Category Archives: Economy

Cold Weather Excuses and Financial Realities


Cold snap brings hot PR,” says Doug Wellman’s letter to the January 18, 2018 Nelson County Times. “Recent cold snap fuels argument in favor of Atlantic Coast Pipeline,” says the news story in the same issue.

Aaron Ruby, Dominion’s ever-present ACP cheerleader, wants to convince us that our recent cold weather is a justification for the ACP, telling us the cold “demonstrated in dramatic fashion the real and urgent need for the Atlantic Coast Pipeline.” Ruby says that because they used more electricity and gas to run heating systems, customers will see higher utility bills. Yes, we may see higher utility bills for January, but that doesn’t justify the immense long-term cost of the ACP ($2.3 billion more than existing sources, according to the Southern Environmental Law Center) which will be passed to Dominion customers – on every month’s utility bill for years to come.

Ruby cites “severely limited capacity” of existing pipelines serving Virginia and North Carolina as the cause for a spike in gas costs passed on to customers. Yet in the same article, Chris Stockton, spokesperson for Williams Partners, which operates the Transco System that Dominion relies on, said the pipelines “performed remarkably” during the cold weather. “We were able to meet all of our firm capacity contracts. The system delivered a record amount of gas,” said Stockton, noting that the system delivered about 10 percent of the natural gas consumed in the country on that day, Jan. 5. “It’s an incredible accomplishment. It’s a testament to the system that we have.”

In his letter to the editor, Wellman reminds us that, “Ruby fails to mention that, if the ACP is built, its captive ratepayers will be paying for it for decades. So the question for consumers is whether to pay now — $5 billion to $6 billion direct cost of construction plus Dominion’s 14 percent return on equity — or to pay later if and when there are short-term spikes in gas prices.

“There are good reasons to opt for the ‘pay later’ approach. If producing electricity is the main reason for the ACP proposal, as Dominion officials claimed when they announced their plan, there is ample pipeline capacity now and more is coming. Independent analyses have shown that existing pipelines have sufficient capacity until 2030. Later this year, modifications of the huge Transco pipeline serving the East Coast are scheduled to be completed, thereby greatly expanding available supplies well before the ACP would become operational.

“More broadly, Dominion’s relentless push to build the ACP runs against the global tide — a shift in energy production from fossil fuels to renewables. This shift is necessitated by the threat of devastating climate change and facilitated by the falling cost of solar and wind energy, both of which have reached or are approaching parity with natural gas. Rather than being a bridge to the future, gas is becoming an anchor in the past.

“If the ACP were truly in the public interest, Dominion would be stating its case directly and openly, rather than relying heavily on politics and PR. Building the pipeline truly is not for ‘public use and necessity,’ but just another instance of public pain for private gain.”

Fossil Fuel Divestment II

In a January 1, 2018, post we discussed the news release from Governor Andrew Cuomo’s office announcing that New York was going to divest its vast pension-fund investments in fossil fuels and an almost simultaneous statement from the comptroller of the city of New York that the city was actively investigating methods for “ceasing additional investments in fossil fuels, divesting current holdings in fossil-fuel companies, and increasing investments in clean energy.” The NY state pension fund totals two hundred billion dollars, making it one of the twenty largest pools of money on Earth, and the city’s pension funds add up to a hundred and ninety billion dollars, also in the top twenty.

On January 11, 2018, The Guardian reported that on January 10 New York City leaders, “at a press conference in a neighborhood damaged over five years ago by Hurricane Sandy, announced that the city was divesting its massive pension fund from fossil fuels, and added for good measure that they were suing the five biggest oil companies for damages. Our planet’s most important city was now at war with its richest industry. And overnight, the battle to save the planet shifted from largely political to largely financial. …. Smart money has been pouring into renewables; dumb money has stuck with fossil fuel, even as it underperformed markets for the last half-decade. Just two months ago Norway’s vast sovereign wealth fund began to divest, which was a pretty good signal: if even an oil industry stalwart thought the game was up, they were probably right.”

