In September, Dominion Energy announced its $7.8 billion offshore wind proposal with more than 200 giant windmills to be located 27 miles off Virginia’s coast. It is to be the largest such facility in the nation. It sounds great unless you are a ratepayer who may have to pick up the tab.
This reminds me of another grand plan by Dominion 50 years ago. At that time, nuclear generation was the answer; some said it would be too cheap to meter. The company planned eight large nuclear units — four at Surry and four at North Anna. It said the nuclear fuel would be repeatedly reprocessed and remains would be easy to store. Moreover, “science” would soon solve spent fuel problems. The company advised that changes and cost overruns would not be a problem. It also said these expensive plants would run almost constantly.
Reprocessing of the nuclear fuel did not materialize, construction costs skyrocketed and reliable operation of the units was many years coming. Four planned units were abandoned, costing ratepayers hundreds of millions of dollars. The catastrophe almost drove the company to bankruptcy, but the State Corporation Commission (SCC) saved it with higher rates and little examination of the company’s prudence.
The four remaining nuclear units now run efficiently, but that took decades and wasted hundreds of millions of ratepayer dollars. And, the spent fuel issue is still very real.
Let’s look at the offshore wind proposal compared to the approach of 50 years ago. The chutzpah of the utility is similar, but here, Dominion doesn’t even bother with the pretense of promises. Virginia law encourages wind energy but does require the SCC to review Dominion’s plans. Unfortunately, Virginia law severely restricts what the commission can do if it finds the project wanting. A hearing was held by the SCC on the $300 million pilot for the project and the SCC found, among many other things, the following with respect to Dominion’s plans:
- Customers bear the risk of potential cost overruns.
- Customers bear the risk of a lack of performance.
- Dominion’s customers will pay the costs of this project.
- The proposed pilot is not the result of competitive bidding.
- The forecasted cost of energy from the pilot is 78 cents/kWh.
- The project energy cost is 9.3 times greater than the Vineyard Wind project off the coast of Massachusetts.
- The project energy cost is 13.8 times greater than new solar facilities.
- The project energy cost is 26 times greater than the market.
- The company did not demonstrate the reasonableness of the estimated operations and maintenance costs by comparison to O&M costs of similar projects.
Finally, and most importantly, from the hearing: The “Project would not be deemed prudent as that term has been applied by this Commission in its long history of public utility regulation or under any common application of the term.”
The SCC concluded that, even with these findings, because of the limitations set by the General Assembly, it had no choice but to approve the plans.
What has happened is worse than the nuclear debacle. There, the company took some responsibility; here it takes none. Dominion can proceed to build the pilot and, if performance is poor, customers will still pay all costs and a profit as well.
Without prudent realistic workable plans including weather considerations, it is absurd even to consider having more than 200 windmills with blades spanning over 500 feet spinning over the ocean 27 miles from shore for the relatively small amount of electricity to be generated. Would this system survive the winds and waves of a storm like Dorian or worse? These storms are getting stronger not weaker. Dorian’s winds were more than 200 miles per hour in the Bahamas and created a 100-foot wave off Newfoundland. Is there replacement power available when these units do not work? If so, at what cost? Is it higher than the 78 cents? If not, why build these? These realities must be considered.
The General Assembly can encourage environmentally friendly projects including offshore wind, but it must not forget that ratepayers pay the bill. The Assembly should not take over regulation and prohibit the SCC from determining whether plans and expenditures are prudent and in the public interest. The SCC must be able to examine fully this project, including all costs and the impacts of weather. The SCC must be able to determine whether spending over $7 billion of ratepayer money for 78 cents /kWh is in the public interest.