the company’s energy mix is another step in reducing customer fuel costs,” declares the company’s press release, issued the same day as its SCC filing. “As Appalachian Power adds more renewables, there is less need for coal and natural gas to generate power.”

Well, yes, but wouldn’t it have been nice if APCo had come to this conclusion before now? The current situation was entirely predictable. A supply glut kept natural gas prices low for almost a decade, but drilling companies weren’t making money. Today’s higher prices make it profitable to drill for gas, but oil and gas companies don’t trust that the market will stay strong, so they are returning profits to shareholders rather than investing in new wells. So tight supplies may keep prices high. Or not! Nobody knows. (As for coal, natural gas generation and coal are ready substitutes for each other, so coal prices track natural gas prices.) 

For years clean energy advocates like me have been urging utilities and the SCC to value price stability in generation planning, only to be ignored. Other states took the lead in installing price-stable renewable energy, while Virginia added more gas plants. When I dug into the data this summer, it became clear that the great majority of states with lower rates than Virginia also had higher amounts of renewable energy in their generation mix. I’ve reprinted a summary table here. 

StatePrice cents/kWh% REsource of RE
Virginia12.837biomass, hydro, solar
Idaho9.8674mostly hydro
Washington10.1275mostly hydro
North Dakota10.4840mostly wind
Utah10.6615mostly solar
Montana11.0052mostly hydro
Wyoming11.0619mostly wind
Nebraska11.1128mostly wind
Oregon11.2268mostly hydro, some wind
Missouri11.5412mostly wind
Arkansas11.7510mostly hydro
Louisiana11.984biomass
South Dakota12.0382wind, hydro
Iowa12.0960almost all wind
North Carolina12.2616mostly solar and hydro
Oklahoma12.3845mostly wind
Kentucky12.637hydro

I compiled this table in July, using then-current Energy Information Agency data. Now EIA has updated its data, and Virginia’s position is worse than ever. As of July 2022, Virginia’s average residential electricity rate has now hit 14.42 cents/kWh. This puts us above every state in the South Atlantic except Georgia. (Poor Georgia comes in at 16.02, but that’s what building nuclear plants will do for your rates.) Meanwhile, the states whose rates increased the least are those with high levels of wind, solar and hydro. 

This isn’t rocket science, folks. Wind and solar have lower levelized costs than coal and gas, and they insulate consumers from the volatility of the world oil and gas markets. You don’t have to be a climate advocate to understand this, but apparently it helps.

Your electric bills are skyrocketing. Blame our failure to invest in renewable energy.

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Photo by Pixabay on Pexels.com

Fossil fuel prices are higher everywhere, and the effect is hitting electric bills as well as prices at the gas pump. 

Utilities that generate power from natural gas and coal face fuel costs two or three times as high as they were just a couple of years ago —and those costs are passed on to customers. Some utilities employ hedging strategies and long-term contracts to reduce the impact of price spikes. But as a general matter, how painful your bill increase will be is a function of how much electricity your utility generates from fossil fuels. 

Gee, don’t you wish we had more renewable energy in Virginia? 

Let’s review the problem. Dominion Energy Virginia, our largest utility, generates most of its electricity from gas and coal, with 29 percent from nuclear and a tiny percentage from solar and biomass. Our second-largest utility, Appalachian Power, derives 85 percent of its power from coal and gas and only 15 percent from renewable energy, primarily wind and hydro. 

Both utilities are investing more in renewables now, but for years they lagged other states even as wind and solar became the lowest-cost sources of energy nationwide. Because the “fuel” for wind turbines and solar panels is free, those sources generate electricity at a stable price that looks even better when coal and gas prices go up. (Nuclear reactors are fueled by uranium, so they aren’t affected by the fossil fuel crunch either; even so, most of them need subsidies to compete in the wholesale market.) 

As previously reported in the Mercury, Dominion filed a request with the State Corporation Commission in May to increase the “fuel factor” portion of its customer bills, citing the higher prices. In the past year, according to Dominion, the price of the natural gas it bought has gone up 100 percent. High gas prices cause utilities to switch to coal generation when it’s cheaper, so the price of coal also rose by 92 percent. In all, the company said it incurred more than a billion dollars more in fuel costs over the past year than it budgeted for a year ago. 

Under Virginia law, Dominion and APCo “pass through” the costs of fuel directly to customers. They don’t collect a profit, but they don’t have to swallow unexpected increases themselves. Customers will have to pay higher rates for as long as it takes Dominion to recoup the extra spending. The only question for the SCC is how quickly Dominion should collect the money.

