By Christen Smith
LS Power is urging Virginia officials to intervene in Dominion Energy’s solicitation for a new 1,500-MW peaking plant, saying in a letter Thursday that the process stifles competition and profits shareholders at the expense of customers.
“Dominion’s ratepayers should get the benefit of a competitive auction and not have to be burdened with higher costs to benefit Dominion shareholders,” Nathan Hanson, senior vice president at LS Power, said in a statement.
The company urged William F. Stephens, the State Corporation Commission’s director of public utility regulation, and state Attorney General Mark Herring “to suspend the solicitation as it is currently structured, review the requirements and implement changes that will make the process competitive, for the benefit of Virginia consumers.”
Hanson sent the letter on behalf an LS Power limited partnership, which began operation of two 170-MW natural gas peaking plants at the Doswell Energy Center in Hanover County, Va., in May 2018. Dominion published the request for proposals Nov. 6 to help close a projected 4,044-MW capacity gap identified through the company’s integrated resource plan. Dominion said it is committed to building a 485-MW combustion turbine facility in 2022 as part of the solution but now seeks third-party proposals to identify “the most favorable supply-side options for its customers.”
In the RFP, Dominion limits proposals to new resources only with an in-service date that’s no later than June 1, 2024. The company specified units must use fossil fuel generation and would prefer a facility with a minimum runtime of 10 hours to maximize capacity value in PJM’s wholesale market. The company said it will compare all proposals to self-build options before selecting a project — a process Hanson said “all but guarantees” the latter will win out.
“Typically, an RFP is utilized to assure a competitive process that will achieve the lowest cost for the consumer,” he said in the letter. “However, Dominion’s RFP is structured in such a way that it limits competition and will not provide the competitive results that will ensure the consumers in Virginia and not the shareholders of Dominion are the beneficiaries of the process.”
Hanson said the SCC could act as an independent third party to review the RFPs and Dominion’s self-build options. Further, he said, the RFP should include existing resources in PJM’s “oversupplied” market — with some peaking generation coming online in Dominion’s zone just last year — that “are very capable of providing ratepayers with competitive supply into the future.”
Bidders should also be privy to the costs and risk associated with Dominion’s self-build options, as well as reserve the right to pass the risk of environmental law changes onto customers, Hanson said.
“Without the changes described above, it is likely that this uncompetitive process will not provide the results that will ensure the ratepayers of Dominion are receiving the benefits in the form of low rates that a truly competitive process can provide,” Hanson concluded in the letter. “Left in its current form, the supposedly ‘competitive’ process will only ensure that the ratepayers are not receiving the most competitive rates achievable.”
Dominion spokesperson Jeremy Slayton told RTO Insider in an email Monday that the company “is reviewing the letter from LS Power.”