Electricity in Virginia is generated by investor-owned companies, publicly owned utilities, and cooperatives. The electricity is sold to commercial, industrial, and residential consumers, plus the Federal government's military installations.
Investor-owned utilities are private, for-profit businesses. Investor-owned utilities sell stock to raise capital, and stockholders typically receive dividends. Stockholders can shape corporate policy through elections to the company board.
State regulatory agencies, such as the State Corporation Commission in Virginia, define the geographic area in which the utility will have a monopoly to provide electricity, minimizing the cost of building the distribution system and avoiding an unsightly tangle of excessive of power lines. To avoid a monopoly charging excessive prices in the absence of competition, the regulatory agency determines the maximum level of profit that the utility may earn.
Publicly-owned utilities are managed by government bodies such as the City of Manassas. The government jurisdiction may issue bonds or use revenue from taxes to fund the initial start of a public utility. Typically the fees paid by electricity customers will fund the operating costs of the utility, and repay the initial start-up costs.
Publicly-owned utilities are operated as not-for-profit bureaucracies. Customers who consider the fees to be excessive or wish to redirect policies of the utility can appeal ultimately to elected officials. Unlike elections for the boards of investor-owned utilities, customers shape decisions of publicly-owned utilities through elections to city or town councils. Every voter has equal weight in such elections; there are no stockholder shares to be considered when votes are counted.
Cooperatives are not-for-profit membership organizations. In cooperatives, customers pay to buy/generate power and build a utility's infrastructure such as power lines. If electricity sales exceed a cooperative's costs to purchase/generate electricity, maintain/upgrade transmission infrastructure, and process customer bills, then the customers of the cooperative will get a reimbursement.
the top two generators of electricity in Virginia are for-profit investor-owned utilities, followed by three non-profit cooperatives
Source: US Energy Information Administration, Virginia Electricity Profile 2014, Table 3. Top Five Retailers of Electricity, with End Use Sectors, Virginia
Dominion Virginia Power (previously known as Virginia Electric Power or VEPCO) is the largest investor-owned utility in Virginia, and Appalachian Power is the second-largest. Back in the 20th Century, they generated most of the electricity needed to supply customers using coal.
Most generating plants were built in two types of locations in the last century. Some power plants were constructed near urban clusters with a large number of customers. Those plants were fueled by coal hauled to those facilities by train (such as the Potomac River Generating Station in Alexandria and the Chesterfield Power Station), or by coal and petroleum brought to the facility by barge (such as Possum Point in Prince William County and the Yorktown Power Station).
Other generating plants were constructed near the coal mines. About 1/3 of electricity used in Virginia is "imported," primarily from coal-fired power plants in West Virginia. For example, Dominion Virginia Power's coal-fired power plant at Mount Storm is located just across the state line in West Virginia, but transmits 1,600 megawatts (MW) of electricity almost exclusively to customers in Virginia.1
in 2012, Dominion generated 2% of its electricity from renewable resources - far short of the Renewable Portfolio Standard of 15% (excluding nuclear)
Source: Dominion, 2012-2013 Citizenship & Sustainability Report
Nationwide there is a surplus of electrical generation capacity, in part due to regulatory requirements to ensure an adequate supply at times of peak demand and in part due to energy efficiency measures to reduce demand. New generation capacity from renewable power sources, especially wind and solar, is disrupting the traditional pattern of supply and demand in electricity.
Until the 21st Century, utilities traditionally estimated future demand based on models of population and economic growth, then constructed new facilities to meet that projected demand. The new Secretary of Energy announced in 2001 after the Bush Administration took office:2
That crystal ball, like so many others in the energy business, was cracked. The 1973 OPEC oil embargo had stimulated new energy efficiency efforts, breaking the old link where economic growth required additional energy. Better-insulated buildings, more-efficient computerized machinery in factories, and EnergyStar appliances changed the pattern. Demand for electricity no longer increases automatically as population grows; implementation of energy efficiency measures has reduced per-capita use significantly.
Solar panels on individual rooftops could depress demand from centralized power plants in the future, but generation from wind turbines is already affecting prices. Texas utilities generated so much electricity from windpower in 2015 that customers received it for free, but transmitting that surplus electricity to Virginia was not feasible.3
Moving electricity from generating plants in areas of surplus capacity to customers requires an extensive network of wires. Long-distance transmission is done at high voltage to reduce loss from the natural physical resistance of wires, and importing electricity into Virginia from Texas is not cost-effective.
Dominion Virginia Power and and Appalachian Power prefer to control costs by building their own power plants, matching generating capacity with projected demand over the next 20 years, rather than purchasing electricity from third parties on shorter-term contracts that might need to be renewed when prices have hit a peak. When investor-owned utilities plan to build new generating plants to meet projected demand, the utilities must obtain approval of the State Corporation Commission (SCC), a state regulatory agency with three commissioners elected by the General Assembly for six-year terms.
The major capital costs of building new transmission networks also requires state approval, since the rates charged to customers are based in part on an investor-owned company's costs to provide reliable service. State approval reduces the risk of an investor-owned utility over-building its infrastructure and then over-charging its customers. The SCC review process also ensured that rates charged by utilities to their customers would exceed the utilities' costs, generating a profit for the shareholders of the utility.