Consumers in other states are also being hit by higher electricity bills, but the effect is uneven across the country. States that built more renewable energy protected their residents from fuel price increases. 

Data collected by the U.S. Energy Information Agency shows that with few exceptions, states with lower electricity rates than Virginia’s have more renewable energy than we do. Since the EIA data doesn’t reflect all the planned increases due to rising coal and gas prices, the disparity will become even more pronounced over the coming year. 

States in the Pacific Northwest with a lot of inexpensive hydroelectric power have especially low rates, but wind and solar are the cheapest forms of new energy. The higher fossil fuel prices go, the better wind and solar look by comparison. 

States in the Great Plains have been building wind for years because it outcompetes everything else, so their rates are low and increasingly insulated from fossil fuel volatility. South Dakota residents pay less per kilowatt-hour than Virginians do, and the state gets a whopping 83 percent of its electricity from renewable energy, primarily wind. Even North Dakota, a deep red state wedded to fossil fuels, gets more than 35 percent of its electricity from wind and another 5 percent from hydro. Its rates are already much lower than Virginia’s, and its renewable energy will cushion fuel cost increases. 

Investments in solar are also paying off. Take Utah for example, where residential rates are also far lower than Virginia’s. Utah has a coal problem, with 61 percent of its electricity from that one dirty source, and another 24 percent from natural gas. But, as EIA reports, “almost all the rest of in-state generation came from renewable energy, primarily solar power.” Moreover, “solar energy powers about 93 percent of Utah’s electric generating capacity added since 2015.” Evidently, Utah spent the past seven years working to future-proof its energy supply, while Dominion kept building more gas plants. 

Virginia’s slow start on the transition to renewable energy is the direct result of poor investment decisions by our utilities and a disgraceful myopia on the part of the State Corporation Commission. Environmental advocates pointed out for years that our over-commitment to fracked gas meant we’ve been gambling on fuel costs and undervaluing price stability. But the SCC kept approving new fossil fuel projects, and actually urged Dominion to build more gas plants.

Indeed, our situation would be even worse if the General Assembly had not passed the Virginia Clean Economy Act in 2020. The VCEA requires our utilities to transition to carbon-free electricity by 2050 and establishes wind and solar targets for Dominion and APCo to achieve by 2035. The targets are still too low to meet the climate emergency — but until the VCEA became law, Dominion was planning to build even more gas plants. 

Now customers have to pay for Dominion’s folly. Dominion’s filing states that if it recovers the entire $1 billion shortfall over the coming year, residential bills would have to go up by 19.8 percent. Dominion instead proposes to spread the higher charges over three years to ease the shock, making the bill increase 12.2 percent.  The effect would be further moderated this year by other adjustments the company proposes, like moving the costs of participating in the Regional Greenhouse Gas Initiative into base rates, where they can be absorbed because those rates are so inflated. (On the other hand, the SCC just granted Dominion a separate rate increase for spending to extend the life of its aging nuclear plants—an undertaking projected to cost nearly $4 billion.) 

An SCC hearing examiner heard testimony in Dominion’s rate case on July 6 and 7. A ruling is expected later this summer, and the SCC seems likely to approve the three-year plan. 

Spreading the cost of higher fuel prices out over a longer time may reduce the rate shock, but there are drawbacks to this approach. First, Dominion will charge customers the financing costs of deferring collection on the full amount, adding to the total cost burden. (What, did you think the company was offering to absorb that cost itself?) The way it works is that ratepayers will borrow money to pay off our debt to Dominion, then repay the loan with interest over the next three years. 

The second problem is that if the high cost of fossil fuel isn’t temporary, extending the recovery period will lead to even greater shocks in coming years. If prices stay high and we keep kicking the can down the road, we will pay more financing costs and pile up more debt. Where does this end?

This is not mere speculation. Dominion’s filing already projects that “fuel costs will remain elevated over the next year,” and expert witness testimony in the case notes that Dominion revised its natural gas price projections upwards after it filed its request, without updating the amount it is seeking to collect to reflect the higher projections. 

Over at Appalachian Power the situation may not be any better. APCo typically seeks its fuel factor rate increases in September of each year. Last year the utility sought a $3 average increase in residential bills to cover higher fuel costs, at a time when coal and gas prices were still well below this year’s prices. When the company files for its next fuel factor increase two months from now, the rate increase it seeks is likely to pack a much bigger punch. 

What of other Virginia utilities? Our smallest publicly-owned utility, Kentucky Utilities (Old Dominion Power, which serves five counties in southwest Virginia), is also heavily dependent on fossil fuels although now planning to build more renewables. ODP filed for a modest rate increase in February of this year, just before Russia invaded Ukraine and sent world natural gas prices to heights not seen since the start of the fracking revolution. 