In addition to divesting $5 billion in their funds from fossil fuels, Mayor Bill de Blasio announced that the city had just filed a lawsuit against major five fossil fuel firms – BP, Exxon Mobil, Chevron, ConocoPhillips and Shell – for their contributions to climate change, saying they “knew about its effects and intentionally misled the public to protect their profits.”

According to a January 10 Guardian article, “Court documents state that New York has suffered from flooding and erosion due to climate change and because of looming future threats it is seeking to ‘shift the costs of protecting the city from climate change impacts back on to the companies that have done nearly all they could to create this existential threat.’ The court filing claims that just 100 fossil fuel producers are responsible for nearly two-thirds of all greenhouse gas emissions since the industrial revolution, with the five targeted companies the largest contributors. The case will also point to evidence that firms such as Exxon knew of the impact of climate change for decades, only to downplay and even deny this in public. New York’s attorney general, Eric Schneiderman, is investigating Exxon over this alleged deception.”

Writing in The Intercept on January 11, 2018, Naomi Klein says, “Now, with New York City’s lawsuit for climate damages, the market is confronting the prospect of a cascade of similar legal actions — cities, towns, and countries all suing the industry for billions or even (combined) trillions of dollars in damages caused by sea-level rise and extreme weather events. The more suits that get filed, the more the market will have to factor in the possibility of fossil fuel companies having to pay out huge settlements in the near to medium term, much as the tobacco companies were forced to in past decades. As that threat becomes more credible, with more players taking New York City’s lead, the investor case for dumping these stocks as overly high risk will be strengthened, thereby lending a potent new tool to the fossil fuel divestment movement. A virtuous cycle. Oh, and the more we are able to hit the industry in the pocketbook, the less likely costly new drilling and pipeline projects will be to go ahead….”

Pipe Dreams

A new study, Atlantic Coast Pipeline:  Economics and Manufacturing Jobs, by the Applied Economics Clinic at Tufts University, looks at repeated claims by project proponents that new interstate natural gas pipelines like the Atlantic Coast Pipeline (ACP) or Mountain Valley Pipeline (MVP) will: (1) save consumers money relative to alternative energy sources; and (2) lead to new manufacturing jobs.

Bottom line: The claims are all hype.

The study was commissioned by the Natural Resources Defense Council and, following its December 5, 2017, release, was analyzed on both the NRDC Web page and by Blue Virginia.

The key findings of the independent study demolish all Dominions claims about economic development and new jobs:

  • The ACP will cost rather than save money for customers: “Dominion claims that the ACP will save consumers money by supplying the region’s power producers with shale gas, even accounting for the additional cost to transport the gas from farther away…In fact, testimony using Dominion’s own, more recent cost projections concludes that Dominion’s customers may actually pay $1.61 to $2.36 billion more with the ACP than without the ACP over the next 20 years.”
  • There is no need or demand: “Dominion and its pipeline partner Duke Energy (Duke Energy Carolinas and Duke Energy Progress) have lowered forecasted demand by 15,468 GWh in 2025 since the ICF report was released. This reduction in future energy load reflects a reduced need for new natural gas combined cycle generating capacity, and a corresponding reduction in demand for natural gas…. These lower utility demand forecasts would eliminate the need for a large amount of new natural gas generating capacity and avoid 375 million cubic feet per day of natural gas delivery.”
  • Pipeline-induced job growth is a myth: “Recent evidence from states with new natural gas pipeline capacity shows no support for the conclusion that the addition of new pipelines leads to additional opportunities for new manufacturing jobs in those states. There is no clear support for the claim that the ACP would lead to additional opportunities for new manufacturing in the region, and this is likely the case for other new natural gas pipelines such as the Mountain Valley Pipeline.”
  • It’s even possible we’ll LOSE manufacturing jobs with the ACP. “Seven states with additional pipeline capacity saw both falling electricity prices and losses to manufacturing jobs, including Virginia, one of the states in which the ACP and MVP would deliver natural gas. West Virginia—a major natural gas producer and the origin for a number of new natural gas pipelines including the ACP and MVP—has experienced increased electricity prices coupled with losses in manufacturing jobs in the state.”  [See the recent opinion column by Tom Perriello and Alex Laskey discussing the ways Virginia lags behind our neighbors when it comes to advanced energy, a sector that supports 3.3 million American jobs, while the job growth in energy efficiency and clean energy is projected to outgrow the rest of the economy several times over.

