Dominion's Post-ACP Clean Energy Awakening: Fact or Fiction?

With the ACP cancelled, is Dominion now truly a "clean energy company" willing to prioritize energy efficiency, or will it just look for new ways to stick Virginians with higher bills?

(Creative Commons)

With Dominion’s massive fossil fuel project—the Atlantic Coast Pipeline—now rightfully abandoned, what’s next for climate action and expanding clean energy in the Commonwealth?

(Spoiler alert: IF Virginia policymakers prevent Virginia’s largest monopoly from heeding the same bad instincts that got it into the ACP mess, then a cheaper, cleaner, more equitable future is ahead for all Virginians.)

In the wake of pulling the ACP plug, Dominion has already executed a dramatic pirouette away from top-heavy fossil fuel mega-projects (at least on paper): Dominion instead now heralds itself as a, ahem, “clean energy company.” So much so, that it is touting to investors $55 billion in planned clean energy investment in the “most attractive” places for regulatory oversight, like right here in Virginia.

That pivot will absolutely be a good one for the planet and for people, but only if it’s equitable and cost-effective, and therefore truly sustainable for the long haul. However, if Dominion’s clean energy “Eureka!” moment is intended merely to provide cash-flow fumes to giddy Wall Street investors, and the leopard has not changed its spots, then like the ACP it is unsustainable and doomed to ultimate failure.

Specifically, Dominion remains a national laggard when it comes to prioritizing the single-most cost-effective means of tackling climate pollution and saving people money on their energy bills: good old energy efficiency. (For more details on the scale of the resource that Dominion is currently leaving on the table, and what the state must do to begin capturing it, see this comprehensive report from Optimal.)

It’s therefore now on all Virginia policymakers—the Governor, the legislature, and the SCC (Virginia's monopoly watchdog)—to ensure that Dominion’s post-ACP pivot to clean, rather than dirty, profits, is a net positive for Virginians as well, and that the company finally gets its act together on energy efficiency. Because a sensible shift to climate action in a way that lowers not just pollution, but total costs as well, can be done. However, to do so, Dominion will likely need to adjust its approach to how it invests, if it is to serve both Virginians and shareholders, rather than serving the latter with an overreliance on the former.

But before we can get to the future, let’s look back at what happened with the ACP, and what we can learn from the saga.

Death by Three Cuts

The ACP was doomed to fail for two foreseeable reasons, and one unforeseen one. ACP’s two foreseeable downfalls were (1) its paper-thin business model and equally-shoddy planning and execution, and (2) the crack attorneys that assiduously applied our bedrock laws that prevent big polluters from running roughshod over public resources. The unforeseen factor in the ACP’s downfall was the strength of Virginia’s tireless grassroots citizens.

First, the ACP’s business model and project planning were fatally flawed from the outset. Crucially, the venture was not a response to any real-world clamoring for additional gas delivered through a brand-spanking new pipeline crossing at least three states. That’s because there was no real-world demand for a new pipeline: the Dominion pipeline’s main customer was always Dominion itself. The “markup” profit of a new pipeline was the only motivation for Dominion (and Duke Energy in North Carolina) to build a new pipeline, to then turn around and sell to itself, all while charging its captive ratepayers to cover costs and profit markup. In other words, the ACP was a corporate affiliate hall-of-mirrors that has long been in danger of collapse. Now that it is cancelled, don’t hold your breath to hear from would-be customers in the real world crying out for the gas the ACP might have delivered, because there never really were any.

With such an illusory house-of-cards “market” propping up Dominion’s venture, it’s no surprise that the planning and execution of the pipeline itself was fatally shoddy as well. Planning and permitting shortcuts—and an overreliance on friends in very high places—were so rampant that they were ultimately a terminal plague upon the project. Whether it was cutting across rugged or public lands that simply shouldn’t be crossed, or water, air, or wildlife permits rushed without regard to content or process, haste made waste and ultimately an insurmountable pileup of do-overs and go-backs.

Amid these rush jobs, legal eagles at the Southern Environmental Law Center, Sierra Club, and many others applied their superior understanding of the laws meant to safeguard public resources against Dominion’s relentless shortcuts. On behalf of all citizens with an interest in water, lands, and wildlife, these lawyers stood up in the face of a short-circuited legal process and rightly said “no way.” And sure enough, they exposed a thicket of invalidly-granted, rushed permits, and they did so with the full faith and credit of national and state law at their backs.

So, as judges rightly shot permit after permit down, and sent each one back to the drawing board to be validly reviewed, the prospects for an already speculative, self-supplying pipeline steadily grew worse.

In addition to Dominion’s house-of-cards business model and the legal watchdogs ensuring our bedrock laws and legal principles were upheld, a sprawling grassroots resistance by everyday citizens—from farmers and families, to anglers and grandmothers—was the third, David vs. Goliath factor that brought down the ill-considered project. For years, everyday citizens vigilantly monitored and watchdogged obscure permitting processes across government agencies, as well as actual construction and related damage across the pipeline’s route. Whether motivated by personal property rights or meeting the impending threat of climate change, grassroots energy successfully delivered the third, decisive cut against the ACP.

So what did we learn? (Other than that we have some incredibly dedicated, passionate, and effective citizens here in Virginia.)

First and foremost, that, despite demoralizing corruption of our institutions at the federal level, our laws worked as intended to protect people and their public resources.

