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The spinning of Virginia’s wind farm

Wall Street Journal|August 22, 2022
VirginiaOffshore Wind

The commission does assert power to hold Dominion accountable. The company forecast that the wind farm will generate electricity in practice at 42% of its maximum capacity. Again it wants consumers on the hook if that target proves optimistic. Instead the commission ordered that “customers shall be held harmless for any shortfall in energy production below an annual net capacity factor of 42%.” Dominion could appeal. “We are extremely disappointed in the commission’s requirement of a performance guarantee,” CEO Robert Blue said on an earnings call. He griped that it would effectively require the company “to financially guarantee the weather, among other factors beyond its control, for the life of the project.” Exactly. Since no one can control mother nature, who should bear the risks? Dominion’s answer is not Dominion.


Now that their climate spending bill has been signed by President Biden, Democrats might go to bed dreaming of wind farms. What they’re sleeping through is the green logrolling and corporatism already evident in the clean-power transition. A good example is an offshore wind farm that Virginia regulators approved recently under obvious duress.

Dominion Energy plans to build 176 wind turbines 27 miles off the coast of Virginia Beach. That’s enough to power about 660,000 homes. The capital cost is $9.8 billion. The state Corporation Commission assented to a related rate increase, but it noted that the downside risk is on consumers. Typically, the commission says, a utility might buy such power from an outside developer, “which limits the risks to customers.” Yet Dominion “has chosen to construct, own and operate the Project.”

What could go wrong? The commission says that “designs for various components of these turbines” have “yet to be finalized.” Because offshore wind at this scale is new to the U.S., “there is no developed supply chain,” ... more [truncated due to possible copyright]

     

Now that their climate spending bill has been signed by President Biden, Democrats might go to bed dreaming of wind farms. What they’re sleeping through is the green logrolling and corporatism already evident in the clean-power transition. A good example is an offshore wind farm that Virginia regulators approved recently under obvious duress.

Dominion Energy plans to build 176 wind turbines 27 miles off the coast of Virginia Beach. That’s enough to power about 660,000 homes. The capital cost is $9.8 billion. The state Corporation Commission assented to a related rate increase, but it noted that the downside risk is on consumers. Typically, the commission says, a utility might buy such power from an outside developer, “which limits the risks to customers.” Yet Dominion “has chosen to construct, own and operate the Project.”

What could go wrong? The commission says that “designs for various components of these turbines” have “yet to be finalized.” Because offshore wind at this scale is new to the U.S., “there is no developed supply chain,” which “could lead to construction delays and cost overruns.” What if it falls through for some reason? “Even if the Project is abandoned at the end of 2023,” the order says, “Dominion still estimates it would have prudently incurred approximately $3.7 billion of costs to be recovered from customers.”

So why approve the wind farm at all? Because the state Legislature mandated that such an offshore project “is in the public interest, and the Commission shall so find.” The commission’s order sounds nearly apologetic in saying that regulators are “keenly aware of the ongoing rise in gas prices, inflation, and other economic pressures,” but “this is a prescriptive statute.”

On one point, however, the commission does assert power to hold Dominion accountable. The company forecast that the wind farm will generate electricity in practice at 42% of its maximum capacity. Again it wants consumers on the hook if that target proves optimistic. Instead the commission ordered that “customers shall be held harmless for any shortfall in energy production below an annual net capacity factor of 42%.”

Dominion could appeal. “We are extremely disappointed in the commission’s requirement of a performance guarantee,” CEO Robert Blue said on an earnings call. He griped that it would effectively require the company “to financially guarantee the weather, among other factors beyond its control, for the life of the project.” Exactly. Since no one can control mother nature, who should bear the risks? Dominion’s answer is not Dominion.

Is this how the energy transition is going to run everywhere, with the cost overruns and financial exposure borne by an inattentive public? In any other industry, if a billion-dollar company were pushing risks on consumers like this, the screams from Democrats in Washington would move enough air to power a wind turbine or two off Virginia Beach. Maybe they’re hypnotized by the spinning blades, but bill payers won’t be.

Content truncated due to possible copyright. Use source link for full article.


Source:https://www.wsj.com/articles/…

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