SECTION 2 - ELECTRICITY

Transcription

1 Virginia s Electric Prviders SECTION 2 - ELECTRICITY Electricity is prvided t retail electric custmers by: Three investr-wned utilities prviding 84.2 percent f retail sales; Thirteen electric cperatives prviding 11.3 percent f retail sales; and Eight municipal utilities prviding 4.5 percent f retail sales. Investr-wned electric utilities include: Dminin Virginia Pwer; Appalachian Pwer (American Electric Pwer); and Old Dminin Pwer (Kentucky Utilities). The 16 municipal electric utilities, serving custmers lcated in their lcalities, include: The Cities f Bedfrd, Bristl, Danville, Franklin, Harrisnburg, Manassas, Martinsville, Radfrd, and Salem; The Twns f Blackstne, Culpeper, Elktn, Frnt Ryal, Richlands, and Wakefield; and Virginia Tech (serving the Twn f Blacksburg). Figure 2-1: Electric Utility Service Territries 1 1 SCC, June 24, Shws Allegheny Pwer service territry which was transferred in 2010 t Rappahannck and Shenandah Valley Electric Cperatives. Sectin 2 - Electricity Page 2-1

2 Electric Cnsumptin Virginians cnsumed 110 millin megawatt hurs f electricity in Electricity use has grwn by apprximately 3 percent per year ver the last 10 years, with abut tw thirds f the grwth attributable t new custmers and ne third t grwth in use per custmer. Grwth is nt unifrm acrss the state, mst being in the Nrthern Virginia, Hamptn Rads, and Richmnd areas. Table 2-1: Electricity Sales by Type f Utility 2 Item Other Full Service Prviders Prvider Investr- Public Cperative Energy Ttal Owned Number f Entities Number f Retail Custmers 2,816, , ,435 1,157 3,578,883 Retail Sales (thusand MWh) 92,727 4,960 12, ,106 Percentage f Retail Sales Revenue frm Retail Sales (millin $) 6, , ,809 Percentage f Revenue Average Retail Price (cents/kwh) Table 2-2: Electricity Sales - Tp Fur Retailers f Electricity in Virginia 3 Entity Type f Prvider All Sectrs Residential Cmmercial Industrial Transprtatin 1. Dminin Investr- Owned 74,453 28,082 38,113 8, Appalachian Pwer Investr- Owned 16,350 6,638 4,161 5, Rappahannck Cp Cperative 4,055 2, , NOVEC Cperative 3,230 1, Ttal, Tp Fur 99,656 39,363 44,066 16, Ttal State Sales 110,106 44,597 46,878 18, % Ttal State Sales (Thusand megawatt hurs) 2 Adapted frm EIA, State Electricity Prfile, Retail Electricity Sales Statistics, June 18, Data mdified t shw sales prvided by cperatives fr custmers frmerly served by Allegheny Pwer. 3 Adapted frm EIA, State Electricity Prfile, Tp Five Retailers f Electricity, with End Use Sectrs, 2008, June 18, Data mdified t shw sales prvided by cperatives fr custmers frmerly served by Allegheny Pwer. Sectin 2 - Electricity Page 2-2

3 Virginia s utilities serve majr military bases, ne f the largest prts in the United States, and a large share f the cmputer infrastructure supprting the Internet and centralized cmputing. This results in a greater cmmercial lad in Virginia than in many ther states. Figure 2-2: Percent f Retail Electric Sales by Custmer Class, % 0.2% 40.5% Residential Cmmercial Industrial Transprtatin 42.6% Virginia s Electric Utility Regulatry Structure Virginia re-regulated electricity in Electricity is prvided pursuant t a mdified cst f service regulated mnply system. Utilities serve exclusive territries and have an bligatin t serve. Rates and terms f service fr investr-wned utilities and electric cperatives are subject t State Crpratin Cmmissin (SCC) review. 5 Utilities are entitled t recver their reasnable and prudent perating expenses and earn up t a reasnable rate f return n the value f their capital investment in generating plants, transmissin and distributin systems, and ther facilities. Calculatin f a reasnable rate f return includes a cmparisn t the rates f return fr peer electric utilities in the Sutheastern United States. Base rates are reviewed every tw years. Rates f return can be increased r decreased based n a utility s perfrmance. Additins t base rates are permitted thrugh applicatin f rate adjustment clauses which allw the recvery f csts fr: Fuel and purchased pwer (fuel adjustment clause); Transmissin, as apprved by the Federal Energy Regulatry Cmmissin; Envirnmental and reliability imprvements; Energy efficiency prgrams; 4 EIA, Virginia Electricity Prfile, Table 8, Retail Sales, Revenue, and Average Retail Price by Sectr, 1990 Thrugh May 7, Virginia Electric Utility Regulatin Act, Chapter 23 f Title 56 f the Cde f Virginia, June 19, 2010 Sectin 2 - Electricity Page 2-3

