Feds May Back Away From Control Over Dominion Power Line

The Department of Energy is going to reconsider its rather hasty decision to declare a National Interest Electric Transmission Corridor that includes much of Virginia and the mid-Atlantic region. See "Energy Department To Rethink Its Ruling On Power Lines."

The earlier decision, derived from legislation Congress passed ostensibly to provide for a more stable power supply in the future, would have allowed federal authorities to override Virginia's Public Service Commission in determining the fate of a proposal by Dominion Virginia Electric to build a new high voltage transmission line for several hundred million dollars.

This must be a good thing, as both Governor Kaine and AG McDonnell praised the decision.

The feds should back off. Virginia is certainly capable of determining both the need for the power lines and the best route for them if they are to be built.

We've previously said that the new lines could be rendered unnecessary with a little out of the box thinking. If Dominion were to take the money it plans to invest in high voltage lines and instead use it to subsidize solar panels, it could generate enough widely distributed peak summer electricity to blunt the demand for new transmission lines. (For details, see "A Better Way To Satisfy Demand Without Expensive, Unsightly Transmission Lines.")

By the same token, we doubt Virginia will come up with such an innovative plan, and we don't think Virginians will be too happy with brownouts and rolling blackouts, so the state will have to do something. If it doesn't, the feds will be waiting in the wings.

A Better Way To Satisfy Demand Without Expensive, Unsightly Transmission Lines

What if we could avoid construction of several hundred miles of unsightly, expensive high voltage transmission lines and instead create the conditions for installation of $6 billion in new solar power generation in the mid-Atlantic region?



It can be done. All it takes is some willpower and creativity. Here's the background.



Demand for electricity in the mid-Atlantic is booming. To meet that demand, electric utilities are proposing a number of new high voltage transmission lines, the largest of which is a 250 mile, $1.4 billion project by Dominion Power and Allegheny Power. Smaller projects around Norfolk and in Maryland bring the total cost of these unsightly new lines to around $2 billion, with the final cost probably being a good deal higher.



The main reason utilities need to build new transmission lines is to meet projected peak power demand in coming years. Peak power demand in our region comes on hot summer days when air conditioners are on full throttle. Typically, there may be 10-15 days when demand gets high enough to put a strain on the electric grid. The rest of year, the grid can handle our power needs without too much of a sweat.



Many opponents of the new transmission lines say they're simply not needed--that we can stave off the demand through conservation and construction of smaller generating plants closer to the areas with high demand. We're not so sure about that. Conservation is great--we encourage it (and practice it) here at the Curmudgeon. But as long as we have cheap power here, people aren't likely to conserve as much as we need them to. And they darn sure aren't going to turn off the A/C when it gets to 100 degrees.



There is an alternative, however: solar electricity. The great thing about solar electricity is that it's at its peak on hot summer days, exactly when it would be needed most. In contrast, transmission lines don't produce a single watt of electricity. Indeed, they lose electricity--the further the power has to travel from generation to use, the more is lost.



Here's how Dominion, Allegheny and the other mid-Atlantic utilities could translate $2 billion in transmission lines into $6 billion in new solar capacity. For most homeowners and businesses, solar electricity is not yet economical. However, if they could get a 30-40 percent subsidy, on top of federal (and sometimes state) tax credits, solar suddenly starts to look like a winning proposition.



Suppose the utilities subsidized one-third of the cost of solar installations, up to the $2 billion they were instead going to spend on ratepayer-financed transmission lines. That would translate into $6 billion in new solar capacity. Since the solar installations are placed at the same site as electric consumption (i.e., homes and businesses) there is no need for any additional transmission lines.


We could offset a large amount of peak power demand in this region with $6 billion in new solar cells on those critical hot summer days.


