Virginia Could Get Its Own Clean Power Plan

Terry McAuliffe’s days as governor of Virginia are rapidly drawing to a close, but proposed carbon-dioxide regulations working through the administrative process could prove to be his most lasting legacy. If adopted, the rule would cap carbon emissions at large power plants in 2020 and then require 3% reductions annually for 10 years, reports the Richmond Times-Dispatch.

After convening a working group more than a year ago to develop recommendations on cutting power plant emissions, McAuliffe signed an executive order in May directing the Department of Environmental Quality to prepare the regulations. The State Air Pollution Control Board is expected to vote on the measure Thursday.

The regulations will be tied to the Regional Greenhouse Gas Initiative (RGGI), a cooperative including nine other states in the Mid-Atlantic and New England. The regional initiative will allow power companies to purchase carbon allowances from one another. The regional approach allows utilities in one state to purchase offsets from utilities in other states that might be able to reduce carbon output more cheaply.

DEQ models indicate that Virginia’s rule could increase the wholesale cost of electricity by about 7% by 2030, although the actual impact on consumers should be lower, say backers of the rule. In other states, expanded energy efficiency programs have offset the higher electricity rates with lower consumption with the result that electric bills are no higher.

While Attorney General Mark Herring has rendered the opinion that the state air board has the power to regulate carbon under its existing authority, others disagree. Air board regulations prevent it from enacting regulations more stringent than federal requirements, Jay Holloway, a partner with Williams Mullen, told the Times-Dispatch.

Republicans also have problems with the rule, arguing that it will weaken the Virginia economy. John Whitbeck, Republican Party chairman, accused McAuliffe of catering to liberal votes in Iowa and New Hampshire for his presidential bid.

Dominion Energy has remain notably silent as the carbon-cap proposal has wended its way through the system. “We already are a low-carbon producer of energy, and have continued to work to lower emissions both in anticipation of future state or federal regulation and because it’s the right thing to do,” said Dominion spokesman David Botkins.

The carbon-cap initiative ties back to the debate over the electricity rate freeze. Critics have lambasted Dominion for the freeze, which arose from fears of the impact of the Obama administration’s proposed Clean Power Plan. Dominion agreed to keep its base rates fixed, which has locked in excess profits for the first couple of years, in exchange for taking the risk of asset write-downs if the federal carbon regulations forced the utility to close one or more of its coal-fired power plants. The Trump administration is rolling back the Clean Power Plan, so Dominion critics say the freeze is no longer justified. But Dominion countered that the McAuliffe initiative still could compel a reduction in carbon emissions, and that the company still is at financial risk.

Bacon’s bottom line: The point that intrigues me is the argument that a 7% increase in electricity rates would not harm Virginia consumers because, by adopting energy efficiency measures, they would offset the higher rates with lower consumption. Voila! With this new alchemy, we can impose regulations that cost hundreds of millions of dollars to comply with, and miraculously, everybody wins and nobody loses!

Pardon my skepticism. The carbon-reduction rule may be justified (if you buy into the more alarmist predictions of the global warming movement) but let’s not pretend there is no cost to consumers. Yes, it’s true, business and homeowner investments in energy efficiency can counter the higher rates. But someone has to pay for those investments!

(This article first ran in Bacon’s Rebellion on November 15, 2017)

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About Jim Bacon

James A. Bacon is the author of “Boomergeddon” and publishes the Bacon’s Rebellion blog at www. Baconsrebellion.com.
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