4 Renewable energy needed t meet the state s renewable prtfli standard; Cst f new generating facilities; and A financial emergency. Electric cperatives are authrized t increase r decrease rates by 5 percent in a three-year perid (nt including fuel factr adjustments) withut SCC apprval. Investr-wned electric utilities are als required t cmplete a 15-year Integrated Resurce Plan (IRP) that sets ut hw the utilities will meet their custmers future demands fr electricity and maintain adequate and reliable service. IRPs are t be updated every tw years. 6 Electric utilities are required t be members f a reginal transmissin rganizatin (RTO). The PJM Intercnnectin serves as the RTO fr Virginia and areas t the nrth and west. PJM perates the largest centrally dispatched electric grid in the wrld by crdinating the mvement f electricity in thirteen states. Rates and terms f service fr municipal electric utilities are set by each City r Twn Cuncil. Reliability Requirements Virginia s utilities must meet natinal standards established by the Nrth American Electricity Reliability Cuncil (NAERC) t ensure the reliability f electric service. Virginia is included in tw regins f the Nrth American Electricity Reliability Cuncil. The Sutheastern Electric Reliability Cuncil (SERC) that cvers the Dminin regin; and The Reliability First Crpratin (RFC, successr t the East Central Area Reliability Cuncil) that cvers the Appalachian Pwer regin in Virginia. Figure 2-3: Nrth American Electric Reliability Cuncil (NAERC) Regins 7 6 Electric Utility Integrated Resurce Planning, Chapter 24 f Title 56 f the Cde f Virginia, June 24, Slcmhuse, The US Pwer Grid, June 19, 2010 Sectin 2 - Electricity Page 2-4

5 Electric Generatin Virginia s utilities use a mix f utility-wned in-state generatin, ut-f-state generatin, cntractual purchases f electricity frm in-state and ut-f-state prducers, and spt purchases f electricity frm the PJM whlesale market t meet custmer lads. Apprximately ne-third f Virginia s electric supply cmes frm pwer generated ut f state. Mst imprts cme frm cal-fired plants lcated west and nrth f Virginia. A small amunt f imprts cmes frm renewable prjects such as wind prjects in West Virginia, Illinis, and Indiana. Electric generatin is measured tw ways, net generatin and generatin capacity. Net generatin is the amunt f electricity generated ver time. It is expressed in megawatt hurs (MWh). Generatin capacity is the amunt f electricity that can be generated at any ne time. It is expressed in megawatts (MW). Net Generatin Virginia s electricity generatin facilities prduced 72,678,531 megawatt hurs f electricity in ,780,402 megawatt hurs (82 percent) were generated in plants perated by electric utilities; and 12,898,129 megawatt hurs (18 percent) were generated in plants perated by independent pwer prducers and industrial cmbined heat and pwer facilities. Electricity is generated frm diverse surces. Significant amunts f pwer cme frm cal, nuclear, and natural gas, with small amunts frm renewable surces and petrleum. Figure 2-4: In-State Net Generatin by Fuel Type, % 1.6% 12.8% 38.4% 43.7% Cal Nuclear Natural Gas Renewables Petrleum 8 EIA, State Electricity Prfile, May 11, 2010 Sectin 2 - Electricity Page 2-5

