Building Gas Plants More Important Than Dominion Sale, Data Center Politics

Despite the heated political wars over NextEra Energy’s effort to purchase Dominion Energy and over Virginia’s fleet of data centers, what matters most to Virginia’s energy future is the fate of four pending natural gas plant applications. If you want the lights and the air conditioning to stay on at your house in coming years, this is the issue to watch.

One of the four proposed plants, Dominion Energy’s 944-megawatt plant proposed for Chesterfield County, already has the approval of the Virginia State Corporation Commission (SCC). Dominion’s customers have already started paying for the plant on their monthly bills, and the facility could be under construction before this year is over.

But the SCC’s certificate of public convenience and necessity (CPCN) has been challenged in the Virginia Supreme Court. The case was expected to test the crucial provision in the Virginia Clean Economy Act (VCEA) that created a loophole for future natural gas generation based on reliability. Opponents also allege that the permit violated the Virginia Environmental Justice Act.

Governor Abigail Spanberger (D) has jumped into the case over the NextEra-Dominion deal, but her position on the Chesterfield plant –- and the other three discussed below – is no clearer now than it was during the campaign a year ago. Her silence is even more deafening considering yet another dire warning that the PJM Interconnection that manages Virginia’s electric grid is rushing toward big shortages.

Instead, the vision she revealed Friday on how to meet the data center’s energy demand was mostly wishful thinking. Neither new natural gas nor new nuclear generation were a focus of her 9-page executive order. She focused instead on promising to wean the data center industry off hydrocarbon generation.

Both the Virginia Clean Economy Act and the Virginia Environmental Justice Act, passed during the previous Democratic Trifecta in 2020 when energy demand had been flat for a decade, were intended as bulwarks against exactly this kind of new hydrocarbon generation. But VCEA included a clear path for the SCC to approve new gas plants based on threats to reliability. During the case before the Commission, environmental opponents argued strongly that there was no need for gas to deal with the reliability challenges from the demand explosion.

Now that a full set of briefs has been filed with the Supreme Court, it is clear this case poses no threat to the reliability loophole. Also, there is no challenge being posed to the SCC’s conclusion that Virginia faces a serious threat to electricity reliability or, surprisingly, to the SCC’s decision that the Chesterfield plant is a prudent response.

The two groups who filed the appeal don’t even agree on what errors they claim were made by the SCC. Only one of them, the Southern Environmental Law Center, is asking the court to void Dominion’s permit to build the plant. The Sierra Club is only asking the court to void the monthly amount already added to customer bills to cover its construction. Dominion can collect the $1.5 billion for the plant in another way if that objection is sustained.

Attorneys for the Commission, in their defense of the approval, provide extensive detail on how the potential negative impacts for neighbors of the facility were considered. They also argue the Environmental Justice Act is based on terms the General Assembly did not define, such as “equitable consideration” and “disproportionate share”.

In the months since the Chesterfield plant decision was appealed, three additional natural gas plants to serve Virginia, all of them much larger and even more crucial, have been proposed and have started through the regulatory gauntlet.

Dominion Energy is proposing two of them:

• The Cumberland Energy Center would provide up to 3 gigawatts of base load generation. The Cumberland County plant would be far more valuable to the grid than the 944-megawatt Chesterfield plant, which is only intended to operate as a “peaker” to cover shortfalls from intermittent wind and solar generation.

• The Mount Storm Combined Cycle Station, which will be built beside Dominion’s existing coal-fired generators in our neighboring state. It is slated to add another 2.6 gigawatts of baseload generation. West Virginia’s governor was ecstatic when he announced the project in late July, but there has been silence about it from Governor Spanberger.

The third pending proposal, already subject to an SCC proceeding for its CPCN, is from merchant generator Tenaska. The Expedition Generating Station in Fluvanna County is near an existing Tenaska plant using similar technology and would add 1.5 gigawatts to the mix.

Combined, the four plants would add 8 gigawatts of stable generation, none of it as dependent on the right kind of weather as are the wind and solar projects demanded by the Virginia Clean Economy Act. All except Chesterfield would use the efficient combined cycle process, which produces more electricity from the natural gas burned than does the combustion turbine process at Chesterfield.

They are exactly the kind of plants that PJM is hoping will be built to forestall the warning in that new Pennsylvania study: “Depending on the year, between 2 and 19 percent of electricity demand would be unmet between 2031 and 2040.”

In her announcement that she was joining the NextEra-Dominion case as a litigant, Governor Spanberger asserted that: “Any company that wants to own our state-regulated, largest utility must have a clear plan to accelerate progress toward producing affordable, reliable, local and clean power…” House Speaker Don Scott (D-Portsmouth) also demanded pledges from NextEra to embrace the VCEA if it wants to come to Virginia.

The two companies responded to her demands last week with a series of amendments to the proffers they have made to overcome objections among Virginians, but promises to “accelerate” the kind of energy projects demanded by the Virginia Clean Economy Act were not included in their fresh SCC testimony.

The silence of our Governor about the Dominion Chesterfield appeal, and on the other three plants publicly announced, may imply a willingness to accept what is necessary by inaction. Perhaps there is a silent wink in her endorsement of VCEA that she means VCEA as it is, with the reliability off-ramp for natural gas, now endorsed by the SCC.

Key Takeaways:

• Data centers and the Dominion merger are a distraction from the need to focus on the four natural gas plants that can keep Virginia’s lights on. These four proposed projects would add approximately 8 gigawatts of dependable generation to help meet Virginia’s growing electricity demand.
• The challenges to the Chesterfield plant do not contest the VCEA’s reliability exception or the SCC’s finding that Virginia faces a serious reliability threat. The disputes instead concern environmental justice and how Dominion recovers construction costs.
• Governor Spanberger needs to make her position clear. She has intervened in the Dominion–NextEra merger, but we still do not know whether she supports the four natural gas projects that are essential to Virginia’s energy future.

Key Quote:

“Combined the four plants would add 8 gigawatts of stable generation, none of it as dependent on the right kind of weather as are the wind and solar projects demanded by the Virginia Clean Economy Act.”

Steve Haner
Jefferson Forum

Steve Haner is the Senior Fellow for Energy and the Environment at the Jefferson Forum and may be reached at Steve@thomasjeffersoninst.org