Second, that the state’s largest monopoly and largest corporate political contributor cannot defy gravity, and wizened citizens and policymakers will no longer go along quietly with poorly-executed, overpriced ventures on the backs of everyday Virginians.

So, What’s Next?

The collapse of the ACP is not only a cautionary tale for how not to execute a massive fossil fuel venture that no one wanted or needed.

The cancellation also represents a chance for Dominion to commit to true climate action, and not just for the purpose of filling—and then some—a balance sheet hole left by the jettisoned pipeline. In other words, pursuing climate action because it can be equitable for both shareholders and for Virginians.

Because Virginia, like most Americans, have long wanted to take climate action and grow clean, not dirty, energy. And rightly so: clean energy is not only pollution-free, it’s cheaper and it creates more jobs. But Dominion must be sincere in its effort to deliver what Virginians want, and in an equitable, cost-effective way.

The main test of this sincerity will be Dominion’s willingness to finally commit meaningfully to energy efficiency as a bedrock, first-order clean energy resource to not only lower costs but also to directly reduce, around-the-clock, climate pollution from Dominion's fleet of new NGCC plants. 

To date, this has not been the case, and Dominion has yet to shift its opposition to meaningful efficiency additions. Dominion has instead long over-relied on the ever-increasing bulk sale of electricity, to justify building large, high-ticket items, like its score of polluting new fracked gas plants it recently built in Virginia over the past decade.

That same Build!-Build!-Build! model, however, cannot be Dominion’s sole approach to climate change, for the simple reason that it is not sustainable or equitable, and therefore simply will not work—for Dominion or for Virginia—over the long term, and will be doomed—like the ACP—to a slow but final failure.

Because that top-heavy model no longer works. Not only are Virginians already paying high energy costs, in a newly rightsized post-COVID world, paying even higher electric bills to underwrite a single company’s unlimited growth is no longer an option. Dominion can no longer count on Virginia’s willingness to be its cash cow, just as Virginia was ultimately unwilling to play host to Dominion’s overpriced pipeline.

To get to sustainable business growth, wind and solar energy are certainly cheaper than building new conventional fossil fuel or nuclear generation, but energy efficiency is the cheapest and most sustainable of them all, and is thus the litmus test for whether or not Dominion’s post-ACP “Eureka” moment is sincere, or just another paean to Wall Street.

Energy Efficiency Is the Litmus Test of Dominion’s Clean Energy Sincerity

The good news for Dominion is that in this brave new world of the 2020s, it need no longer oppose and undercut demand- and bill-lowering energy efficiency as it has in the very recent past.

First, Dominion cannot afford to: there will be no appetite in Virginia to underwrite $55 billion in spending that Dominion is touting to Wall Street, without commensurate customer bill savings through efficiency investment.

Second, even without consumer and policymaker backlash to skyrocketing bills, there is no longer any substantive reason for Dominion to oppose investing at scale in energy efficiency: the utility no longer relies on relentless growth of bulk electricity sales, as public policy—rather than demand—is what now drives what Dominion can (and cannot) build. 

So, if Dominion maintains its costly aversion to energy efficiency as a core resource, then they are stuck in an antiquated past that simply no longer exists, which is the same clouded thinking that led to the ACP debacle.

If Dominion instead recognizes that it can succeed as a company founded on wise investments that equally serve customers, the planet, and shareholders, then efficiency will be its first-order priority resource.

Lawmakers too must be willing to hold Dominion’s newly-enlightened feet to the fire on affordable and equitable clean energy, and must enact several commonsense efficiency policies to rightsize Dominion’s model in a way that is good for both customers in the near term and Dominion’s shareholders over the long term.

First, that means restoring meaningful, long-term energy efficiency requirements to the Virginia Clean Economy Act to ensure our state’s marquee climate package tackles equity as well as climate, by lowering bills alongside pollution.

Second, after next year’s rate case, join many other states in rewriting the rules of the road by “decoupling” Dominion’s revenues from simply selling more electricity. We’ve already decoupled Virginia’s gas monopolies, which therefore no longer have a disincentive to sell less gas to make their necessary profits.

Third, the SCC should eliminate outdated caps on how much energy efficiency Dominion can pursue, to clear the way for deeper bill savings and efficiency advances through everyday technology like heat pumps (the existing regulatory framework leaves significant savings on the table).

These are all commonsense policies for which, other than longstanding animosity to efficiency, there is literally no longer any single rational reason for Dominion to be opposed.

So, if Dominion’s recent “Eureka!” reawakening as a “clean energy company” is genuine, then they too will embrace the three efficiency policies listed above, to lower costs and the climate pollution currently spewing from their NGCC fleet. In doing so, it should be rightly rewarded for providing those meaningful climate and customer benefits.

But if Dominion fails the energy efficiency litmus test and insists on outdated opposition to efficiency, then Dominion is a “clean energy company” only so far as it pleases shareholders. And that's an inequitable priority at the expense of Virginians that is literally unsustainable: it will not last.

We will learn soon whether Dominion’s ACP loss is truly a lesson learned, or whether the leopard is doomed to never change its spots, and it’s back to an unsustainable, overpriced business as usual.

In the meantime, all Virginians should celebrate successfully avoiding the lasting environmental, economic, and climate harms the ACP would have caused, and get ready to keep pushing—if need be—for the equitable clean energy and more energy efficient future that should now await us all.

About the Authors

Walton Shepherd

Virginia Policy Director, Climate & Clean Energy Program

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