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North Anna 3 Would Raise Rates for Dominion Virginia Power Customers by 25%

Ivy Main's picture
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Ivy Main is a writer, lawyer, and environmental advocate, and volunteers extensively with the Virginia Chapter of the Sierra Club. In addition to lobbying in the Virginia General Assembly for...

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  • Oct 16, 2015 2:12 pm GMT
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Some see a nuclear power plant cooling tower. Others see a rat-hole. Hang onto your wallet. Photo credit Wollenkratzer/Wikimedia Commons.

Some see a nuclear power plant cooling tower. Others see a rat-hole. Hang onto your wallet. Photo credit Wollenkratzer/Wikimedia Commons.

Dominion Virginia Power’s latest Integrated Resource Plan (IRP) includes construction of a third nuclear reactor at North Anna, just as previous IRPs have done every year since 2008. What’s new this year is that we finally have a price tag. Scott Norwood, a witness for the Attorney General’s Office of Consumer Counsel, says Dominion’s $19 billion forecast will mean an average rate increase of approximately 25.7% over current Virginia retail residential rates.

The 2015 IRP shows cost estimates for the new nuclear plant have spiraled upwards. Norwood notes that the forecasted capital cost is currently 55% higher than in 2011. This capital cost is not only ten times the cost of new natural gas generation, it is also higher than Dominion’s solar energy option—which happens also to be its least-cost option for complying with EPA’s Clean Power Plan.

Indeed, the NA3 price tag makes it far more expensive even than the other nuclear plants currently under construction in Tennessee, Georgia and South Carolina. All three are behind schedule and over budget, which hardly inspires confidence in the industry’s ability to contain costs anywhere.

In his testimony to the State Corporation Commission, Norwood argues that North Anna 3’s high price tag means it is not reasonable to keep it in the IRP. Section 56-599 of the Virginia Code requires the Commission to make a determination whether the IRP is “reasonable” and in the public interest.

Including nuclear in an IRP doesn’t commit Dominion to building a reactor or the SCC to approving it, so the SCC has not previously chosen to weigh in. Nor have elected leaders yet responded to the rising cost numbers.

Legislators may be tempted to ignore North Anna 3 until Dominion secures an operating license from the Nuclear Regulatory Commission (anticipated in 2017) and applies to the SCC for a Certificate of Public Convenience and Necessity (with a decision likely in 2018).

Yet delaying the conversation is expensive. Dominion is already spending hundreds of millions of dollars annually on North Anna 3 development—and one way or another, Dominion expects customers to bear the cost.

In 2014 the company successfully lobbied for legislation shifting the costs it had incurred through 2013 onto its ratepayers, a move that sopped up Dominion’s overearnings and prevented a rate cut.

But those costs were chicken feed compared to what’s coming. By the end of 2018, Dominion will have spent close to $2 billion dollars on North Anna 3. The company can afford to front the money, in part because of 2015 legislation “freezing” rates until 2020 and allowing the company to keep what could amount to hundreds of millions of dollars more in excess earnings.

NAr costsIf the SCC waits until 2018 to consider the merits of North Anna 3 and then denies Dominion permission to move forward, the company will argue for the right to bill ratepayers for all that money it threw down the rat-hole. The SCC might not prove sympathetic, but General Assembly members maintain a strong record of doing anything Dominion wants.

Still, allowing Dominion to soak customers for $2 billion would be a welcome outcome compared to the alternative. Worse would be for the SCC to approve the plant—or more likely, for legislators to take it out of the hands of the SCC and simply vote to let Dominion proceed. Dominion has begun spinning a tale about North Anna 3 being needed for energy security, resource diversity, and compliance with new environmental rules. All of these are wrong, but they play into narratives that resonate with many lawmakers.

Meanwhile, the vast sums required for a new reactor would siphon money away from much more cost-effective strategies that can deliver carbon pollution reductions far sooner, including investments in solar and energy efficiency. That makes it critical for the SCC to put an end to the North Anna 3 rat-hole this year.

The Commission will hold a hearing on Dominion’s IRP on October 20. The case is PUE-2015-00035.

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Bob Meinetz's picture
Bob Meinetz on Oct 16, 2015

Ivy, do you have a link to Scott Norwood’s testimony?

Thanks

Nathan Wilson's picture
Nathan Wilson on Oct 17, 2015

Reading through the actual Dominion Virginia Power 2015 resource plan gives a much different impression of the situation than Ivy Main’s article (DVP web page).  The primary activity going on is that they will buy into the Atlantic Coast Pipeline, so they will have assured access to the (temporarily) cheap fossil fuel from the nearby Marcellus Shale formation, supplementing the Transco, TCO, and DTI pipelines (see page 71).

