Dominion’s NUG contracts to expire over the next few years

There is an open question, really several of them, related to the futures of certain coal- and gas-fired power plants that have power supply contracts with Virginia Electric and Power that expire over the next few years.

The utility, which does business in Virginia as Dominion Virginia Power, filed its latest integrated resource plan with the Virginia State Corporation Commission on Aug. 29. In it, this Dominion Resources (NYSE: D) subsidiary lists its various contracts with non-utility generators (NUGs) and when those contracts expire. These contracts all date back to various times in the 1990s.

While the utility doesn’t say in the IRP what will happen once those contracts expire, in some cases around the power industry when such contracts end, the NUG is left to scramble for enough business to keep its plant open. Or replacement deals can be signed with the customer utility, though often at lower prices than before.

The NUG plants with contracts to supply Dominion are:

  • Spruance Genco Facility 1, Richmond, Virginia, baseload, coal, 115.5 MW (summer), contract expires July 31, 2017;
  • Spruance Genco Facility 2, Richmond, Virginia, baseload, coal, 85 MW (summer), contract also expires July 31, 2017;
  • Edgecombe Genco (Rocky Mount), Battleboro, North Carolina, baseload, coal, 115.5 MW (summer), expires Oct. 14, 2015;
  • Doswell Complex, Ashland, Virginia, intermediate load, natural gas, 605 MW (summer), expires May 5, 2017;
  • Hopewell Cogen, Hopewell, Virginia, intermediate load, natural gas, 336.6 MW (summer), expires July 31, 2015;
  • Covanta Fairfax, Lorton, Virginia, baseload, municipal solid waste, 63 MW (summer), expires May 31, 2015;
  • Roanoke Valley II, Weldon, North Carolina, baseload, coal, 44 MW (summer), expires March 31, 2019;
  • Roanoke Valley Project, Weldon, North Carolina, baseload, coal, 165 MW (summer), expires March 31, 2019; and
  • SEI Birchwood, King George, Virginia, baseload, coal, 217.8 MW (summer), expires Nov. 14, 2021.

Said the IRP about NUGs: “A portion of the Company’s load and energy requirements is supplemented with contracted NUG units and market purchases. The Company has existing contracts with NUGs for capacity of 1,747 MW, of which 63 MW are from renewable sources. These NUGs are considered firm capacity resources and are included in the 2014 Plan.

“NUG units are obligated to provide firm capacity and energy at the contracted terms during the life of the contract. The firm capacity from NUGS is included as a resource in meeting the reserve requirements. The remaining NUG contracts expire at different times during the Planning Period, with the last contract expiring in 2021. For modeling purposes, the Company assumed that its NUG capacity will be available as a firm resource in accordance with current contractual terms. These NUG units also provide energy to the Company according to their contractual arrangements.

“At the expiration of these NUG contracts, these units will no longer be modeled as a firm capacity resource. The Company assumed that NUGs or 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 these resources in lieu of other Company-owned/sponsored supply- or demand-side resources should the market economics dictate. Although this is a reasonable planning assumption, parties may elect to enter into future bilateral contracts on mutually agreeable terms. For potential bilateral contracts not known at this time, the market price is the best proxy to use for planning purposes.” 

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.