The VA Legislature provides leadership keeping Gov. Northam busy signing bills

From an Update by Ivy Main, Power for the People, VA, April 3, 2020

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 now signed these bills. The legislation takes effect on July 1. One of the strongest arguments in support of our energy transition 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.

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).

MORE ON THESE UPDATES IN VIRGINIA FOR TOMORROW . . .

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See also: VIRGINIA becomes first state in the South to commit to carbon-free – The Washington Post, Gregory Schneider, April 13, 2020

RICHMOND — Over the weekend, Gov. Northam authorized the omnibus Virginia Clean Economy Act, which mandates that the state’s biggest utility, Dominion Energy, switch to renewable energy by 2045. Appalachian Power, which serves far southwest Virginia, must go carbon-free by 2050. Almost all the state’s coal plants will have to shut down by the end of 2024 under the new law. Virginia is the first state in the old Confederacy to embrace such clean-energy targets.

Solar panel installation underway at Washington and Lee University in Lexington, VA

From an Article by Sarah Vogelsong, Virginia Mercury, February 9, 2020

The Virginia Clean Economy Act, the Democrats’ energy omnibus bill designed to achieve Gov. Ralph Northam’s goals of reducing Virginia’s carbon emissions to zero by 2050, sparked sharp questions from senators Sunday over how the costs of shifting away from carbon should be calculated.

“You can’t do this stuff for free,” said a visibly irritated Senate Majority Leader Dick Saslaw, chair of the powerful Commerce and Labor Committee, at an unusual Sunday meeting designed to clear the Senate’s legislative decks before the crossover deadline Tuesday. “Everybody says that we’ve got a climate problem, and you know, you can’t fix the climate problem for free. You all need to understand that.”

Saslaw’s comments were addressed to Kimberly Pate, director of the Division of Utility Accounting and Finance for the State Corporation Commission, the body that regulates all electric utilities in Virginia. But while they reflected an ongoing tension between the legislature and the SCC over who should take the reins in energy decision-making, they also touched on a question increasingly troubling governments forced to grapple with the consequences of climate change: What are the costs of doing nothing?

The SCC estimates that the Clean Economy Act, which is being backed by a coalition that includes the renewable energy industry, environmental groups and Virginia’s two electric monopolies, will cause the average electric ratepayer’s bill to increase by at least $23.30 per month by 2027-2030. Annually, customers would see a roughly $280 jump in their bills.

According to the SCC, the majority of that increase will come from the buildout of 5,200 megawatts of offshore wind and 16,100 megawatts of solar, both of which the legislation would declare to be in the public interest.

Some legislators seemed skeptical of those numbers: Sen. John Bell, D-Loudoun, in particular questioned Pate about the SCC’s decision to not include estimated fuel savings in its calculations of the offshore wind component of the cost. “The problem is the fuel savings may or may not occur. And so we have not quantified that,” said Pate.

In an email to the Virginia Mercury, SCC Division of Information Resources Director Ken Schrad pointed to the uncertainty surrounding the offshore wind units’ capacity factor, a measurement that compares how much energy a unit actually produces to how much it’s capable of using.

“All of the risk is on the ratepayer. If the project does not generate electricity at its expected capacity factor, the utility company will have to purchase power from the wholesale market or construct backup generation (i.e. — gas-fired generation),” Schrad wrote. “Purchased power and fuel costs are recovered through the fuel factor. So, while (Dominion Energy) claims the possibility of fuel savings, staff cannot quantify what those savings might be because of the unknown capacity factor of offshore wind.”

Fuel savings aren’t the only variable that Clean Economy Act backers claim were incorrectly omitted from the cost analysis.

The Executive Director of the Virginia Advanced Energy Economy is Harry Godfrey, one of the key players involved in drafting the legislation,. He told the Mercury that the commission had also failed to take into account ratepayer savings from such provisions as binding energy efficiency targets and investments, cost caps and a rate relief program for low-income customers. “I don’t know that they have considered any of this,” he said.

