Doswell fails to win contract extension with Dominion for gas-fired plant

Doswell Limited Partnership, owner of a gas-fired power plant, told the Virginia State Corporation Commission that Virginia Electric and Power’s decision not to extend a contract to buy power from Doswell is proof that the commission needs to order the utility to be more open in its off-system power purchases.

Doswell on Aug. 16 filed a brief with the commission, past the filing deadline set by the commission in an integrated resource plan (IRP) case that began in September 2011. Doswell said it wants to file this “out of time” brief because it has just found out that Virginia Electric, d/b/a Dominion Virginia Power, won’t extend a power purchase agreement (PPA) between Dominion and Doswell beyond its current May 5, 2017, termination date.

The regulated utility is a subsidiary of Dominion Resources (NYSE: D). Independent power producers like Doswell have often fought state procedures that they feel unfavorably favor utility self-generation plans.

This move underscores the serious concern raised in this proceeding that the IRP, because it relies almost exclusively on self-build options, is not reasonable or in the public interest, Doswell said. Doswell said it therefore supports the requests made by other respondents in this proceeding that the commission require, in either the IRP or subsequent Certificate of Public Convenience and Necessity (CPCN) proceedings for specific projects, an open and transparent competitive market test to evaluate Dominion’s preferred resource solutions.

Doswell owns a natural gas-fired facility in Hanover County, Va., with an aggregate capacity of approximately 760 MW (summer rating), consisting of a 605 MW combined-cycle facility and a 155 MW simple-cycle combustion turbine generating facility. The capacity and electrical output from the combined-cycle facility is committed to Dominion under the PPA that expires in 2017.

“Dominion’s ‘Preferred Plan’ outlined in the IRP assumes that Dominion will not enter into any power purchase agreement with non-utility generators (‘NUGs’), or extend any of its existing contracts with NUGs physically located in Virginia,” Doswell wrote. “Rather, the Preferred Plan assumes that the existing NUG contracts, including Dominion’s PPA with Doswell, will simply be phased out. While Doswell did not participate in the evidentiary hearing in this proceeding, it followed the hearing closely and agrees with the position taken by Electric Power Supply Association (‘EPSA’) and the Virginia Committee for Fair Utility Rates (‘CFUR’) that Dominion has not properly evaluated all available options to meet its capacity needs, including short- and long-term market opportunities.”

Without an open and transparent competitive market test, there is no way to evaluate whether Dominion’s designated projects are in the best interests of its customers, or whether Dominion simply decided not to consider available market alternatives to self-building rate-based generation, Doswell said. It added that it has made significant capital expenditures, and intends to continue to make such investments to ensure the Doswell facility remains a reliable, low-cost resource into the foreseeable future.

If the commission approves Dominion’s 2011 IRP, without an open and transparent competitive market test, Doswell said it strongly supports EPSA’s request that the commission expressly clarify that such approval does not represent an endorsement of any particular project or technology in a subsequent CPCN proceeding. Dominion’s recent attempt to support its CPCN application for the gas-fired Warren County Power Station by claiming that the need for that project was identified in its 2009 and 2010 IRPs highlights the necessity of a clear statement from the commission that approval of the 2011 IRP does not create a presumption in favor of any particular resource, Doswell argued.

Doswell said that Dominion disclosed in its second quarter 2012 earnings call that it has already executed an engineering, procurement and construction contract for its proposed Brunswick County gas-fired project. “This further demonstrates Dominion’s lack of interest in seriously considering competitive alternatives, and its assumption that the Commission will issue it a CPCN for the Brunswick County project, without having to demonstrate that Dominion has evaluated competitive alternatives,” Doswell contended.

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.