Way back on page A-101, there is a table of capital costs, which contradict Ivy’s implication that nuclear costs are out of line with other clean energy sources.  It gives the following values:

  •  Nuclear: $8.59/Watt ($8.95/W_avg, assuming 96% Capacity Factor, p. 87)
  •  Solar PV w/ Battery: $13.9/Watt ($46/Watt_avg, assuming 30% CF, p.85)
  •  Wind offshore: $10.7/Watt ($25.5/Watt_avg, assuming 42% CF)
  •  Solar PV: $1.92/Watt ($8.73/Watt_avg, assuming 22% CF, p. 87)

The levelized cost table on page 103 does show a cost advantage for solar over nuclear, before grid integration costs (such as the fossil fuel backup deployed with each solar farm) are included:

  •   Fixed tilt PV: $95.9/MWh
  •   North Anna 3: $126.5/MWh
  •   Biomass: $152/MWh
  •   Off-shore wind: $427/MWh
  •   Fossil gas CC: $72.8/MWh
  •   SCP coal: $138.4/MWh

The summary scorecard comparing several options (which include integration costs) for meeting the EPA Clean Power Plan rules is given on page 127.  It predicts that compared to the least cost fossil fuel based option (which has a portfolio average cost of $39.85/MWh), the solar option adds 8.6%, the nuclear option adds 14.5%, and the wind option adds 30.9%.  The solar option has 3 GW of PV, which produce an average of 0.66 GW; the wind option has 2.2 GW of wind, producing 0.92 GW on average; the average demand is 12 GW.  So the amount of clean energy generated by either renewable option is small compared to the output of the proposed nuclear expansion (1.4 GW average), and compared to Virginia’s existing nuclear fleet (3.4 GW nameplate).

So the nuclear option cost is not out of line with that of (fossil backed) solar and wind (and enormously cheaper than solar+batteries).  In fact, much of the cost increase is attributable to the fact that it makes more clean energy than the solar option (with 8% lower CO2 emissions in 2030, p. 118).  The nuclear option also delivers most of its clean energy long after the solar and wind plants have reached the end of their 25 year projected lifetimes.  As usual, the non-nuclear options mean more fossil fuel use, more air pollution, and more CO2 emissions. 

The very low grid average cost ($44/MWH in the nuclear option) compared to the new build cost of any of the options shows that grid costs are low when regulated utilities invest in long lived baseload assets like nuclear plants.

Hops Gegangen's picture
Hops Gegangen on Oct 17, 2015

If I were planning for a utility, I would look at the cost curves and the reasonably foreseeable product innovations over the investment timeframe.

It is virtually certain that the cost of solar and battery will fall in half by 2018, as SolarCity completes it’s gigafactory in NY producing 22% efficient cells at $.55/W. Likewise, 1366 Technology is ramping up production of Direct Wafer cells in NY. And 24M is building a factory to make grid-scale batteries.

Nor need we assume that all hydrocarbons will be fossil fuels in the future. Arterran Renewables has a process for converting sources of cellulose into a product that is a drop-in replacement for coal in existing power plants.

A number of companies, many in the U.K., have developed catalysts for efficient conversion of materials like plastic into diesel and methane. And of course companies like Pepsi are already making plastic out of biomass.

Just in the past week, I read two reports of new materials cheaper and better than the amines used to capture CO2 today. So you could imagine reasonably sequestering CO2 that is ultimately from biomass, and so net carbon negative.

There’s a lot going on out there that isn’t covered here on TEC.

Bob Meinetz's picture
Bob Meinetz on Oct 17, 2015

Nathan, thanks for following up on that. Suggestion: go to Ivy’s website (“original article”) and cut and paste your response. She’s good about replying to submitted comments.

Nathan Wilson's picture
Nathan Wilson on Oct 17, 2015

If battery costs fall by half, they will still be far too expensive to make solar power cost competitive at night.  For cell cost, remember that even today, PV cells only cost $0.32/Watt (SEIA 2014 year in review); so further tech advances aren’t that important.  The major factors for future solar cost declines are the same as for nuclear cost declines: supply chain experience leading to work efficiency and project risk reduction.

I actually think that Dominion’s proposed 3 GW solar deployment, which would yield 5.5% of annual grid demand, is a good long-term target (it would complement 60% nuclear very well, and will be innocuous when we reach 130% nuclear with the excess used for fuel synthesis). The problem with including it in the short/mid term plan (which makes a 38% reduction in CO2 emissions, mostly from increased use of fossil gas), is that it helps perpetuate the myth that we don’t need nuclear to get rid of fossil fuel use (the German grid demonstrates that even coal can out-compete energy storage in a wind&solar rich grid, and their pumped-hydro is around an order of magnitude cheaper than batteries).

The big problem with biomass can’t be fixed with technology; for a given amount of energy, biomass uses 30x more land than solar, plus there are the issues of soil nutrient depletion and air pollution.  In a future non-fossil world, I can see biofuel powering most of aviation, and maybe a small percentage of land and sea vehicles.  But the idea that we should devote even more of the Earth’s surface to bio-energy to also help out the grid (when we have a safe, affordable, and very low impact option in nuclear) seems beyond reckless.

Nathan Wilson's picture
Nathan Wilson on Oct 17, 2015

thanks.