Disagreements between the SCC and other officials on energy costs are not uncommon. Last spring, the commission and the Department of Environmental Quality quarreled over the cost to Virginia of joining the Regional Greenhouse Gas Initiative, a cap-and-trade agreement between 10 states that aims to reduce carbon emissions. The SCC estimated the average customer would see their bill rise by $7 over 25 years; DEQ said joining the market would decrease monthly bills by about 54 cents.

The SCC’s current estimate of the costs of RGGI membership, according to the analysis presented by Pate Sunday, is a $2 to $2.50 increase in the average customer’s monthly bill. RGGI is the Regional Greenhouse Gas Initiative.*

At Sunday’s meeting, however, lawmakers’ criticism went beyond whether fuel savings should or should not be included in the financial impact estimate, with Sen. Scott Surovell, D-Fairfax, questioning whether the very foundation of the SCC’s analysis was sound.

“You all do this analysis every time, and all you focus on is the cost you can identify on a bill,” he said. “If you all quantified what the cost of however many more Virginians are going to have asthma or cancer, or what happens when Norfolk goes underwater, or all the other costs that we continue not to count of puffing carbon in the atmosphere — do you all ever look at that when you make these decisions?”

“That is not the charge of the commission,” Pate responded. “We are an economic regulator. We look at the applications before us … and we analyze the costs there and what the impact is on customer bills. That is what the commission does.”

If the Clean Economy Act is passed, that may change: among the many provisions of the 75-page bill is one that would require the SCC to consider the “social cost” of carbon in evaluating new generation facilities. That, said Godfrey, could begin “to rebalance the equation and analysis” of what energy proposals cost.

The Clean Economy Act passed Senate Commerce and Labor on a 12-3 party-line vote. A House version of the legislation advanced to the floor last week.

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* — Power plant emissions down 47% under the Regional Greenhouse Gas Initiative » Yale Climate Connections, Jan Spiegel, Yale Climate Connections, January 16, 2020

The Regional Greenhouse Gas Initiative is not a cap-and-trade program.

This first-in-the-nation regional effort to lower carbon emissions from power plants is actually a cap-and-invest program. Power plants buy emission allowances through quarterly auctions for the right to pollute above a set cap. The states get the money, most of which they’re supposed to invest in consumer benefits such as energy efficiency programs that help lower energy use further.

From 2009, when RGGI – pronounced Reggie – officially kicked in, through 2017, that system sent $2.4 billion back to the nine current member states, according to the most recent report from RGGI.

Note the heavy concentration of coal plants in the Ohio River valley

From an Article by Dan Gearino, Inside Climate News, March 25, 2019

Nearly three-fourths of the country’s coal-fired power plants already cost more to operate than if wind and solar capacity were built in the same areas to replace them, a new analysis says.

Coal-fired power plants in the Southeast and Ohio Valley stand out. In all, 74% of coal plants cost more to run than building new wind or solar, analysts found.

Not a single coal-fired power plant along the Ohio River will be able to compete on price with new wind and solar power by 2025, according to a new report by energy analysts.

The same is true for every coal plant in a swath of the South that includes the Carolinas, Georgia, Alabama and Mississippi. They’re part of the 86 percent of coal plants nationwide that are projected to be on the losing end of this cost comparison, the analysis found.

The findings are part of a report issued Monday by Energy Innovation and Vibrant Clean Energy that shows where the shifting economics of electricity generation may force utilities and regulators to ask difficult questions about what to do with assets that are losing their value.

The report takes a point that has been well-established by other studies—that coal power, in addition to contributing to air pollution and climate change, is often a money-loser—and shows how it applies at the state level and plant level when compared with local wind and solar power capacity.

“My big takeaway is the breadth and universality of this trend across the continental U.S. and the speed with which things are changing,” said Mike O’Boyle, a co-author of the report and director of energy policy for Energy Innovation, a research firm focused on clean energy.

The report is not saying that all of those coal plants could or should be immediately replaced by renewable sources. That kind of transition requires careful planning to make sure that the electricity system has the resources it needs. It also doesn’t consider the role of competition from natural gas.

The key point is a simpler one: Building new wind and solar power capacity locally, defined as within 35 miles for the report, is often less expensive than people in those markets realize, and this is indicative of a price trend that is making coal less competitive.

