Renewables or Fossil Fuels? Voters Want Both

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Given a choice between an energy future that is a) dependent on generation using sun, wind or falling water, or b) dependent on thermal sources using fossil fuels or uranium, or c) a combination of both, which do Americans prefer?  Should it surprise anybody that the answer is both?

Reliance on both, the need for at least a substantial amount of electricity not depending on weather, is at the heart of the recommendations coming at Virginians from many directions.  It came recently from the Federal Energy Regulatory Commission, including the Virginian on that panel, Mark Christie.  It is the premise for both Virginia Governor Glenn Youngkin (R) 2022 Energy Plan and Dominion Energy Virginia’s new integrated resource plan.

The message is being disputed by the advocates for the rapid retirement of existing coal and natural gas generation, many of whom are (sadly) also strongly anti-nuclear. But a recent poll shared with the Thomas Jefferson Institute for Public Policy indicates the message of maintaining traditional baseload strongly resonates.  It does so across party lines.

The American people are receptive to the message because they already believe that fossil fuels will continue to be around, and surprising percentages of them would like to see their use expanded.  The number of Americans dubious of reaching the poorly defined target of “net zero” by 2050 – a Shibboleth among Democrats — is higher than the percentage who believe it possible.

A recent poll by Hearts + Minds Strategies of Reston, with the Thomas Jefferson Institute an invited listener to the discussion (watch it in full or read a summary here), underscores this assertion. This was not a confab of climate catastrophe skeptics.  Quite the opposite.

Its polling found a large majority (72%) of Americans, even 69% of identified liberals, want the U.S. to be energy independent.  Asked about whether they wanted traditional energy sources, renewable, or both, 64% said both and 23% said traditional only.  Only about 1 in 8 respondents favored pure renewable.

That bears repeating.  Of the 1,000 polled, 87% favored either full reliance on thermal generation or some combination of traditional and renewable generation. Only 13% favored renewables exclusively.  The rigid Democratic positions of “green only” are in response to just a subset of their own core voters.

Looking at various energy sources, solar and wind were the most popular, with oil and coal the least popular.  But 67% favor either expansion or retention of natural gas, with only 19% advocating its retirement. A quarter of Democrats favor gas expansion.  Nuclear power’s support remains soft, with only 25% favoring expansion and 28% favoring retention, combining to a bare majority.

Given just two choices, support or opposition, 56% overall favored expansion of domestic energy production (oil and gas included) and only 14% opposed it.  On related infrastructure, 58% favored expansion and only 12% opposed.  The crosstabs were not shared, but those figures cannot represent just Republicans or conservatives.

Asked whether they believed “net-zero” was probable by 2050, only 5% said definitely yes and 22% probably yes.  The definitely not and probably not groups added up to 39% with 33% not sure.  Plenty of liberals and Democrats were among the skeptics, although one of the analysts said parsing the results by age in a different poll produced more dramatic gaps.

The youngest voters embrace the climate apocalypse narrative.  That is the case in both parties, although among the youngest Democrats the results approach unanimity (99.4%, the analyst says on the recording.) Look to the schools and 30 years of a unified media message of alarmism for explanation.

It is not surprising that people who have lived through five or six decades of weather are less susceptible to the nonsense that every storm or drought is a sign of imminent climate catastrophe.  The good thing about youth and inexperience is time cures both (but probably not before the next election.)

Again, the Youngkin Energy Plan and new Dominion IRP line up very well with those attitudes, even though the poll was national and not just a Virginia sample.  The people are ready to hear and accept the advice coming from FERC, the regional transmission organization PJM and our own FERC Commissioner Christie.

Every time anybody preaches the message that we can run a modern economy on wind and solar, it should be challenged.  Politicians and industry should not be afraid to engage with a contrary message of the need for balance, diversity and reliability.  The American people are smarter on this than many give them credit for.

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FERC’s Mark Christie Warns Electricity Growing Unreliable

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Virginian Mark Christie is using his position on the Federal Energy Regulatory Commission as a national pulpit to preach a message of energy reliability doom, and he is being heard.

It helps that he is not alone in spreading the alarm.  It also helps that he is basing his warning on actual instances of energy shortages, from Texas’s deadly experience two years ago to the problems in the Eastern United States just before Christmas 2022, which merely came close to catastrophe.

“The United States is heading for a very catastrophic situation in terms of reliability,” Christie told a United States Senate hearing May 4. “The arithmetic doesn’t work…This problem is coming. It’s coming quickly. The red lights are flashing.”

