Several environmental groups filed Nov. 5 testimony at the Virginia State Corporation Commission saying that Virginia Electric and Power d/b/a Dominion Virginia Power didn’t adequately take into account things like renewable energy and energy efficiency when it decided on the 1,588-MW Greensville gas-fired project as its next major capacity addition.
This Dominion Resources (NYSE: D) subsidiary filed in July for commission approval of the Greensville project. The Nov. 5 testimony responding to Dominion’s arguments for the project came from Rachel S. Wilson, and was submitted on behalf of Appalachian Voices, the Chesapeake Climate Action Network and the Natural Resources Defense Council, which are being represented in this case by the Southern Environmental Law Center. Wilson is a Senior Associate with consultant Synapse Energy Economics Inc.
The Greensville County Power Station is an approximately 1,588-MW natural gas-fired combined-cycle (NGCC) project to be located in a county of that same name in Virginia. The project is supported by the company’s most recent integrated resource plan (IRP).
“I find that Dominion overstated its electric load and thus the need for the Greensville plant, and did not give appropriate consideration to the numerous technologies that offer an alternative to the self-build NGCC option proposed in this docket, as required under Virginia Code…,” Wilson wrote. “First, the Company’s analysis of need overstates electric demand. It does not consider reductions in load from increased energy efficiency nor from the recent changes in PJM’s load forecasting methodology.
“Second, the modeling done by Dominion in this proceeding and in the IRP docket do not support Greensville as the least-cost option—especially in light of Virginia’s pending obligations under the Clean Power Plan (‘CPP’). Dominion did not use Strategist’s optimization capabilities to allow the model to select Greensville as an optimal resource, instead manually inputting it into the model as new capacity. In the IRP, the Company stated its belief that new natural gas resources will not meet the CO2 standards required by the CPP. The Greensville project thus may not be the most economic resource choice for ratepayers, and a commitment to a large increase in natural gas use could in fact make it more difficult and more expensive for the Company to meet the CPP emission reduction targets than if another resource, or combination of resources, had been chosen.
“Finally, the Company’s analysis of alternatives improperly restricted the available resource choices. The Company did not include a range of potential resources that might meet energy and capacity needs at a lower cost. Following the example of the Public Service Company of Colorado (‘Xcel’), Dominion should have developed an all-source solicitation/RFP that evaluated bids from a combination of gas, solar, and wind generation resources to meet its anticipated needs. Dominion’s analysis was thus too limited and failed to consider options that would better protect ratepayers from significant increases in their electric rates, would deliver additional savings in the form of a lower fuel factor, and provide benefits to the electric grid.”
Wilson said that Dominion’s forecast of total system summer peak, presented on page 50 of the 2015 JRP, does not include conservation and energy efficiency adjustments. Applying a reserve margin requirement to these unadjusted values will result in a higher total resource requirement than actually exists. Dominion has energy efficiency programs in place, and the expected savings that result from these programs should be included in the load forecast in order to produce a more accurate estimate of peak and energy needs, Wilson wrote.
Wilson says Dominion more or less took NUGs out of the equation
Dominion also states in the IRP that it has existing contracts with non-utility generators (NUGs) for 1,684 MW, which is more than the capacity of the proposed Greensville NGCC unit. These contracts expire at different times during the planning horizon, beginning on May 31, 2015, with the last contract expiring in 2021. At the expiration of these contracts, Dominion assumes that these units will no longer be modeled as a firm generating capacity resource and instead will be available to the company at market prices.
The expiration of the NUG contracts creates a capacity gap that is approximately the size of the entire Greensville project, Wilson added. The company did not provide evidence that renewal of the PPAs was either not possible or would be priced unfavorably, it did not adequately consider in the IRP and the associated modeling the possibility that some or all of these PPAs might be renewed at prices that are below market, or that PPAs from other entities might become available during the 2015 to 2021 time period, thus offsetting a portion of the need for the Greensville NGCC, Wlson wrote. “This is important because this is one of the major functions of the PJM market—when prices rise it sends a signal to non-utility generators to enter the market and provide competitively priced energy and capacity, causing prices to adjust. Therefore, there is reason to believe that some amount of capacity and energy would be available in the form of a PPA between 2015 and 2021,” Wilson said.
As part of the IRP process, Dominion compared the Greensville NGCC to market alternatives though a Request for Proposal (RFP) process. In November 2014, Dominion issued an RFP for baseload and intermediate resources that are fully dispatchable, with delivery commencing in 2019/2020. The RFP is “fatally flawed” in that it fails to consider the full array of alternatives that might best serve customers, said Wilson, again citing the Xcel example of an “all-source” RFP.