Chris Whelan, vice president for communications and corporate responsibility, told me ODP is able to dampen the effect of fuel price volatility through a “flexible fuel procurement strategy that includes long-term contracts to help hedge against price swings as well as the ability to purchase fuel on the spot market when prices drop.” Still, ODP will have to seek another increase next February unless prices suddenly plummet. The utility recovers excess fuel costs (or lowers rates if fuel costs fall) on an annual basis, so customers would pay off the full amount over 12 months. 

Electric cooperatives that buy electricity from Old Dominion Electric Cooperative also face price increases due to high fossil fuel prices and a paucity of renewables. ODEC’s 2021 energy profile shows it generates 38 percent of its electricity from gas, 14 percent from nuclear, and 4 percent from coal. It purchases the rest from the wholesale market (38 percent) and from renewable energy projects (6 percent). Electricity sold on the PJM wholesale market is generated mainly by natural gas, nuclear and coal, so wholesale market prices are also higher now.

According to Kirk Johnson, ODEC’s senior vice president for member engagement, ODEC has had to raise energy prices twice since the beginning of the year, effective May 1 and July 1. Assuming individual distribution cooperatives passed those costs through immediately, residential co-op customers will have seen a 16 percent increase in their electricity rates since Jan. 1. That’s a really steep increase, but Johnson notes ODEC will collect the full amount of the excess cost by Jan. 1, 2023. 

ODEC’s increase for six months is almost four percentage points lower than the increase Dominion would impose for 12 months if it were to collect its full $1 billion in the shortest time possible. Johnson said ODEC engages in a hedging strategy that acts like an insurance policy to limit the effect of fuel price volatility, and that this strategy has saved their ratepayers hundreds of millions of dollars.

So hedging and long-term contracts can smooth out fossil fuel volatility, but rates are going up everywhere in Virginia. The lesson is clear enough: “cheap” fracked gas was a bad bargain. Our utilities should have been building wind and solar over the last several years to protect us from fossil fuel price volatility, rather than waiting for the General Assembly to force them to act. 

Going forward, the more we invest in wind and solar, the more price stability we will have in our electricity rates, and the less we will have to worry about high fossil fuel prices in the future.  

This article originally appeared in the Virginia Mercury on July 18, 2022. I’ve corrected information for Utah.

*EIA’s webpage lists each state’s average residential price of electricity per kilowatt-hour, but finding the fuel mix for each state requires looking up each one separately. For those of you who like to dive into these details, I’ve assembled the information for you. Note that most of EIA’s data is for 2021, but some state data is for 2020. Unfortunately this includes Virginia.

StatePrice cents/kWh% REsource of RE
Virginia12.837biomass, hydro, solar
Idaho9.8674mostly hydro
Washington10.1275mostly hydro
North Dakota10.4840mostly wind
Utah10.6615mostly solar
Montana11.0052mostly hydro
Wyoming11.0619mostly wind
Nebraska11.1128mostly wind
Oregon11.2268mostly hydro, some wind
Missouri11.5412mostly wind
Arkansas11.7510mostly hydro
Louisiana11.984biomass
South Dakota12.0382wind, hydro
Iowa12.0960almost all wind
North Carolina12.2616mostly solar and hydro
Oklahoma12.3845mostly wind
Kentucky12.637hydro

Dear readers: Many of you know that although I write independently of any organization, I also volunteer for the Sierra Club and serve on its legislative committee. The Sierra Club’s Virginia Chapter urgently needs funds to support its legislative and political work towards a clean energy transition. So this summer I’m passing the hat and asking you to make a donation to our “Ten Wild Weekends” fundraising campaign. Thanks!

West Virginia wants to raise Virginia power bills

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photo of mountain scraped of soil for coal mining
Under the West Virginia order, customers will pay more to support the state’s coal industry. Sierra Club photo.

Most people are aware by now that inflation has hit the energy sector hard, with fossil fuels in particular skyrocketing in price over the past year. 

Dominion Energy Virginia, the state’s dominant utility, says it needs to charge residential customers an extra $14.93 per month on average to cover higher natural gas prices. Appalachian Power, which serves Southwest Virginia as well as West Virginia, has already asked the West Virginia Public Service Commission for permission to increase residential bills by an average of $18.41 to cover higher coal and gas prices, and is likely to seek a similar increase from Virginia customers this summer.  

But for residents of Southwest Virginia, that could be just the beginning of the rate increases: West Virginia wants to force APCo customers to pay even more, and not just in West Virginia. If the West Virginia PSC has its way, Virginia customers would have to shoulder their “share” of the cost of propping up two money-losing West Virginia coal plants. 