Christie joined the FERC panel in January 2021, after 17 years as a member (and often chairman) of Virginia’s energy regulator, the State Corporation Commission.  Prior to that he had a career as a lawyer, lobbyist and then legal advisor to Virginia’s Republican state legislators.  

This is not just a national debate, but also a Virginia debate.  Virginia’s Governor Glenn Youngkin (R) 2022 Energy Plan and now Dominion Energy Virginia with its new integrated resource plan are sending the same message. They also warn that eliminating most or all fossil-fueled baseload generation rapidly and replacing it with wind and solar only is a recipe for failure.  

And Christie isn’t alone.  The other three FERC commissioners, two of them appointed by Democratic administrations, joined him in the message to the Senate.  The uniformity of their views is the point that cannot be ignored, and you can watch the full hearing here.  The Utility Dive coverage quoted the other commissioners extensively as well, but then ran to various advocates for intermittent renewable energy who proceeded to dispute that there is a problem or sought to blame it on fossil fuels. 

Behind the argument is a February report from the regional PJM Interconnection transmission network, the largest such regional electricity sharing organization in the country.  Quoting from the media release of the same date: 

Energy policies and market forces already have, and could further expedite, the retirement of existing generation resources faster than new resources are able to come online. PJM’s analysis…indicates that there is up to 40 GW (gigawatts) at risk of retirement from economic and policy drivers by 2030. The report also highlights significant uncertainty around the pace of resource additions, which at current completion rates would be inadequate to maintain resource adequacy. The potential also exists for significant load growth in the future, driven by data center additions and electrification of transportation, heating and industry.

The coal, gas and nuclear plants disappearing are reliable baseload generators. They account for more than 20% of PJM’s entire power assets.  Dominion’s entire generation portfolio is 21 gigawatts.  While they are retiring, demand is expected to grow about 13 gigawatts. The replacements coming online, and coming online more slowly than the retirements, are weather dependent.  

Solar panels produce nothing 75% of the time and wind turbines produce nothing 60-65% of the time. That is Christie’s point about the numbers not adding up.  Some of the plants PJM warned were going to close, however, were Dominion’s and its new IRP calls for maintaining them instead.

In a Tweet, Christie (who has become prolific on Twitter), noted that another energy market observer, Independent Market Monitor, published an estimate the retired generation within PJM could reach or exceed 50 gigawatts.  

Christie then bolstered his argument with a law journal article challenging some of the basic economics and incentives of our current energy market, including PJM’s capacity market and the standard practice of paying all power generators within a single clearing price. That is usually higher than their actual costs. The article is technical, but you don’t need to be an economist or engineer to understand it.  Read the summary at least. 

Utility Dive went to the Natural Resources Defense Council and a Washington lobbying group for the renewable industry to dispute FERC’s warning.  In Virginia, the angry pushback has come from Virginia Mercury, with a column by the Sierra Club’s Ivy Main complaining that Dominion is simply pandering to Youngkin.  Main ignores the possibility that Dominion, in earlier IRP filings moving away from gas, might also have been pandering to a Governor she agreed with, Ralph Northam. 

Main makes no mention of the PJM reliability report from February, or of the energy crunch right before Christmas. Virginia Mercury appears to have ignored both, along with the unanimous and bipartisan testimony in front of the Senate two weeks ago. Those who have disputed PJM’s report claim the problem in December was caused by a failure of the natural gas plants, but that is misleading.  

In Texas two years ago, gas plants and pipelines that were not properly winterized failed from the cold.  PJM facilities were better prepared for the cold (some still failed) but a different problem cropped up.  Much of the shortfall happened because gas plants could not get supply.  

When PJM was stretched near the breaking point, on December 23 and then again on December 24, generation units which had participated in the capacity market and been paid for their promised electricity didn’t step up.  Some are facing fines, and the excuse that they could not get fuel is not being accepted.  Christie’s complaints that the capacity markets are not working is becoming a common one. 

The argument for more gas supply is also a Virginia debate, as the Mountain Valley Pipeline across Southwest Virginia and TC Energy’s pipeline upgrade into Hampton Roads are being opposed bitterly by the wind and solar industry advocates.  Both are vital. Both could still fail. 

The competing visions for Virginia’s energy future, a diverse supply adding new natural gas and nuclear, or retiring gas to rely on two sources – wind and solar with some battery backup – should be put honestly before the voters picking a new General Assembly in November. 

Steve Haner is Senior Fellow with the Thomas Jefferson Institute for Public Policy.  He may be reached at [email protected]

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Power Lines Divide the Beach

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One four-hour public hearing was not enough. Virginia Beach City Council wants another such debate before it votes on a wind company’s request to bring power cables ashore at Sandbridge Beach.