6 Generatin Capacity Dminin, Appalachian Pwer, and ODEC wn pwer plants in Virginia with a cmbined peak generatin capacity f 18,828 megawatts. Municipal utilities have very little generatin capacity, purchasing almst all pwer thrugh lng-term, whlesale pwer cntracts. Virginia s merchant and industrial cgeneratin plants prduce pwer fr the whlesale marketplace and internal industrial use. These have a generatin capacity f 4,648 megawatts. The ten largest pwer plants in size make up 60 percent f the generatin capacity in the state. Figure 2-5: Virginia Electric Generating Capability (MW) by Fuel Type, ,161 13% 2,418 10% 677 3% 691 3% 3,404 15% 5,773 25% 7,351 31% Natural Gas Cal Nuclear Pumped Strage Petrleum Hydrelectric Other Renew ables Plant Table 2-3: Ten Largest Plants by Generatin Capacity Primary Energy Surce r Technlgy Operating Cmpany Net Summer Capacity (MW) 1. Bath Cunty Pumped Strage Virginia Electric & Pwer C 2, Nrth Anna Nuclear Virginia Electric & Pwer C 1, Pssum Pint Gas Virginia Electric & Pwer C 1, Chesterfield Cal Virginia Electric & Pwer C 1, Surry Nuclear Virginia Electric & Pwer C 1, Yrktwn Cal Virginia Electric & Pwer C 1, Tenaska VA Gen Sta Gas Tenaska Virginia Partners LP Clver Cal Virginia Electric & Pwer C Dswell Energy Center Gas Dswell Ltd Partnership Chesapeake Cal Virginia Electric & Pwer C 710 TOTAL 14,164 9 EIA, State Electricity Prfiles, May 11, 2010 Sectin 2 - Electricity Page 2-6

7 Generatin facilities are lcated acrss Virginia. Sme are near ppulatin centers while thers are lcated in remte areas requiring additinal electric transmissin t deliver the pwer t ppulatin centers. Figure 2-6: Lcatin f Electric Pwer Generatin Plants by Primary Fuel Cnsumed 10 Virginia City. 10 Virginia Energy Patterns and Trends. Lcatin f Electric Pwer Generatin Plants by Primary Fuel Cnsumed, June 19, Nte that the generatin resurces shwn n these maps will be augmented by the new generatin resurces, including the cal/bimass Virginia City Hybrid Pwer Statin in Wise Cunty (t be nline in 2012), and the natural-gas Warren Cunty Pwer Statin (t be nline in 2015) Sectin 2 - Electricity Page 2-7

8 Renewable Prtfli Standard Virginia established a vluntary renewable prtfli standard (RPS) fr investr-wned utilities t prvide increasing amunts f electricity frm renewable resurces. Targets, measured against 2007 base lad sales (ttal less sales attributable t nuclear generatin), are: 4 percent by 2010; 7 percent by 2016; 12 percent by 2022; and 15 percent by A utility is eligible t earn an enhanced rate f return f up t 50 basis pints if it meets the RPS targets and is nt receiving a separate perfrmance incentive fr verall utility peratins. Utility RPS plans and cst recvery are subject t SCC apprval. Table 2-4: Generatin Needed t Meet RPS Targets (MWh) 11 Utility Base Line 2010 Target 2016 Target 2022 Target 2025 Target Dminin 43,318,649 1,732,746 3,032,305 5,198,238 6,497,797 Appalachian 16,377, ,080 1,146,390 1,965,240 2,456, Surced frm applicatins fr apprval f Renewable Prtfli Standards filed with the State Crpratin Cmmissin in case numbers PUE (Appalachian Pwer) and PUE (Dminin Pwer). Sectin 2 - Electricity Page 2-8

9 Generating Plant Lading Order PJM is the reginal transmissin rganizatin (RTO) serving Virginia and areas t the nrth and west. PJM wrks with electric generatrs and utilities t perate the whlesale electric market and ensure reliable surces f electricity are available in the regin. PJM selects which pwer plants are needed t meet electric lads based n plant availability and cst and capacity t deliver the electricity frm the generating plant t lad centers. Generatin wners bid generatin and demand side management capacity int the PJM marketplace. PJM selects the lwest cst resurces first, and mves up the cst curve until the demand is satisfied. The cst bid fr the last plant needed t meet demand sets the price fr all electricity delivered during the bid perid. This prcess results in the fllwing mix f fuel types being used t supply pwer in the PJM system. Table 2-8: PJM Electric Generatin by Fuel Type, CY Electricity Imprts Virginia utilities d nt wn in-state generatin capacity sufficient t meet the state s peak lad plus the reserve capacity required by federal regulatin. It is smetimes less expensive t purchase electricity n the whlesale market than t generate the electricity at in-state, utility-wned facilities. 12 PJM Year in Review Sectin 2 - Electricity Page 2-9

