While plans by Dominion Virginia Power to retire coal capacity are appropriate, the company may in its current integrated resource plan (IRP) be overstating things like its load forecast, said Jeffrey Loiter, a consultant with Optimal Energy.
Testimony by Loiter, who is working for the Chesapeake Climate Action Network, Appalachian Voices and the Virginia Chapter of the Sierra Club, was filed March 15 at the Virginia State Corporation Commission as part of a review of the IRP. Among other things, Loiter wants the Dominion Resources (NYSE: D) subsidiary to let stakeholders have a bigger role in the final plan.
Loiter said his review of the company’s IRP led him to conclude that:
- The IRP is based on a load forecast that has not been fully explained and may well be over-stated.
- The IRP does not consider renewable energy resources and energy efficiency resources on an equal basis with supply side options within the company’s planning models. As a result, customers will likely face higher costs from construction of new nuclear generation, new natural gas generation, and from expensive environmental compliance costs for existing generation, Loiter said.
- The retirement decisions for several coal-fired units are well- justified.
- The IRP does not include higher energy savings rates from efficiency despite the fact that energy efficiency is a low cost and low risk alternative to supply-side options. In fact, forecasted energy efficiency is far less than what could reasonably be achieved and what many other organizations are achieving today.
Although Virginia adopted a voluntary goal of reducing the consumption of electric energy by retail customers by 10% by 2022, the company does not appear to be committed to meeting this goal, Loiter said. Cumulative energy efficiency (less voltage conservation programs) is only estimated to reach 2.38% of 2006 load by 2026. This is far less than other investor owned utilities have accomplished in recent years, he added.
Because the IRP is deficient in many respects – and because the IRP envisions spending billions of dollars in ratepayer money on new capital expenses in the near future – Loiter recommended that the commission require the company to convene a stakeholder committee meeting within 30 days of a final IRP order and resubmit a new IRP, with greater input obtained through the stakeholder review process, within 12 months.
“A more inclusive planning process needs to give all stakeholders and the company ‘skin in the game’ with regard to the stakeholder committee, which would help to ensure that the company develops an IRP that is consistent with industry best practices and better coordinated with regional bulk power operators such as PJM,” Loiter stated.
PJM power group pushes for more outside power use
The PJM Power Providers Group on March 15 filed its own critical comments with the commission. The group has an interest in this proceeding as it directly affects wholesale energy and capacity markets in the PJM Interconnection. The group, known as P3 for short, is a non-profit organization dedicated to advancing federal, state and regional policies that promote properly designed electricity markets in the PJM region.
“P3 respectfully recommends that this commission consider available alternative competitive options for supply-side resources to cost-effectively and reliably meet Virginia Power’s future energy resource needs,” the filing said. “Similarly to Virginia Power’s 2009 IRP, however, Virginia Power’s Preferred Plan (‘Preferred Plan’) promotes utility build of new generation in Virginia, but fails to fully consider the wide variety of existing resources inside and outside of the state which are available to Virginia Power as a member of PJM, the largest, independently operated energy market.”
P3 said the IRP also fails to: make a meaningful commitment to competitive bidding processes for either the potential purchasing or construction of energy or capacity to meet Virginia Power’s future energy needs; and recognize the benefits the new Trans-Allegheny Interstate Line (TrAIL) will provide to Virginia customers, through both enhanced reliability and increased import capability of lower cost energy.
Electric power association also has problems with IRP
More March 15 testimony came from Michael Schnitzer of consulting firm The NorthBridge Group, working on behalf of the Electric Power Supply Association. Schnitzer said he had four primary conclusions:
- The Dominion IRP fails to appropriately consider competitive market alternatives available to Dominion customers through its membership in the PJM RTO and the related customer benefits that competitive markets provide. On the contrary, rather than relying on the evidence from competitive markets to support its findings, the resources selected in the IRP are justified by a single long-term forecast of market prices, which, if incorrect, could cost Dominion’s captive customers billions of dollars of pre-mature or unnecessary investment.
- Dominion fails to adequately analyze the costs and risks associated with moving from its current portfolio mix, which includes market purchases, to its recommended portfolio based almost exclusively on building and owning capacity.
- The commission should subject any significant generation investment, whether new build, retrofit, or environmental control, to an open and transparent market test.
- The “need” determined in Dominion’s IRP is not a physical reliability need and should not be construed to mean that all of the new resources it identifies are required to maintain the reliable operation of the system. As such, resource decisions should be made based upon the costs and risks of a broad set of alternatives including market purchases.
Dominion IRP covers wide range of plans
The preferred plan in the IRP filed last September supports construction of generating units using natural gas, a fuel with lower emissions than other fossil fuels. Three new gas-powered generating stations using combined cycle technology are planned for the 2012-2026 period, each with a capacity of more than 1,300 MW. This includes the proposed Warren County Power Station, and two additional stations that are in the plan to be available resources in 2016 and 2019. Additional combustion turbines with a total capacity of about 2,400 MW are also planned, with the new units beginning operation from 2020 to 2026.
The preferred plan also includes the potential third reactor at North Anna Power Station. The company said in the IRP that it expects to receive approval of its combined construction and operating license from the Nuclear Regulatory Commission in 2013, and plans to reassess the project schedule around that time. If the company determines that construction of the reactor is in the customers’ interests, it expects North Anna 3 to be operational in 2022.
The preferred plan expands the company’s use of renewable resources and includes the conversion of three small coal units to biomass, totaling approximately 153 MW, to be completed by the end of 2013. The preferred plan also contains the addition of a 4-MW, solar-powered facility with an advanced battery storage unit in Halifax County, scheduled for completion in 2014.
The preferred plan includes installation of environmental control equipment on two large oil-powered units at the Yorktown and Possum Point power stations by 2015. It also includes the repowering of a coal-fired generating unit at Yorktown to natural gas by 2015. The company plans the conversion of both coal-powered units at Bremo to natural gas in 2014. The retirements included in the preferred plan are all four coal-fired units at Chesapeake by 2016 and one coal-fired unit at Yorktown by 2015. After repowering and retrofitting, the two remaining units at Yorktown will continue operating into the next decade and then will be retired in 2022. Additionally, the company plans to retire the coal-powered North Branch plant in West Virginia once the Warren County facility begins commercial operation.