Last week’s hearing on Kitty Hawk North’s application for an easement to bury cables apparently was not covered by any Hampton Roads news media. Almost half of the time (watch it here) was used by the company’s speakers, both before and after the public spoke. Parent firm Avangrid Renewables LLC personnel were at the podium for so long because of questions from council members.

The representative for that part of the city, Barbara Henley, was the most pointed.

“We’ve heard a lot tonight from Avangrid, but in all this time, this is the first time we’ve heard it,” she complained.  “I think we all deserve answers to all of the questions before we make a decision.” Information she’d heard that evening seemed to contradict previous things she was told by city staff, she claimed. She also said city staff at one point told her of the project: “It’s not going to be viable. Don’t worry about it.”

Henley said the Sandbridge residents have been “shortchanged” so far, and also worried that nobody in the room spoke for the residents along the nine-mile route the power cables will take before connecting to the main electric grid at Corporate Landing.

Her comment came right before the meeting ended. She did not indicate how she might vote and included in her comments general support for offshore wind and the economic dream of creating a wind energy industry hub in the region. “None of that depends on where this project lands,” she said.

She was followed by Mayor Robert “Bobby” Dyer, who announced the intention for council to host another hearing “but not have a vote that night.” No date was announced.

As speaker after speaker was recorded, key observers watched from the back row. To the left (from the camera’s perspective) was William Murray, Dominion Energy Virginia’s top governmental affairs vice president. To the right was Robert Matthias, longtime Virginia Beach City lobbyist in Richmond and an early advocate for offshore wind.

So far, Dominion’s project, much larger and much closer to Virginia’s beaches, has not sparked the kind of public opposition demonstrated to Kitty Hawk that evening. Dominion’s cables are coming ashore further north, away from any residential or public beach areas, but it is going to require an even longer network of new power lines.

Maps of the lines required for both projects exist separately. What does not exist, at least in the record examined, is a combined map showing all the lines from both. Nor it is clear if the powerlines shown on current applications will be sufficient for future phases or if more will be needed, as both Dominion and Avangrid have plans for hundreds of additional turbines later.

The first speaker in opposition to the project was Joe Bourne of Protect Sandbridge Beach; several speakers wore stickers from this organization. One opponent had the crowd of opponents stand, and it appeared to be two-thirds of those present. Concerns ranged from lowered property values to construction disruptions to medical impacts of electromagnetic radiation from power lines. One speaker worried about the turbine projects driving off the region’s whales.

Speakers against included the owner of the market directly on the parking lot in question and a spokesman for the condo association directly across from it.

Speakers in favor did include residents of the Sandbridge neighborhood and other Virginia Beach residents who use it frequently. Most supportive speakers focused, however, on the economic hopes the region is pinning on the overall East Coast wind industry wanting to use Hampton Roads as its long-term installation, operations and maintenance hub.

“New York and New Jersey are coming on strong and they want to take our jobs!” warned Gretchen Heal of the Greater Hampton Roads Chamber of Commerce. Television reporter-turned-public-relations-professional Joel Rubin, who said on this occasion he was not representing his client Dominion, predicted the region can become “the center for clean energy in this country.”

Avangrid disputed claims that the work installing the transmission lines and equipment under the parking lot would create a long disruption, saying it could be done in one off season, between October and May. It wasn’t clear whether that would cover just the first phase of turbines being built or would need to be repeated with future phases.

Kitty Hawk project manager Megan Higgins was pressed by a councilman on alternative landing sites for Avangrid’s cables and said a long analysis of other options determined this location was “optimal.” There isn’t enough capacity at the nearest points of possible grid interconnection in North Carolina, she said.

The project, which so far lacks any fixed power purchase agreement, wants to feed its electrons into the PJM Interconnection regional transmission organization for market prices. From a landing on the Outer Banks, hooking into PJM would require perhaps hundreds of miles of onshore transmission lines.  Pamlico Sound was rejected as a route because of the disruption to the fishing industry there and its soft bottom. Sandbridge is 36 miles from the lease area off Kitty Hawk and Sandbridge Road is almost a straight shot to the grid.

Higgins and others claimed that by bringing the cable on shore in Virginia and becoming a PJM supplier, the project would comply with the 2020 Virginia Clean Economy Act. That law does state that up to 5,200 megawatts of offshore wind “in federal waters and interconnected directly into the Commonwealth” shall be recognized as “in the public interest” by regulators.

Only half that favored approval status has been used up by Dominion’s first project, but it also has designs on the second 2,600-megawatt tranche in the law. Dominion could satisfy its customers’ needs and VCEA requirements by purchasing wind power from Avangrid.

