August 24, 2018

 

Mr. Al Christopher, Director Energy Division

Department of Mines, Minerals and Energy

1100 Bank Street #817

Richmond, Virginia  23219

 

Dear Mr. Christopher:

Columbia Gas of Virginia (“CVA”) appreciates the opportunity to offer comments on the 2018 Virginia Energy Plan (“Plan”). As the Department of Mines, Minerals and Energy (“DMME”) assembles the 2018 Virginia Energy Plan, CVA urges the DMME to recognize the fundamental importance of natural gas, natural gas infrastructure, and natural gas-fired power generation in the lives of every Virginian. Natural gas has contributed greatly to the reductions in carbon dioxide emissions over the past decade and will continue to play an important role. Natural gas is abundant, domestically produced and critical to having a reliable and affordable energy source.

CVA, one of seven state operating companies of NiSource Inc., is headquartered in Chester, Virginia and employs over 400 Virginians across the state. CVA is a gas distribution company, serving approximately 265,000 residential, commercial, and industrial customers in 98 cities, counties and towns across the Commonwealth.  CVA provides that service through 5,185 miles of mains and 264,330 service lines that it owns, operates, and maintains. The gas distribution industry, as a whole, safely and reliably serves more than 1.2 million customers in the Commonwealth.

Natural Gas Should Continue to Play an Important Role in Virginia’s Energy Plan

Title 67 of the Code of Virginia, Virginia Energy Plan, sets forth Virginia’s energy objectives which include:

• minimizing the Commonwealth's long-term exposure to volatility and increases in world energy prices through greater energy independence;
• ensuring the availability of reliable energy at costs that are reasonable and in quantities that will support the Commonwealth's economy;
• optimizing intrastate and interstate use of energy supply and delivery to maximize energy availability, reliability, and price opportunities to the benefit of all user classes and the Commonwealth's economy; and 
• maintaining access to this abundant, domestically-produced energy source is critical to heating our homes and businesses, powering our electric grid, and growing our economy.     

Natural gas meets each of these objectives.  For example, according to the Energy Information Administration’s Virginia profile, more than half of all electricity in 2017 was produced via natural gas-fired generation.  This is an increase of 100% since 2012, and nearly 400% since 2008.  Increased natural gas electricity production provides reliable, affordable generation and has contributed significantly to reductions in carbon dioxide emissions.  The Plan should recognize these benefits and encourage the continued use of natural gas as an integral part of Virginia’s energy future. Electric generation that relies heavily on renewables will increase prices for Virginia consumers, and jeopardize generator reliability.  

In addition to its use in electric generation, natural gas fuels Virginia’s economy through its use in the commercial and industrial sectors.  Manufacturers rely on natural gas because of its affordability and reliability.  Many industrial and commercial customers in Columbia’s service territory have switched to natural gas and realized both cost savings and a reduced carbon footprint.  Availability of natural gas is needed for continued economic growth in the Commonwealth.  Further, residential customers prefer natural gas for space and water heating and for cooking.  Columbia has experienced strong growth over the past several years and expects that growth to continue.

Natural Gas Infrastructure

The recent cold weather events in early January of this year in the Mid-Atlantic and Northeast are a case study in the importance of ensuring sufficient infrastructure between natural gas producers and consumers. In early January, average daily temperatures were 10 to 15 degrees below average in Virginia, and this cold weather generated considerable demand from customers who sought to keep their homes and businesses warm.  The interstate and intrastate pipelines that bring natural gas from producers, located in Southwest Virginia, West Virginia, Pennsylvania and Ohio, are constrained due to lack of infrastructure. The enormous supply potential, estimated to last more than a century at current consumption rates, in the United States could not meet demand, forcing, in some cases, distribution companies to curtail industrial customers. Without increased deployment of pipeline infrastructure, manufacturers, and the hundreds of thousands of Virginians that they employ, will remain at risk of future curtailment.

Energy Efficiency of Natural Gas

A further objective of Virginia’s Energy Plan is stated in Virginia Code § 67-101.6 as “using energy resources more efficiently.” Not only are pipelines the safest method of transporting our energy resources, but they are also the most efficient method of energy transportation. The national average line loss for electric transmission and distribution in the United States is around 5%, according to the Energy Information Administration. A recent Washington State University study found that as little as 0.1% of total natural gas delivered is emitted from distribution systems, resulting in considerable energy efficiency savings for natural gas customers. While CVA acknowledges that some of our largest customers are electric generating facilities, pipeline transportation is the most efficient method of delivering energy to consumers.

CVA Promotes the Most Efficient Use of Natural Gas

The 2008 General Assembly enacted House Bill 543 (“CARE Act”) which allowed for the creation of local distribution company energy efficiency programs. CVA’s energy efficiency program has resulted in energy savings of more than $13.5 million across tens of thousands of customers since its inception eight years ago, in addition to a reduction in overall emissions. This program responds to customers’ interest in increasing their energy efficiency and reducing their energy costs. CVA’s recent filing with the SCC indicates that a residential customer could save from approximately $25 to over $200 per year. Further, over the long term, reducing the overall energy needs of CVA’s customers will result in reduced capacity needs – a benefit realized by Virginians.