Our back of the envelope calculation is as follows: the peak output of the Curmudgeon's $20,000 solar array is about 2200 watts (2.2 kilowatts), reached in the middle of the afternoon on a sunny summer day. That's about .11 watts per dollar invested. So $6 billion would translate into 660 million watts, which is 660 megawatts--the generating capacity of a medium to large nuclear reactor. Except that in this case, almost no electricity would be lost in transmission, and our calculation is conservative because Dominion could find better sites than the Curmudgeon's (we don't have a true southern exposure) and could achieve economies of scale that we can't.



The net result would be have Dominion and other utilities partner with thousands of businesses and homeowners--generating an additional investment of $4 billion by those individuals and businesses--to bring widely distributed solar generation right to the source of demand.



The key to achieving this is to give Dominion and the other utilities the incentive to invest in solar power, rather than to invest in transmission lines. It's not that difficult--California has already done it.


We think that, given the right incentive, a private utility like Dominion would learn to become quite efficient at siting and installing solar power, thus bringing the cost down to some degree. (Solar will remain expensive, however, for a few more years due to capacity shortages in the industry.) Dominion would be likely to identify ideal candidates--for example, a larger business with plenty of unobstructed south-facing roof space--and then approach them with the subsidy needed to make the installation economical. Dominion would also be able to develop a unit with the expertise to install solar efficiently, and it would have sufficient purchasing power to obtain better deals on solar panels, inverters and other required equipment.



Of course, this process would also generate a huge "green" dividend, and if trading carbon credits becomes the norm, Dominion could reap fairly large additional benefits by selling its carbon credits to other utilities. In contrast, no transmission line is ever going to generate any carbon credits.



Ultimately, it becomes a "win-win" for both Dominion and its customers, not to mention the many thousands of landowners who won't be impacted by hundreds of miles of new steel towers and humming transmission lines. Why can't this be done?

Dominion Re-Regulation Bill Amendments--A Start In The Right Direction

Governor Kaine made some important amendments to the Dominion Re-Regulation Bill passed by the General Assembly. For stories from the Washington Post and Richmond Times-Dispatch, see here and here. (The Times-Dispatch story has more detail.)

In a nutshell, Governor Kaine has strengthened provisions promoting greater energy conservation and increasing investment in renewable energy sources, which is certainly to the good.

Notably, the Governor raised from 5% to 10% a goal for reducing energy consumption through conservation measures between 2006 and 2022. (Still too modest a goal, but we can work to increase it further in the future.)

In addition, the amendments increase the incentives to invest in renewables such as wind, solar and hydro. Other provisions also provide incentives for "clean coal" and, more importantly, reduce the profit that can be made from conventional coal-fired electric plants. (National cap and trade legislation may further discourage new construction of conventional coal plants.)

Kaine also smartly decided to exempt large industrial consumers of electricity in the state from requirements that they help cover the "costs" to utilities if those consumers fund their own investments in renewable energy generation. (More on this below.)

Finally, the Governor tinkered with some other provisions to provide marginally greater protection to consumers from large rate increases.

We share the disappointment of the Piedmont Environmental Council and other conservation groups in the state that the Governor didn't do more on the environmental front, especially while he had clear leverage over Dominion since it desperately wants this bill. (Indeed, Dominion's spokespeople voiced support for the Governor's amendments, meaning plenty was left on the bargaining table.) (But, just imagine where we'd be on this if Republican Jerry Kilgore had defeated Kaine.)

That said, the amendments are a good step forward. We've never believed for an instant that Virginia will suddenly become a green mecca, a' la California. Rather, it will take a sustained effort over many years to make good progress. It will help if Democrats continue to gain seats in the Assembly, as we expect they will, and it will also help when farmers, fishermen, hunters, coastal residents and others realize they have a big stake in all this and become more natural allies on these types of measures.

The good news is that between the conservation/renewables provisions of the re-regulation bill and the energy bill passed last year, there is ample room for small, incremental amendments over the next few years to further boost conservation and renewable investment.

