APS to attend Virginia Governor’s Conference on Energy

11th October 2010  |    |  0 Comments

Courtesy Richmond Times-Dispatch

By PETER BACQUE | TIMES-DISPATCH STAFF WRITER
Published: October 11, 2010

More than 800 public and private-sector leaders will come together to consider what Virginia’s energy future should be.

Much of Virginia’s future will depend on how the state handles energy, experts say.

And this week, more than 800 public and private-sector leaders will come together at the Governor’s Conference on Energy in Richmond to consider what Virginia’s energy future should be.

Gov. Bob McDonnell said his goal for the conference, in the short run, is simply to have a robust discussion aimed at promoting low-cost energy production.

Long term, McDonnell said in an interview last week, his aim is to create more jobs. From building wind turbines and nuclear-power equipment to servicing new offshore oil and gas fields from Hampton Roads to producing biofuels in Southside Virginia, energy initiatives will turn into employment opportunities for Virginians, officials said.

“There’s no way America can continue to grow at the rates we have grown without a reliable energy supply,” McDonnell said. “Energy demands are going to rise geometrically.”

In the past 40 years, the world has seen energy crises because of wars in the Middle East, electric grid brownout, wild price swings — for instance, oil prices went from $147 a barrel in July 2008 to $33 in January 2009 to more than $80 now — and environmental catastrophes.

“We’ve already got the makings of a crisis if we don’t have a steady supply of low-cost energy,” McDonnell said.

With 175 speakers, the wide-ranging program invites participants to examine how the energy sector operates in Virginia, discuss state and federal regulatory activity, talk about alternative energy projects, and outline energy research at the state’s universities. The conference tomorrow through Thursday at the Greater Richmond Convention Center will include a keynote address Wednesday by energy entrepreneur T. Boone Pickens.

Transportation represents 31 percent of the state’s energy consumption, residences use 24 percent, the commercial sector takes 23 percent, and industrial enterprises consume 22 percent, according to the state Department of Mines, Minerals and Energy.

Virginia will need to add at least 7,200 megawatts of electrical generating capacity by 2020, according to state energy officials. One megawatt can power about 250 homes in Virginia. Currently, the state has a total of more than 23,400 megawatts of generating capacity.

Electricity use has grown by about 3 percent annually over the past 10 years in Virginia, with about two-thirds of the growth attributable to new customers and one-third to more usage per customer, the state said. Most of the increase has been in Northern Virginia, Hampton Roads and Richmond metropolitan regions.

Nationally, electricity demand from 2000 to 2008 grew slower, on average by 0.9 percent a year, according to the U.S. Department of Energy’s Energy Information Administration. McDonnell wants Virginia to become the energy capital of the East Coast, which is the conference’s theme.

. . .

The Old Dominion has wide potential as an energy producer, McDonnell said: coal, natural gas, nuclear power, hydro, biomass, and wind and oil, particularly offshore. States that capitalize on their energy resources first “are going to have a tremendous economic bonanza,” he said.

Just last week, a Spanish wind-turbine maker announced that it will partner with the Northrop Grumman Newport News shipyard to develop offshore wind technology, creating 40 engineering jobs in the Hampton Roads area.

At the other end of the state and the energy spectrum, coal mining is a major economic driver for the Southwest Virginia economy, providing about 4,400 mining jobs and $1.7 billion in revenue from coal sales.

“People want to believe there’s a magic bullet, that we can just harness the wind, harness the sun, and everything will be fine,” said Dominion Virginia Power CEO Paul D. Koonce. “That’s just not the case.”

According to the Virginia Department of Mines, Minerals and Energy, 36 percent of the energy used in Virginia comes from petroleum — 78 percent of which is used to fuel transportation — 17 percent from coal, 13 percent from nuclear power, 5 percent from natural gas and 5 percent from renewable sources like wind and hydro. Electricity generated outside the state provides for 18 percent of the state’s energy use.

“Where are we going to get our base-load generation in the future?” asked Jackson E. Reasor, president and CEO of the Old Dominion Electric Cooperative, a wholesale co-op electricity supplier based in Henrico County.

“Historically it’s been coal and nuclear and some hydro,” Reasor said. “All those seems somewhat problematic for future base-load generation.”

Despite energy sources’ individual drawbacks, officials said the state will need to tap every resource it can. “If we do that,” Koonce said, “we will continue to be an affordable and reliable electric provider.”

Meanwhile, “we buy more energy off the [national electrical] grid than any state other than California,” McDonnell said. “That alone is not good.”

Virginia utilities do not own enough in-state electric generation capacity sufficient to meet the state’s peak load plus federally required reserves, the state’s energy plan says.

“If we don’t meet demand with our own energy resources generated within Virginia, we’ll be subjected to increasing energy prices and we won’t be able to control our own destiny,” said Maureen Matsen, the state’s deputy secretary of natural resources and senior adviser on energy.

While Virginia’s electric rates have risen over time, the state’s rates remain below the U.S. average, at 90.5 percent of national rates in 2009, according to Mines, Minerals and Energy.

On the other hand, petroleum prices are largely set by volatile national and international markets. For example, gasoline prices nationally have ranged from more than $4 a gallon in September 2008 to current prices of about $2.70 a gallon.

“We look at the world through the prism of energy consumers,” said Michael Whatley, executive director of the Southeast Energy Alliance, a business energy group in Fredericksburg. “We want to do everything we can to ensure that we’re not going to go back to the price spikes we saw in 2008.”

Inexpensive energy generally doesn’t come cheap.

Dominion Virginia Power, the state’s largest electric utility with about 2.3 million Virginia customers, will be spending $7 billion during 2010-2012 on power plants, transmission lines and other infrastructure.

“If the focus is trying to keep rates under control, efficiency has to be where you begin,” said Cale Jaffe, an attorney with the Southern Environmental Law Center.  “The cheapest kilowatt is the one you don’t have to generate.”

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