Any discussion of energy efficiency must also take into consideration the use of combined heat and power (CHP) or waste heat to power (WHP) systems. The Governor and the General Assembly recently recognized the benefits of CHP in the Grid Transformation and Security Act (Senate Bill 966), the 2018 omnibus energy bill, which includes language directing Dominion to consider deploying 200 MW of CHP and WHP by 2024, through either supply-side or demand-side incentives, over the next five years in its next integrated resource plan.

Virginia is uniquely positioned in our economic reliance on critical infrastructure assets, including Department of Defense installations, data centers, and universities. This reliance has generated a crucial need to create and maintain resiliency for these sites, a role that can be filled by the enhanced deployment of CHP and WHP systems. Onsite, gas-fired systems ensure continuity in the event of an emergency, in addition to cost savings for customers who benefit from pipeline transportation efficiency.

Carbon-Trading and “Green” Energy

While the carbon-trading regime proposed by Governor McAuliffe’s Administration, and continued by Governor Northam’s administration, is not finalized, CVA foresees natural gas as being an integral part of any plan to reduce carbon dioxide emissions. In fact, natural gas use in Virginia increased more than 50% between 2003 and 2014, allowing for a 25% reduction of carbon emissions, according to the Environmental Protection Agency. In Dominion Energy Resource’s 2018 Integrated Resource Plan, each forecast scenario call for at least eight new gas-fired power stations by 2033. Although the total cost of the carbon-trading regime is contested, Virginia electric utilities and their customers stand to benefit from economically-priced natural gas and the resulting reduction in carbon emissions.

Throughout the 2018 Plan process, the DMME’s primary focus is on renewable energy, and CVA welcomes it as part of an ‘all of the above’ energy strategy.  The Plan should clearly recognize the supportive role that natural gas plays with wind, solar and hydro energy sources. Renewable energy is reliant on specific weather conditions; however, when suboptimal conditions are present and generation drops, our grid must still meet the demand of Virginia consumers.  A typical gas-fired generator can be brought online within a matter of minutes during these suboptimal events. Without natural gas generation to bridge the gap between supply and demand when renewable energy fails, electricity prices will increase and the grid could fail to the meet the needs of Virginians, and putting Virginia’s critical infrastructure and economic viability at risk.

For example, before the 2017 Solar Eclipse, the Department of Energy estimated “. . .that PV [photovoltaic] output will drop 5 gigawatts (GW) below typical generation levels during the eclipse” and that “the burden of compensating for the lost energy from solar generators will fall mostly on natural gas powered turbines, which are able to ramp up ahead of the eclipse.” Although solar eclipses are rare, cloudy weather, wind-less days and draughts are much more common, and all will negatively impact renewable electric production. Natural gas is necessary to ensure the reliability and resiliency of the electric grid.

Renewable Natural Gas

In Virginia, there is a great potential to reduce emissions by harnessing a byproduct of everyday industry, while increasing our production of renewable energy. There are more than 50 solid waste landfills currently in operation today, and one of the natural byproducts of solid waste decomposition is methane, the primary component of natural gas.  Currently, these sites either flare the byproduct or vent it directly into the atmosphere, accounting for around 14% of total methane emissions nationwide, according to the Environmental Protection Agency. Landfill methane is not the only source of renewable natural gas (RNG), it can also be produced via wastewater treatment or from livestock operations.

The greatest challenge to introducing these sources into the gas distribution system is the cost of the infrastructure required to scrub the byproduct of non-methane particles in order to meet the gas quality standards that protect our customers.  Credits available through the renewable fuel standard, a program authorized under the 2005 Energy Policy Act, are due to sunset in 2022.  Given that these are renewable sources that would otherwise go unused, CVA urges that DMME include renewable natural gas as a potential recipient in any renewable energy incentives put forth in the Virginia Energy Plan.

Conclusion

The stated goal of the Energy Plan is to “provide a strategic vision for the energy policy of the Commonwealth over the next 10 years” and this vision must be realistic about the critical role played by natural gas in heating our homes and businesses, powering our electric grid, energizing our manufacturers, and reducing carbon dioxide emissions. Our abundant domestic supply of natural gas serves as an asset to every Virginian and CVA urges the DMME to consider this fact in the Plan.

Recommendations for the 2018 Virginia Energy Plan

• Recognition of the critical role natural gas plays in growing Virginia’s economy and improving the lives of every Virginian.
• Recognition that the abundant domestic supply of natural gas provides customers an economic and reliable energy source
• Recognition that increasing natural gas use in power generation significantly reduces carbon dioxide emissions, and ensures a reliable electric grid.
• Inclusion of renewable natural gas, or biomethane, in any definition of renewable energy put forward by the Governor or the Legislature.

 

Regards,

 

Brentley K. Archer

President and COO

Columbia Gas of Virginia

1809 Coyote Drive

Chester, Virginia 23836