We also want to say a word about the provision that allows large industrial users to invest in renewable energy without compensating Dominion for the "cost" of opting out. This is an excellent amendment. We want to encourage the largest power users to search out and invest in renewable sources of electricity to service their needs. As a practical matter, today that means mostly wind energy, because it is economical, but the mix may change down the road.

In any event, it is a myth that there is somehow some "cost" to Dominion, or to other ratepayers, when large consumers decide to generate their own electricity from renewables. Quite the contrary, those investments reduce the need for Dominion to build new plants to meet growing demand, reduce the need for new high voltage lines, help distribute the energy load more efficiently around the state, help reduce the cost down the road for medium and smaller consumers to invest in renewables (by developing the technology infrastructure and expertise), and force Dominion to keep its prices competitive or lose customers.

For all those reasons, we should encourage the largest power consumers to "go for it" on renewable energy, and that's what Governor Kaine's amendment will do.

Now, the one thing we can't yet figure out is whether Dominion will be required to offer its "Greenpower" program--available in North Carolina--to Virginia consumers. That program allows a consumer to pay a premium for electricity generated from clean sources--in essence to help fund increased renewable generation. Getting that program to Virginia consumers is one of our priorities.

Disappointment on Dominion Re-Regulation Bill

We've looked around and can't find anything on Governor Kaine's actions with respect to the Dominion re-regulation bill, which we take to mean he signed it as is, or at most made minor revisions. If so, that's quite disappointing.

If anyone out there has additional info, let us know.

Solar Synergy For Northern Virgin-y

We were reading a Washington Post article today on the natural synergy in the Pacific Northwest between hydroelectric power and wind energy and it got us thinking about the local situation in Northern Virginia.

(The synergy in the Pacific NW occurs because wind farms can ideally be placed near existing underutilized high voltage transmission lines used for hydro power and because hydro can efficiently kick in when wind is scarce.)

In Northern Virginia, a different kind of synergy exists, with solar power.

As discussed in this blog on a number of occasions, Dominion Virginia Power plans to build a $300 million high voltage transmission line through parts of Northern Virginia to meet the region's voracious demand for electricity. Absent the new line, Dominion says some parts of NoVa may experience temporary blackouts by 2011 or 2012. While there's vigorous debate about some of Dominion's numbers and motives, there's not much dispute that NoVa's continued rapid development will, sooner or later, tax the region's distribution system IF something isn't done.

One answer is solar energy. We're the first to tell you that as a stand-alone proposition, solar electric is still not economical for the average home or business. However, solar has one quality that fits perfectly with NoVa's needs: it generates maximum output on hot summer afternoons when the distribution system is strained by high air conditioning demand. Solar, therefore, is a great relief valve that can stave off the need for additional high voltage lines. And, when you factor in the high costs of peak power and additional distribution capacity, solar suddenly becomes much more economical.

Alden Hathaway, who built a solar home in Loudon County and wrote a book about it, estimates that each zero energy solar electric home cancels out the need for peak power/additional distribution capacity of four standard homes on a hot summer afternoon. The Curmudgeon's experience with solar panels so far would seem to validate that: during the middle of the day on a sunny day, we're generating a good deal more electricity than we're using, putting it back into the local grid.

Solar electricity stabilizes the grid because it is usually produced right at the source of consumption, rather than miles away in a power plant, such that there is no need to build expensive high voltage lines to transfer it around. (In contrast, wind turbines often are most ideally situated in remote areas, requiring additional transmission lines to get the power to where its needed.)

Here's how Dominion--given the proper incentives--could alternatively invest $300 million in solar power in NoVa instead of building a new, ugly, intrusive, expensive high voltage line. Take the $300 million and offer homes and businesses a 25% subsidy for installing solar cells where they are suitable. The subsidy would make solar sufficiently economical for many homeowners and businesses to want to invest in the other 75%. That way, Dominion could transform its $300 million into $1.2 billion in new solar in NoVa, which would make a huge dent in peak summertime power consumption.

As an additional incentive, Dominion could credit solar power generators with a summer peak premium for the electricity they provide during certain hours on certain summer days, reflecting the true value of such power.

