- Associated Press - Sunday, January 21, 2018

RICHMOND, Va. (AP) - The 2014 “polar vortex” and the wave of cold weather it unleashed over much of the U.S. has surfaced again and again as proponents have made the case for one of Virginia’s most controversial infrastructure projects, the Dominion Energy-led Atlantic Coast Pipeline.

The same argument, that existing pipeline capacity is stretched to the max during periods of severe weather, reared its head again a few weeks ago after a similar spate of plunging temperatures ushered in 2018.

“The extreme cold and spikes in natural gas usage across the mid-Atlantic over the last two weeks demonstrated in dramatic fashion the real and urgent need for the Atlantic Coast Pipeline,” Dominion spokesman Aaron Ruby said in an email Tuesday. In a separate statement, the company said its customers used more energy during the first week of January than any on record.

“It means that many customers will see bills that are higher, possibly much higher, than expected as their heating systems strained to keep pace with demand,” said the company, which now produces about 30 percent of its electricity from natural gas-fired plants.

Pipeline opponents say Dominion is recycling an old argument that ignores other factors that lead to service curtailments and contend that building a $5.5 billion new pipeline is the most expensive way to deal with demand spikes caused by cold weather.

“Dominion is peddling the same unsupported story about accessing cheaper gas via the ACP,” said Will Cleveland, an attorney with the Southern Environmental Law Center, which claims that the Atlantic Coast Pipeline will cost utility customers as much as $2.3 billion more than existing sources of gas. “Simply put, the ACP cannot and will not lower energy costs for Virginia power plants.”

(asterisk)(asterisk)(asterisk)

Ruby said “severely limited capacity” on existing pipelines serving Virginia and North Carolina forced some utilities to curtail some gas service to major industrial customers and raised consumer prices to “historic highs,” from $3 per dekatherm in late December to an all-time record high of $175 at the end of the first week of January. Power plants that burn natural gas pass those higher fuel costs on to their electric customers.

“The reason is simple,” Ruby said. “Our region’s pipelines are too constrained, and we don’t have enough access to lower-cost supplies from the Appalachian region.”

That’s a problem that Ruby and Jim Kibler, president of Virginia Natural Gas, which has nearly 300,000 residential and commercial customers in southeastern Virginia, say the 600-mile Atlantic Coast Pipeline, which would run from West Virginia through Virginia and into North Carolina, with a spur to Hampton Roads, is intended to fix.

“What it does is provide a reserve margin for these cold winter days,” Kibler said. VNG is a subsidiary of Southern Company, which is a partner in the pipeline, and has contracted to use roughly 5 percent of the Atlantic Coast Pipeline’s capacity of 1.5 million dekatherms of natural gas. It will also provide additional capacity for industrial expansion.

“There’s essentially no capacity available east of Richmond for any economic development projects,” Kibler said. “ACP will really harden our ability to serve south-side Hampton Roads.”

During the 2014 polar vortex, Kibler said, Virginia Natural Gas curtailed service to about 100 “interruptible” industrial customers to prioritize delivery for power generation and home heating for such facilities as schools, hospitals, retirement homes, day cares and prisons, among others.

This month, Virginia Natural Gas curtailed only 10, though he said that in no way undermines the need for the pipeline. The reduction in curtailments was partly the result of some of the coldest weather falling on a weekend and the fact that it was interrupted by warmer days, Kibler said. Also, the company’s system saw no major compression or other mechanical failures.

“We used every asset that we have last week and everything worked,” he said.

PJM Interconnection, the regional transmission organization that runs the electric grid for all or parts of 13 states, including Virginia, and the District of Columbia, said the run of cold weather from Dec. 27 through Jan. 7 delivered three of the system’s top 10 highest winter peak demands for electricity. Despite that, lessons learned during the 2014 polar vortex helped ensure that most power generators stayed online as demand surged.

Chris Pilong, PJM’s director of dispatch, said the recent cold weather was not quite as severe as the polar vortex of 2014, which caused forced outages because of a range of factors, including inadequate fuel supplies, lack of insulation of crucial components, freezing coal piles and mechanical problems. About 40,000 megawatts of generation, more than a quarter of the system’s power generation, went offline during the polar vortex. This month, only about 16,000 megawatts of outages were reported, he said.

