Despite Clean Economy Act, Dominion forecasts a strong role for natural gas in Virginia

From Virginia Mercury

Despite highly publicized commitments by political leaders and Dominion Energy to transitioning the state off carbon sources in favor of renewable forms of energy, the state’s largest electric utility is continuing to bank heavily on natural gas, a long-range plan and statements to investors and shareholders reveal.

The continued allegiance to the fuel, expressed in Dominion’s forward-looking Integrated Resource Plan released May 1 and reiterated in investor and shareholder calls this week, sparked a sharp response from the two Democratic legislators who spearheaded Virginia’s historic Clean Economy Act this past session.

The utility’s long-range plan, said a joint statement from Sen. Jennifer McClellan of Richmond and Del. Rip Sullivan of Fairfax, “is tantamount to quitting the game before the first pitch is thrown.”

A legislatively mandated but not binding forward look, the IRP sketches out the demand the utility expects to fulfill over the next 15 to 25 years and how it anticipates meeting that demand.

This year’s plan was the first to reflect the ambitious climate change goals of both Gov. Ralph Northam and the new Democratic majority that took control of both houses of the General Assembly for the first time in a generation this winter.

Last September, Northam issued an executive order directing that Virginia’s electric grid become carbon-free by 2050. And this March, after months of negotiation with environmental groups, the renewables industry and Virginia’s two major electric monopolies, Dominion and Appalachian Power Company, the legislature passed the Virginia Clean Economy Act, which upped Northam’s ante to chart a course for the state’s grid to become carbon-free by 2045.

Among the provisions of the highly technical law are mandated targets for solar, wind and energy storage development, as well as binding standards for utilities’ renewable generation portfolios and energy efficiency provisions.

The Integrated Resource Plan released by Dominion last Friday incorporates many of the commitments fervently sought by clean energy advocates, including a roadmap for adding 16 to 19 gigawatts of new solar, five gigawatts of offshore wind and 2.7 gigawatts of energy storage over the next 15 years, with just under a gigawatt of natural gas energy as a “placeholder” to remedy potential reliability problems.

But while Dominion offered four possible paths forward for regulators to review, the IRP it released Friday ultimately recommended approval of its natural gas-heavy Plan B, which recommends retaining almost 10 gigawatts of natural gas as part of the utility’s portfolio “to address future system reliability, stability and energy independence issues.”

“In order to preserve the option to address probable system reliability issues resulting from the addition of significant renewable energy resources and the retirement of coal-fired facilities in the near term, the Company is evaluating sites and equipment for the construction of gas-fired [combustion turbine] units,” the IRP said.

A press release issued by the company along with its IRP filing emphasized that “natural-gas fired generation will continue to play a critical, low emission role in our system for decades to come.”

Two alternative plans outlined by the utility would retire all carbon generation by 2045 but, Dominion warned, would “severely challenge the ability of the transmission system to meet customers’ reliability expectations” and would require the company to import electricity from outside the state, “in part from CO2-emitting generation.” (The fourth plan, which outlines a scenario that ignores existing laws and regulations, serves only as a baseline and is not “realistic,” the utility noted.)

That importation, according to the IRP, could necessitate some $8.4 billion in transmission upgrades — and maybe more.

But even Dominion’s preferred course will come with a hefty price tag: the utility projected customer bills will rise by about $46 between now and 2030, of which about $19 is attributed to legislative mandates from the 2020 session such as the Clean Economy Act.

Exactly how much of a financial burden the VCEA would exact upon ratepayers’ was a hotly contested issue this winter. Supporters including the Northam administration argued that due to factors such as fuel savings and energy efficiency, customers could see their bills slightly fall or only rise marginally as a result of the law and other legislation joining Virginia with the Regional Greenhouse Gas Initiative’s cap-and-trade carbon market.

Republicans, however, fretted that the new mandates would push captive ratepayers’ bills ever higher, a fear bolstered by estimates from the State Corporation Commission that they could increase average monthly costs by almost $28 by 2030.

McClellan and Sullivan said Dominion’s IRP “underutilizes energy efficiency and underestimates its cost effectiveness,” contributing to an overestimate of the burden on Virginia ratepayers.

“Energy efficiency is also the largest source of jobs in the clean energy sector. By underinvesting in this clean, affordable resource, Dominion is not only needlessly inflating costs, it is shortchanging Virginia’s economy and workers. Rejecting energy efficiency efforts will result in ratepayers getting higher bills without the intended climate or economic development benefits the VCEA intended to achieve,” they wrote.


This article is from Virginia Mercury. The full article can be found here: https://www.virginiamercury.com/2020/05/08/despite-clean-economy-act-dominion-forecasts-a-strong-role-for-natural-gas-in-virginia/

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