(While conservation is generally less expensive than solar, it is not that helpful on hot summer afternoons. For example, the cheapest conservation measure--installing fluorescent lighting--has little impact during daytime summer hours when lighting needs are minimal. Dominion could, however, encourage greater use of the most efficient air conditioning systems, especially in all new homes.)

Our back of the envelope calculation suggests Dominion could fund 60,000 Curmudgeon-sized solar systems (about 2.5 kws) with our 25% subsidy scheme, and could probably do much better because it could achieve greater economies and efficiencies. It would also stimulate a large investment in solar infrastructure for further development over time.

We'd also rather see Dominion--and other local utilities--head up programs like this because they'd generally be more efficient than government. For example, Dominion presumably would want to get the most bang for its buck and would therefore select solar sites with the most optimum characteristics.

The key, of course, is to give Dominion the proper incentives for structuring such a program, allowing it to recoup a premium on its investment. With a little creativity, we have no doubt that such incentives can be crafted, just as they have in other states. (Dominion could also increase the investment pot by being granted authority to charge a higher peak power rate, with the extra money going to solar and conservation subsidies.)

We note that environmental groups have, of late, had some success in sitting down with utility executives and negotiating agreements to reduce carbon emissions and invest in green power. Perhaps its time to do the same with Dominion?

Progress On Dominion Re-Regulation Bill Veto

The Washington Post today reports on a number of Virginia organizations that have joined the Curmudgeon in calling on Governor Kaine to veto the hastily passed bill, practically written by Dominion Virginia Power, to re-regulate the electric utility industry in the state.

We're happy to be joined by the likes of the Northern Virginia Regional Commission, Piedmont Environmental Council, the Virginia Citizens Consumer Council and AARP Virginia, among others.

Quote of the day: Republican Delegate Clarke Hogan, who helped draft the Dominion bill, says now is the time to act "versus having this deregulation train running down the tracks at us and having to do something drastic at the last minute."

Let's be clear: the current law doesn't lift regulation until 2010, so we have plenty of time to act. What is inexcusable, is how Dominion, with the legislature's cooperation, rammed this bill through with minimal discussion, i.e., "something drastic at the last minute." So Del. Hogan is correct: the bill should be vetoed to avoid drastic last minute legislation. Following a veto, Dominion and other interested parties can sit down and start working out a more considered bill for the next legislative session.

Environmental Fixes For Dominion Re-Regulation Bill

Governor Kaine has his plate full with the defective, but still fixable, transportation bill sitting on his desk.

That leaves little time for him to focus on an equally important bill dumped in his lap by the General Assembly, which would dramatically change the way electric utilities--particularly Dominion Virginia Power--are regulated in the Commonwealth.

Among other things, the bill is an environmental disaster. Here, we explore some ideas for improving the bill on the environmental side. However, the entire bill needs careful consideration--which it did not get this term. The Governor should veto it so that he, the Attorney General and the General Assembly can more carefully consider these important issues next year.

Others have done an excellent job of detailing the way Dominion rammed this bill through the General Assembly this term without anyone really understanding what it will do to electric power consumers in the state.

Our focus today is on the environmental side. For all practical purposes, Dominion is the only electric utility in the state of Virginia. We are fortunate that it is a well-managed company that has kept electricity rates relatively low.

Dominion, however, is behind on the environmental curve, and it won't even try to catch up unless the legislature, Public Service Commission, Governor and Attorney General force it to.

Dominion badly wants new legislation that will change the way it is regulated and allow it to raise the capital needed to meet Virginia's future power demands. That puts the state in an excellent bargaining position to obtain some key environmental concessions.

First, Dominion should be required to offer its Greenpower program--which is available in NC--to Virginia customers. This program, similar to programs offered by other utilities around the country--allows a customer to pay a bit extra to obtain his or her power solely from renewable resources, such as wind energy. These programs incentivize utilities like Dominion to expand their investments in renewable energy.

