Virginia's Utility Regulatory Staff: Wielding a Nuclear Ax When Toothpicks Would Do

With Virginia already 80 percent of the way toward meeting its climate pollution reduction target under the proposed Clean Power Plan (CPP), and Governor McAuliffe’s Energy Plan poised to get the state the rest of the way, it’s perplexing that staff at the state’s utility commission suggests Virginia would employ the single most expensive method possible-- building a nuclear reactor—to get to the finish line.

The staff at the State Corporation Commission (SCC), which regulates utilities in the Old Dominion, made that recommendation in comments submitted last week to the U.S. Environmental Protection Agency on EPA’s proposed rule for how each state can cut climate-changing carbon emissions from existing power plants. 

That recommendation is surprising, considering that the state is already four-fifths of the way to EPA’s proposed goal, thanks to the planned retirement and replacement of Virginia’s dirtiest sources of coal-based carbon pollution, and the final portion can be met by cost-effective policies already on the books, namely Virginia’s Renewable Energy Portfolio goal and its Energy Efficiency Resource goal. Those policies define how much of Virginia’s electricity generation resource mix should come from renewable energy like wind and solar, and how much of the state’s power needs could be met by using energy smarter.

So why would those charged with ensuring just and reasonable electric rates for Virginians suggest the SCC might approve nuclear energy, which is absurdly costly and unnecessary? While staff might be inclined to use a nuclear ax when toothpicks would do, it’s puzzling that they assume their commissioners will agree, given that efficiency and renewables are more immediately available -- and at a vastly lower cost

That’s just one of the many problems with the staff’s comments. Other issues include:

1) Cost

By assuming the highest cost-option (building a new nuclear reactor) would be used to meet Virginia’s carbon emissions reduction goal, the SCC staff waved the cheapest option of efficiency away with a nuclear ax, mystifyingly claiming that optimizing energy use is “extremely ambitious, almost certainly unachievable, and uneconomic under traditional standards.” Come again? The SCC has already determined that Virginia’s goal of using efficiency goal to reduce electricity use by10 percent by 2022 is achievable. In addition, Governor McAuliffe’s Energy Plan smartly moves the 10 percent savings goal up two years, to 2020. That’s the kind of low-cost planning that will create jobs and help cut the pollution harming Virginia's coastline and Virginians’ health.

Meanwhile, the SCC’s estimate of a whopping $6 billion pricetag for a new nuclear plant is based solely on an outdated proposal: Dominion’s eye-popping estimate for its proposed North Anna 3 reactor – which was not pursued due to (guess what?) the availability of lower-cost options to meet electricity demand and lower emissions.

Fortunately, a more accurate cost-benefit analysis estimates the cost for Virginia to cut its emissions to EPA’s proposed benchmark would be less than 20 percent of the nuclear option cited by SCC staff. Integrated Planning Modelling (IPM) –  considered the gold standard of cost-benefit analysis and used by utilities and government when making power sector investment decisions – conducted by EPA for Virginia also showed the Clean Power Plan will lead to at least a 7 percent reduction in household electric bills by 2030 thanks to the increased levels of energy efficiency.

2) Possible Misunderstanding of the Clean Power Plan

Under the proposed plan, Virginia can apply four “building blocks” to meet its emissions reduction target:

  • Increase the efficiency of coal plants so they emit less carbon for each megawatt hour (MWh) of electricity produced
  • Increase the use of existing natural gas combined cycle (NGCC) plants and those under construction (which are not as dirty as coal plants)
  • Increase the use of zero-carbon renewables and keep existing nuclear plants online, and
  • Increase the use of the lowest-cost “power plant” of all, energy efficiency, because each unnecessary kilowatt hour can  be used elsewhere, resulting in less fossil fuel-fired electricity generation and pollution.

However, the staff comments appear to ignore that the SCC has already overseen, reviewed, and approved major changes to Virginia’s electricity system that can count toward a whopping 80 percent of Virginia’s goal (the retirements of coal plants and the increased use of natural gas).   

The SCC staff comments also mistakenly assert that that the almost 3,000 megawatts from coal-fired power plant retirements will be “replaced” by 351 MW of wind energy, but those coal plant closings previously approved by the SCC are slated to be replaced largely through currently unutilized NGCC gas capacity, not just zero-carbon wind. It’s almost as if the person writing the comments hadn’t finished reading the rule – or has forgotten there’s been a massive shift from coal to gas in Virginia’s electricity generation.

The SCC staff comments also indicate they mistakenly believe Virginia was “penalized” for its nuclear energy because 6 percent of its nuclear output is included in the reduction goal. But a closer reading of the proposed rule shows Virginia’s nuclear energy is counted in both the reduction goal and as a compliance mechanism, which means it’s not a “penalty” when it comes to the Clean Power Plan. And in fact, the presence of nuclear in Virginia’s portfolio means they have an easier time of achieving carbon reduction goal, because every unit of added renewables and efficiency goes further in offsetting carbon pollution from coal and gas generation.

Although the SCC comments cite “reliability concerns,” they wrongly assume retiring coal plants won’t be replaced, when in fact the SCC itself has already approved the construction of an almost equal amount of gas capacity -- not to mention the ramping up of already-existing NGCC capacity. In addition, the reliability of electric service to Virginians is assured through the Federal Energy Regulatory Commission, NERC (North American Electric Reliability Corporation), and PJM – which manages the transmission grid.   

Let’s hope other comments sent to EPA regarding its plan for Virginia to cut dangerous pollution from its existing power plants better reflect what’s actually happening when it comes to how the Old Dominion can easily comply with the emissions target goals. We don’t need a nuclear option when toothpicks will do.