The Virginia attorney general’s office is pushing to block Dominion Energy from charging ratepayers $247 million to recover money spent on environmental upgrades at its Chesterfield County power plant, calling the spending “imprudent” given that it will provide “little or no value to customers.”
Dominion, the state’s largest utility, said in December that the upgrades to four coal-burning energy units in Chesterfield were needed to meet federal and state environmental regulations.
But, in a filing with the state regulator on utility pricing, a consultant with the attorney general’s office said Dominion knew or should have known that its coal-burning units would become virtually obsolete, making the upgrades unnecessary.
The application Dominion filed in December with the State Corporation Commission, which regulates the utility, would allow the company to recover the cost of the projects, along with a profit of 9.2 percent. Households using roughly 1,000 kilowatt-hours per month would see their bills rise by $2.15 starting in November.
If the SCC doesn’t approve the increase to ratepayer bills, Dominion will have to absorb most of the costs of the project.
Scott Norwood, an energy consultant hired by the attorney general’s office, told the SCC that Dominion has long expressed concerns about the economic viability of generating electricity through coal at its facilities, mostly because of stricter regulations on coal emissions and the low cost of natural gas.
He said that those questions go back to 2011 — long before Dominion opted to proceed with its multimillion-dollar environmental improvement projects.
He said Dominion had other options, like converting those units to burn natural gas, temporarily halting their operation or retiring them ahead of schedule, as Dominion ultimately decided to do in March for two of the four units in Chesterfield.
Norwood also slammed Dominion for failing to provide data to support its decision to upgrade the coal-burning units, saying there are “serious deficiencies” in the utility’s decision-making process.
He said Dominion returned his request for explanation with a one-page document showing the upgrades would yield small benefits, but later could not provide the data it used to come to that conclusion.
Reached for comment, the utility issued the following statement: “This case is set to be heard by the Commission in June. We look forward to rebutting the attorney general’s claims point-by-point at that time.”
The state’s largest utility has for months touted the projects at its Chesterfield and Clover power plants and the Dominion-owned Mount Storm site in West Virginia, which the company says allow for cleaner disposal of coal ash. The ash, a byproduct of burning coal, contains heavy metals including arsenic and mercury.
The total cost of the upgrades to ratepayers fall at $302.4 million, $247 million of which were spent at the Chesterfield plant.
All of the expenses are tied to coal burned by Dominion. The company has for years said it is moving toward cleaner and renewable sources of energy, but is arguing that coal remains “an important element of Dominion Energy’s diverse mix of power generation resources.” Coal accounts for about 13 percent of the utility’s electricity production, according to its website. Coal has been largely replaced by an abundance of cheap natural gas.
Dominion argued the upgrades would bring its coal-burning work up to new, more environmentally friendly standards set by the Environmental Protection Agency and adopted by the state.
“Those plants still provide low-cost, very competitive power and fuel diversity,” Mark Mitchell, vice president of generation construction for Dominion, told the Richmond Times-Dispatch in December.
“We’ve spent a tremendous amount of money in upgrading Chesterfield to make it environmentally compliant, from an emissions standpoint, so it makes sense to operate the plant for a while.”
Federal and state regulations required the closure of Dominion’s two ash ponds in Chesterfield, where the utility has for decades stored coal ash mixed with water to prevent it from becoming airborne.
The company is angling to recover $66.8 million for the construction of a modern landfill for the ash, a 1,400-foot bridge that connects it to the power plant, and nearby roadwork. The utility is also petitioning to recover an additional $180 million spent to transition the power plant away from transporting and storing coal ash with water.