The PSC’s order of May 13 reiterates previous instructions to APCo to keep its West Virginia coal plants running at least 69 percent of the time, even when the plants lose money. This decision comes on top of a decision in October of 2021 allowing APCo to charge customers for hundreds of millions of dollars in costs to prolong the life of these coal plants out to 2040. An expert hired by the Sierra Club found it would cost up to $1.1 billion more to keep the plants operating until 2040 instead of retiring them in 2028. 

For Virginia customers, the problem is that these West Virginia coal plants, Amos and Mountaineer, also provide electricity to Southwest Virginia, so Southwest Virginia residents have to pay for them. Even before the fuel price spikes of the past year and a half, APCo wanted to charge its Virginia customers for the upgrades approved by the West Virginia PSC. The company will certainly also want Virginians to pay for the even higher costs that will follow from the 69 percent run requirement.

Virginia’s State Corporation Commission has so far held off on approving the millions of dollars that would be Virginia’s share of the costs to upgrade Amos and Mountaineer. But with the West Virginia PSC plowing ahead to support its state’s favored industry, it’s not at all clear the SCC will stand its ground. 

APCo’s study claims that closing Amos and Mountaineer will cost ratepayers more than keeping them open, ensuring there will be a battle of the experts come the September hearing. The study is opaque in its methodology and reasoning. But APCo almost certainly didn’t assume the plants would have to run 69 percent of the time regardless of market conditions, and it probably also didn’t factor in today’s sky-high fossil fuel costs that further support retiring the coal plants and investing in cheaper, price-stable wind and solar.

Obviously, the biggest losers here are West Virginia residents. They will bear the largest share of these costs, one more price of living in a state run by fossil fuel oligarchs.

In an alternate universe, West Virginia would have developed an economy that took advantage of its extraordinary natural beauty, one based on small farms, four-season tourism, artist enclaves and vacation homes: think Vermont but with better weather. Instead, fossil fuel and mining barons bought up mineral rights, paid off politicians, and despoiled vast swaths of the state, leaving most residents dependent on dirty jobs or piecing together a living from low-wage work. 

I’m rooting for West Virginia to change course for a post-coal world, but that’s not easy for a state where politicians, bureaucrats and industry conspire to maintain the power of extraction industries. Virginians, however, shouldn’t be forced to enable this misuse of power. The SCC should reject West Virginia’s effort to make Virginia customers pay to prop up West Virginia coal.

This article originally appeared in the Virginia Mercury on June 10, 2022.

Dear readers: Many of you know that although I write independently of any organization, I also volunteer for the Sierra Club and serve on its legislative committee. The Sierra Club’s Virginia Chapter urgently needs funds to support its legislative and political work towards a clean energy transition. So this summer I’m passing the hat and asking you to make a donation to our “Ten Wild Weekends” fundraising campaign. Thanks!

The facts about coal plants Dominion didn’t want you to know

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smokestack

Photo credit Stiller Beobachter

Last winter, during the fight to pass the Virginia Clean Economy Act, Dominion Energy lobbyists went out of their way to save the company’s youngest coal plant in Wise County. It worked. Legislators exempted the Virginia City Hybrid Energy Center from closure until 2045, when Dominion has to shutter all its fossil fuel generation.

VCHEC was approved in 2008 and built in 2013 as a boondoggle for Dominion, earning the company an enhanced rate of return. It was also intended as an expensive gift from then-Gov. Tim Kaine to coalfield Democrats, who went on to lose their seats anyway. Even then, it was a terrible deal for Dominion’s customers and the climate, with all the carbon pollution you expect from coal and a cost that was twice that of cleaner alternatives.

No wonder it proved to be one of the last coal plants ever built in the U.S.

Knowing this, and knowing the determination of this year’s General Assembly to turn the commonwealth in the direction of clean energy, you might not have expected VCHEC to have a lot of friends left in Richmond. But Dominion never told legislators what it would cost consumers to keep its coal plants running. Among all the criticism of the price tag associated with Virginia’s energy transition — much of that criticism coming from Dominion itself — one crucial fact gets lost: It’s coal that is hitting consumers the hardest.

An analysis Dominion reluctantly made public last month as part of its Integrated Resource Planning case shows that VCHEC is far and away the worst performing economically of all the utility’s fossil fuel-burning plants. This one coal plant carries a 10-year net present value of negative $472 million. (The analysts didn’t extend their calculations out to 2045, where it would certainly cross a billion dollars; maybe they were running low on red ink.)

