By Arianna Skibell, E&E News reporter
A large coalition of Virginia residents and national advocacy groups sent a message yesterday to Dominion Energy Inc.: Abandon the Atlantic Coast pipeline.
The pushback follows Dominion CEO Thomas Farrell saying he expects the project, owned by units of Dominion and Duke Energy Corp., to be ready for business in early 2022.
“We can maintain the existing schedule and cost estimates, so long as we can take advantage of the November 2020 through March 2021 tree-felling season,” he told analysts after Dominion released its first-quarter earnings this week.
Ahead of the energy giant’s annual shareholder meeting, nearly 80 organizations launched an ad campaign and thousands of individuals signed on to two petitions urging the company to cancel the $8 billion pipeline, the nation’s most expensive.
“Dominion Energy’s stubborn push to continue building the Atlantic Coast Pipeline despite ballooning costs, legal and permitting challenges, and a seismic shift in Virginia’s energy landscape betrays its duty to shareholders,” Brennan Gilmore, executive director of the nonprofit Clean Virginia, said in a statement. “The responsible thing — for Virginians and shareholders alike — is for Dominion to shutter the project before another tree is felled.”
The pipeline has been held up for years by state, environmental and regulatory hurdles, which Farrell said he expects the pipeline to soon clear. But as a growing number of states and territories pursue aggressive clean energy goals to curb the impacts of climate change, the embattled Atlantic Coast pipeline is emblematic of a larger national question about whether investment in new natural gas infrastructure still makes sense.
In a full-page ad in the Richmond Times-Dispatch and a half-page ad in The Washington Post, the coalition says the pipeline still faces a battle, including getting eight additional permits. Its primary permit is under review by U.S. Court of Appeals for the District of Columbia Circuit, the ad states.
“New legislation and legal challenges have rendered the completion of the Atlantic Coast Pipeline unrealistic,” the ad says. “It’s time Dominion Energy walks away from the project for good.”
The coalition includes the Alliance for Affordable Energy, the Chesapeake Climate Action Network, the Hip Hop Caucus, the Indigenous Environmental Network, the Virginia League of Conservation Voters, 350.org and others.
Separately, 2,200 Virginia residents urged Farrell in a petition to walk away from the pipeline for the financial health of his company. Another petition, which received 1,800 signatures, targeted Dominion shareholders and argued that the pipeline “no longer makes economic sense, even based on Dominion Energy’s own logic” and that “continuing to pursue this project is fiscally irresponsible.”
Dominion spokeswoman Ann Nallo said the company disagrees with the coalition’s message, “as do tens of thousands of others across the region.”
“As Dominion Energy and Duke Energy have made clear in recent days, natural gas will continue to play a critical role in our company plans for reaching net zero in the coming decades. One of the main purposes of the ACP is to move our region from coal to cleaner natural gas and renewables,” she said in an email. “The project will bring many environmental and economic benefits to the region and we are completely committed to its completion.”
Atlantic Coast, which is slated to run from West Virginia east through Virginia and into North Carolina, was announced in the fall of 2014, with an estimated price tag of $4.5 billion.
The Federal Energy Regulatory Commission approved the project in 2017, and in the ensuing years the cost has ballooned to $8 billion. The cost increase — in combination with other holdups like complicated lawsuits and construction delays — has led financial analysts to downgrade the pipeline as an investment.
In March, Gov. Ralph Northam (D) enacted the sweeping Clean Economy Act, Virginia’s landmark clean energy law, which would require Dominion to reach net-zero emissions by 2045, further casting doubt on the necessity of the proposed 600-mile-long gas line.
Additionally, the Virginia General Assembly pushed through a measure that requires a utility to prove new infrastructure is necessary for reliability and is the least-cost way to meet electricity demands before it can recoup the costs from its captive ratepayers. With the state headed toward renewable integration, the law could spell additional trouble for the project (Energywire, April 24).
In Dominion’s recent blueprint for its energy future, the company made no mention of the pipeline. A spokesperson said the pipeline will be addressed in the utility’s upcoming fuel cost review (Energywire, May 5).
In an increasingly changing energy world, state energy markets vary widely in how they allow companies to compete for and retain customers. And that’s beginning to matter more in states with large retail customers in a (mostly) regulated vertical energy market, such as in Virginia.
Dominion Energy, the state’s dominant utility, in May filed an application with the State Corporation Commission (SCC) for approval of its 100% renewable energy tariff. If approved, that tariff offering would prevent other retail electricity providers from competing in the market to give large and residential customers a 100% renewable option.
Virginia customers are only able to procure energy outside Dominion through two routes: If a customer has a load larger than 5 MW, it can apply to exit through the SCC. Or, customers of any size can shop for a 100% energy product from competitive services providers (CSPs).
Two CSPs — Direct Energy and Calpine Energy — have been soliciting business customers in the state to offer a 100% renewable energy package. On July 15, Dominion terminated processing all current and future interconnection applications with those CSPs, citing concerns over their ability to provide that offering to customers.
