Report claims new coal plant will lead to higher rates

A report, released by the Wise Energy for Virginia Coalition, which includes five environmental groups, argues that consumers who receive power from Old Dominion will pay more for electricity from the coal plant than they would with the use of renewable energy and efficiency programs.

The environmental coalition commissioned the study by Synapse Energy Economics Inc., an energy research and consulting firm based in Cambridge, Mass. The report concluded that rising construction expenses, economic uncertainty and the costs of controlling carbon dioxide emissions will lead to unnecessarily high electricity rates for consumers who depend on Old Dominion for their power.

The cooperative has proposed to build what would be the state's largest coal plant in the town of Dendron, about 50 miles west of Norfolk. Cypress Creek Power Station would cost up to $6 billion and generate as much as 1,500 megawatts of electricity.

"The confluence of factors described in this report make it unlikely that investment in a new coal-fired facility at this time of regulatory uncertainty and increasing costs will be the lowest-cost option for customers," the report's authors wrote. "This is especially true given the project's $6 billion estimated construction cost, the likely costs of complying with federal regulation of CO2 emissions, potential structural changes in the natural gas market leading to lower prices, both current and long-term, and the availability of low cost energy efficiency."

Old Dominion is owned by 11 mostly rural electricity cooperatives in Virginia, Maryland and Delaware. Those cooperatives buy electricity from Old Dominion and deliver it to their members, including those in A&N Electric Cooperative's territory on the Eastern Shore and in Community Electric Cooperative's area west of Hampton Roads.

The environmental groups are hoping the economic argument will convince Old Dominion and other utility companies to stop relying on a fossil fuel that causes pollution and depends on mining practices that damage the landscape. Based on the report's findings, they argue that a combination of energy-efficiency efforts, wind turbines, biomass energy from wood materials and cleaner natural gas-fired plants would equal Cypress Creek's output but would cost ratepayers 1.7 cents to 4.5 cents less per kilowatt hour.

"Electric utilities are stuck in an old way of thinking," said Tom Cormons, who directs the Virginia office of Appalachian Voices, a member of the Wise Energy coalition. "It's useful to make a financial case, which to a growing extent reflects the environmental reality."

Old Dominion officials have argued that coal is the best source for generating enough baseload power - electricity that is constantly available - to meet growing demand in its territory. Renewable options such as wind and solar power are not reliable, they have said, and energy-efficiency programs cannot reduce usage enough to offset growing demand.

"It is still the least-expensive way for us to make sure we have the electricity we need and at an affordable price," said Jeb Hockman, Old Dominion's spokesman.

The technology to capture and contain carbon dioxide emissions remains far from developed, leaving Old Dominion without a viable method to reduce the 14.6 million tons of carbon dioxide each year that it projects the plant will produce. With the expected implementation of President Barack Obama's "cap-and-trade" program, which would limit carbon emissions and require companies to pay for their pollution, Old Dominion and its customers would end up with a hefty tab, the report said.

The report also questioned the cooperative's assessment of growing demand and the need for a plant of the proposed size of Cypress Creek.

Old Dominion has factored the costs of cap-and-trade requirements and carbon controls into its projections for Cypress Creek, Hockman said. "We still feel like it's very economically feasible and makes a lot of sense."