Dominion’s Pipeline: Sticker Shock for Virginia Consumers

It’s time for Virginia to take a good look under the hood of Dominion’s proposed Atlantic Coast Pipeline, to determine whether Virginia is being sold a lemon that’s not just overpriced, but is one that Virginia doesn’t even need in the first place.

Expert analysis from a natural gas industry veteran, recently filed with state regulators, provides an eye-popping estimate of just how much the Atlantic Coast Pipeline will likely cost Virginia consumers: well over a billion dollars (yes, that's a B), and possibly well over two billion.

This is the first time we have known how much Virginia customers might be on the hook for this pipeline.

Despite this, Dominion has a powerful incentive to build anyway: as a result of prevailing trends at the Federal Energy Regulatory Commission regarding pipeline agreements, Dominion’s corporate shareholders stand to make a healthy profit of as much as 14% on the over $5 billion project, profits we now know would come out of Virginians’ pocketbooks.

With evidence like this mounting that the Atlantic Coast Pipeline (ACP) is a bad deal for both Virginia’s economy and environment, it is now incumbent on state regulators and policymakers to take a long, hard look under the ACP’s hood. A careful evaluation of whether a $5 billion pipeline is a prudent way to spend the hard-earned dollars of everyday Virginians could avert the need to pay a steep cost for an unclear, unjustified project.

A Steep Cost

As the expert testimony from a respected industry expert states, there is a “contradiction between statements adopted by the Company with respect to the “value” of the ACP and the Company’s own projections.” The analysis, which has not been disputed by Dominion, shows that, using Dominion’s own projections, the ACP would deliver not a cost decrease, but a significant cost increase for consumers.

This additional expense of $1.6-2.3 billion would show up on Virginians’ high electricity bills that are already among the top-ten highest bills in the nation. That extra cost reflects the increased pricetag to reserve space and transport natural gas in a brand-new pipeline, rather than simply use already-existing and therefore lower-cost pipelines. 

An Unclear Project

Dominion’s already flimsy footing for building the ACP was made even more speculative by the latest revelation that South Carolina (not North Carolina) is their pipeline’s ultimate destination. This means Dominion’s lynchpin claim of bringing jobs and manufacturing to Virginia is now an even more questionable, blue-sky promise: what evidence is there that a manufacturer will “set up shop and pump money” in Virginia, rather than the now three other states the pipeline would go through? 

Another question that needs addressing, in light of the steep net cost Virginians will pay for the pipeline, is whether Dominion's job promises are valid. Dominion has touted that over a thousand Virginia jobs will materialize due to "energy cost savings." But now that those "cost savings" have been invalidated, which Dominion presented in an out-of-date study over two and a half years ago, then so too do Dominion's stale job creation claims need a wholesale revisiting.    

These two significant concerns, about whether manufacturing and jobs will in fact flock to Virginia (as opposed to South Carolina), now that we know how costly the pipeline will be, are but two of the major unanswered questions that remain unsettled.

An Unjustified Pipeline

In addition to rosy, if-you-build-it-they-will-come promises of an industrial renaissance in Virginia (or is it in South Carolina?), Dominion has repeatedly stated it needs to build the pipeline so it can fuel natural gas plants.

However, Dominion acknowledges it has not documented any actual need in Virginia for a new natural gas pipeline (or its gas), casting doubt on this central justification for the pipeline:

Dominion acknowledged in the 2017 Integrated Resource Plan proceeding at the Virginia State Corporation Commission that it hasn’t conducted any assessment of whether its own current or future power plants would require the additional, $5 billion ACP infrastructure. And, compared to when they first proposed the pipeline in order to “meet the growing energy needs” of its customers, Dominion has since significantly reduced its forecast for its future energy needs.

Dominion’s recent acknowledgement that South Carolina, not North Carolina, is the pipe’s ultimate destination, appears to confirm that the company does not have sufficient demand for ACP gas in Virginia to justify building the project.

A Heavy Opportunity Cost for Virginians

Given the doubt cast by these recent revelations on Dominion’s “trust us” promises of an industrial renaissance and customer cost savings, it’s becoming clear that the ACP would be a big step backward for Virginia. Investing Virginia dollars so heavily and needlessly in the outdated, overpriced energy system of the last century would shut Virginia out of the clean energy revolution that is driving economic growth across the rest of nation.

Rather than sinking Virginia dollars into a highly speculative pipeline, Dominion can and should lead the way in this very real boom in clean, renewable energy. Virginia could reduce its higher-than-average electric bills by capturing its untapped energy efficiency reserves; ramp up investments in solar and wind projects, both on and offshore; and Virginia could meet the urgent need (as climate champion Governor McAuliffe has already committed to do) to cut—rather than increase with the ACP carbon exhaust pipe—the carbon pollution that drives costly climate change along Virginia’s coast and more extreme weather across the nation.

So, as Virginia contemplates its economic, energy, and climate change future, it should confront the reality that Dominion’s proposed ACP pipeline presents: it is unnecessary, expensive, and highly profitable for Dominion alone; it’s all risk and no reward for the environment; and its steep cost would ultimately be paid for by Virginia consumers.

The good news is that it’s not too late.

Virginia regulators have an opportunity to really kick the tires of the ACP and see if building and paying for an unnecessary $5 billion pipeline would be a good deal for everyday Virginians, or just for Dominion.

About the Authors

Walton Shepherd

Staff Attorney and Policy Advocate, Energy & Transportation program

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