Virginia’s Wise County needs to prepare for smooth transition out of coal – report

Dominion Energy’s Virginia City Hybrid Energy Center. (Image by Hansellts, Wikimedia Commons).

A recent report by the Institute for Energy Economics and Financial Analysis states that Virginia’s Wise County needs to start preparing for the retiring of Dominion Energy’s Virginia City Hybrid Energy Center (VCHEC).

The 8-year-old coal-fired power plant, owned by Dominion through its subsidiary Virginia Electric & Power Co., is at risk of closure as market and policy forces work against its viability.

According to the report, VCHEC ran at only 19.86% capacity during the first eight months of this year. At its peak performance in 2013 and 2014, it operated at slightly more than 65% of its capacity but has fallen off over the past two years, to 54% in 2018 and 22% in 2019. 

If the Virginia City Hybrid Energy Center remains online, it is estimated that its annual capacity factor will average less than 7.7% over the next 10 years

The document states that if the plant remains online, it is estimated that its annual capacity factor will average less than 7.7% over the next 10 years, meaning its output will be insignificant on the grid that is run by the 13-state PJM Interconnection and has access to 180,000MW of other generation capacity.

“VCHEC’s underperformance, coupled with shrinking utility industry appetite and demand for coal-powered electricity, show clearly that there is no sensible business case for keeping the plant open other than to reward Dominion shareholders with ratepayer-subsidized dollars,” the report states.

In the view of the Institute for Energy Economics and Financial Analysis, VCHEC’s situation is more precarious than has been publicly acknowledged by Dominion.

“While Dominion has some motivation to keep the plant online even as a marginally productive generator, the company is likely to run into regulatory resistance to doing so, as ratepayers would be footing the bill for a money-losing operation,” the analysis reads.

In view of this situation and the fact that the plant’s closure would cost the community 153 full-time jobs, as many as 400 additional indirect jobs, and between $6 million and $8.5 million in local annual tax revenues, the IEEFA calls for more accountability from Dominion.

“Community leaders should press for full transparency from Dominion on its plans for the plant and call for serious reinvestment in the local economy,” Karl Cates, lead author of the report, said in a media statement. “Economic transition models around the early closures of Navajo Generating Station in Arizona, the San Juan power plant in New Mexico, the Centralia Coal Plant in Washington, and part of the Comanche Generating Station in Colorado can serve as models for responsible change.”

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