Wind turbines that could soar 600 feet above the Atlantic Ocean may soon produce power used by Virginia homes and businesses.
On the surface, it seems that capturing ocean’s trade winds to create electricity could catapult Virginia into a 21st-century example of green energy production.
But below the surface, the State Corporation Commission’s review this month of Dominion Energy’s turbine project came with several concerning caveats as well as a reminder that a new law gutted the commission’s authority to determine if the project is necessary and if covering the project’s cost is a reasonable burden to put on ratepayers.
Ratepayers will be responsible for shouldering nearly all of the $300 million cost associated with constructing two 6-megawatt turbine generators in federal waters close to 27 miles off the Virginia Beach coastline.
The wind turbines will act as a test-bed for a larger project that would include constructing more turbines by 2024 at a cost of about $1.77 billion. The project would create enough power to supply 500,000 homes if it is built to completion.
Dominion, however, is putting ratepayers in a precarious situation by not entering into a more traditional power purchase agreement, which would make a third-party developer – in this case, Danish energy company Orsted – responsible for constructing the project and selling the power to the utility company.
The agreement places some of the risks on the developer, making it a safer investment for the utility’s ratepayers.
Instead, Dominion decided against the power purchase agreement, moved forward with the project and did so without going through a competitive bidding process.
A Dominion spokesman has said existing utility rates will be enough to cover the cost of the massive project. But that truly cannot be known until the final construction (and any cost overruns) are calculated.
In its review, the state commission placed serious doubt on the need of this offshore project.
Commissioners noted the project is not necessary to provide reliable service to customers.
And the cost of the electricity produced by offshore wind is much greater than other forms of electric production including wind farms, natural gas facilities and onshore wind projects.
The commission stated in 20-page its ruling that it does not find the project to be “prudent as that term has been applied by this Commission in its long history of public utility regulation.”
So what stopped the commission from halting Dominion’s plans?
Commissioners felt legislative reforms passed by the General Assembly earlier this year handcuffed the regulatory authority, forcing it to rubberstamp Dominion’s wind turbine projects as a matter of “public interest.”
And that’s where we sit. The commission in charge of regulating Dominion’s proposal finds the project to be overly expensive, risky and unnecessary, but it says it is unwilling to send it back to the utility company because state legislators believe such a project, in principle, would benefit the commonwealth.
That’s a shame. The commission’s research highlights significant concerns with Dominion’s proposal. Yet, the project moves ahead.
Overall, the use of environmentally friendly methods to meet demands for electricity is exactly what we need in the 21st century.
Sierra Club Virginia has referred to offshore wind as “an unparalleled opportunity” to provide cleaner energy to Dominion’s customers.
And that is true.
But the question that the General Assembly never directly answered, when it said wind power, including the test turbines, were automatically deemed to be in the public interest, is what is the fair way to finance new technology.
There doesn’t appear to be a way for the SCC to ask that question. We expect the General Assembly probably won’t revisit the issue.
So for now, we’d suggest lots of transparency as Dominion moves forward.
Dominion still has to obtain several permits for the project, including final approval from the Bureau of Ocean Energy Management, plus approval of the final turbine design.
Approval for those permits should be done in a transparent way that allows ratepayers, and the public-at-large, to comment and critique Dominion’s plans.
After all, it’s the ratepayers shouldering the financial burden of this project.
It should be the ratepayers that have a significant say in whether it moves forward.
|Wind Watch relies entirely
on User Funding