Dominion Virginia Power, a subsidiary of Dominion Resources (NYSE: D), on Aug. 2 received permission from the Virginia State Corporation Commission to construct a 1,358-MW, natural gas-fueled station near Lawrenceville in Brunswick County.
The combined-cycle, natural gas-fired power station will serve growing customer demand and replace electricity from aging coal-fired power stations that are being retired for economic and environmental reasons. The approval came despite the fact that parties to the case, including a commission hearing examiner, said the utility hadn’t done enough to seek outside power in place of this self-built project.
“The Brunswick Power Station will produce significant customer benefits in helping to keep power costs low and reliability high,” said Thomas Farrell II, Dominion’s chairman, president and chief executive officer. “It also will benefit Virginia in terms of cleaner air and providing a major economic boost for the region.”
Dominion said it plans to start construction immediately with commercial service expected to begin in the summer of 2016.
The total cost of the station is $1.3bn. During the development and construction period, the station will generate about $824m in economic benefits for the state, according to a study done for Dominion.
The commission also approved a Certificate of Public Convenience and Necessity for transmission interconnection facilities needed to tie the station to the grid and a rate adjustment clause, Rider BW, which will allow the company to recover project costs.
In the first full year of the station’s operation Dominion expects there will be fuel savings of about $96m. Those fuel savings will continue over time. In addition, the station is expected to save customers an additional $1bn over its expected life compared with the next-best option for supplying power.
The plant will in part replace 918-MW of coal-fired capacity that the utility plans to shut over the next couple of years at the Yorktown and Chesapeake plants due to the age of that capacity and a need for clean-air compliance.
Commission says no outside power solicitation was needed
Said the commission’s Aug. 2 approval order: “We find that the Company’s choice of technology for the Brunswick facility – a 3×1 natural-gas fired combined-cycle plant – is reasonable based on the record herein. As noted by the Company, ‘[t]he 3×1 technology is cost-effective, proven, reliable and widely-used in commercial plants around the world.’ Once this plant is constructed and in operation in the Commonwealth, it will be ‘among the largest, most efficient gas-fired units in the country.’ The unit will operate at a very low heat rate and is expected to operate as, or very close to, a baseload unit. The Project is expected to meet approximately 9% of customers’ total energy requirements while reducing system-wide fuel expenses.”
The commission said about the lack of a major effort to seek outside power bids other than e-mail contacts with a handful of existing power providers: “[W]e have found – based on the specific facts and circumstances attendant to this particular Project – that the Company has presented adequate evidence which, taken as a whole, is sufficient to satisfy the statutory requirements necessary for approval. The Company provided limited cost data and projections of market cost as part of its justification for the Project, but it did not conduct a solicitation for the total capacity of the Brunswick Project. The adequacy of the Company’s showing was challenged by several parties, who supported a solicitation by the Company to meet its capacity needs. The Hearing Examiner recommended that the Application be denied without prejudice for the Company to re-file at a later date with additional information, but recognized a basis for the Commission to approve the Project in this proceeding. While more evidence on market alternatives would have improved the record, we do not view the record as legally deficient without a capacity solicitation based upon the overall evidence presented.”
Various parties had argued that the commission set a new, tougher requirement for the utility to seek outside alternatives within its approval for the utility’s latest integrated resource plan (IRP). “Although the IRP Order reflects the Commission’s view that the Company ‘should adequately’ consider third-party alternatives, what may or may not be adequate or necessary – and what evidence is sufficient to meet the applicable statutory requirements – remains a unique factual question attendant to each CPCN case,” the commission wrote. “In short, the plain language of the IRP Order did not reverse Commission precedent and create a new mandatory legal threshold (i.e ., some undefined third-party solicitation requirement) for all CPCN applications.”