Virginia Electric and Power d/b/a Dominion Virginia Power told the Virginia State Corporation Commission on May 29 that it supports a hearing examiner’s findings on its application for a coal-to-gas conversion for its Bremo power plant.
On May 8, hearing examiner Howard Anderson Jr. filed his report recommending that the commission approve the application by this Dominion Resources (NYSE: D) subsidiary.
In August 2012, the company filed this application for the conversion of Bremo (also known as Bremo Bluff) Units 3 and 4 to burning gas. Two parties filed notices of participation – independent power producer Doswell Limited Partnership and Columbia Gas of Virginia. Columbia Gas provided comments supporting the Bremo conversion. Doswell filed no comments with its notice. Neither party requested a hearing.
Doswell, which has been trying to sell its gas-fired power plant in Virginia to Dominion, has often been critical lately of Dominion Virginia Power’s self-build efforts in terms of power plants. But Dominion said the Doswell comments in this case did not request any particular relief, cite to any portion of the staff report, or ask that the company’s filing be denied. Furthermore, Doswell did not put any material fact in dispute and offered no evidence contradicting the staff report’s conclusion that the commission should approve the Bremo conversion, Dominion added.
“Doswell alleged, however, that the Bremo Application did not consider market alternatives consistent with the Commission’s October 5, 2012 Final Order approving the Company’s 2011 Integrated Resource Plan (‘October 5 IRP Order’),” the utility added. “But the record shows that the Company did consider market alternatives. In addition, though the Company does not believe that the October 5 IRP Order represents a sharp change in course in terms of Commission precedent on the need to consider Market alternatives, as a practical and legal matter, the Commission’s October 5 IRP Order was issued on October 5, 2012, which was more than one month after the Company’s Application for the Bremo Conversion was filed on August 31, 2012.”
The natural gas conversion of Bremo Units 3 and 4 is part of the company’s strategy of providing- customers with reliable capacity and energy in a cost-effective manner. Due to environmental factors, the company determined that if these Bremo units remained as coal-fired units, their capacity factors would continue to decline and they would have to be retired or converted to gas by March 2014 under a deal with regulators to get the coal-fired Virginia City Hybrid Energy Center built.
The company will invest approximately $53.4m (excluding financing costs) to convert Bremo Units 3 and 4 from coal to natural gas and those costs will be recovered through base rates.
As presented in the application, the Bremo conversion is anticipated to provide customer savings of approximately $32m net present value (NPV) when compared to building new generation, $123.2m NPV when compared to market purchases, and $155m NPV when compared to continued operations on coal. In addition, the Bremo conversion is anticipated to provide additional significant benefits, including: contributing to meeting the company’s growing capacity needs by providing 227 MW (net) of capacity that would otherwise be lost; providing a low-cost means to maintain existing capacity, while meeting future EPA regulations; reducing certain pollutants; supporting economic development by creating construction jobs and preserving jobs; supporting the state’s Energy Policy and Virginia Energy Plan; and meeting customers’ future energy needs in an efficient, reliable and cost-effective manner.
The company requested approval of the Bremo conversion within approximately 12 months of the filing of its application – or by Sept. 16, 2013 – to support the timetable for the Bremo conversion.