By Nigam Trivedi, Lehigh University
Those who argue in favor of construction or expansion of non-renewable facilities say it will create jobs. In that vein, advocates for Dominion’s Atlantic Coast Pipeline (ACP) point to the significant benefits it will have for Eastern North Carolina. To transport the fracked gas the 554 miles from West Virginia, however, the ACP will be routed through rural Virginia, which is not going to realize the same benefits from it.
In our last post, we shared an example of how the ACP poses risk to homeowners in and around its projected path. The issue, however, reaches deeper. The eminent domain granted to Dominion has already wreaked havoc on the lives of many Virginians, who have banded together to form “All Pain No Gain,” (APNG) to highlight the negative impacts the ACP will have on property owners, the environment, small businesses, public safety, local heritage and history.
Virginia Constitution Article I, Section 11 gives a utility, if granted the authority, the ability to use or cause ruin to any private property without the permission of the property owner as long as the effort is directed towards an effort of public service. Dominion has even asked the Virginia Outdoors Foundation to abdicate responsibility of 10 protected areas in favor of the ACP.
If the gas is going to North Carolina, is it truly a “public service” to Virginians? Since it won’t benefit Virginians, eminent domain shouldn’t be invoked for the ACP. This issue and others prompted Dominion to commission impact analyses from Chmura Analytics and ICF International, both of which they have used to substantiate the claim that the ACP will drive the creation of thousands of new jobs and create millions in economic benefits.
APNG disputes the studies, and says the ACP will spur a rise in energy prices for Virginians, while simultaneously creating less than 10 percent of the 9,000 jobs Dominion claims it will. In my opinion, it is always better to find a neutral source, such as the Synapse Energy Economics study commissioned by the Southern Environmental Law Center (SELC).
This study also counters the claims made in Dominion’s reports and noted that at least one of them has a noticeable lack of transparency and lacks clarity in the presentation of its data. SELC study leveled eight main criticisms against the ICF report, including the claim that the ACP will bolster reliability for regional consumers. To support the claim, the ICF used data from an electric utility based in Maryland and does not provide any data on reliability impacts that relate to the ACP in particular.
The SELC study also criticizes Dominion’s Chmura report for a shortage of data or assumptions relevant to its claims, specifically regarding whether ACP would provide tax revenue benefits for the states in which it will actually be located.
So why is Dominion working so hard to justify the construction of the ACP?
Simply put, it is profitable. In fact, current regulatory policy favors utilities that build pipelines for natural gas. Rates of return can be as high as 14% from a natural gas pipeline, compared to the average return of under 10%, despite the fact that the Federal Energy Regulatory Commission (FERC) has done little to verify the necessity of such a large rate of return. While the FERC can challenge the rate that a utility requests, it generally does not do so until after a pipeline is in service.
The FERC process actually incentivizes utilities to overbuild, because it does not require that a utility take into account regional demand in the area that it proposes to build. Also, the FERC will declare a pipeline necessary, if the would-be-builder has convinced a certain number of companies to join in on capacity for the line. As long as the pipeline has enough partners signed up for participation, FERC will approve their request.
If Virginia residents wish to protect their property rights and values, look out for their own economic interests, and preserve their physical environment for their safety and health, they need to ask, “What’s in it for me?” Currently, it seems that the answer is financial, environmental and human health risks – all at no benefit to Virginians and with great benefit to Dominion.
This is just another reason that the task falls on Virginia energy consumers to gain energy independence as quickly and effectively as possible and to push for a better mix of energy options for the commonwealth.
In his next post in this series, Nigam will compare the cost of renewables to the cost of the pipeline, the output from both scenarios and how each will affect ratepayers in Virginia.