Higgins also conceded that the project has filed none of the needed applications with Virginia’s State Corporation Commission, and really cannot start that process until it has the right of way secured to build the interconnecting transmission. The key to that remains the easement under and across the Sandbridge Beach parking lot, owned by the City of Virginia Beach.

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Will a Simpler Electric Bill Lower Your Costs?

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Simpler is usually better.  Monthly electric bills for many Virginians are about to get less complex, and in the short run also lower.  Will that lower cost be long term?  It is too soon to tell.

On July 1 Dominion Virginia Power will stop collecting separate monthly payments on its bills for three of its newer power plants, all now covered by their own stand-alone rate adjustment clauses or RACs.  This change flows from the major regulatory revision the General Assembly recently adopted and does not need State Corporation Commission approval.  Dominion instead notified the SCC of this change.

This is a different filing than the one about collecting its unpredicted fuels costs, and while they were announced together on May 1, really needed its own analysis.

The three generation RACs to be retired are Rider R for the Bear Garden natural gas plant, Rider S for the Virginia City Hybrid Energy Center which burns coal and biomass, and Rider W for the Warren County natural gas plant.  Combined they are collecting about $350 million per year from customers for operations, capital costs and utility profits.

Dominion’s proposal to delay collection under Rider A of its excess fuel expenses from past years until it can roll them into a 10-year bond does not constitute “bill relief.”   Baking these RACs into base rates, on the other hand, may prove beneficial over time to its customers.  Whether that is true and by how much won’t be clear until Dominion files its next overall rate case.

Using the standard illustration for residential users of 1,000 kWh usage, this will save that account about $6.75 per month.  Different customer classes pay different amounts per kilowatt hour for these RACs.  Larger commercial and industrial customers pay less, in some cases about half the cost per kilowatt hour.  The changes to their bills from this consolidation will thus be less dramatic.

When the state rewrote its regulatory laws in 2007 and created the opportunity for the plethora of individual rate adjustment clauses now in place, the original intent was some would be short term.  As the company went through periodic rate reviews, the opportunity would exist to fold them into the base rates.  Under traditional ratemaking, pre-2007, these separate charges were rare and new generation plants were all paid for through base rates.

The intent to routinely retire the rate adjustment clauses was just one of several parts of that 2007 bill which never came to pass.  Now, however, it is finally happening.  When Dominion does file that application for a full rate review later this year, using the new rules in the 2023 bill, one of two things is likely to happen.

It may not seek any adjustment in its current base rates and may instead decide to continue paying the operational and capital cost for these three facilities with the existing charge.  That will be viewed by some as strong evidence that the base rates have been excessive all along, as many claim (including the SCC.)

Or Dominion may indeed seek an increase in base rates blamed in part on covering these costs.  Which will be fine.  But that will mean the “bill relief” now being claimed was only temporary, as with the fuel costs.  Theoretically, adding the cost of these plants into base rates might also prevent a base rate reduction the SCC would otherwise have ordered.  The SCC accounting process should sort that out.

Ideally, base rates should be designed to cover the cost of service, cost of capital and provide the allowed profit margin with no excess in either direction.  For the past fifteen years most cases have involved fierce arguments over whether the utility had earned excess profits, and if so whether customers were owed refunds.  In many years the SCC ordered such refunds.

This move won’t change that argument in the next review, which will look back at the period ending December 31, 2022.  For that period, all of the RACs will still be considered as outside of base rates and in their own silos.  It may still be that Dominion earned excess profits and owes customer refunds.

But the better outcome going forward is setting base rates which produce no excess or shortfall.  Putting these three RACs back into the general expense pot may move Dominion in that direction.  Perhaps one or two more conversions would be needed to complete the task, but whether the SCC has the authority to do that on its own may turn into another major legal battle.

The irrefutable bottom line which must always be remembered is one way or another, now or later, the customers pay for it all.  Shuffling the deck doesn’t change the outcome of the game.

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Dominion Changes Course on Natural Gas, SMR Nukes

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Dominion Energy Virginia has long been warning, albeit somewhat quietly, that the dream of running Virginia’s economy on nothing but solar, wind and battery power was not based on reality. With the filing of its most recent integrated resource plan (IRP) on May 1, proposing how to meet customer needs out 25 years, it has made those warnings concrete.

The alternative plan that the company seems to be pointing to as preferred includes adding natural gas generation as early as 2028, an idea not even hinted at in the previous plan just a year ago. It wants to add 2,900 megawatts of new gas plants in all. That proposal will prove anathema to the climate alarmism movement that imposed the Virginia Clean Economy Act just three years ago, demanding carbon-emissions free electricity by 2045.