10 These factrs resulted in Virginia imprting 34 percent f electricity cnsumed in the state during As demand has grwn faster than additins t generatin, imprts have increased by an average f 1.4 percent per year ver the last 10 years. Virginia s imprts cme frm: Dminin s 1,632 megawatts Munt Strm electric generating statin in West Virginia dedicated t serving Dminin s custmers; American Electric Pwer s generating plants dedicated t serving AEP custmers; Kentucky Utility s generating plants dedicated t serving KU custmers; and Generating plants nt dedicated t serve nly Virginia custmers, primarily lcated in the PJM Intercnnectin area that runs frm Virginia nrth t New Jersey and west t Illinis. Figure 2-8: Virginia s Net Electricity Imprts, Electric Rates Virginia s electric rates vary amng the state s electric utilities 14, but n average have histrically remained belw the natinal average. 13 EIA. State Electric Prfiles, Virginia, 14 See fr data n residential electric rates fr individual Virginia electric utilities Sectin 2 - Electricity Page 2-10

11 Table 2-6: Average Retail Electric Rates by Custmer Class (cents/kwh) 15 Sectr YTD Thru Mar 2010 Residential Cmmercial Industrial Transprtatin All Sectrs VA All Sectrs US VA as % f US Future electric rates in Virginia will be affected by factrs such as: Utility perating csts; Fuel csts; Cst f capital; Need fr investments in new generatin and transmissin infrastructure; Level f utility investments in energy efficiency and renewable prtfli standard prjects; and Rates f return fr Virginia utilities. The federal Energy Infrmatin Administratin (EIA) predicts that natinally, electric rates will fall thrugh 2011 as fssil fuel csts and demand fr electricity drps. Csts shuld then shw a mderate increase thrugh 2035 in respnse t rising fuel prices and the cnstructin f new pwer plants. Figure 2-7: EIA Electricity Price Frecast EIA, State Electricity Prfiles, June 24, EIA, Annual Energy Outlk, 2010, Electricity Prjectins, May 7, 2010 Sectin 2 - Electricity Page 2-11

12 Factrs Affecting Electric Generatin Csts Electric generating csts vary based n the type and age f generating plants, the size f the plants, capital csts and the amunt that has been depreciated, the cst f fuel and persnnel, and ther peratinal csts. Older plants typically have lwer csts. Hwever, these plants may be mre expensive if substantial envirnmental cntrls have t be added. Larger plants generally ffer an ecnmy f scale due t spreading infrastructure and persnnel csts ver larger amunts f generatin. Fuel csts vary by fuel type. The relative cst f fuel als varies ver time. Fuel csts are typically cmpared n a cst per millin Btu input. Differing types f electric generating plants require different amunts f manpwer. Sme plants, such as peaking natural gas plants, can perate with few, if any, wrkers present. Others, such as a bimass r cal plants, require larger numbers f wrkers t manage fuel, envirnmental cntrls, and ash. Table 2-7: Average Whlesale Cst f Pwer by Pwer Plant Type (cents/kwh), Plant Type 2008 Csts Operatin Nuclear Cal, and Oil Hydrelectric Gas Turbine and Small Scale Maintenance Nuclear Cal and Oil Hydrelectric Gas Turbine and Small Scale Fuel Nuclear Cal and Oil Hydrelectric 0 Gas Turbine and Small Scale Ttal Nuclear Cal and Oil Hydrelectric Gas Turbine and Small Scale EIA. Electric Pwer Annual. Average Pwer Plant Operating Expenses fr Majr U.S. Investr-Owned Electric Utilities, June 19, 2010 Sectin 2 - Electricity Page 2-12

13 Table 2-8: Average Delivered Cst f Fssil Fuel t Utility Pwer Plants ($/MMBtu), Type f Fuel Ttal All Sectrs Electric Pwer Sectr Electric Utilities Independent Pwer Prducers Bituminus Cal Petrleum Natural Gas Whlesale Electricity Pricing Whlesale electric prices in the PJM system are affected by the cst and availability f generatin and the availability f transmissin capacity t carry pwer frm generating plants t lad centers. Whlesale prices are higher in areas that d nt have sufficient lcal generatin r lngdistance transmissin capacity t meet peak electric lads as the demand in these areas must be met by lcal, mre cstly generating plants. This methd f whlesale pwer pricing is called Lcatinal Marginal Pricing (LMP). LMP in castal areas with mre cngestin, such as Virginia, generally runs higher than in areas t the west, such as Illinis r Kentucky. Utilities in generatin and transmissin cnstrained areas must pass higher LMP alng t their custmers thrugh higher retail rates. Whlesale electric csts in the PJM market vary ver time as the demand fr pwer grws r shrinks, as input csts such as fr fuel change, and as new generatin and transmissin capacity is added t the regin. Fr example, whlesale electric csts have drpped during 2009 and 2010 as demand and fuel csts have drpped. 18 EIA. Cst and Quality f Fuels fr Electric Plants Editin, June 19, 2010 Sectin 2 - Electricity Page 2-13