VCHEC isn’t the only coal plant in Dominion’s fleet with a negative valuation, just the worst. In fact, all the Virginia coal plants have negative values.

These are Dominion’s numbers, not those of the Sierra Club or the other environmental and consumer groups challenging Dominion’s plans. The Sierra Club hired a consulting company to run its own analysis, using a standard utility model. That analysis concluded it would be cheaper for customers to build more solar now and speed up the closure not just of VCHEC but of all Dominion’s coal plants. This includes even the company’s Mount Storm coal plant in West Virginia, the only one assigned a positive economic value in Dominion’s analysis. From a customer standpoint, all of them should go.

Maybe that’s not too surprising. We already knew coal was dead. But how many of us knew we were paying to prop up the corpse?

Dominion’s lawyers tried to keep the terrible cost numbers out of the public’s hands, contending it was “confidential commercial and financial information that other entities could use to their competitive advantage in future negotiations.” I can imagine these future meetings: the other entities would be so busy mocking Dominion that, indeed, negotiations might stall permanently.

Fortunately for all of us, the Attorney General’s Office of Consumer Counsel persuaded the SCC the information should be public. Some information truly is confidential; this is merely embarrassing. Dominion’s customers—and the General Assembly—should know what it’s costing us to prop up coal.

This article originally appeared in the Virginia Mercury on September 24, 2020.

The analysis Dominion ultimately produced, showing 10-year Net Present Values for certain of its generating units, under various scenarios. Notice biomass doesn’t do too well either. The analysis omits some additional units, apparently because they are already scheduled for retirement.

What part of ‘zero’ doesn’t Dominion understand?

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Photo courtesy os the Sierra Club.

The more things change, the more they stay the same.

Dominion Energy Virginia filed its 2020 Integrated Resource Plan on May 1. Instead of charting the electric utility’s pathway to zero carbon emissions, it announced its intent to hang on to all its gas plants, and even add to the number. In doing so, it revealed a company so thoroughly wedded to fracked gas that it would rather flout Virginia law and risk its own future than do the hard work of transforming itself.

The Virginia Clean Economy Act may be new, but Dominion can hardly claim to be surprised by the commonwealth’s move away from fossil fuels. Gov. Ralph Northam’s executive order last September set a statewide target of zero carbon emissions from the electric sector by 2050. “Challenge accepted,” said a Dominion spokesman at the time, and in February of this year the company claimed it was embracing a 2050 net-zero-carbon goal company-wide. A month later, passage of the Clean Economy Act moved the deadline up to 2045 for Dominion, keeping it at 2050 for utilities that lack Dominion’s head start of 30 percent nuclear power.

Dominion’s IRP, however, does not accept the challenge to get off fossil fuels. It rejects the challenge, directing a giant middle finger at the governor and the General Assembly. Dominion’s “preferred” plan keeps the utility’s existing fracked gas generating plants — currently 40 percent of its electric generation — operating through 2045. The IRP acknowledges this violates the law, so it argues against the law.

The IRP posits that if Dominion stops burning gas in Virginia, it will instead simply buy electricity from out of state, some of which will be generated by gas, and this will cost more money without reducing carbon emissions at the regional level. Better, then, to keep burning gas in Virginia.

It gets worse. The IRP actually proposes increasing the number of gas combustion turbines in Dominion’s fleet. The VCEA imposes a two-year moratorium on new fossil fuel plants, so Dominion’s timetable has these gas peaker plants coming online in 2023 and 2024. The justification is vague; the IRP cites “probable” reliability problems related to adding a lot of solar, but it offers no analysis to back this up, much less any discussion of non-gas alternatives.

Dominion’s flat-out refusal to abandon gas by 2045 poisons the rest of the document. The IRP is supposed to show a utility’s plans over a 15-year period, in this case up to 2035. And for those years, the IRP includes the elements of the VCEA that make money for Dominion: the build-out of solar, offshore wind and energy storage projects. It also includes money-saving retirements of outmoded coal, oil and biomass plants, as the VCEA requires. Heck, it even includes plans to close a coal plant the VCEA would allow to stay open in spite of its poor economic outlook (the Clover plant, half-owned by Old Dominion Electric Cooperative.)

But the IRP proposes no energy efficiency measures beyond those mandated by the VCEA between now and 2025. Dominion hates energy efficiency; it reduces demand, which is bad for business. So the company has made no effort to think deeply about how energy efficiency and other demand-side measures can support a zero-carbon grid — or, for that matter, how customer-owned solar can be made a part of the solution, rather than part of the problem.