This shift shows how market forces are helping the country move away from fossil fuels. At the same time, coal interests have been trying to obscure or cast doubt on this trend, while seeking more government subsidies to slow their industry’s decline.

Coal Concerns in the Solar-Rich Southeast

Nearly three-fourths of the country’s coal-fired power plants already cost more to operate than if wind and solar power were built in the same areas to replace them, the report says.

By 2025, with the costs of building wind and solar power expected to continue to decline, the analysts project that 86 percent of coal-fired power plants will be more expensive than local renewable energy. Notably, the 2025 wind and solar estimates assume that expiring federal tax credits will not be extended, so any price advantage is without federal credits.

In parts of the country where power plants compete on open markets, such as most of Texas, companies may be more quick to shut down money-losing plants because plant owners are the ones bearing the losses. It’s different in places where plants are fully regulated, as plant owners can pass extra costs on to consumers.

The Southeast, which is almost entirely regulated markets, has some of the costliest coal plants and is rich with solar resources. “Consumer advocates and regulators there should be asking harder questions about integrating renewables,” said Eric Gimon, an energy analyst and co-author of the report.

In North Carolina, for example, a state second only to Indiana in total coal plant capacity, every one of those coal-fired power plants is “substantially at risk,” meaning the existing plants have operational costs that are at least 25 percent more than what it would cost to build wind or solar capacity, the report says.

The state’s largest utility, Duke Energy, has invested in solar. The report shows that there is room for more of this development, and that the state remains heavily dependent on coal power that is not cost-competitive.

Political Opposition in the Ohio Valley

In the Ohio Valley, some of the sunniest parts of Ohio are near the river in the southern and southwest parts of the state, areas that now have almost no solar power development. American Electric Power, a Columbus-based utility, has proposed solar arrays there, but the plans are running into fierce opposition before state regulators and it is far from clear that the projects will get approved.

The Ohio Valley is a hub for coal-fired power, with plants that were built because of proximity to coal mines and the ability to deliver coal on river barges. And yet, the report shows that most of those plants cost more to operate than building new wind and solar capacity.

One of the exceptions is the Gavin Power Plant, the largest in Ohio and one of the largest in the country at 2,600 megawatts, which is operating at a large enough scale to remain competitive. But by 2025, even Gavin won’t be able to keep up with the declining costs of wind and solar, according to the report. This doesn’t mean the plant will be unprofitable, but it signals a shift in the market that will put increasing pressure on the plant.

Some Utilities Are Factoring in Climate Impact

Colorado and the St. Louis metro area are two of the few places were coal plants would retain a cost advantage over new renewable energy in 2025, according to the analysis. The authors say that is because of a lack of available land to build cost-effective wind or solar within 35 miles and because the plants are close to coal mines, which reduces fuel costs.

But a purely cost-based analysis leaves out other reasons to shut down coal plants and build wind and solar, as shown by the largest utility in Colorado, Xcel Energy, which is doing just that.

The company’s executives said they were responding to reports about the acceleration of climate change. They have found that they can build new wind and solar capacity for little or no extra cost, which is a less precise comparison than in the new report.

And, they are preparing for the possibility that Colorado will pass a law requiring utilities to shift to 100 percent renewable energy, which is a priority of new Democratic Gov. Jared Polis.

Distance can also make a difference in cost calculations. If new resources are built far from the ones they are replacing, grid operators and utilities need to make sure they have enough power line capacity to transport the electricity. Also, there are local economic considerations. Utilities sometimes put new projects in the same metro areas as ones that are closing to help the local community. This has been part of Excel’s planning process in Pueblo, Colorado, where it is closing a coal plant and developing new solar.

Natural Gas Competition Also Plays a Role

The report’s findings about the declining viability of coal plants are in line with previous studies, including one from March 2018 from BloombergNEF with the headline “Half of U.S. Coal Fleet on Shaky Economic Footing.”

But there is a key difference. The BloombergNEF report looked at the finances of coal plants in the context of competition from all fuels, including natural gas.

William Nelson, a co-author of the BloombergNEF report, says he is leery of comparing the costs of building new wind and solar to the costs of operating existing coal plants because a coal plant is capable of running around the clock, which makes it a different type of resource than wind and solar unless there is large-scale battery storage.