14 Table 2-9: Whlesale Electric Prices (LMP) by State ($/MWh), Table 2-10: Whlesale Electric (LMP) Prices in PJM ($/MWh), Mnitring Analytics, LLC State f the Market Reprt fr PJM, Table 2-57, Page Mnitring Analytics, LLC State f the Market Reprt fr PJM, Table 2-55, Page 65 Sectin 2 - Electricity Page 2-14

15 Cst f New Generatin Electric generatrs cnsider a variety f factrs when deciding t build a new generating plant. These factrs can be evaluated t calculate a levelized cst f pwer. Factrs include: Fuel csts and their expected change ver time; Risk assciated with being able t successfully permit and cnstruct each type f plant; Time needed t cnstruct the plant; Expected life f the plant; Cst f capital; Capacity factr f the plant; and Other. Table Estimated Levelized Cst f New Generatin Resurces, DOE EIA Annual Energy Outlk Estimated Levelized Cst f New Generatin Resurces, June 19, 2010 Sectin 2 - Electricity Page 2-15

16 Future Electric Demand PJM frecasts f summer peak demand and cnsumptin predict: Demand in Dminin s cntrl area will grw n average 2.5 percent per year ver the next 10 years. Cnsumptin is frecast t grw by 2.4 percent per year. Demand in Appalachian Pwer s cntrl area will grw by 1.3 percent per year. Cnsumptin is frecast t grw by 1.2 percent per year. Based n these grwth rates, Virginia will need t add ver 7,200 megawatts f capacity by 2020 t maintain the same electricity imprts rati f 38 percent as in Virginia will need t add 11,700 megawatts f capacity t meet 100 percent f prjected grwth. These grwth frecasts may increase in the future as the state and natinal ecnmy recvers, and as the electric market changes due t electric cars, added cmputing capacity, and ther factrs. Table 2-12: Frecast f Peak Electric Demand in Virginia (MW) 22 Year Peak In-state Demand (MW) Grwth at 2.26% In-state Generatin Capacity (MW) at 38.3% Imprt Rati In-state Grss Cnsumptin (MWh) Grwth at 2.16% Cnsumptin (MWh) frm In-state Generatin at 34% Imprts , , ,106, ,679, , , ,484,290 2,378,290 74,239, , , ,913,950 2,429,661 75,843, , , ,396,092 2,482,141 77,481, , , ,931,847 2,535,756 79,155, , , ,522,375 2,590,528 80,864, , , ,168,858 2,646,483 82,611, , , ,872,506 2,703,647 84,395, ,501 1,006 28, ,634,552 2,762,046 86,218, ,530 1,028 28, ,456,258 2,821,706 88,081, ,581 1,052 29, ,338,913 2,882,655 89,983, ,657 1,075 30, ,283,834 2,944,921 91,927, ,756 1,100 30, ,292,365 3,008,531 93,912,961 Integrated Resurce Plans Electric utilities in Virginia are required t cmplete an Integrated Resurce Plan (IRP) t address hw they will meet this grwing demand ver a 15-year time frame. Dminin s preferred IRP includes adding 7,900 megawatts f generatin capacity, nearly 950 megawatts frm demand side management prgrams, and market purchases. 23 Prjected new generatin capacity wuld cme frm the Virginia City cal-bimass hybrid plant under cnstructin and new plants including six natural gas cmbined cycle, fur natural gas cmbustin turbine, the third Nrth Anna nuclear, tw bimass, and fur wind facilities. 22 Calculated based n EIA Electricity Prfile Supply and Dispsitin histrical data 23 Virginia Electric and Pwer Cmpany Integrated Resurce Plan filed with the Virginia SCC n September 15, 2009 Sectin 2 - Electricity Page 2-16