Hops Gegangen's picture
Hops Gegangen on Oct 18, 2015

 

Note that the advance by Solar City was in panel cost as well, using copper rather than silver, etc.

There are sources of biomass that don’t require additional land. Most corn stover, for example, just decays in the field. Another huge source of cellulose is dead trees, which build up and result in intense forest fires. Harvesting that would be a double win in some places.

Algenol can produce biofuels from algae for $1.30 a gallon. That can be done in areas not suited to agriculture.

The issue I see with nuclear is the complexity — people have trouble dealing with the project management and the technology. With solar, a factory churns out parts just about anyone can install. 

If we can get to the point of building modular systems in factories, that would certainly inprove matters, especially if they can run on the existing waste rather than just creating more. 

 

Joris van Dorp's picture
Joris van Dorp on Oct 19, 2015

misplaced

Joris van Dorp's picture
Joris van Dorp on Oct 19, 2015

“Algenol can produce biofuels from algae for $1.30 a gallon.”

No, they can’t, unfortunately.

Ivy Main's picture
Ivy Main on Oct 19, 2015

Bob, try this link to Norwood’s testimony: http://www.scc.virginia.gov/docketsearch/DOCS/34bx01!.PDF. If that doesn’t work (and in the past this has been a problem due to a poor website), you will have to go to the docket search feature of the website at http://www.scc.virginia.gov/docketsearch, click on “search cases” and put in the case number PUE-2015-00035. That brings up the case information, and from there you follow the links to doucments. 

Rick Engebretson's picture
Rick Engebretson on Oct 19, 2015

I agree, “There’s a lot going on out there that isn’t covered here on TEC.” I would like to add there are a lot of half truths endlessly argued.

First, nuclear fission doesn’t deliver commercial electric power. Boiling water through a mechanical turbine, spinning a generator, creating Poynting Vectors (volts x current) over huge areas, managed with pervasive infrastructure delivers commercial electric power. And that doesn’t include the nuclear fission complexity. Nuclear electric power likely has a large role in out future, but the blow hards seem more intent on insulting other considerations than describing their own ideas in any meaningful detail.

As regards biomass, it is created in photsynthesis by “photo-excited electron transport,” The volts x current is used in molecular wires, and several “battery and membrane” steps are included. This is quite well known biochemistry. What biomass achieves is also the carbon sequestration, food and habitat, air and water and soil and marine properties that continue to make planet Earth unique. Can we copy it and scale it up?? I don’t know, but this certainly isn’t the place to try discuss it.

Some nuclear advocates work hard to dumb down biochemistry. But they really only dumb down their own advocacy.

Bob Meinetz's picture
Bob Meinetz on Oct 20, 2015

Thanks Ivy, first link worked.

I have no idea what kind of math Scott Norwood is using to arrive at his price to consumers for North Anna Three, but here are the facts: Dominion is building a 20MW solar facility in Northern Virginia at a cost of $47 million. NA3 will cost $19 billion and deliver 1450 MW. Assuming a generous capacity factor of 15% for Virginia solar and a conservative capacity factor of 90% for NA3, NA3 will deliver 435 times as much energy for 404 times the price.

Land use vs. fuel costs are probably a wash, because 1305 MW (1450 x .9 CF) would require 130 square miles of Virginia land covered with solar panels, worth at least $228 million at today’s prices. There’s no question NA3 would carry the day for emissions, because it’s going to be running day and night, rain or shine. Dominion’s plants have some of the lowest nuclear O&M costs in the country.

Texas-native Norwood’s LinkedIn entry touts his consulting expertise in “Oil & Energy”, and committing VA generation to 15% solar means committing a good chunk of the other 85% to natural gas. Might be a factor.

Mark Heslep's picture
Mark Heslep on Oct 19, 2015

The source for Mr Norwood’s capital cost analysis is “DVP’s Confidential Response to OAG 2-87 in Case No PUE-2015-0027”, and is redacted?  This is does not seem to be adequate justification for declaring in the article that Mr Norwood’s figure is “Dominion’s $19 billion forecast”.  

Mark Heslep's picture
Mark Heslep on Oct 19, 2015

Ivy – I notice on  your blog’s “About” page you state: 

“Virginia lags behind most other states in developing clean energy: wind, solar, and energy efficiency. We are missing out on huge opportunities for jobs and economic development, and for a cleaner environment. Besides, it’s embarrassing …”

The EIA’s profile of Virginia’s net electricity generation shows a near 1/4 share for nuclear, a little hydro, and a little “other renewable” ( biomass), which in the aggregate yields a 32% non-fossil share of all VA generation for July 2015.   Virginia is also home to the world’s largest pumped storage hydro plant (by power).  This mix has enabled residential power priced 10% below the US average, and 25% below for commercial power.  Hardly embarrasing.

By contrast, California has a non-fossile net share of 42% per EIA, but with a residential average power price 39% above the US average, and a commercial price 82% above the US average.

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