For example, in 2016 the SCC approved Dominion Virginia Power's plan to construct a $1.3 billion facility in Greensville County that will use natural gas to generate 1,600MW of electricity. Together with that authorization came SCC approval for the utility to bill its customers an addition $0.75/month on average. That rate adjustment will allow Dominion Virginia Power to earn a 9.6% profit on the $1.3 billion invested in the Greensville County power plant.4
Dominion Virginia Power's 1,600MW power plant in Greensville County will be constructed five miles east of the 590-megawatt Bear Garden Power Station completed in 2011 (yellow circle)
Source: Google Earth
For decades, the State Corporation Commission (SCC), the successor to the Board of Public Works and the state railroad commission, has controlled the utility rates charged to customers. As part of the approval process, the SCC required the utility companies to build enough generating plants to ensure customers would have a reliable supply of power. In exchange, the companies got exclusive rights to sell electricity in certain portions of Virginia, along with rates that were set high enough to ensure a steady dividend was paid to the company stockholders.
The investment decisions by the private-sector companies were also affected by the government. In the 1980's, the Federal Government and the SCC encouraged purchase of power from non-standard sources rather than construction of new power plants. The "avoided costs" of not having to borrow money and build new facilities were incorporated into the contracts. By 1999, 20% of the electricity available to Virginia Power (now Dominion Resources) was from contracts with non-utility generators such as solid waste incinerators and pulp mills.
This approach appeared to minimize waste ("why put wood chips in a landfill if you can burn them for power?") and reduce the costs to rate-payers. However, it locked the utility company into long-term contracts for high-cost electricity. Proposals for deregulation threaten to change the rules of the utilities game.
There are few - or no - remaining sites suitable for generating electricity by hydropower. The environmental tradeoffs are too great, at least as we view them today. The state has two large pumped storage facilities. The Smith Mountain Project owned by Appalachian Power is relatively small, with a capacity to generate 636MW. The Bath County Pumped Storage Station owned by Dominion Virginia Power can produce 3,003MW.
Windpower is still marginally utilized in the state, compared to pre-Depression days when windmills were common on farms - but wind turbines are "bird Cuisinarts" and Virginia is on the Atlantic flyway. Co-generation associated with chip mills or paper mills is a source of power as well as way to reduce the wood waste, but there's far too little power available from that source to meet the predicted increase in demand.
Coal is plentiful in Virginia. If the United States ever signs something like the Kyoto Protocol, utilities and other users of fossil fuels would have to reduce carbon dioxide emissions substantially to reduce global warming. The Obama Administration, after several court rulings, has decided to treat carbon dioxide as a pollutant to be regulated by the Clean Air Act restrictions (along with ozone, particulate matter, carbon monoxide, nitrogen oxides, sulfur dioxide, and lead).
For 50 years after World War II, coal was the most popular fuel for new power plants in Virginia. Coal was cheap and plentiful, easily transported by rail from mines to power plants in urban areas. In 1949, a coal-fired power plant was built on the shoreline of the Potomac River in Alexandria, and 20-plus years later the Possum Point plant was constructed downstream in Prince William County. However, use of coal to generate electricity will be limited in the future, due to both CO2 pollution concerns and basic economics.
After the development of shale gas resources, natural gas displaced coal as the low-cost source for generating electricity. Gas from the Gulf of Mexico and from shale beds in the Ohio River Valley is not as vulnerable to disruption due to overseas political conflicts. Most gas pipelines run from Texas and Louisiana through Virginia's Piedmont to New York, so new power plants east of the Blue Ridge can be supplied easily with natural gas. The 2014 "Integrated Resource Plan" of Dominion Resources, describing plans for future facilities, was blunt:5
Solar power and nuclear power plants offer the alternative fuel for utilities to generate electricity without carbon.
Nuclear energy is never going to be "too cheap to meter" as promised in the 1950's, but Virginia has two nuclear power plants and their four nuclear reactors supply some of the cheapest power in Virginia now.
The world was awash in cheap uranium when nuclear weapons were being decommissioned, and Virginia has a massive uranium deposit in Pittsylvania County at Coles Hill. The Three Mile Island disaster in 1979, Chernobyl in 1986, and the Fukushima meltdowns in 2011 have all contributed to public opposition to building more nuclear reactors.
Dominion Virginia Power has plans to construct a third reactor at North Anna in Louisa County, anticipating that the Federal government will finally construct a repository somewhere to store the radioactive waste and public fears of nuclear power can be overcome.
If the priority for building a new nuclear plant was to find a location downwind from population centers, then the Eastern Shore would be the most suitable site. However, nuclear plants have traditionally been sized to generate 800-1,000MW each, due to economies of scale. There is no demand for such a quantity of electricity on the Eastern Shore; it lacks urban centers and industry.
Customers seeking to purchase electricity generated from just renewable sources can purchase Renewable Energy Credits from utility providers. The largest utility in Virginia, Dominion, offers Green Power certificates that document the company has purchased electricity generated from wind, solar, or biomass sources.
In 2016, the additional cost was 1.3 cents ($0.013) per kilowatt-hour (kWh). For the Northern Virginia Electric Cooperative (NOVEC), certificates cost $.015 per kWh.6