EPSA, P3 say Va. consumers get bad deal on Brunswick gas plant

Virginia’s State Corporation Commission (SCC) shouldn’t sign off on a Dominion (NYSE:D) plan to build a $1.3bn natural gas power plant in Brunswick County, Va., without first forcing the company to consider potentially cheaper  options, two groups said March 14.

That’s the crux of testimony submitted to the SCC by the Electric Power Supply Association (EPSA) and the PJM Power Providers Group (P3). The non-utility power groups claim that Dominion’s case for the 1,300-MW combined-cycle power plant is deeply flawed.

The groups also claim Dominion showed a distinct lack of meaningful consideration of lower cost market alternatives. Dominion has been a member of PJM for years and could find access to ample generation resources going through that market, the parties said.

PJM is currently expected to have an actual reserve margin of more than 20% in the 2015-2016 period, which is well above PJM’s target reserve margin of 15.4%, the groups argue.

A Dominion spokesperson declined comment, saying the company would be filing its response with the SCC in April. In the past Dominion has said its service territory in Virginia is seeing increasing demand growth and also noted that Virginia imports much of its electricity from out-of-state.

EPSA is a group that represents competitive power producers. It often fights utility self-build programs in regulated power states. P3 describes itself as a non-profit organization that supports the development of properly designed and well- functioning markets in the PJM region.

Groups say cheaper options are available

“Dominion’s proposed Brunswick County Power Station would cost Virginia consumers over $1.3 billion for a power plant that does not need to be built in order to keep the lights on,” said EPSA President and CEO John E. Shelk.

“This is a particularly bad option for consumers given that Dominion proposes to build this new, more expensive plant on the backs of consumers at the same time it is not considering other, less costly alternatives in the region,” Shelk said.

EPSA cites testimony by Michael Schnitzer of the NorthBridge Group to assert that “Dominion’s customers could be forced to pay significant above-market generation costs for a long period of time.”

Dominion filed its certificate of public convenience and necessity for the Brunswick County power plant in November 2012.

In a 58-page brief filed March 15 the parties claim that the forecast of market prices that Dominion relies upon is inconsistent with observable market data. The actual prices are deleted from the document.

While Dominion did not conduct an adequate solicitation of competitive offers, the results from the company’s limited solicitation suggest that the company’s capacity price forecast is far too high, the groups contend.

Also, Dominion fails to consider short-term market purchase opportunities which could defer the Brunswick project, while continuing to preserve the option to build the project later, when it might be more economical to do so, according to the EPSA filing.

Dominion plans to self-build 1,358 MW of new generation and associated transmission facilities without fully considering market alternatives and without conducting a transparent, competitive market test to determine whether such a plan would in fact provide its customers the lowest reasonable cost resource solution.

The groups assert that Dominion only approached three entities, whose contracts with Dominion expire in the next several years, in gauging the generation market. Power solicitations in other parts of the nation often involve far more potential suppliers.

 

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.