Policy watchers say this fight between Dominion and the CSPs highlights a larger tension in the state — whether Virginia should move toward a competitive retail choice market, something customer advocates, environmentalists, corporate customers and others are advocating for.
The state’s other utility, Appalachian Power Company (APCo), had its tariff approved in January, meaning CSPs cannot offer their 100% renewables package through that power provider’s load zone. And though Dominion filed with regulators in 2017 for approval of its 100% tariff, it says it has modeled its new application off APCo’s.
“Our goal is to ensure that all customers in Virginia are protected. And so we want the competitive service providers to be held to the same standard that APCo and Dominion Energy are being held to,” Dominion spokesperson Audrey Cannon told Utility Dive. “We want them to have to be able to show the SCC that they have that generation in the same way that we’re showing it.”
Direct Energy serves almost a quarter million business customers across North America and says they “clearly have the expertise needed to provide renewable power to customers,” Direct Energy Director of Government and Regulatory Affairs Ron Cerniglia told Utility Dive. “We look forward to establishing in the course of this proceeding that we are supplying customers with 100% renewable energy. And we’ve certainly adequately documented [Direct Energy’s] ability to do so.”
That process is “very prescriptive,” according to Cerniglia. Direct Energy contracts with a renewable energy provider and delivers that power through Dominion’s load zone, pending its approval.
The only exception, is if the utility offers a 100% renewable option in the form of a tariff, regulators ruled in 2017 after pressure from Direct Energy to clarify the rules.
In May of that year, Dominion proposed one of those tariffs, but regulators shot down the proposal a year later, ruling the process would have allowed “extraordinary discretion delegated to the utility.”
But Dominion says this time around it expects to receive approval — because APCo pulled it off in January.
“We modeled that 100% renewable tariff really closely after the one that was recently approved by the Commission for APCo,” said Cannon. “We intentionally followed their guidance. So that’s why we feel good about, hopefully, the commission approving it.”
The utility, under its proposed tariff, would use wind, solar and its four biomass units, including its 600 MW Virginia City Hybrid Energy Center, which generates the majority of its power from coal, and up to 117 MW from biomass. By 2023, 10% of the plant’s power will come from biomass, which qualifies the plant as a renewable facility, said Cannon.
But the fight between the two providers and Dominion highlights a larger standoff in the state.
“There are sort of two fights,” Harrison Godfrey, executive director of Advanced Energy Economy’s Virginia chapter told Utility Dive. “One is this very technical fight” around qualifying the CSPs to deliver renewable energy into Dominion’s load zone, he said.
“That’s a concern in of itself — obstruction by bureaucracy and slow walking these processes. That coincides with a concern about whether or not you essentially get the introduction of a tariff … that closes down the 100% market for consumers large and small, but provides them with an option that is substandard or does not meet their specific requirements.”
“Virginia is a little unique,” said Godfrey. The state currently operates under a “hybrid” market, somewhere between regulated and deregulated, he told Utility Dive.
Virginia began the process of deregulation, along with a lot of the Northeast, in the late 1990s, before the “Re-regulation Act” was passed in 2007, creating the current structure, which incorporates most customers into the vertical utility model, with a few exceptions.
If a business customer’s load is greater than 5 MW of electricity, it can apply to the SCC to leave Dominion’s service. Regulators earlier this year denied the exit applications of two of the utility’s larger customers, Walmart and Costco, citing concerns over impacts to other ratepayers.
That brings forward another concern outside customer access to clean energy: cost.
“As an entrepreneur I just prefer a competitive marketplace,” said Bob Pizzini, CEO of iFly, an indoor skydiving company in Virginia Beach, which has a demand capacity of approximately 1 MW. Pizzini is one potential customer of Direct Energy and says he has a problem with both the pricing structure and the accessibility of clean energy under Dominion.
Expense was a large driver for Walmart and Costco as well — Costco in its application complained Dominion’s “excessive costs” compounded through “piling on” rate adjustment clauses were unfair. The utility in April filed for a return on equity of 10.75% and last week a coalition of customer groups, including the U.S. Navy, Walmart and low-income advocacy groups protested that proposed increase.
And in May, several technology customers, including Microsoft, Apple and Salesforce, wrote a letter to the utility, criticizing its integrated resource planfor not incorporating enough renewable energy and relying too heavily on natural gas. Earlier that month, a group of environmentalists and free market advocates formed a coalition, calling for the state to deregulate its energy market.
“Big retail customers like Walmart, Costco, all the tech companies that are creating a data center right now in northern Virginia, they’re pretty much shackled to Dominion Energy,” Cassady Craighill, communications director at Clean Virginia, one of the groups in the coalition, told Utility Dive.
“But what’s important to remember that you shouldn’t have to be a major corporate customer to use and even have the option to buy renewable energy. … So in the case of Direct Energy, we’re not necessarily saying that that’s the choice for everybody, but the point is that there’s no choice right now.”
Written comments on the application are due by Nov. 14 and a public hearing to receive testimony on Dominion’s Tariff is scheduled for Nov. 21.