Wilson added: “Under the flawed RFP from Dominion in this docket, submittals must have offered a minimum of 300 MW of summer firm capacity, up to approximately 1,600 MW, with a duration of ten to twenty years, and be physically located in or in near proximity to the PJM Dominion Transmission Zone. The proposals received in response to the RFP were evaluated against Dominion’s self-build option based on price and non-price factors. According to Mr. Glenn A. Kelly, the price evaluation involved a three step process: first, the Company developed a levelized busbar curve as an initial economic screen of each proposal; second, the Company used the production cost capabilities of the Strategist model to determine the expected value of each proposal against replacement power and capacity as part of the Company’s portfolio; and third, the Company used Strategist’s optimization capabilities to allow the model to select multiple proposals in a single portfolio in order to test if any resource combinations might result in a lower cost plan. Dominion found that the Greensville project was the most favorable of the alternatives under this methodology.
“While Dominion conducted an RFP to compare Greensville to other similar generating units, this is not sufficient in this case. Dominion did issue an RFP in the case of the proposed Remington solar project. That project was extremely small at only 20 MW, and as the alternatives to it were more limited, it made sense to do an RFP to compare prices for projects of a similar size and capacity type. The Greensville NGCC, however, is a much bigger power station, and a combination of a number of different types of resources could offer an alternative to the Project. In addition, given the new constraints imposed by the CPP, it is Dominion’s obligation to seek out a resource, or combination of resources, that could meet peak and energy requirements at a lower cost and with lower carbon emissions. It is correct that generating units fueled by coal, natural gas, or nuclear fuels are the few technologies that could substitute for Greensville on a 1:1 basis; however, this type of substitution is unnecessary. Given the falling costs of energy efficiency and renewable technologies and their increased performance, it is probable that a portfolio of resources that includes efficiency, renewables, and smaller gas units would meet energy and capacity needs at a lower cost to consumers, while offering other benefits to the electric grid.”
Dominion touts high efficiency as a key plus for this project
Dominion has said this project’s economic benefits flow from its highly-efficient 3×1 combined-cycle technology and low installed cost per unit produced. The plant will include three Mitsubishi Hitachi Power Systems Americas “J” class (M501J) combustion turbine generators, three heat recovery steam generators with supplemental firing capability, one turbine steam generator, and auxiliary equipment. It is expected to achieve, without supplemental firing, an output of 1,417 MW and, with supplemental firing, a nominal net capacity of 1,558 MW. This performance will be achieved at an installed cost of approximately $837/kW at the 1,588 MW (nominal) rating based on a total estimated construction cost of approximately $1.33 billion, excluding financing costs.
The Greensville County Power Station will be fueled using 250,000 Dth per day of natural gas with reliable firm transportation provided by Transcontinental Gas Pipe Line Co. LLC (Transco).
Incidentally, to fill out what Wilson was referring to about expiring NUG contracts, here is a list of those contracts from the latest IRP:
- Spruance Genco, Facility 1 (Richmond 1), located Richmond, Va., Baseload, Coal, 115.5 MW, contract expiration date 7/31/2017;
- Spruance Genco, Facility 2 (Richmond 2), Richmond, Va., Baseload, Coal, 85 MW, contract expiration 7/31/2017;
- Edgecombe Genco (Rocky Mount), Battleboro, N.C., Baseload, Coal, 115.5 MW, contract expiration 10/14/2015;
- Doswell Complex, Ashland, Va., Intermediate, Natural Gas, 605 MW, contract expiration 5/5/2017;
- Hopewell Cogen, Hopewell, Va., Intermediate, Natural Gas, 336.6 MW, contract expiration 7/31/2015;
- Roanoke Valley II, Weldon, N.C., Baseload, Coal, 44 MW, contract expiration 3/31/2019;
- Roanoke Valley Project, Weldon, N.C., Baseload, Coal, 165 MW, contract expiration 3/31/2019;
- SEI Birchwood, King George, Va., Baseload, Coal, 217.8 MW, contract expiration 11/14/2021; and
- Covanta Fairfax, Lorton, Va., Baseload, Municipal Solid Waste, 63 MW, contract expiration 5/31/2015.
Notable would be that at least the coal-fired NUGs on this list would be endangered under the Clean Power Plan, so their existence beyond the 2022 initial compliance deadline under the Clean Power Plan would be in doubt. Of course the Clean Power Plan itself, published in final form on Oct. 23, is subject to numerous lawsuits, so its existence is up in the air.