One point of interest for the coal industry is what Dominion Virginia Power plans to do with coal-fired non-utility generation (NUG) power plants when its contracts to take power from those plants run out.
On Aug. 31, Dominion Virginia Power, a unit of Dominion Resources (NYSE: D), filed a 2012 integrated resource plan (IRP) with the Virginia State Corporation Commission. In that plan, Dominion said it is moving to retire, convert to biomass and convert to gas a number of its owned coal-fired units in order to meet clean-air standards.
But the IRP didn’t offer a lot of specifics on plans to deal with 743 MW (total summer capacity) of coal-fired NUG generation that is under power contracts dating back to the 1990s. The 115-MW Edgecombe Genco (also known as Rocky Mount) facility in North Carolina is the most immediate concern, since its 1990 contract to supply power to Dominion expires first, on Oct. 14, 2015.
The other NUG coal plants are:
- Spruance Genco Facility 1 (Richmond 1) in Virginia, 115 MW, contract signed 1992, expires July 31, 2017;
- Spruance Genco Facility 2 (Richmond 2) in Virginia, 85 MW, contract signed 1992, expires July 31, 2017;
- Roanoke Valley II in North Carolina, 44 MW, contract signed 1995, expires May 31, 2020;
- Roanoke Valley in North Carolina, 165 MW, contract signed 1994, expires May 28, 2019; and
- SEI Birchwood in Virginia, 217 MW, contract signed 1996, expires Nov. 14, 2021.
Notable is that the two Roanoke Valley facilities are located at the same site and controlled by Westmoreland Coal (NASDAQ: WLB), which buys coal for the facilities from Central Appalachian suppliers.
Dominion said in the IRP that it has existing contracts with NUGs for capacity of 1,747 MW consisting of nine units, which includes the coal units listed above, with the rest mostly fired by natural gas. These nine NUGs are considered firm capacity resources and are included in the 2012 IRP. NUG units are obligated to provide firm capacity and energy at the contracted terms during the life of the contract. In 2011, the company said it was notified by three unnamed NUGs that those resources (totaling 316 MW) would be unavailable as direct resources to the company after the expiration of the existing contracts.
In 2012, Dominion said it provided an opportunity for several existing NUGs, all of whose contract expiration dates are in the near future, to submit offers to extend their contracts. During the same time frame, one potential new renewable NUG also submitted an offer to the company. The company’s evaluation of the offers recently concluded, and only the offer presented by the potential new renewable NUG was identified as being in the best interest of customers at this time. For planning purposes, the company in the IRP assumed that NUG capacity will no longer be modeled as a firm capacity resource at the expiration of each facility’s existing contract.
“However, the Company leaves open the possibility that some of the NUG contracts may be renewed or extended at the expiration of their existing contract terms as the relevant economics warrant,” Dominion added. “Also, these resources may continue to operate in the PJM market and will remain available to the Company as a resource on a contract or spot basis along with other non-Company-owned resources. In developing the 2012 Plan, the Company assumed that NUGs and any other non-Company owned resource without a contract with the Company are available to the Company at market prices; therefore, the Company’s optimization model may select market capacity and energy resources in lieu of other Company owned/sponsored supply- or demand-side resources should the economics dictate.”