Category Archives: Economy

Economic Blows to ACP

According to the February 18, 2019, Rocky Mount Telegram, Moody’s Investors Service has changed its rating of the proposed Atlantic Coast Pipeline “to credit negative due to the project’s latest increases in costs and delays in construction. ‘As cost estimates continue to rise and as the completion date is pushed further out, Dominion’s path for financial improvement is starting to look more uncertain,’ said Moody’s Vice President Ryan Wobbrock. When investors begin to sour on big construction projects, the collapse comes into view, said Jim Warren, executive director of N.C. Warn, a Durham-based environmental watchdog group. ‘This project is $3 billion over budget yet construction had barely begun when it’s been halted for many months,’ Warren said. ‘My guess: 30 percent chance it’ll ever be completed.'”

A few days earlier, S&P Global reported on February 14, 2019, that “On its earnings call, Duke executives expressed concern over litigation and permit delays of one of its biggest projects, the planned 600-mile Atlantic Coast Pipeline. Analysts were told that the company hopes it can resume construction of the line in the fall when it will pursue a phased schedule, with the first phase of the line in service by late 2020 and the second in 2021. The estimated cost of the pipeline has risen to $7.8 billion from $7 billion, Duke Energy chairman and CEO Lynn Good told the analysts.”

The $7.8 billion mentioned by S&P is a new high for the ACP projected cost. Recently mentioned estimated costs had been $7 billion, up from the original $4.5-$5 billion estimated by Dominion in 2014.

Three Fine Letters

Three fine letters in the January 31, 2019, Nelson County Times address a January 24 article (an article not a letter) supporting the Atlantic Coast Pipeline, saying “saying it will bring jobs to younger generations and create revenue to ensure the county continues.”

In Dominion’s job-creation myths, Joe Madison points out that by Dominion’s own admission there will be no meaningful post-construction pipeline jobs in the county, and almost all of the construction jobs will be held by out-of-state workers who travel the length of the line.

In Pipeline a thing of the past, Jane Twitmyer cites Bloomberg data to show the ways that the ACP will keep Virginia in the past rather than allowing the commonwealth to move forward into a future with a modern energy system.

Finally, in ACP can’t deliver on promises, Helen Kimble, President of Friends of Nelson, says, “Atlantic Coast Pipeline opponents and our neighbors who support the project share at least some of the same goals. Like the proponents, those who oppose the project also want a healthy county economy that provides good jobs and enables the young people who want to stay in Nelson to do so. However, we differ strongly about how to achieve those goals. We view the ACP as a threat to one of the state’s fastest growing rural economies.”

Kimble quotes Dominion data saying there would be 271 jobs spread over three states during the planned six-year development and construction phase, and many of those, as well as all of the construction jobs, would go to out-of-state contractors with special skills. If the ACP is built, Wintergreen will not build its planned hotel and conference center, nor would developers build Spruce Creek Resort and Market – immediate proximity of the ACP to both projects would kill them. “Taken together, the Wintergreen hotel and Spruce Creek resort represent $75 million in investments, $23.5 million to $32 million in annual revenue and at least 250 new full-time tourism jobs, according to Friends of Wintergreen. For Nelson’s younger generation, those jobs could help them develop their business skills and gain entry into the worldwide, multi-billion dollar tourism industry.”  During construction, “some motels, gas stations, speedy marts, dollar stores and fast food places would get a temporary boost in their businesses, but that boost is small compared to the revenue from a single week during a good ski season.”

Kimble notes the expensive damage to roads by construction vehicles (who would pay to repair?) and the ever-present danger of pipeline failure. “In 2018 alone, 12 gas pipelines ruptured nationwide. In at least two cases, brand new pipelines failed because of soil movement following heavy rains. With the ACP route traversing Nelson’s steep slopes, there is a good chance that something similar could happen here.”

She concludes, “Building the ACP is not the right way to reach the goals its proponents seek. The ACP is an economic loser and environmental threat for Nelson County.”

Read all three letters here.

The Vanishing Need for the ACP

Oil Change International and the Institute for Energy Economics and Financial Analysis have issued a new report, The Vanishing Need for the Atlantic Coast Pipeline, discussing the growing risk that the pipeline will not be able to recover costs from ratepayers.

Reminding readers that the cost of the project has increased dramatically above initial projections (from $4.5-$5 billion to now $7 billion), the report says “cost overruns are not the only challenge faced by the project. The biggest threat to the project’s profitability may come if and when the project is ever completed. The demand outlook for gas has changed dramatically since the project’s inception and much of the project’s original justification has evaporated. Indications are that the project’s affiliated utility customers may struggle to convince state regulators to pass the full cost of pipeline transportation agreements through to utility customers. Indeed, the project does not represent good value to the ratepayer.”

The report recommends “questions investors could be asking management in order to obtain a clearer view of the project’s value.”