17 Appalachian Pwer s IRP (East Zne) includes adding 4,168 megawatts f generatin capacity and 1,346 megawatts frm demand side management. This will be ffset by planned unit retirements and retrfits lwering capacity by 5,093 megawatts fr a net capacity additin f 422 megawatts. 24 Prjected new generatin capacity wuld cme frm cmpletin f the Dresden plant under cnstructin in Ohi; capacity uprates at the Ck nuclear plant in Michigan; and cnstructin f fur new fssil fuel plants, bimass c-firing and tw new bimass plants, and purchases r additins f wind and slar capacity. The Old Dminin Electric Cperative (which prvides whlesale pwer t its member retail electric cperatives) is prpsing cnstructing a new cal-fired pwer plant near Cyprus Creek in Surry Cunty. The Cyprus Creek Pwer Statin wuld have a capacity between 750 and 1,500 megawatts, and be cmpleted at the earliest by Transmissin and Distributin f Electricity Electricity is delivered t end users thrugh a netwrk f high-vltage transmissin and lcal distributin lines. 25 Electric pwer is transmitted in Virginia thrugh 230, 500, and 765-kV transmissin lines cnstructed, wned, and perated by Dminin, Appalachian Pwer, Delmarva Pwer, and Allegheny Pwer. Transmissin lines are typically lcated abve grund. The cst f burying highvltage transmissin lines undergrund is many times the cst f placing the lines verhead. Undergrund lines als present higher maintenance challenges and csts. Electricity is distributed frm the transmissin netwrk t end users thrugh a netwrk f smaller, lwer-vltage lines and facilities. Distributin lines are typically lcated abve grund. Distributin lines can als be placed undergrund, typically in new develpment where the incremental cst f burying the lines is lwer. Electric cperatives and municipal electric departments d nt wn any transmissin lines. Management f and additins t the reginal transmissin grid are directed by the PJM Intercnnectin t ensure reliability f the system. 24 Appalachian Pwer Cmpany s Integrated Resurce Plan filed with the Virginia SCC n September 1, PJM 2009 RTEP Reprt Sectin 12.12, Virginia, rtep/2009-sectin12-12-va.ashx, June 18, 2010 Sectin 2 - Electricity Page 2-17

18 Figure 2-9. Virginia s Electric Transmissin System 26 PJM creates a Reginal Transmissin Expansin Plan (RTEP) t identify the need fr new transmissin resurces. The 2009 RTEP includes fur high-vltage lines affecting Virginia. Allegheny and Dminin s 500 kv Trans Allegheny Interstate Line (TrAIL) frm the 502 Junctin in western Pennsylvania t Ludun Cunty; Dminin s 500 kv Carsn t Sufflk line; Allegheny and Appalachian Pwer s 765 kv Ptmac-Appalachian Transmissin Highline (PATH) frm Atms, West Virginia, t Kempstwn, Maryland; and Pepc s 500 kv Mid-Atlantic Pwer Pathway (MAPP) frm Pssum Pint in Virginia t Indian River, Maryland. The Virginia SCC must determine and certify the need fr and lcatin f prpsed new electric transmissin lines. The SCC has apprved the TrAIL and Carsn-Sufflk lines. PJM has delayed the schedules fr the PATH and MAPP lines due t the drps in electric demand. 26 PJM. PJM 2009 Reginal Transmissin Expansin Plan, Sectin 12.12, Virginia RTEP Overview, Map 12-53, Page 321 Sectin 2 - Electricity Page 2-18

19 Figure 2-10: PJM 2009 RTEP Apprved 765 and 500 kv Facilities 27 The Federal Energy Regulatry Cmmissin (FERC) regulates electric transmissin rates. The charges are passed thrugh t Virginia ratepayers n a dllar-fr-dllar basis. FERC has the authrity under the Natinal Interest Electric Transmissin Crridr (NIETC) legislatin t designate pririty electric transmissin crridrs in transmissin cnstrained areas. Based n a U.S. Department f Energy study f transmissin needs, FERC has designated tw crridrs in the Eastern United States with inadequate transmissin, ne crssing thrugh Nrthern Virginia. If the SCC fails t act n a petitin t build a new line in a designated crridr, the applicant t the line culd petitin FERC t take ver jurisdictin fr the line. Cnservatin and Efficiency Electric efficiency actins can be used t reduce future grwth in electrical demand. Substantial cst-effective investments in energy efficiency remain unmade as there are factrs that undercut market frces. These include: Principal-agent barriers the party respnsible fr the building imprvements desn t pay electric bills; 27 PJM. PJM 2009 Reginal Transmissin Expansin Plan, Executive Summary, Map 1.2, Page 6 Sectin 2 - Electricity Page 2-19

