Dominion suggests changes to EPA’s proposed Clean Power Plan

Dominion Resources (NYSE: D), in recent comments filed with the U.S. Environmental Protection Agency, expressed concern about potential adverse impact on electric reliability and customer bills due to EPA’s proposed Clean Power Plan.

The company also said some states – such as Virginia and North Carolina, which it serves through regulated subsidiary Virginia Electric and Power – are treated unfairly in the proposal because of the “greater and unreasonable” reductions required in CO2 emissions rates relative to other nearby states. The proposed regulations could penalize states that already have reduced their carbon intensity, the company said.

“We are supportive of policies and programs that will achieve meaningful emission reductions and environmental benefits while maintaining electricity reliability, minimizing effects on customer rates, and recognizing and appropriately accounting for measures states and affected entities have already undertaken to reduce carbon emissions,” the company wrote in comments signed by Pamela F. Faggert, Dominion vice president and Chief Environmental Officer. “However, we are concerned the (Clean Power Plan) proposal falls short of these principles in many respects.”

Dominion noted it has an integrated strategy for reducing greenhouse gas emissions intensity that already has produced significant results. The average carbon dioxide emissions rate – or carbon intensity – for all the company’s owned generation fell by about 39% from 2000 to 2013. The carbon intensity for the power stations serving Dominion Virginia Power and Dominion North Carolina Power fell by about 19% during the same period. Those are the “doing business as” names in each state for Virginia Electric and Power.

The company was able to achieve those reductions by constructing modern, diverse power generation that also promotes reliability and stable customer rates. Dominion’s generating portfolio includes efficiently operated nuclear, coal, natural gas, oil, hydro and renewable generation. It also has implemented cost-effective energy conservation and other programs.

The company noted that it has recently converted two coal units to natural gas, and converted three other small coal plants (total of 153 MW) to burning biomass. It has retired coal units already and has other coal retirements in the works.

While EPA’s efforts to avoid a “one-size-fits-all” approach are laudable, the Clean Power Plan must do better to provide consistency, reasonableness and equity among the states, the company said. For example, Virginia already is a low-carbon state, but would have to reduce its emissions intensity by 38%, yielding a state goal for Virginia that is significantly stricter than all of its neighboring states and at least twice as strict as two of its neighboring states. “This dichotomy creates an economic and competitive advantage to those states that have done the least and a disadvantage to those who have done the most,” Dominion said.

Robert M. Blue, president of Dominion Virginia Power, testified in November before a joint meeting of the Virginia House and Senate Commerce and Labor committees that customers would see a significant increase in their electricity rates and in their bills by 2025 under the EPA proposal. Blue also said that despite the company’s concerns, it must begin preparing immediately for the new targets because of the short lead time for compliance, which begins in 2020 under the draft rule. 

In addition to advocating for more-reasonable and equitable standards for Virginia and North Carolina, Dominion also recommended:

  • Consider a more-representative baseline for states by using an average of multiple years and allow compliance through multi-year averaging.
  • Adjust state goals to recognize emissions improvements, efficiencies and uprates accomplished in recent years. Also adjust state goals to reflect state-specific renewable potential and state-specific energy efficiency potential.
  • Recognize the value of all existing nuclear generation, including Dominion’s four nuclear units located in Virginia. Last year, Dominion’s carbon-free nuclear units generated 41% of its power to service its customers in Virginia and North Carolina.
  • Nuclear plants whose licenses are extended beyond 60 years should be counted as new sources of carbon-free generation.
  • Do not count emissions from natural gas combined cycle generating facilities now under construction in the state reduction targets. Dominion has two large, state-of-the-art natural gas power stations under construction in Warren and Brunswick counties in Virginia. These clean, modern units should count for compliance, not to make compliance more difficult.
  • Eliminate the interim reduction target and allow states more flexibility in reaching the ultimate reduction goal. This includes the addition of a compliance mechanism that accommodates longer installation times for low- and non-emitting generation.
  • Clarify rules regarding waste wood products as a carbon-neutral generation and for supply-side efficiency programs. Dominion is the nation’s leading utility operator of renewable biomass, having converted the three coal plants to biomass and designed the coal-fired Virginia City Hybrid Energy Center to co-fire with up to 20% biomass.
  • Allow states to seek adjustments in their targets based on changing circumstances and include a safety valve, or “off ramp,” to address both unexpected scenarios and to address situations where implementation of the rule threatens service reliability or leads to rate shocks for customers.

Dominion is one of the nation’s largest producers and transporters of energy, with a portfolio of about 23,600 MW of generation, 10,900 miles of natural gas transmission, gathering and storage pipeline and 6,400 miles of electric transmission lines. Dominion operates one of the nation’s largest natural gas storage systems with 947 billion cubic feet of storage capacity and serves utility and retail energy customers in 10 states. 

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.