Category Archives: Economy

Everybody Loses

In his January 2020 report, Why Support for the Atlantic Coast Pipeline Adds Risks to Shareholders and Ratepayers, Tom Hadwin, a former utility company executive and a member of the Steering Committee of the Allegheny-Blue Ridge Alliance, clearly explains why both stockholders and customers are losers in the Atlantic Coast Pipeline should be built.

His Executive Summary states:

  • Continued efforts to complete the Atlantic Coast Pipeline (ACP) are fraught with risks.
  • A huge surplus of generating capacity exists within the region. S&P Global Market Intelligence says we have a glut of gas-fired generation. The surplus capacity in the PJM region is growing and will last past 2050.
  • About 80% of the capacity of the ACP was reserved for new power plants. Large gas-fired facilities, once thought necessary when the pipeline was proposed, have been cancelled or significantly postponed.
  • Existing pipelines serving Virginia and the Carolinas have already increased in capacity by more than what the ACP would provide.
  • Our region has access to all the gas we need without the Atlantic Coast Pipeline.
  • Rather than saving us money, the ACP will add tens of billions of dollars to our energy costs in just 20 years.
  • Utility customers will be asked to pay in full for the capacity reservations on the ACP whether all of it is used or not.
  • The full report expands on these points, and also provides a summary of the ACP’s revoked permits and legal obstacles.

Reminding us that numerous recent articles document over and over a long-term glut of natural gas-fired power plants, a long-term glut in natural gas supplies, and a decreasing demand for natural gas, Hadwin says, “There is no reason to burden families and businesses in Virginia and North Carolina with more than $30 billion in added energy costs for an unnecessary pipeline.”

He concludes, “To embrace the future, our energy companies must cut the chain that ties them to the outdated business model that keeps their thinking confined to the options that worked well in the 20th century. They can embark on that new path by cutting loose the Atlantic Coast Pipeline. New opportunities arise when tough decisions are made.”

New Paper Underscores Lack of Need, High Risks of the ACP

The following announcement from the Allegheny-Blue Ridge Alliance (ABRA) appears in their ABRA Update 261 for January 30, 2020.

“Continued efforts to complete the Atlantic Coast Pipeline (ACP) are fraught with risks” to investors, ratepayers and those who live along the route of the ACP, according to a new paper released January 30 by ABRA. “Why Support for the Atlantic Coast Pipeline Adds Risks to Shareholders and Ratepayers” is authored by Thomas Hadwin, a former utility executive who is a member of ABRA’s Steering Committee.

Hadwin points out that since 2014, when the ACP was proposed, existing pipelines serving Virginia and the Carolinas have increased in capacity more than the ACP would provide. The paper explains that the cost for Dominion subsidiaries to use gas from the ACP would be over four times as expensive as gas transported by the Transco system, where sufficient capacity exists. The same would be true for Duke Energy’s subsidiaries.

Describing the environmental risks associated with the project, the paper notes that over 150-miles of the ACP route – one-fourth its length – would traverse terrain that is landslide prone. ABRA will be releasing next month a study on the landslide threat to pipelines built through the central Appalachian region. The paper concludes: “We have an overabundance of gas-fired generating capacity and gas transmission pipeline capacity. The Atlantic Coast Pipeline is not a solution. It is part of the problem.

Support Virginia’s HB 167

Please ask your delegate to support HB 167. The bill would require electric utilities who want to expand their capacity to deliver fuel and then recover the costs from their customers to prove that: 1) additional capacity is needed, 2) both the amount of additional supply and its delivery date are clearly identified, 3) alternatives have been objectively studied, and 4) the new source is the least expensive option. If HB 167 were to become law, it would cut down on the number of costly, dangerous and unnecessary pipeline projects like the Atlantic Coast and Mountain Valley pipelines.

Click here for detailed information on the bill and to follow its progress.

Click here to find your legislators and their contact information.

In addition to contacting your own legislators, the League of Conservation Voters suggests it would be useful to contact the following key legislators and tell them you support HB167:

New Study: Charitable Gifts by Utilities Used to Win Public Support

In a first-of-its-kind analysis, the Energy and Policy Institute has examined the charitable contributions of 10 leading investor-owned electric utilities in the U.S., finding that all of these major utilities use charitable giving to manipulate politics, policies and regulation in ways designed to increase shareholder profits, often at the expense of low-income communities whose communities are more likely to bear the brunt of climate impacts and suffer higher levels of air pollution.

Strings Attached: How utilities use charitable giving to influence politics and increase investor profits, finds that:

  • From 2013 to 2017, EPI estimates that the 10 utilities that we assessed – Ameren, American Electric Power, Arizona Public Service, Dominion Energy, DTE Energy, Duke Energy, Entergy, FirstEnergy, NextEra Energy, and Southern Company – gave approximately $1 billion to charitable organizations
  • That number, for just 10 companies, is 13 times greater than the $78 million that the entire utility sector – including political action committees and individual employees – contributed to federal elections in the 2014, 2016, and 2018 cycle
  • Much of the utilities’ charitable activity is geared explicitly to influence politics
  • Organizations who received contributions from the utility companies engaged in political activities on the companies’ behalf without disclosing that reality publicly
  • Utilities use charities to extort support from low-income communities and communities of color
  • These companies spend millions of dollars, earned from captive customers, to prosecute their political arguments, and have the resources to employ fleets of lobbyists and lawyers to represent them at public utility commissions and state legislatures.