20 Infrmatin barriers cnsumers dn t have sufficient trusted infrmatin in rder t act; Transactin cst barriers cnsumers cannt budget r brrw the up frnt investment needed fr energy efficiency prjects; and Externality cst barriers benefits f energy efficiency, such as lwer utility csts frm reduced peak demand, accrue t ther peple than thse making the investments. State gvernment has taken a number f actins t vercme these market barriers, including: Adptin by the General Assembly f vluntary gals t reduce electric use by 2022, thrugh cnservatin and efficiency, by an amunt equal t 10 percent f 2006 use; An Energy Star appliance sales tax hliday ver Clumbus Day weekend in Octber; An incme tax exemptin fr sales tax paid n certain energy efficiency imprvements; $15 millin in American Recvery and Reinvestment Act (ARRA) State Energy Prgram funding fr energy efficiency rebates; $7.4 millin in ARRA funds fr Energy Star appliance and equipment rebates; $94 millin in ARRA funds t expand the Weatherizatin Assistance Prgram, under which efficiency imprvements are made t hmes f families earning up t 60 percent f the state medium based n family size; $200 millin in energy efficiency imprvements made t state gvernment facilities; Cmpletin f carbn emissin inventries and plans t lwer carbn emissins. Energy efficiency actins are a primary strategy f these plans; and Authrizatin fr lcal gvernments t prvide prperty tax and ther incentives fr: Energy Star buildings (at least 20 percent mre efficient than minimum building cde requirements); Buildings with green rfs and slar energy systems; and Prperty Assessed Clean Energy (PACE) r Hme Perfrmance with Energy Star prgrams. Virginia s cnsumers als benefit frm federal incentives and prgrams that encurage efficiency, such as: Federal energy efficiency incme tax credits; Strengthened minimum equipment efficiency requirements; and Expansin f the Energy Star prgram. Cnservatin and efficiency can ffset a prtin f future electric lad grwth. If Virginia s cnsumers can meet the state gal t reduce its electricity use by 10 percent, the frecasted peak electric generatin capacity wuld be reduced by 3,285 megawatts. Sectin 2 - Electricity Page 2-20

21 Table 2-13: Electricity Generatin Scenaris fr Virginia (Demand/Generatin Capacity) Scenari Year In-State Electrical Demand (MW) Energy Efficiency Gal Percent Energy Efficiency Gal (MW) Base Case ,052 0% ,756 0% ,471 9% 3,285 Scenari Descriptin Base Case Base histrical year Based n Energy Infrmatin Administratin data 1 N cnservatin and efficiency impacts, n new generatin 2 10% cnservatin and efficiency impacts, n new generatin Energy Efficiency gal based n 10% reductin frm 2006 base year by 2022 as prvided in Chapter 888 (HB 3068), 2007 Virginia Acts f Assembly base cnsumptin was 118,365,000 MWh, with an apprximate 36,500 MW peak demand. (2006 data surce - State Electricity Prfiles 2006, 11/21/07). Adequacy f Electric Infrastructure Siting Requirements Permitting fr new electric facilities is a cmplex and lengthy prcess. Multiple federal, state, and lcal permits are required t address issues such as need fr the prject, cst, and impact n ratepayers; envirnmental impacts; safety; and lcal land use impacts. The permits establish perfrmance requirements in multiple envirnmental and public safety areas. These prcesses prvide fr multiple pprtunities fr public cmment, in writing and rally. Fr example, an applicant fr a prpsed fssil-fuel pwer plant must apply fr permits r apprvals frm: The Department f Envirnmental Quality (DEQ) fr air, water, and waste discharges, including: Air permits t address use f Best Available Cntrl Technlgy t maintain cmpliance with the Natinal Ambient Air Quality Standards (NAAQS) and Maximum Achievable Cntrl Technlgy fr hazardus air pllutants; Water permits t address withdrawals frm and discharges t surface and grundwater; Wetland permits (issued jintly with the U.S. Army Crps f Engineers and Virginia Marine Resurce Cmmissin) t address cnstructin affecting wetlands; and Waste permits t address management f slid wastes, typically bttm and fly ash frm cmbustin. The Department f Cnservatin and Recreatin fr ersin and sediment cntrl and strmwater management; Sectin 2 - Electricity Page 2-21

