A Better Way: Require Dominion Power To Invest In Alternative Energy

Dominion Power, which serves all of Northern Virginia, plans to construct a new 40 mile long high voltage power line, at an estimated cost of $300 million, to prevent possible power blackouts in the region by 2011.

Because the new power line will cut a swath across some of the most scenic land in the region, while skirting Civil War battlefields and nature conservation areas, it is generating a fair amount of controversy. Some of the proposed routes also cross through, or near, new upscale residential communities in the outer exurbs, where wealthy folks in gated communities with nicely landscaped golf courses are horrified that they, of all people, would have to look at the unsightly lines that bring electricity to their mega-mansions.

Not surprisingly, opposition is brewing. For example, the all-Republican Prince William Board of Supervisors, who you'd normally associate with pro-growth, pro-business, and pro-local utility monopoly, has unanimously voted to oppose the new line, not that they have any official say-so in the matter. (If they did have regulatory authority, and had to worry about a potential black-out in their communities, it wouldn't be quite so easy for them to just say no to Dominion.)

We think the debate over the new power line will be useful, as it will finally awaken Northern Virginia residents to a host of energy development issues they need to face in the coming years.

Here's some facts from Dominion: the NoVa region currently consumes 6700 megawatts of electricity, with that number steadily increasing with the region's growth. Only 2900 megawatts of that electricity is generated within the region, so the rest has to be shipped in from somewhere else. Electricity is shipped on high voltage transmission lines. Like NoVa's roads, its transmission lines are congested, so we need more.

Of course, we could build more electrical generating facilities in the region, but you can bet that each of those would also get the NIMBY (not in my back yard) treatment. In any event, building new central generation facilities takes a lot of lead time and is quite expensive.

In the short run, the new hgih voltage line is probably inevitable. In the long run, however, we need a much better solution than importing electricity to NoVa.

Fortunately, there is a better solution, which is to require Dominion to invest in low impact alternative energy, particularly wind and solar, in NoVa to deal with the growth in demand.

The most expensive electricity is that on the margin, i.e., new electricity to power new homes and businesses, and peak electricity to deal with peak demand on hot days with the air conditioners blazing away. That's because building a new power plant--or building new power lines and paying to import electricity from somewhere else--costs a lot more than simply fueling and running existing plants.

An alternative to building expensive new central generation plants is to invest in distributed energy--smaller sources of electricity that are distributed throughout the region and plugged into the grid. Solar energy from photovoltaic cells, wind energy from wind turbines, bio-diesel generators, and other small energy sources easily fit the distributed energy model.

In theory, anyone can invest in alternative distributed energy systems, plug them into the grid and reduce their own electric consumption, saving money. However, for most homeowners and businesses, it is not economical to do so. (See our discussion of the Curmudgeon's own experience with installing a solar electric array: http://xcurmudgeon.blogspot.com/2006/11/solar-energy-good-feel-bad-deal.html).

But for Dominion, it IS economical. Here's why:

A homeowner or businessperson gets charged the average cost of all the electricity Dominion produces, which is well below the marginal cost of a new kilowatt of electricity, or a kilowatt of peak electricity. If that homeowner/businessperson pays to install, for example, a solar electric system (as the Curmudgeon did recently), he will have to pay for it, upfront, at the cost of installing marginal or peak electricity. Under that model, it will be a long time before Joe Q homeowner is going to find it economical to invest in his own generation of electricity.

But what if Dominion were to make that investment instead? What Dominion could do is seek out the homes, businesses and properties that are most suited for alternative energy generation and offer to install and maintain it, while giving the property owner an incentive (reduced electricity rate) for agreeing. Under this arrangement, all ratepayers would share the costs and benefits of the new installations, which would be economical, because they would be in lieu of the massive costs of new central generating plants and power lines.

Here's an example of how it could work. My neighbor down the street has a perfect roof for solar electric cells. It faces south, is unobstructed by trees and has a nice pitch to it. Dominion could approach my neighbor and offer to install solar panels on his roof, which Dominion would own and maintain. Dominion could offer my neighbor a discount on his electricity in exchange for agreeing to let his roof become an electrical generator.

In this way, Dominion would have an incentive to go out and find the most ideal properties for installation of solar, wind or other technologies. At the same time, Dominion could develop economies of scale that individuals lack, thereby further reducing costs.

Our rough back of the envelope calculation is that Dominion could install 400MW of new capacity in NoVa for the $300 million it will spend on the new high voltage line. Dominion could also begin investing in renewable energy some of the billions of dollars it will need in new generating capacity over the coming decade, thereby transforming NoVa into an energy leader.

The sooner we get started, the better.