This isn’t surprising: a plan that contemplates keeping gas plants around indefinitely looks very different, even in the first 15 years, from a plan that closes them all within 10 years after that.

A company that really accepted the challenge of creating a zero-carbon energy supply would not just get creative in its own planning; it would look beyond generating and supplying electricity, at the larger universe of solutions. It would advocate for buildings constructed to need much less energy, including for heating and cooling, to lessen the seasonal peaks in energy demand.

It would want the state to embrace strong efficiency standards. It would press its corporate and institutional customers to upgrade their facilities and operations to save energy, especially at times of peak demand. It would partner with communities to create microgrids. It would invest in innovation.

In short, it would ask “How can we achieve our fossil-free goal?” instead of asking “How can we keep burning gas?”

It’s not hard to understand why Dominion clings to gas; its parent company is fighting desperately to keep the Atlantic Coast Pipeline project alive in the face of spiraling costs (now up to $8 billion), an increasingly uphill battle at the State Corporation Commission to stick utility ratepayers with the costs of a redundant gas supply contract and a dearth of other customers anywhere along the route.

What is really hard to understand, though, is why Dominion chose to be quite so transparent in its disdain for the VCEA. Senator Jennifer McClellan and Delegate Rip Sullivan, both Democrats, who introduced the law and negotiated its terms with Dominion lobbyists and other stakeholders through many long days and nights, reacted to the IRP with entirely predictable outrage. In a statement they responded:

“The VCEA requires Virginia utilities to step up to the plate and be active leaders in carbon reduction. Dominion Energy’s IRP is tantamount to quitting the game before the first pitch is thrown. The law sets clear benchmarks for Virginia to reach 100 percent clean energy by 2045, not for utilities to plan to import carbon-polluting energy from West Virginia or Kentucky.”

Senator McClellan, it might be pointed out, could be on her way to becoming Virginia’s next governor. Most companies would hesitate to offend a leader of her stature, as well as such a prominent Democratic leader as Delegate Sullivan.

A growing number of legislators also seem interested in ending Dominion’s monopoly and bringing retail choice to Virginia. Though the bill that would have done that didn’t make it out of committee this year, the high-handed tone of the IRP will push more legislators into the anti-monopoly camp.

Arrogance and complacency seem like dangerous traits in times like these, but that’s Dominion for you. It will rise to any challenge, as long as the challenge doesn’t require anything the company didn’t already want to do.

A version of this article appeared in the Virginia Mercury on May 14, 2020.

Want a better understanding of how this year’s legislation works? I’m presenting the ins and outs of over a dozen bills in these three webinars:

  • What to expect when you’re expecting an energy transition, May 14, 2020 (recording available here)
  • New solar opportunities for homeowners, businesses and nonprofits, May 21, 2020, 5:30 p.m., register here
  • New tools for local governments to cut carbon, May 28, 2020, 5:30 p.m., register here

With a framework for Virginia’s energy transition in place, here’s what happens next

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workers installing solar panels on a roof

One expected effect of the Clean Economy Act will be a boom in solar jobs across Virginia. Photo courtesy of NREL.

With Democrats in charge, Virginia passed a suite of bills that establish a sturdy framework for a transition to renewable energy in the electric sector.

At the center of this transformation are the Clean Economy Act, HB1526/SB851, and the Clean Energy and Community Flood Preparedness Act, HB981/SB1027. Other new laws direct further planning, make it easier for customers to install solar, improve the process for siting wind and solar farms, and expand financing options for energy efficiency and renewable energy.

Gov. Ralph Northam has signed some bills already, and has until April 11 to sign the others or send them back to the General Assembly with proposed amendments. Once signed, legislation takes effect on July 1.

I assume the Governor has other things on his mind right now than asking the General Assembly to tinker further with a bill like the Clean Economy Act, though bill opponents may be using the virus pandemic to argue for delay. That would be a self-defeating move; as the economy restarts, Virginia is going to need the infusion of jobs and investment that come with the build-out of clean energy. And one of the strongest arguments in support of our energy transition, after all, is that it will save money for consumers.

So what happens after July 1? How does this all work? Let’s look at the way these major pieces of legislation will change the energy landscape in Virginia.

Virginia joins RGGI, and CO2 emissions start to fall. 

Virginia’s Department of Environmental Quality has already written the regulations that call for Virginia power plants to reduce emissions by 30 percent by 2030. The mechanism for achieving this involves Virginia trading with the Regional Greenhouse Gas Initiative, a regional carbon cap and trade market.

The regulations have been on hold as the result of a budget amendment passed last year, when Republicans still ruled the General Assembly. After July 1, DEQ will be able to implement the regulations, with the commonwealth participating in carbon allowance auctions as early as the last quarter of this year or the first quarter of 2021.