“We’re not seeing those types of generation performance issues this winter,” he said. PJM has also created a penalty system for generation sources that fail to perform during emergency demand situations.

(asterisk)(asterisk)(asterisk)

Dominion says it relied on the Transco pipeline system, which runs from the Gulf of Mexico to New York City and has a daily capacity of 14.7 million dekatherms, for about 75 percent of its natural gas supply during the cold spell. Public utilities in North Carolina, Ruby said, relied on the Transco system for 100 percent of the state’s supply.

Chris Stockton, a spokesman for Williams Partners, which operates the Transco system, said the pipelines “performed remarkably” during the cold weather.

“We were able to meet all of our firm capacity contracts. The system delivered a record amount of gas,” said Stockton, noting that the system delivered about 10 percent of the natural gas consumed in the country on that day, Jan. 5. “It’s an incredible accomplishment. It’s a testament to the system that we have.”

Though he said it is the Federal Energy Regulatory Commission’s job to determine the need for new pipeline infrastructure, such as the Atlantic Coast Pipeline and another project moving toward construction through Virginia, the Mountain Valley Pipeline, Stockton said the existing system “performed as it was designed to perform.”

“That, to me, says the infrastructure is in place right now to meet the current demand,” he said. “Those kinds of projects are really designed to meet future growth, and FERC is the body determining whether or not that project is really justified.”

The FERC has issued certificates for both projects - though, in a rare dissent, one commissioner said she could not conclude that either pipeline was in the public interest.

While Dominion has argued that the pipelines will provide “supply diversity” that will hedge against price shocks by allowing utilities to purchase gas from different geographical sources - such as the Dominion South Point trading hub in Pennsylvania, which can experience price fluctuations at different times of year - opponents contend the project is more about the 14 percent rate of return guaranteed by the FERC, with utility ratepayers bearing all the risk.

“There’s no reason to think it’ll be cheaper than Transco Zone 5 once the pipeline is built, which makes sense considering that the producers at Dominion South Point would sell their gas ’at market’ once they have a pipeline able to bring the gas to market,” said Cleveland, the SELC attorney. “Dominion’s own internal price forecasts confirm that Dominion South Point won’t be cheaper than Transco Zone 5 in the future.”

(asterisk)(asterisk)(asterisk)

Dominion has cast the Atlantic Coast Pipeline as urgently needed to meet utility demands in Virginia and North Carolina. But the company’s planned merger with SCANA Corp., a South Carolina electric and gas utility holding company, that was announced this month has added fuel to arguments that its real intent is to bring gas farther south.

“We like the deal on the margin as the strategic rationale makes sense to us (this creates an expansion opportunity for Atlantic Coast Pipeline in SC, which remains a clear strategic desire in 2018 for D),” said a Bank of America-Merrill Lynch report on the merger announcement.

Tom Hadwin, a former New York utility executive who lives in Waynesboro and is opposed to the ACP, also said the South Carolina acquisition makes sense for Dominion and its partners, which also include Duke Energy.

“Dominion and Duke have considerably reduced the number of gas-fired power plants they say they need. PJM believes Virginia’s electricity demand will be relatively stable over the next 15 years,” Hadwin said. “They bought SCANA at a discount and will receive a long-term stream of tax-protected profits. It gives them a chance to extend the ACP in hopes of finding someone who needs the gas.”

Cleveland said the ACP is designed not to bring gas to Virginia, but to “move gas through Virginia.”

“Once it’s built, all but two gas power plants in the entire state will still rely almost exclusively on pre-existing pipelines to operate,” he said. “There won’t be any incentive for those plants to pay higher ACP-related transportation costs for gas that’s the same price as everywhere else in the market.”

Ruby, the Dominion spokesman, has said the company has made no decisions about potentially expanding the Atlantic Coast Pipeline.

Copyright © 2024 The Washington Times, LLC.

Please read our comment policy before commenting.

Click to Read More and View Comments

Click to Hide