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Experts Predict the Price of Power Will Rise


The State Corporation Commission or SCC is supposed to make sure electric rates charged by utilities are fair and reasonable. Last month it held hearings on Dominion’s plans to supply power for the next 15 years.  The company offered five different scenarios, combining various amounts of nuclear energy, gas, solar and wind power. Whichever one Dominion  settles on, some experts say customers will be paying more. 

Northern Virginia is a magnet for data center with a dense intersection of fiber networks underground serving the federal government.  They’re the fastest growing sector of Dominion sales, and they want more green energy – solar and wind.  Ceres, a nonprofit sustainability group, speaks for five of them. Adobe, Akamai, E-Bay, Equinix and Sales Force were the signatories to the letter that was submitted to the State Corporation Commission, according to Ceres’ Alli Gold Roberts.  That letter begged the state to require more renewable energy from Dominion.

"Four of the companies have 100% renewable energy goals,” she explains, “and one has a 50% renewable energy goal."

Dominion spokesman Rayhan Daudani says all five scenarios outlined by the utility include a big increase in solar generation, which is now cheap enough to compete with coal and gas.

“In some cases solar is beating out some of those other resources. Solar – because it is intermittent – does require us to have other forms of generation.”

The company could invest in batteries to back-up solar at night and on days when the sun doesn’t shine.  Their costs are falling while capacity is rising.  Instead, Dominion proposes construction of at least eight new power stations that would burn natural gas – and a pipeline that might supply them.  Spokesman Aaron Ruby says gas would mean low prices for customers.

“We currently are heavily reliant on Gulf Coast supplies of natural gas in Virginia.  We have very limited access to much lower cost natural gas that’s available in the nearby Appalachian Basin, and the Atlantic Coast Pipeline is going to bring new, lower-cost supplies of natural gast to Virginia.”

But Tom Hadwin disagreed in testimony to the State Corporation Commission. He was an executive with gas and electric companies in New York and Michigan before retiring to Virginia. Right now, he says, gas from West Virginia is especially cheap, but those low prices won’t last.

"If you don’t have enough pipelines to get your gas to market, the only way people will buy it is  it’s cheaper.  Twenty-five new pipelines are going into that region between this year and next."

And when this country starts exporting gas, he adds, the price could go even higher.

"In Australia they’ve been exporting gas for ten years.  Their domestic gas prices went up 300-400%."

Hadwin points out that ratepayers would also be forced to cover the cost of the pipeline and provide Dominion shareholders with a profit --  a 14% rate of return on construction, That – critics say – is the real reason the pipeline is being built. Spokesman Aaron Ruby says that claim is untrue and unfair.

“Tens of thousands of Virginians, including many of your listeners, have entrusted our company with their hard-earned money by purchasing our stock, to help them create wealth to pay for their children’s college tuition, to save for retirement.  We have an obligation to be good stewards of their money and to invest their money wisely,” he says.

And he insists the pipeline is needed.  During the polar vortex, for example, there wasn’t enough capacity to fully supply Hampton Roads.

“To be able to keep homes and hospitals warm, public utilities had to shut off natural gas service to hundreds of major businesses across the region for several days at a time. Over a two-week period, from the end of December until early January natural gas prices in Virginia and North Carolina skyrocketed by 5000%.”

The State Corporation Commission says the price spike only applied to the spot market – a place where utilities go to supplement main gas supplies already purchased at a fixed price, so customers did not see a big bump in their bills, and those businesses had signed up for interruptable service – paying lower rates with the understanding that they might, at times, be unable to get fuel.  The SCC is expected to issue its thought on Dominion’s 15-year plans early next year.

Sandy Hausman is Radio IQ's Charlottesville Bureau Chief