In addition to joining RGGI, the Clean Energy and Community Flood Preparedness Act also allows the commonwealth to earn money from the allowance auctions. The Department of Housing and Community Development will spend 50 percent of auction proceeds on “low-income efficiency programs, including programs for eligible housing developments.”

The Department of Conservation and Recreation will get 45 percent of the auction proceeds to fund flood preparedness and climate change planning and mitigation through the Virginia Community Flood Preparedness Fund. The last 5 percent of proceeds will cover administrative costs, including those for administering the auctions.

Energy efficiency savings become mandatory, not just something to throw money at.

Two years ago, the Grid Transformation and Security Act required Dominion and Appalachian Power to propose more than a billion dollars in energy efficiency spending over 10 years, but the law didn’t say the programs had to actually be effective in lowering electricity demand.

This year that changed. For the first time, Virginia will have an energy efficiency resource standard (EERS) requiring Dominion to achieve a total of 5 percent electricity savings by 2025 (using 2019 as the baseline); APCo must achieve a total of 2 percent savings. The SCC is charged with setting new targets after 2025. At least 15 percent of the costs must go to programs benefiting low-income, elderly or disabled individuals, or veterans.

The EERS comes on top of the low-income energy efficiency spending funded by RGGI auctions.

Dominion and Appalachian Power ramp up renewables and energy storage. 

The Clean Economy Act requires Dominion to build 16,100 megawatts of onshore wind and solar energy, and APCo to build 600 megawatts. The law also contains one of the strongest energy storage mandates in the country: 2,700 MW for Dominion, 400 MW for Appalachian Power.

Beginning in 2020, Dominion and Appalachian must submit annual plans to the SCC for new wind, solar and storage resources. We’ll have a first look at Dominion’s plans just a month from now: the SCC has told the company to take account of the Clean Economy Act and other new laws when it files its 2020 Integrated Resource Plan on May 1.

The legislation provides a strangely long lead time before the utilities must request approval of specific projects: by the end of 2023 for APCo (the first 200 MW) or 2024 for Dominion (the first 3,000 MW). But the build-out then becomes rapid, and the utilities must issue requests for proposals on at least an annual basis.

In addition to the solar and land-based wind, Dominion now has the green light for up to 3,000 MW of offshore wind from the project it is developing off Virginia Beach, and which it plans to bring online beginning in 2024. All told, the Clean Economy Act proclaims up to 5,200 MW of offshore wind by 2034 to be in the public interest.

Dominion’s plans for new gas plants come to a screeching halt.

Before the 2020 legislative session, Dominion’s Integrated Resource Plan included plans for as many as 14 new gas combustion turbines to be built in pairs beginning in 2022. In December, the company announced plans to build four gas peaking units totaling nearly 1,000 MW, to come online in 2023 and 2024.

But that was then, and this is now. The Clean Economy Act prohibits the SCC from issuing a certificate of convenience and necessity for any carbon-emitting generating plant until at least January 1, 2022, when the secretaries of natural resources and commerce and trade submit a report to the General Assembly “on how to achieve 100 percent carbon-free electric energy generation by 2045 at least cost to ratepayers.”

Even with no further moratorium, Dominion will find it hard to sell the SCC on the need for new gas plants on top of all the renewable energy and energy storage mandated in the Clean Economy Act. Solar and battery storage together do the same job that a gas peaker would have done — but they are required, and the gas peaker is not. Meanwhile, the energy efficiency provisions of the act mean demand should start going down, not up.

Dominion has already signaled that it recognizes the days of new gas plants are largely over. On March 24, Dominion filed a request with the SCC to be excused from considering new fossil fuel and nuclear resources in its upcoming Integrated Resource Plan filing, arguing that “significant build-out of natural gas generation facilities is not currently viable” in light of the new legislation.

Fossil fuel and biomass plants start closing.

By 2024, the Clean Economy Act requires the closure of all Dominion or APCo-owned oil-fueled generating plants in Virginia over 500 MW and all coal units other than Dominion’s Virginia City Hybrid plant in Wise County and the Clover Station that Dominion co-owns with Old Dominion Electric Cooperative.

This mandate is less draconian than it sounds; it forces the closure of just two coal units, both at Dominion’s Chesterfield plant. Other Dominion coal plants in Virginia have already been retired or switched to using gas or biomass, and one additional coal plant in West Virginia lies beyond the reach of the legislation. Oil-fired peaking units at Yorktown and Possum Point were already slated for retirement in 2021 and 2022. APCo owns no coal or biomass plants in Virginia.