22 The Departments f Game and Inland Species and Agriculture and Cnsumer Services fr threatened r endangered plant, animal, r insect species; The Department f Histric Resurces fr state and federally-prtected histric r ther natural r cultural resurces; The Department f Transprtatin fr access t public highways; The SCC which must issue a Certificate f Public Cnvenience and Necessity shwing the need fr the prject, that the pwer plant is in the public interest, and that it wuld nt have an excessive rate impact; Multiple federal agencies fr envirnmental cntrls, such as: The Envirnmental Prtectin Agency (EPA); The Army Crps f Engineers; The U.S. Fish and Wildlife Service; and The U.S. Frest Service. Virginia has taken a number f actins t facilitate permitting f new electric infrastructure. Applicants fr new electric generatin r transmissin prjects, r natural gas transmissin lines r strage facilities, may use a pre-applicatin planning and review prcess with agencies within the Secretary f Natural Resurces t prvide a plan that will prvide fr an efficient and crdinated review f the prpsed energy facility. The plan includes: A list f the permits r ther apprvals likely t be required based n the infrmatin available; A specific plan and preliminary schedule fr the different reviews; A plan fr crdinating thse reviews and the related public cmment prcess; and Designatin f pints f cntact, either within each agency r fr the Cmmnwealth as a whle, t facilitate this crdinatin. The DEQ is drafting permits by rule fr renewable energy prjects f 100 megawatts r less in size (such as land-base wind prjects) and f 20 megawatts r less if the prject results in air emissins (such as bimass prjects) t prvide a streamlined permitting prcess fr smaller renewable prjects. The SCC, in cnsidering its Certificate f Public Cnvenience and Necessity fr electric generating plants and assciated facilities, cannt impse additinal cnditins with respect t envirnmental prtectin, building cdes, transprtatin plans, and public safety when a separate permit is granted by a federal, state, r lcal gvernment entity. A lng permitting prcess makes it mre difficult t finance the large capital investments required fr generating facilities. T help reduce the financial risk, Virginia prvides, subject t SCC apprval: An increased rate f return fr utility investments in new, clean-technlgy generating plants; and Sectin 2 - Electricity Page 2-22

23 Cnstructin wrk in prgress cst recvery t reduce the regulatry lag in recvering capital investments in new plants. EPA has taken steps under the Clean Air Act t regulate carbn emissins as a regulated emissin. This will require a change in hw utilities permit new fssil-fueled generatin plants. Virginia lacks a prcess t permit carbn capture and strage that might be part f a new generatin prject. Items t be addressed befre widespread carbn sequestratin is pssible include: Testing technlgy and permanence f sequestratin in unminable cal seams; Addressing the rights and liabilities f wners f lands used fr sequestratin; and The ptential f saline aquifers in Central and Eastern Virginia t serve as undergrund carbn sinks. Future Directin T meet the prjected grwth in electric demand and the need t replace aging generatin capacity, we must : Cnstruct new, large centralized generatin facilities and smaller-scale independent pwer prjects; Expand distributed generatin; Cnstruct new transmissin facilities; and Expand cnservatin and efficiency actins. EPA s decisin t regulate carbn dixide as a pllutant, r federal carbn legislatin that wuld supersede EPA regulatin requiring mre stringent emissin standards, may make lder fssil fuel facilities mre expensive t perate. In respnse, utilities may retire such units and increase reliance n mre expensive pwer purchased n the whlesale market. The threat f cap and trade regulatin creates substantial uncertainty that may discurage investment in new fssil-fueled generatin. The greatest ptential fr renewable electric generatin and new jbs cmes frm nshre and ffshre wind, waste r bimass-t-energy facilities, and slar. Hwever, renewable prjects are typically smaller and are unable t substitute fr new base-lad generatin. Hydrpwer is limited due, t the few lcatins in Virginia withut a majr envirnmental impact. The unknwn rate f penetratin f electric vehicles int the marketplace may require additinal generatin capacity expansins. Smart meters have been subject t cmplaints by sme regarding their accuracy. There may need t be a lnger histry f use befre public acceptance imprves and the savings frm vltage cntrl attributable t smart meter use has been prven. Sectin 2 - Electricity Page 2-23