Needed Scrutiny of the ACP

Needed scrutiny of the Atlantic Coast Pipeline, the December 4, 2017, editorial in the Raleigh NC News and Observer says it all:

“The Atlantic Coast Pipeline will face many hurdles from gaining permits to burrowing through 600 miles of terrain from West Virginia through Virginia and North Carolina. But its biggest obstacle may be time. The project is already more than a year behind schedule and now faces further delays as it waits for environmental permits. The project’s backers don’t like it, but the delays are a helpful test. If the project is truly needed, time should make that clearer. If it’s not – as many argue – then time will reveal that as well. …. There’s no doubt North Carolina needs reliable sources of energy, but there is doubt about whether it needs a massive new pipeline carrying natural gas from fracking operations in West Virginia and Pennsylvania. Whether it does will become clearer as DEQ and the public has time to assess the environmental and economic impacts of the Atlantic Coast Pipeline.”

We hope the Virginia DEQ & Water Control Board take heed of North Carolina’s caution: ask the questions now so your negligence doesn’t cause disaster later.

Hiring Impact Called Short Term

A November 18, 2017, article in the Buckhannon WV Record Delta is titled “Pipeline starting April 1.” It begins, “Construction on the Atlantic Coast Pipeline project is expected to begin on April 1, 2018, and that is not an April Fool’s joke. Mike Cozad, a third-party contractor for ACP, came to the Upshur County Commission’s weekly meeting Thursday to provide commissioners with a timeline and update on the building of the 42-inch, 600-mile natural gas pipeline that will extend from Harrison County, West Virginia to Robeson County, North Carolina.”

The article notes that out-of-state people working for the ACP or it’s contractors are already arriving, as the vanguard of the expected influx in March 2018. “In the latter part of March, you’ll see a whole lot of people coming in here and getting set up with the anticipated start date (of construction) 1 April 2018. Prior to that, we will be dropping trees, but that’s a much smaller impact – they’re just going out, felling the trees and moving on. …. Each construction spread will be 400 to 600 people, depending on the contractor.”

Also at the County Commissioner’s weekly meeting was April Pierson-Keating, a member of Mountain Lakes Preservation Alliance. She pointed out “a few things that might counter the rosy picture that Dominion (ACP) is painting of this project. There are numerous permits that this pipeline still needs. The certification from FERC (Federal Energy Regulatory Commission) is being challenged by several community groups and then lawyer groups that are helping them take the case.”

She reminded the Commissioners (and Mr. Cozad) that North Carolina’s Department of Environmental Quality has not yet issued Section 401 Water Quality Certification to ACP, and that ACP/Dominion contractors won’t necessarily hire Upshur County workers, but rather, employees from other counties in West Virginia or elsewhere. And, she said, “We believe that the tax money that is going to be coming in and the few jobs that are going to be going to West Virginians are offset by lower property values, damage to the water and long-term damage to our economy in terms of tourism and other things. I’m not asking you to do anything today. I’m just trying to provide a counter and a balance to the happy-dappy, rosy picture and also to let you know that there are a lot of permits outstanding, there are hearings and trials coming up, so the timeline they expect may be pushed back.”

Mr. Cozad, the contractor for the ACP, actually agreed that most benefits would be short term, saying, “The bigger impact is going to be short term, of course, while construction is going on. There will still be some long-term jobs, but she’s correct that the number’s probably not that much. They are intending to hire as many local people as possible. They may come from other counties, but they are, in my mind, local people.”

Few local jobs, especially few long-term jobs – just as we’ve been saying here in Virginia!