Although the exceptions might appear to swallow the rule, the truth is that coal plants are too expensive to survive much longer anyway. One indication of this is a March 24 report Dominion filed with the SCC showing its fuel generation sources for 2019: coal has now fallen to below 8 percent of generation.

By 2028, Dominion’s biomass plants must shut down, another victory for consumers. All other carbon-emitting generating units in Virginia owned by Dominion and APCo must close by 2045, including the Virginia City plant and all the gas plants.

As of 2050, no carbon allowances can be awarded to any generating units that emit carbon dioxide, including those owned by the coops and merchant generators, with an exception for units under 25 MW as well as units bigger than 25 MW (if they are owned by politically well-connected multinational paper companies with highly-paid lobbyists).

Solar on schools and other buildings becomes the new normal.

In December, Fairfax County awarded contracts for the installation of solar on up to 130 county-owned schools and other sites, one of the largest such awards in the nation. Using a financing approach called a third-party power purchase agreement (PPA), the county would get the benefits of solar without having to spend money upfront. The contracts were written to be rideable, meaning other Virginia jurisdictions could piggyback on them to achieve cost savings and lower greenhouse gas emissions.

Fairfax County’s projects, along with others across the state, hit a wall when, on Jan. 7, the SCC announced that the 50 MW program cap for PPAs in Dominion territory had been reached. But with the passage of the Clean Economy Act and Solar Freedom legislation, customers will be able to install up to 1,000 MW worth of solar PPAs in Dominion territory and 40 MW in APCo territory.

Fairfax County schools will soon join their counterparts in at least 10 other jurisdictions across the state that have already installed solar. With the PPA cap no longer a barrier, and several other barriers also removed, local governments will increasingly turn to solar to save money and shrink their carbon footprints.

Virginia agencies start working on decarbonizing the rest of the economy. 

In spite of its name, the Clean Economy Act really only tackles the electric sector, with a little spillover into home weatherization. That still leaves three-quarters of the state’s greenhouse gas emissions to be addressed in transportation, buildings, agriculture and industry. Ridding these sectors of greenhouse gas emissions requires different tools and policies.

Other legislation passed this session starts that planning process. SB94(Favola) and HB714 (Reid) establish a policy for the commonwealth to achieve net-zero emissions economy-wide by 2045 (2040 for the electric sector) and require the next Virginia Energy Plan, due in 2022, to identify actions towards achieving the goal. Depending on who the next governor is, we may see little or nothing in the way of new proposals, or we may see proposals for transportation and home electrification, deep building retrofits, net-zero homes and office buildings, carbon sequestration on farm and forest land and innovative solutions for replacing fossil fuels in industrial use.

Collateral effects will drive greenhouse gas emissions even lower.

Proposed new merchant gas plants are likely to go away. With Virginia joining RGGI and all fossil fuel generating plants required to pay for the right to spew carbon pollution, the developers of two huge new merchant gas plants proposed for Charles City County will likely take their projects to some other state, if they pursue them at all.

Neither the 1,600 MW Chickahominy Power Station and the 1,050 C4GT plant a mile away planned to sell power to Virginia utilities; their target is the regional wholesale market, which currently rewards over-building of gas plant capacity even in the absence of demand. The Chickahominy and C4GT developers sought an exemption from RGGI through legislation; the bill passed the Senate but got shot down in the House.

If the C4GT plant goes away, so too should Virginia Natural Gas’ plans for a gas pipeline and compressor stations to supply the plant, the so-called Header Improvement Project.

Other coal plants will close. Although the CEA only requires Dominion to retire two coal units at its Chesterfield Power Station, other coal plants in the state will close by the end of this decade, too. That’s because the economics are so heavily against coal these days that it was just a matter of time before their owners moved to close them.

Adding the cost of carbon allowances under RGGI will speed the process along. That includes the Clover Station, which Dominion owns in partnership with Old Dominion Electric Cooperative (ODEC), and the Virginia City Hybrid Electric plant in Wise County, Dominion’s most expensive coal plant, which should never have been built. 

The Atlantic Coast and Mountain Valley Pipelines find themselves in more trouble than ever. If I had a dollar for every time a Dominion or Mountain Valley spokesperson said, “Our customers desperately need this pipeline,” I would not be worried about the stock market right now.

The fact is that no one was ever sure who those customers might be, other than affiliates of the pipeline owners themselves—and that doesn’t exactly answer the question. With Virginia now on a path away from all fossil fuels, neither pipeline has a path to profitability inside Virginia any longer, if they ever had one.

 

A version of this article originally appeared in the Virginia Mercury on March 31.