Tag: State Corporation Commission
Virginia State Corporation Commission Orders Heavily Fossil-Fuel-Based Appalachian Power to Model...
This works out to over $13,000 per installed kilowatt, according to the testimony of Scott Norwood, an energy consultant hired by the Attorney General's Department of Consumer Counsel to analyze Dominion's earnings evaluations. He notes that this capital cost is "approximately ten times the capital cost of the Company's new Brunswick combined cycle unit," which will burn natural gas.
As a result of this high capital cost, the "total delivered cost of power from NA3 is more than $190 per MWh in 2028." That translates into 19 cents per kilowatt-hour.
By comparison, in 2014 the average wholesale price of electricity in the PJM region (which includes Virginia) was 5.3 cents per kWh. Dominion currently sells electricity to its customers at retail for between 5.5 and 11 cents/kWh.
In other words, NA3 is ridiculously expensive.
Dominion had kept its cost projections for NA3 secret until this rate case forced the disclosure. Previously, executives had acknowledged only that the cost would be "far north of 10 billion."
This cost revelation may point to the real reason Dominion pushed so hard for SB 1349, the 2015 legislation that insulates the company from rate reviews until 2022. As Norwood testifies, "DVP forecasts a dramatic increase in NA3 development costs over the next five years, during which there will be no biennial reviews."
The applause had hardly died down, though, when Amazon Web Services announced it would be building a solar project in Accomack County, Virginia, that will be four times the size of Dominion's, at a per-megawatt cost that's 25% less.
Why such a big difference in cost? The way Dominion chose to structure the Remington project, building and owning it directly, makes it cost more than it would if a third party developed the project, as will be he case for the Accomack project. That means Dominion is leaving money on the table-ratepayers' money.
There is nothing wrong with the Remington project otherwise. The site seems to be good, local leaders are happy, and solar as a technology has now reached the point where it makes sense both economically and as a complement to Dominion's other generation. But by insisting on building the project itself, and incurring unnecessary costs, Dominion risks having the State Corporation Commission (SCC) reject what would otherwise be a great first step into solar.
And that's a crying shame, because solar really is a great deal for consumers these days. Utilities now regularly sign contracts to buy solar for between 4.5 and 7.5 cents per kilowatt-hour. Compare that to the 9.3 cents/kWh cost of electricity produced by Dominion's newest coal plant in Virginia City, and it's no wonder that solar is the fastest growing energy source in the country.
Utilities get those rates by buying solar energy from solar developers, not by playing developer themselves. From the ratepayer's point of view, developers have three advantages over utilities: they are experts at what they're doing, they work on slimmer profit margins, and they get better tax treatment. Dominion loses all three advantages if it builds the Remington solar farm itself.
In its Final Order in case number PUE-2014-00026, dated November 26, the SCC ruled that APCo's standby charge complies with § 56-594 F of the Virginia Code, which provides for standby charges for net-metered residential systems between 10 and 20 kW. (The law does not allow for net metering of residential systems over 20 kW.)
Environmental groups intervened in the case and ran a grassroots campaign that generated over 1500 comments to the SCC, opposing what has been dubbed a "tax on the sun." The result, however, was never in much doubt. The SCC has repeatedly demonstrated a willingness to accept without scrutiny utility assertions that solar customers impose costs on other customers.
Attorneys at the Southern Environmental Law Center, who argued against the standby charges on behalf of the Sierra Club and other groups, say the SCC's reasoning is flawed. According to Cale Jaffe, Director of the SELC's Virginia office, "Appalachian Power actually conceded during the hearing that it was 'not in a position' to determine whether solar customers had 'a positive or negative impact to the distribution cost of service.' In other words, Appalachian Power said that solar customers might be having a positive impact in helping to reduce APCo's distribution costs, but that the power company didn't have the data and didn't know one way or the other."