Second, Dominion should be required to expand its net metering program in Virginia by providing a set amount of financing for consumers who want to install their own renewable energy generation onsite. This further encourages development of wind and solar energy in the state. At present, there is a cap on the amount of net-metered energy that Dominion must accept, equal to 0.1% of its total energy demand in Virginia. The cap should either be removed, or raised to at least 5%. There is some other tinkering that can be done with the net metering provisions to further encourage individuals and businesses to develop their own alternative sources of renewable electricity.

Third, Dominion should be required to make aggressive investments in conservation. There are ways to structure regulation that will give Dominion appropriate incentives to promote electricity conservation programs. We should study successful programs from other states and implement them here. Remember: a 100 megawatt reduction in electric demand is just as good as building a new 100 megawatt powerplant. There is plenty of room for Virginians to reduce their consumption without any impact on lifestyle. (I have detailed on my own blog how I reduced my power bill by as much as 30 percent in some months by taking simple steps that don't require any sacrifice.)

[One way to improve conservation is to raise rates. We note that higher rates does not necessarily mean higher bills: if rates go up 25% but as a result you use 25% less energy, your total bill will stay the same. Californians use, on average, almost half the electricity of Virginians. Their electric rates are higher, but their total electric bills are not.]

Fourth, we need to explore incentives to discourage Dominion from building new coal-fired power plants in Virginia (or elsewhere for purposes of supplying Virginia). With prospects high for the enactment of national legislation to discourage carbon emissions, it would be economic folly for Dominion to commit the state to new generation from coal. In any event, it is environmentally irresponsible. Virginia has a long and sensitive coastline that is vulnerable to rising sea levels and increased storm activity. We can ill afford to endanger our historically significant and economically vital coastal communities through such short-sighted actions as building new coal electric plants. If anything, we should be looking for ways to retire the existing ones.

With its good management and sound financial base, Dominion could, with the right incentives, become an environmental leader that would do Virginia proud. Now is the time to make sure those incentives are put in place.

Governor Kaine should veto the bill hastily pushed through the General Assembly this term, followed by a commitment to work with Dominion, environmental groups and consumer advocates for a bill that suits all Virginians in the next term. (We might add that Attorney General Bob McDonnell is at grave political risk on this bill, since his office undertook to study and attempt to modify Dominion's original draft bill. Unless he wants to be known as "Dominion Bob" when he runs for Governor, McDonnell should support efforts to bring in a wider array of citizens groups to meld a better bill in a future term.)

Veto The Dominion Bill

We were going to put something together on the multiple problems with the bill hastily passed by the General Assembly to "re-regulate" electric utilities in the state, but someone else has already done an excellent job, so we'll just point you in the right direction.

To recap, Dominion Virginia Power, pretty much the only private electric utility in the state, drafted up its own bill to "re-regulate" itself. After minimal study and virtually no public input, Dominion managed to ram the bill through the General Assembly, which was consumed with the transportation issue.

It's a bad bill. We can, and should, do much better, and we have time, as deregulation doesn't kick in until 2010. We urge Governor Kaine to veto the bill and set up a task force, study group--whatever you want to call it--to work with Dominion reps on a more balanced comprehensive bill that can be introduced next year.

Here are links to a three-part series on why the Dominion bill is bad for the environment, bad for consumers and bad for the state's political system.

1. Bad for the environment.

2. Bad for consumers.

3. Bad for political system.

Fluorescent Aussies, Green Californians, Red Virginians

In a rather stunning development, Australia has announced that it will ban traditional incandescent light bulbs in just three years, requiring the entire country to conserve electricity by adopting energy-saving compact flourescent lights.

Imagine the United States having the willpower to do something that dramatic! (If we did, we could reduce electric consumption by several percentage points.)

We hope that by the time the Aussies' long-lasting fluorescents burn out (7-8 years) the next generation of even more energy stingy lights--LED's like those blinking on your modem--will be ready for prime time.