Key findings in the report include:

  • Six companies, all of whom are regulated utility affiliates of the pipeline’s sponsors, have contracted for 96% of the pipeline’s capacity.
  • Atlantic Coast Pipeline, LLC will recover the costs of the pipeline through rates charged to the pipeline’s customers. Given that the vast majority are regulated utilities, these costs will have to be approved by state utility regulators in Virginia and North Carolina.
  • Electric utility subsidiaries of Duke and Dominion in Virginia and North Carolina have contracted for 68% of the pipeline’s capacity. Yet, the argument by these utilities that they need new natural gas pipeline capacity has been significantly weakened since the ACP was first proposed.
  • In its most recent long-term Integrated Resource Plan (IRP), four out of five of Dominion’s modeled scenarios show no increase in natural gas consumption from 2019 through 2033.
  • Dominion’s 2018 IRP was rejected by Virginia state regulators, in part for overstating projections of future electricity demand. This implies that future natural gas consumption will likely be even less than forecasted in the IRP.
  • The most recent IRPs of Duke Energy Progress and Duke Energy Carolinas show that previously planned natural gas plants have been delayed further into the future. We also find that Duke also has a history of overstating its forecast of electricity demand.
  • Over the next decade, it is likely that the demand for natural gas in Virginia and North Carolina will be further eroded as renewable energy and storage technologies continue to rapidly decline in price.

Download the full report here.

“Leaking Serious Oil”

“Forgive the imagery (and the irony), but the Atlantic Coast Pipeline (ACP) is increasingly looking like an old automobile in need of a valve job – it is leaking serious oil, suffers by comparison to newer, more advanced models, and even if it can be made roadworthy, you and I will pay the bill for decades.” So says State Representative David Toscano in his blog post on January 2, 2019.

He goes on to describe how what “was first presented about future energy needs requiring the building of this massive new pipeline has been undercut by developments over and over again.” Specifically:

  • “recent testimony before the State Corporation Commission (SCC), critics utilized Dominion Energy’s own data to show that the ACP could increase ratepayer bills as much as $2.3 billion over the life of the project”
  • legal challenges continue, leading to several stays and lawsuits
  • “the energy landscape has changed dramatically in the last few years. Renewables are increasingly competitive with fossil fuel generation”
  • “As costs of renewables have declined, electricity usage remains relatively flat, thereby raising questions about the need for larger pipelines. Though not related exclusively to the pipeline, the SCC recently directed Dominion to refile its Integrated Resources Plan (IRP), largely because the company’s projections of ‘peak load and sales forecasts’ were unjustified by the data, and ‘have been consistently overstated.'”
  • “we now know that Dominion’s existing long term pipeline contracts, mostly with the Transcontinental Gas Pipeline (Transco), can deliver enough gas to existing power plants and even those that may be built in the future”

He concludes that, “there is a need to replace our aging and increasingly decrepit thermal generation fleet (coal, gas, and nuclear power plants), and natural gas remains cheaper and certainly less toxic than coal.” BUT – “As we transition to a carbon-free future, the Commonwealth obviously wants to avoid unacceptable disruptions or major rate spikes. Consequently, there may be a need for some small gas interconnectors (particularly in the Tidewater region) to overcome regional pipeline congestion, and likely some hard choices about pipelines and transmission lines will remain for some time. But those choices do not mean we need to embrace a pipeline as massive as the Atlantic Coast Pipeline. This behemoth is ‘leaking oil’ and, like that old car, is no longer worth the investment needed to keep it going.”

Read Toscano’s full statement here.

Virginians Pay More for Energy Than They Should

A new report from Clean Virginia shows that because Dominion and APCO are shifting more than $700 million in excess profits and costs onto ratepayers, Virginians pay more on their energy bills than they should. The report, The Dominion Tax: How Virginians Pay Millions Extra to Subsidize Dominion’s Legalized Corruption, explains how Dominion and APCO charge their ratepayers not only for energy use and delivery but also to subsidize excess corporate profits, executive pay, lobbying, campaign contributions, and more. The extra charge averages out to about $254 annually per Dominion ratepayer and $89 per APCO ratepayer, including households, businesses, and industry. Dominion and APCO between them provide service to more than 8 in 10 Virginians.

The report includes proposals for ways Virginia legislators and government agencies can curb Dominion’s outsized influence in Richmond and eliminate excess charges to utility customers.

Virginia Has a Pipeline Problem

On November 2, 2018, the Washington Post published on its website an op-ed by former Virginia Attorney General Ken Cuccinelli, a Republican and a conservative – an op-ed opposing Dominion Energy’s Atlantic Coast Pipeline project. In Virginia Has a Pipeline Problem, Cuccinelli, who was Attorney General from 2010-2014, says he is not opposed to natural gas pipelines, and is not opposed to eminent domain for “appropriate and necessary projects. But I am opposed to captive monopoly customers shouldering the cost and risk of Dominion projects that are rubber-stamped without anyone at any level asking whether the pipeline provides value to Virginians.”

He points out that every Dominion customer in Virginia will “pay hard cash for this unneeded project when the utility bill shows up, thanks to a poorly regulated monopoly scheme that Dominion and its political cronies have constructed.”

He reminds readers that “Dominion Energy Virginia testified before the Virginia State Corporation Commission in September that the company has not analyzed how much the Atlantic Coast Pipeline will cost its customers. That answer is, frankly, shocking, especially after a non-Dominion expert testified that the pipeline would raise power bills by $2.5 billion over the next 20 years. Dominion intends to charge its customers for all of its Atlantic Coast Pipeline contract costs, regardless of whether it actually uses the pipeline.”

And he says, “From my view as a former Virginia attorney general, the process that allows Dominion to do business this way is broken, and Virginia consumers will be left holding the bag.”

Read the full Cuccinelli op-ed here. It will appear in the print edition of the Washington Post on Sunday November 4, 2018.