Dominion defends rule’s goals as ‘feasible’

Source: Rod Kuckro and Elizabeth Harball, E&E reporters • Posted: Thursday, April 7, 2016

Energy giant Dominion Resources Inc. is making a strong business case in favor of U.S. EPA’s Clean Power Plan, telling a federal appeals court that compliance with the rule to curb carbon emission from power plants is “feasible” and that “effects on power plants and customers can be successfully managed” with market-based tools.

And in a rebuke to opponents of the EPA rule, led by West Virginia Attorney General Patrick Morrisey, Dominion said their “overly narrow interpretation of the Clean Air Act would be more disruptive to the power sector, and result in higher compliance costs for power plant owners and electricity customers.”

Richmond, Va.-based Dominion is the dominant utility in the state. Even with its diverse generation fleet, Dominion produced the lion’s share of its electricity — 32 percent — from coal-fired power plants in 2015.

But in its amicus brief filed Friday with the U.S. Court of Appeals for the District of Columbia Circuit, Dominion emphasized that the EPA rule “is compatible with current trends toward additional renewable and natural gas generation in the power sector based on market condition and customer demands.”

Dominion was the sole electric utility to file an amicus brief by the Friday deadline in advance of the appellate court hearing oral arguments on the EPA rule on June 2 (EnergyWire, April 4).

A handful of other utilities, including Southern California Edison Co. and Pacific Gas and Electric Corp., had earlier intervened in the case on EPA’s side, but most in the power sector are seeking to block the rule.

Still, Dominion spokesman David Botkins made a point of saying the brief does not amount to “an endorsement” of the Clean Power Plan.

That comes as news to some, such as Walton Shepherd, a staff attorney with the Natural Resources Defense Council who also is a member of Virginia Gov. Terry McAuliffe’s stakeholder group weighing compliance with the EPA rule.

“They’ve been consistent in their support of the Clean Power Plan” in the group’s meetings, Shepherd said.

He praised Dominion’s brief for recognizing that the Clean Power Plan goals “are actually imminently achievable” and for warning against an assault on “market-based approaches” to compliance such as emission trading that can lower costs for customers.

“If you look at their emissions trajectory, it is already in a downward trajectory compared to 10 or 20 years ago,” Shepherd said. “So they’re basically saying, ‘We got this.'”

Bill Becker, executive director of the National Association of Clean Air Agencies, said Dominion “should be given credit. They could have sat on the sidelines and done nothing. But to their credit they responded appropriately as one should when the regulatory agency meets most of the company’s expectations.”

He commended the company for “calling out” Morrisey and other petitioners “who have been arguing against the flexibility” the EPA rule offers in terms of compliance options. “Taking that flexibility away would result in more of their [coal] plants shuttering,” he said.

‘Lowest cost’ is Dominion’s goal

“Our two points are that government and industry must plan accordingly if the Clean Power Plan moves forward, and we want to pursue the option that results in the lowest cost for all our customers,” Dominion’s Botkins said.

“We contend that two types of flexibility the rule authorizes — the ability to average and trade emission credits among multiple power plants, and the ability to customize an emission reduction glide path between 2022 and 2030 — could make the rule significantly more workable,” he said.

Botkins emphasized that the brief “endorses the widely held and long-standing view that the Clean Air Act allows and encourages the use of market-based programs.”

“Electric utilities such as Dominion have a long history of successfully using similar programs to comply with past Clean Air Act rules that have achieved substantial reductions in sulfur dioxide, nitrogen oxides and other pollutants,” he said.

Paul Patterson, an analyst with Glenrock Associates in New York who follows Dominion, said that not all utilities can make the same case as Dominion.

“They clearly have the vision so they’re pretty well-positioned. You’re talking about one of the larger, more sophisticated utilities that has a large amount of natural gas infrastructure, nuclear expertise and now they’re involved in renewables,” he said.

Parties opposed to the EPA rule were reluctant to comment on Dominion’s brief.

A spokesman for coal company Alpha Natural Resources Inc., which operates in Virginia, declined to comment, as did a spokeswoman for the American Coalition for Clean Coal Electricity, a national group that is participating in the legal challenge of EPA’s climate rule.

A spokeswoman for Virginia-based Old Dominion Electric Cooperative, which has been critical of the EPA rule, also declined to comment on the brief.

This story also appears in EnergyWire.