And, he thinks that natural gas prices are an essential part of the conversation in places such as the Ohio Valley, where gas is plentiful and inexpensive.

Gimon of Energy Innovation says he agrees that the role of natural gas in the market is an important element, but he says the report intentionally narrowed the focus to look at the deteriorating finances of coal and the improving competitiveness of wind and solar, rather than at the electricity market as a whole.

Daniel Cohan, a Rice University engineering professor who is not involved in the new report, says “gas is more of a gamble” for power plant owners than wind or solar because of uncertainty about future gas prices.

He thinks there is more certainty that wind and solar will continue to get less expensive and that their prices can serve as a useful comparison for coal.

The decreasing costs of wind and solar will lead to a growing gap compared to the costs of operating coal plants, one that coal plant owners and regulators would be wise to prepare for, Gimon said. “You really can’t hang tight,” he said. “It’s just going to get worse.”

Three-Mile Island in Susquehanna River south of Harrisburg, PA

From an Article AD CRABLE, Lancaster OnLine, March 11, 2019

Legislation calling for electric ratepayers to prop up nuclear power in Pennsylvania — and save Three Mile Island from closing — was introduced Monday in the state House.

State Sen. Ryan Aument of Landisville said he would introduce similar but not identical legislation in the Senate later this week.

“My focus remains on finalizing a proposal that I intend to introduce along with Senators Yudichak, Gordner, Boscola, Folmer, and Vogel that is consistent with our report and comments I have made over the last two years with regards to the Commonwealth’s ability to make strategic public policy decisions to ensure that Pennsylvania consumers are able to benefit from the environmental and economic attributes of nuclear energy.”

Lawmakers in both chambers will have to act quickly if they want to prevent TMI from closing — a process that is scheduled to begin in September.

TMI owner Exelon has said that it needs assurances of support by June, which is when it would have to order another round of uranium fuel to run the plant for another two years.

Meanwhile, FirstEnergy says it will close its Beaver Valley reactors in western Pennsylvania by 2021.

State Rep. Thomas Mehaffie of Dauphin County, who introduced the bill on Monday, said nuclear power deserves preferential treatment as a “clean” energy source. His plan would cost ratepayers $500 million in subsidies, adding about $1.77 a month to the average household bill, he said.

That’s a small amount to pay, Mehaffie added, compared to the environmental costs of losing a reliable carbon-free energy source that does not contribute to global warming, and to losing the economic benefits the state’s five nuclear plants offer.

Looking to ratepayers

The legislation would designate nuclear power as a non-polluting renewable energy, similar to wind and solar.

It would require a percentage of energy purchased by electric-distribution companies to come from nuclear power. The added cost of buying the more expensive power — power produced by natural gas and coal-fired plants, for example, is cheaper — would be passed on to ratepayers.

But the natural gas industry, consumer groups, including the AARP, and large industrial users of electricity quickly panned the legislation, calling it a bailout that would saddle all Pennsylvania residents with added costs while hurting free-market competition.

Also quickly coming out against the plan were environmental groups that had considered endorsing the legislation if it was tied to a comprehensive plan to cut back on all sources of carbon emissions from energy production and further stimulate renewable energy sources in the state.

‘Expensive Band-Aid’

“This is an expensive Band-Aid that saddles consumers with the majority of risk,” said Elaine Labalme, Pennsylvania advocacy director of the Environmental Defense Fund.

“Pennsylvania must take concrete action to reduce its carbon emissions. It’s the only state from Maine to Georgia without a limit on carbon pollution from the power sector and today’s proposed legislation will leave Pennsylvania even further behind.”

Other environmental groups opposing the bill were PennFuture, PennEnvironment, Keystone Progress, Clean Water Action, Physicians for Social Responsibility, Conservation Voters of Pennsylvania, Philadelphia Solar Energy Association, The Sierra Club, Natural Resources Defense Council and Clean Air Council.

Other groups questioned whether nuclear power in Pennsylvania — beyond Three Mile Island — need a financial rescue. They cited a PJM Interconnection study that found four of the five plants are currently profitable.

Nearly 40 percent of the electricity produced in Pennsylvania comes from nuclear power. More than 27 percent of that is exported to other states.