A Dominion Energy report finds that the company’s largely coal-fired Virginia City Hybrid Energy Center in Wise County is economically viable, but critics say it lacks substantive, in-depth analysis to back its claims that the economic and environmental Benefits of the facility justify a continuation of the current operations.
Dominion submitted it 28-page report as part of an agreement reached earlier this year with the State Corporation Commission and the Virginia chapter of the Sierra Club, which argued the plant should close next year. The company’s own calculations, the chapter said, found the plant will cost taxpayers nearly $500 million by 2030 to operate while it produces just 6.3% of the energy it can generate.
As part of the agreement, Dominion agreed to “continuously complete an analysis of a possible path to commercial viability” for VCHEC.
Dominion agrees to study the viability of the Wise Power Plant, which doesn’t produce much electricity
The report was required to consider scenarios in which the facility would be decommissioned prior to 2045, the Virginia Clean Economy Act fossil fuel facility retirement date, and analyze alternative uses for the site, including the development of solar, wind, and energy storage. In addition, it was necessary to include a discussion on local economic impacts, system reliability, environmental equity and the social cost of carbon.
The result was a discussion of the $156 million annual economic benefits of the facility to Wise County, the environmental benefits of using waste coal for fuel, and the potential siting of battery storage or a small modular nuclear reactor at the site.
“The plant is currently viable to operate given current market conditions and high natural gas prices, and there is a path to at least 2045 viability,” the report said. “The significant regional economic and environmental benefits that would be foregone in an early retirement scenario also speak against early retirement.”
But critics say the report doesn’t fully analyze the facility’s potential uses, particularly in light of the recently passed Inflation Control Act and bipartisan Infrastructure Act, or address whether taxpayers, who all live outside of Wise County, should pay the benefits of the plant.
“We’re pretty disappointed with that,” said Evan Johns, chief counsel for the West Virginia-based Appalachian Mountain Advocates, who represent the Sierra Club. “There are some obvious omissions.”
In response to several questions from Mercury about the impact on taxpayers and plant operations, Dominion Energy spokesman Jeremy Slayton issued a two-sentence statement.
“VCHEC plays an important role in providing our customers with reliable and affordable power,” said Slayton. “Additionally, the station provides hundreds of jobs and a significant contribution to the local economy in Southwest Virginia, while helping eliminate millions of tons of coal waste, thereby improving the area’s environmental quality.”
Dominion defends ongoing operations
VCHEC began operations in July 2012 and produces 610 megawatts of electricity using a combination of waste coal, waste wood and regular coal for fuel.
It was built after the General Assembly passed legislation in 2004 declaring a Virginia coal-fired power plant in the state’s coalfield region to be of public interest. In 2007, the legislature changed the bylaws to allow Dominion to reimburse the cost of setup through a tab or an additional fee on customer bills.
Today, VCHEC supports approximately 121 direct and 180 indirect jobs, according to Dominion’s profitability report. The facility also provides Wise County with over $11 million in annual tax revenue, state property taxes and more than $3.5 million in charitable giving annually.
Aside from the dollars the plant is pumping into the region, Dominion argues that it brings a number of environmental benefits. All discharged wastewater is treated on-site, the boilers capture carbon and the plant purifies the toxic by-product of coal production known as gob coal.
Southwest Virginia has more than 100 million tons of gob, the report said. This waste can end up in water bodies, and natural oxidation in droplet piles releases methane and carbon dioxide, both of which contribute to climate change.
Legislation, passed in 2022, directs the Department of Energy to submit a report to the General Assembly by next month on options to eliminate drop heaps, which Dominion says can only be done permanently through VCHEC.
Additionally, given the rising costs of natural gas and oil, VCHEC’s use of coal makes it an “essential” part of Dominion’s generation fleet that can be deployed during periods of high demand, the report says.
If VCHEC were to close early, the company estimates that Dominion’s customers would lose between $40.9 million and $158.8 million in losses.
Overall, Dominion says it would need to recoup $1.8 billion from taxpayers to close VCHEC in 2026, $2.4 billion to close it in 2030, and $4.4 billion dollars to close it in 2045. Customers would see steeper cost spikes if the plant closed earlier: For residential customers, the driver would be $7.80 for 2024 retirement, $5.35 for 2030 retirement, and $3.78 for 2024 for retirement to peak in 2045.
Analyzing potential alternative uses of the site, Dominion says onshore wind is not viable and only 6 megawatts of solar power could be supported. However, since the facility is not connected to Dominion’s distribution system — the Appalachian Power Company is the local transmission system operator — the connection would present financial and technical challenges.
The company says an energy storage facility of about 600 megawatts could be supported on-site, but placing such a facility in a location with greater power demands would be better value for customers, and battery storage would support fewer jobs.
Another option could be an SMR, which could generate up to 300 megawatts of power with fewer manufacturing requirements than a larger nuclear power plant. But because the technology isn’t ready for deployment in the US yet (the first ones aren’t expected to arrive until May 20). end of the decade), such plans are speculative, the report said.
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Critics say the report falls short
While developing state policies to create economic and environmental benefits for a region is one thing, said William Shobe, director of the Center for Economic and Policy Studies at the University of Virginia’s Weldon Cooper Center for Public Service, Dominion customers foot the bill leaving for them is another.
“From a state perspective, there is no net gain in moving money from (outside the region) into Wise County via the electricity tariffs,” Shobe said. “There seems to be an assumption here that people across the state are responsible for eliminating Gob without considering what it’s costing people in the rest of the state.”
For the plant to generate these benefits, tariff payers “almost certainly” have to pay more than the value of the electricity generated by the plant to keep it running, Shobe said.
The use of VCHEC has declined: A recent filing by Dominion with the State Corporation Commission shows that the facility’s capacity factor, a measure of the actual power a facility produces compared to the amount it can produce, in will peak at 15.5% in the coming years. in 2024 and then decreases further to 6.33% in 2029.
“Power from VCHEC is just too expensive to ship the plant most of the year. Other sources are cheaper,” Shobe said. “The state would have to subsidize the operation of the plant so that it runs at a higher capacity factor.”
Johns said the report was also overly dismissive of other potential uses of the site
While noting that solar and wind power may be difficult to develop at VCHEC, he said the report unnecessarily dismisses battery storage potential and fails to take into account the benefits contained in the Inflation Mitigation Act. These include incentives for clean energy projects for communities that have historically relied on coal mining, like those in Southwest Virginia. In addition, funds are available from the bipartisan Infrastructure Act to support the reclamation of abandoned mine land and funding programs to reduce the cost of decommissioning fossil plants.
“It’s really disappointing to have all these pieces of legislation that touch on a lot of the issues covered in this report and just omit them entirely,” Johns said.
Finally, he said, the report discusses the social cost of carbon in one case, fuel costs, but not in another. And it’s not clearly stated where Dominion gets its fuel for burning gob coal, which Johns says will likely become more expensive and less useful over time.
It just doesn’t have the kind of discrepancies that you like to see when you’re really trying to isolate variables [to] Look at how a facility like VCHEC is supposed to run under a variety of scenarios,” he said.
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