Dominion Coal Ash Disposal Cost Recovery
The Sierra Club retained Synapse to evaluate the economics of operating the Chesterfield and Clover Power stations to determine whether it was appropriate for Dominion to rate-base and recover coal ash disposal costs associated with historic plant operations. Synapse evaluated whether the plants have been operating economically, and explored what Dominion knew about the historic and future economics of the plant at the time the Company decided to invest in the coal ash projects.
Synapse found that: (1) In 2015, the Company would have known that the economic performance of existing coal plants was in decline due to falling gas and renewable prices, more stringent environmental regulations, and falling load; (2) Specifically, the Company knew about the uneconomic status of Chesterfield Units 3 and 4 as it moved forward with its plan to install wet-to-dry conversion technology at the two units; (3) the Company could also have reasonably known in 2015 that with lower market price and generation levels, net revenues would be higher with a 2019 retirement of the Chesterfield Plant; (4) given substantial planning uncertainty, the Company should have conducted robust economic analysis to compare the cost of the environmental projects and continued operation of the units to alternative options, including retirement and repowering; (5) the company also should have deferred the decision to install the wet-to-dry technology on Chesterfield Units 5 and 6 until plant economics were clear. The Commission ruled to disallow recovery of costs associated with the wet-to-dry technology on Units 3 and 4, however, the Commission allowed recovery of all other costs.