Barry DuVal: EPA Saps Virginia’s Energy
November 15th, 2014

Barry DuVal: EPA Saps Virginia’s Energy

For the past four decades, Virginians have invested heavily in clean energy. Unfortunately, a draft regulation from the U.S. Environmental Protection Agency released in June threatens to create a competitive disadvantage for Virginia relative to its neighboring states.

We have four nuclear units in Virginia that produce virtually no air emissions of any type, some of the most modern power plants in the nation, significant amounts of renewable biomass generation, the world’s largest hydro pumped storage facility, and low overall emissions compared to other states.

We have managed to do this while maintaining electricity rates well below the national average. This is an enviable record and one that Virginia’s business community very much wants to keep in place: clean energy and low electricity rates.

The EPA’s so-called Clean Power Plan sets individual state limits on emissions of carbon dioxide from power plants and directs large amounts of expensive renewable generation and energy-efficiency programs. The plan is designed to replace coal as the chief source for electricity generation, with increased use of natural gas, renewable power and energy-efficiency measures.

The emissions plan will have wide-ranging effects on utilities, forcing changes that will upend models used for a century for generation and distribution of electricity. The EPA assigns Virginia a state emissions limit that is more stringent than any of our neighboring states, and more stringent than our key economic competitors such as Ohio, Georgia and Pennsylvania. For example, Virginia’s goal under the draft regulation is twice as stringent as West Virginia’s and nearly 50 percent more stringent than Maryland’s.

The North American Electric Reliability Corporation (NERC), the organization charged with protecting America’s power supply, has recently warned that the EPA’s power plant proposal would threaten the nation’s electric reliability.

The staff of the Virginia State Corporation Commission, the independent state agency responsible for regulating utility rates, estimates that the Clean Power Plan could cost Dominion Virginia Power customers alone $5.5 billion to $6 billion. There may be billions of dollars more in costs for customers of the commonwealth’s other power companies.

What is really concerning to me is that the SCC staff says that is a conservative estimate — the costs could be substantially higher, particularly if utilities have to retire relatively modern power plants well before the end of their useful life.

The SCC staff notes that EPA assumes Virginia will adopt certain policies, such as mandatory renewable portfolio standards and mandatory energy efficiency standards. The true costs of these “mandatory” actions is far from clear, but it is worth noting that these policies are employed by states to our north that also now have substantially higher power prices.

The staff also notes that EPA’s goal for Virginia sets a tougher goal for existing power plants than for brand-new ones, a very unorthodox approach to environmental regulation. No one would seriously propose that a 20-year-old car should have to have lower tailpipe emissions than a new one, but that is exactly what EPA is proposing for Virginia.

As the SCC staff notes, Virginia customers have already paid for significant investments in cleaner energy and received only minimal credit for them under the draft EPA regulation. For example, 41 percent of the power generated last year by Dominion came from its carbon-free nuclear plants. Virginia receives little credit for this vast amount of clean energy.

Similarly, Virginia utilities have made significant investments in adding environmental controls to their coal-fired power plants. Rather than being rewarded, they are threatened by this new proposed EPA regulation.

It is important that Virginia businesses and public officials insist on more equitable treatment for our state under this rule. At the same time we fight for more equitable treatment in Washington, it is important that we chart our own destiny here in Virginia.

For example, we should consider ways to invest in electric reliability and promote the continuation of our rate advantage. Modern power stations improve reliability and the environment while creating jobs, and they provide more stable prices than relying on purchasing power from volatile energy markets.

As always, Virginia businesses stand ready to do their share to maintain a clean environment, just as we have for decades. However, we should not carry a disproportionate burden.

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