Two proposed gas-fired power plants are the Chickahominy (1600 MW) & C4GT (1060 MW)
From the Staff Reports, Virginia Mercury, June 26, 2020
The Virginia State Corporation Commission regulates Virginia electric utilities. In an order Friday, this State Corporation Commission imposed conditions that must be met before a contentious natural gas expansion project can proceed.
The Virginia Natural Gas company has been seeking approval to expand its pipeline and compressor station infrastructure in Northern and Central Virginia, primarily to supply a natural gas-fired power plant proposed by C4GT, though that project remains stalled amid “market uncertainties,” the developers say, in the regional PJM power grid’s capacity market.
“Put simply, if C4GT is built, we find that the project is needed. If C4GT is not built, the project is not needed,” the commissioners wrote in the order.
The SCC, which regulates utilities, says it won’t issue an approval for the Virginia Natural Gas (VNG) project until the power plant it will serve provides proof that it has a “firm financing commitment” for construction. The commission will also require Virginia Natural Gas to recover costs for the expansion over “the same time period for which it has contracts with C4GT and other large customers to receive the payments necessary to pay for the project.” And C4GT must “reconfirm all contractual obligations to VNG necessary to pay its share of the header project.”
C4GT is planned to be a “merchant generator,” which means it will sell electricity on the mid-Atlantic states (PJM) market.
“As a merchant plant, C4GT may operate for some years but, if it becomes unprofitable, may shut down, as many other merchant generators nationally have shut down when they became unprofitable. So it is imperative that VNG’s other customers not be left ‘holding the bag’ for the costs of the project should C4GT cease operating before those costs have been fully recovered,” the commission said.
The commission also required Virginia Natural Gas to agree to a “strict cap” on any costs it plans to shift to residential or business customers, comply with all environmental requirements imposed by the Virginia Department of Environmental Quality and file additional information on environmental justice concerns with the project.
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See also: With new energy regime only months away, regulators grapple with gas expansion proposal – Sarah Vogelsong, Virginia Mercury, May 19, 2020
Three years after private backers secured state regulators’ approval to build a major new natural gas plant in Charles City County, the fate of the facility has become a key factor in a controversial proposal by Virginia Natural Gas to expand its pipeline infrastructure throughout Northern and Central Virginia.
“The big issue here is risk, and how are we going to allocate the risk and who’s going to be holding the bag if this plant doesn’t get built,” said Judge Mark Christie during a Wednesday hearing conducted via Skype.
The facility, known as C4GT, has been in the works since 2016, when private developers first applied to the State Corporation Commission for a certificate of public convenience and necessity. A combined-cycle natural gas plant, the facility is expected to produce some 1,060 megawatts of power — about two-thirds the size of Dominion Energy’s most recent natural gas plant, the Greensville Power Station, which is capable of powering some 400,000 homes.
Yet despite securing regulators’ thumbs-up in 2017, the project stalled. Last March, the backers asked for a two-year extension of their certificate, citing declining interest from investors in light of changes in the regional PJM power grid’s capacity market.
Since then, Virginia’s energy landscape has also changed significantly.
The passage this spring of the Virginia Clean Economy Act and a law that will join the state to the Regional Greenhouse Gas Initiative, a carbon cap-and-trade market, have committed Virginia to transitioning off fossil fuels and toward renewable energy sources. Mandatory renewable portfolio standards for electric utilities and ambitious targets for solar and wind development are all designed to phase out the use of coal and natural gas by 2045.
“This legislation casts serious doubt on the financial viability of the C4GT plant and the likelihood it will ever be built,” said Greg Buppert, an attorney with the Southern Environmental Law Center representing environmental and consumer protection groups Appalachian Voices and Virginia Interfaith Power and Light, at the beginning of Wednesday’s hearing.
But Virginia Natural Gas, in arguing that regulators should approve its pipeline expansion proposal, dismissed those concerns, seeking instead to focus the proceedings on what it described as a “simple need solution” to its obligation as a utility to serve any customer in its territory that requests service.
“This application is not the place to debate public policy and legislation,” said VNG attorney Lisa Crabtree. “We’re not here to speculate on what will happen in 2045 and beyond.”
The Header Improvement Project regulators have been charged with considering what was first outlined by Virginia Natural Gas this December, when it filed an application with the State Corporation Commission for approval to construct.
The proposal would add about 24 new miles of pipeline to VNG’s system: the 6.2 mile Transco Interconnect Pipeline running between VNG infrastructure in Quantico and the Transco pipeline in Catlett in Fauquier County, the 3.3 mile Quantico Parallel Pipe in Fauquier running alongside an existing company pipeline, and the 14.6 mile Mechanicsville Parallel Pipe running alongside another existing VNG line in Hanover, New Kent and Charles City counties.
Two new compressor stations would also be built: the Transco Interconnect station in Prince William and the Gidley station in Chesapeake, while a third station at Ladysmith in Caroline County would be expanded.
And while three parts of the project are directly tied to C4GT’s operation, three others — the Transco Interconnect Pipeline, Transco Interconnect Compressor Station and Quantico Parallel Pipe — would be required for any expansion of Virginia Natural Gas’ capacity, testified the company’s director of gas supply, Kenneth Yagelski.
Currently, VNG’s system is supplied from the north by an interconnection with the Dominion Energy Transmission pipeline at Quantico that is responsible for providing capacity to about half of VNG’s customers.
An expansion plan submitted by Virginia Natural Gas to the State Corporation Commission to meet the needs of the planned C4GT natural gas plant and increase system capacity. But the Dominion pipeline has no more capacity, said Yagelski, and VNG has concerns about its continued reliability.
“It’s never resulted in an outage to our customers, but we’ve come very close in the past,” he told the State Corporation Commission, and an extended outage “we believe is a possibility.”
That means that for any expansion of VNG’s service, the utility must look for other sources of supply, said Yagelski.
“We’ve often looked at a new connection to Transco at this location for reliability purposes, but it would be very expensive for VNG to justify on its own the 6.2 miles of pipe and the compressor station,” he told regulators. “This is an opportunity for VNG to essentially take advantage of the larger HIP project to get that reliability increase when some of those costs are shared with the other HIP participants.”
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