Old Dominion keeps coal plant option open after dropping nuclear

Old Dominion Electric Cooperative (ODEC) in Virginia is still pursuing development of a major coal-fired power project after in 2011 dropping its planned participation in the North Anna 3 nuclear project.

ODEC said recently it’s taking a go-slow approach on the coal project until it gets a clearer picture of regulatory requirements for a new coal plant. Nevertheless, the cooperative said it wants to keep the coal plant option open. 

Through its member distribution cooperatives, Old Dominion served more than 550,000 retail electric consumers (meters) in 2011, representing a total population of about 1.2 million people, said the cooperative’s March 14 annual Form 10-K report.

In 2007, Old Dominion filed a joint application at the NRC with investor-owned Dominion Virginia Power for a license to construct and operate a new reactor at North Anna called North Anna Unit 3. Dominion Virginia Power is part of Dominion Resources (NYSE: D). In October 2010, Virginia Power announced that it would slow its pursuit of North Anna Unit 3 and planned to reassess the schedule for construction of the unit in 2013. Old Dominion then evaluated its continued participation in this project and on Feb. 28, 2011, it announced a decision not to participate in the development or ownership of this unit. It formally withdrew as a participant in the project and transferred its rights relating to North Anna Unit 3 to Virginia Power on Dec. 16, 2011.

“We are continuing to separately evaluate the possibility of constructing a new baseload generation facility,” the Form 10-K noted. “In 2010, we purchased two tracts of land in Virginia for potential development; one tract is in the town of Dendron in Surry County and the other is in Sussex County. We received the necessary zoning approvals for both tracts for siting of a power plant and approval to proceed with the attainment of required air and other environmental permits. Several residents of Surry County filed a Complaint for Declaratory and Injunctive Relief with the Surry County Circuit Court, requesting that the court void the zoning approvals granted based on the residents’ allegation of inadequate notice of a public hearing. During 2011, the Surry County Circuit Court voided the zoning approvals. We repeated the application process and on March 5, 2012, we received the necessary zoning approvals for the tract located in Surry County.”

The Cypress Creek project that Old Dominion is currently pursuing at this site would be coal-fired, though the Form 10-K noted: “We have not selected the technology, the final site or determined the size of any facility that may be built. We have not made final commitments to proceed with the construction of a facility.” Preliminary plans for Cypress Creek call for one or two coal- and biomass-fired generators capable of producing 750 MW to 1,500 MW.

Old Dominion does already hold a 50% undivided ownership interest in Clover, a two-unit, 860 MW (net capacity entitlement) coal-fired plant operated by Virginia Power. Virginia Power, as operating agent of Clover, has the responsibility to procure coal for the operation of the facility. Virginia Power has advised Old Dominion that it uses both long-term contracts and short-term spot agreements from both domestic and international suppliers to acquire the low-sulfur bituminous coal used at Clover. As of Dec. 31, 2011, and Dec. 31, 2010, there was a 73-day and a 38-day supply of coal at Clover, respectively.

Old Dominion reported that Clover, which has two units that went commercial in the 1995-1996 period, is in good shape in terms of compliance with both the Cross-State Air Pollution Rule and the Mercury and Air Toxics Standards (MATS) recently issued by the U.S. Environmental Protection Agency. “We do not anticipate that any additional measures will be required at Clover to comply with MATS due to Clover’s existing pollution control requirement, which already removes greater than 90% of the mercury emitted from the facility,” the Form 10-K said.

Old Dominion has an 11.6% undivided ownership interest in North Anna, a two-unit, 1,868 MW (net capacity entitlement) nuclear plant. North Anna is operated by Virginia Power, which owns the balance of the plant.

Related to that February 2011 decision not to participate in North Anna Unit 3, as of the end of 2010 the cooperative had $21.3m of construction work in progress related to North Anna Unit 3, and had incurred about $1.8m in financing-related costs that were included in “deferred charges–other” in its financial statements. During 2011, it established a regulatory asset and reclassified the $21.3m of construction work in progress costs. The $1.8m in financing-related costs were expensed in the first quarter of 2011 as administrative and general expense. As of the end of 2011, its regulatory asset balance was $22.7m, which includes the $21.3m referenced above and additional costs incurred during 2011 prior to the project withdrawal notice.

Old Dominion continued to incur costs related to North Anna Unit 3 until the finalization of its withdrawal and the transfer of its interest in the project to Virginia Power in December 2011. At that point, it received payment of $11.3m from Virginia Power, which included reimbursement of $10.4m of costs incurred from February 2011 until Dec. 16, 2011, including interest, and $0.9m for the sale of land related to North Anna Unit 3.

Reimbursement of costs recorded in the regulatory asset to Old Dominion by Virginia Power is subject to Virginia State Corporation Commission approval. The cooperative said it cannot currently estimate if or when Virginia Power will seek approval from the commission. If these costs are not determined to be collectible from Virginia Power, Old Dominion will collect them from its member distribution cooperatives through its formulary rate.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.