Why Do We Need It?

In December 2018, Virginia’s State Corporation Commission rejected Dominion Energy Virginia’s proposed Integrated Resource Plan, finding that Dominion’s forecasts “have been consistently overstated, particularly in years since 2012, with high growth expectations despite generally flat actual results each year.” S&P Global, in their December 4, 2019 article, Overpowered: In Virginia, Dominion faces challenges to its reign, goes on to say that, “electricity demand in Virginia grew less than 1% from the Great Recession of 2007-2008 through 2017, according to the U.S. Energy Information Administration, and is projected to remain essentially flat for at least the next decade. In an era of little to no demand growth, when it is already removing plants from service long before their planned retirement dates, Dominion continues to add thousands of megawatts of new gas-fired capacity. And since it is a regulated monopoly, the company continues to pass the costs of those plants along to its customers.”

The S&P Global also notes, “An examination of SCC records, Dominion’s past integrated resource plans, campaign finance documents and independent reports, along with interviews with utility analysts and environmental advocates and statements from Dominion officials, shows that the company has consistently over-forecast electricity demand to justify building new capacity, primarily natural gas plants with dubious economics that will ultimately be paid for by ratepayers.”

A day after publication of the S&P article, it is interesting to read in Utility Dive’s article, Dominion suspends plan to add 1.5 GW of peaking capacity as Virginia faces gas glut, that “Dominion Energy on Wednesday announced it suspended a request for proposals (RFP) that targeted up to 1,500 MW of dispatchable peak capacity in its Virginia territory, which observers said would have likely resulted in natural gas additions. Announced in November, the utility said the RFP aimed to replace retiring generation and provide system balancing needs as more renewables are added onto the grid. Dominion said it may reissue the RFP in the future, if it determines the capacity is needed. The utility’s announcement follows reporting from S&P Global that the company has been over-forecasting its demand for years in order to justify spending on new natural gas facilities.”

So if electricity demand is over-forecast, Virginia faces a power glut, and Dominion is pulling back from building additional gas-fired power generation plants, why is it we need the Atlantic Coast Pipeline?

“Heads Must Be Exploding in the Board Rooms”

In an update posted on September 18, 2019, the Institute for Energy Economics and Financial Analysis (IEEFA) discusses low natural gas prices now and going forward. They say, “With the news from IHS Markit that natural gas prices in the United States will drop below $2 MMBtu in 2020 and remain low through at least 2024, if not longer, heads must be exploding in the board rooms of oil and gas producers throughout the U.S. and Canada. The profit picture is now imploding. The ramifications run deep, far and wide. The mantra that more pipelines will rationalize the market has been upended. This view from the oil and gas industry never made sense. As IHS Markit makes clear, new pipeline capacity contributes to an oversupply of natural gas forcing down prices and profits.”

The IEEFA update is based on a new forecast from IKS Markit, a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The update notes that:

  • New pipeline capacity contributes to an oversupply of natural gas forcing down prices and profits.
  • Smaller exploration and production companies, already suffering, are likely to continue to fail.
  • The oil and gas equipment and supply sector will worsen.
  • The global market remains oversupplied, with limited profit potential on the export side. Increased exports from the U.S. will deepen the oversupply.

In a September 18 article, OilPrice says, “While gas has become the primary source of electricity production, technological advancements are about to make fossil fuels more expensive and therefore uneconomic compared to renewables. The tipping point could come much sooner than certain utilities and investors are expecting, which could hit current investment plans for gas-fired power plants.”

Read the IHS Markit press release here, read the IEEFA update here, and read the OilPrice article here.

Despite the continuing predictions of the decreasing demand for fossil fuels and the explosive increase in both demand and capacity for renewables, Dominion continues its efforts to build the unnecessary Atlantic Coast Pipeline. On September 25, 2019, Maplight and the Huffington Post discussed “The $109 Million Lobbying Effort To Run A Pipeline Through National Treasures.”

Maplight says, “A trio of utility giants building a natural gas pipeline that would cut across the Appalachian Trail has spent more than $109 million lobbying federal lawmakers and officials since the $7.8 billion project was unveiled five years ago, according to a MapLight analysis. The controversial 600-mile-long project, which is being compared to the Dakota Access Pipeline because of its stiff opposition from Native and local communities, would bisect the fabled trail, as well as the Blue Ridge Parkway and a pair of national forests. Appeals courts have thrown out seven separate permits for the project, with sentiment running so high that one judge wrote an opinion using a quote from The Lorax to blast the U.S. Forest Service for its failure ‘to speak for the trees, for the trees have no tongues.’ Despite the setbacks, the utilities have continued to press their case, hoping the rulings can be overturned by the U.S. Supreme Court or Congress.”

On other words, Dominion is pushing hard to build a pipeline that industry analysts say is well on its way to being both unneeded and outmoded.