We were at the Wisp ski resort in western Maryland this weekend and are happy to report that the lodge there has converted most of its lights, including basic lamps in guest rooms, to flourescents. (Soon, we'll review Wisp from the skiing standpoint and compare it to Wintergreen, another nearby ski resort we visited this season.)

On our way home, we also noted with interest a large wind farm perched along a ridge near the continental divide, which much be as good a place as any to "mine" the wind. No doubt some see the huge turbines as ugly, but we think they're beautiful--a lot nicer than a tanker full of Arab oil.

While it's good to see individuals and businesses in our neck of the woods adopting conservation measures and investing in renewable energy, it was rather shocking to learn this weekend (courtesy of the Washington Post) that Californians, on average, have just half the per capita electricity use of Virginians. (Californians: 6732 kwh's/per capita; Virginians: 13,748 kwh's per capita.)

That proves the point of some of our regular commenters, who note that Dominion Power would not need to string ugly new high voltage cables (or build a costly new nuclear power plant) if Virginians simply adopted a number of fairly simple conservation measures.

(By the way, those California figures are BEFORE factoring in California's aggressive program to invest in renewable sources of electricity, particularly solar.)

How does California do it? Partly it is the high cost of electricity in the Golden State, but a lot of it has to do with how the utilities are regulated. California has adopted de-coupling, which allows a utility to profit even as its sales decline. This encourages the utilities to invest in conservation instead of simply promoting increased demand. (Also, we note that if you pay double the rate for electricity, but use half as much, the cost really isn't any higher.)

It's pretty clear that decoupling, along with some aggressive state programs such as strict building codes that require conseration measures, really works. If the entire U.S. consumed electricity at the same rate as California, we could retire dozens and dozens of dirty coal-fired electric plants and reduce our dependence on mid-east oil.

Virginia legislators are still considering a bill to re-regulate the electric utilities here--essentially Dominion Power. Previously, we urged the General Assmbly to table the bill that they've been rushing through (it was drafted by Dominion) so that a broader group can study it and make recommendations. Seeing that Virginians are using double the electricity of Californians (who aren't exactly living a deprived lifestyle) only reinforces the point. Something is wrong here in the Old Dominion. With thoughtful regulation, we, too, can live the good life without destroying the environment and contributing to flooding of our coastal communities.

Dominion's New Route

Yesterday, the Washington Post reported that Dominion Power has decided to re-route it's new high voltage line so that it runs along an existing line, and today the Post reports that no one is happy with the new proposal.

We have to say, the Post's reporting on the issue is a bit too negative, giving way too much play to opponents of the line. The new proposal is more expensive--$60 million more--because instead of running in a straight line between two substations, the line will curve in a giant arc that is much longer.

Still, we think it's a reasonable compromise, although we are sympathetic to the notion that Dominion gave in to Middleburg millionaires only to stick it to residents of more modest means in other parts of the state. But since the new route follows that of an existing high voltage line, we think it makes the most sense by reaching the best balance between providing for the future while minimizing the disruption to NoVa's landscape.

To be sure, we're with those who think there are alternatives. Fairly simple conservation measures alone could forestall this new line (check out how we reduced out power bill by 30 percent here), whereas aggressive investment in distributed renewable energy (wind and solar) could eliminate the need.

BUT, we don't see any sign of the willpower in the legislature that would be needed. Indeed, quite a few GOP lawmakers have complained about the line when it impacts THEIR constituents, but other than proposals that simply dump the problem on someone else, we haven't seen any of them pushing for a REALISTIC alternative, such as REQUIRING Dominion to INVEST significant sums in conservation and distributed energy. (It would take tens of thousands of businesses and residences to adopt conservation measures for it to work. That ain't gonna happen without serious legislation). All these legislators are really doing is sounding off--a lot of bark, but no bite. And you can bet that those same legislators will give Dominion what it wants when it comes to the bill Dominion is pushing to "regulate" itself.