The previous 2022 plan did include the possibility of the utility building additional nuclear generation, with the first of four small modular reactors proposed to come online about 2042. This plan advances that schedule by eight years, to 2034, and calls for six reactors in all with 1,600 megawatts of capacity.

On the same day, Dominion also announced an application to change how it will collect fuel costs from customers, and some changes in the structure of its base rates and rate adjustment clauses. The radical turn in the IRP is the bigger news, however. Future columns will address those other two proposals.

Release of the IRP was followed that evening by a news release praising it from Governor Glenn Youngkin (R), something that normally doesn’t accompany these bureaucratic undertakings. But Youngkin has pinned his political fortunes to what he calls the “moon shot” of introducing more nuclear power into Virginia’s mix, and his 2022 energy plan also supported continued and even expanded use of natural gas to maintain system reliability. Dominion did both.

The review process will take months and may not be complete until after the November elections. Virginia Democrats are firmly opposed to and have voted down efforts to delay retiring the existing natural gas plants, let alone adding new ones. The fate of that idea may rest with the voters.

Youngkin and the Dominion plan summary point to two major developments since last year’s IRP discussion. First is the revised demand forecast by the regional electricity marketplace PJM, showing far greater growth in the data center industry and the need for more electricity as transportation and other sectors abandon fossil fuels under climate alarmism pressures. Second was a close call just before Christmas as demand for energy spiked in a cold spell, with PJM’s members almost replicating the blackout problems Texas suffered a few years back.

The Governor’s release stated:

The threat of premature (fossil fuel plant) retirements, and the resulting reduction to baseload and dispatchable generation capacity they produce, is magnified when the outsized load growth of Virginia is evaluated. PJM’s revised load forecast reveals that Dominion’s load will grow at 5% annually – higher than annual growth projected for Virginia when the Clean Economy Act was evaluated, and multiples of the 1% annual growth projected for the entire PJM region in the revised forecast.

As we explained last fall, there is a significant mismatch between supply and demand in the VCEA framework. Baseload generation provides the energy backbone to Virginia’s economy, and it would be a huge mistake to turn it off without an achievable plan to replace it…Our regulated utilities have the responsibility to ‘keep the lights on.’”

Adding the new SMR nuclear capacity and natural gas capacity allows Dominion to propose either building or buying substantially less solar capacity. The preferred 2022 plan projected adding almost 26 gigawatts of solar but this new plan trims that to below 20 GW. Both the 2022 and 2023 plans include the second phase of the Coastal Virginia Offshore Wind project, another 2.6 gigawatts, coming online in the early 2030s. But the 2023 plan, for the first time, also includes more than 600 megawatts of onshore wind turbines.

As before, Dominion offered five alternatives in all, one intended to be “least cost” and showing no concern for reducing CO2 emissions, and then two that achieve a claimed zero emissions by the VCEA target date of 2045. Interestingly, the zero carbon alternatives rely on even more nuclear power to balance demand with supply. The least cost plan adds no nuclear but far more natural gas generation. What are Virginians willing to pay for miniscule, too-tiny-to-matter reductions in worldwide CO2 levels?

The 2023 plan also increases the amount of planned battery storage, from 3070 megawatts in the earlier plan to more than 5,000 megawatts in this one. Perhaps recognizing the limits of battery technology, the 2023 plan also projects major purchases of power from other utilities, reaching the level of 4 GW per year in the out years. The 2022 plan didn’t show a shortfall until 2044. The 2023 plan shows shortfalls in all five alternatives, some of them massive.

The customer cost projections on the 2023 option adding new natural gas and nuclear power does not change much between the 2022 and 2023 document. Another change since last year, of course, is the federal Inflation Reduction Act changing all the federal tax credits and subsidies for nuclear and renewable energy. The details on how they impacted these calculations may emerge as the IRP review proceeds.

Dominion calculates the future cost one way, the State Corporation Commission uses another method, with the difference apparently being how they account for the impact of load growth. With so many assumptions, both must be taken as just estimates, but the trend lines are both steadily up.

Last year Dominion projected a residential bill on 1,000 kilowatt hours per month would reach $177 by 2035, and now it has lowered that to $174. (The actual bill was under $117 three years ago.) The earlier estimate using the SCC’s method was $213 and now it projects that bill reaching $235 by 2035. Yes, the SCC methodology has bills doubling between 2020 and 2035.

Keep those long term cost projections in mind with all the hoopla you will hear during this election year about some temporary changes in your bills (your bills, not your total costs) due to the proposed changes in how the fuel costs are recovered and in rate adjustment clauses. More information on those will follow soon.

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