29 May 2012


Dominion Power is positioning itself to control how and when wind energy is developed off the Virginia coast, and a fair number of environmentalists, local officials and would-be competitors are nervous about that. Few contest that Dominion, the state's largest electricity utility, is a prime candidate to build and operate the first offshore wind farm in Virginia, given its money, political clout and experience. Critics, though, question its commitment to being a clean-energy pioneer. "Signs suggest that it may be more interested in preventing others from developing" offshore wind "than in doing so itself in a timely manner," Glen Besa, state director of the Sierra Club, said in a letter this week to federal regulators. Dominion told the same regulators at the federal Bureau of Ocean Energy Management this week that it wants to lease all 112,799 acres of space designated for wind turbines off the coast, an area due east of Virginia Beach, between 23.5 and 36.5 nautical miles from shore. At the same time, the utility is requesting that the government leave out Virginia when considering a giant backbone cable proposed along much of the Atlantic Seaboard. Investors, including Google, the Internet giant, hope to build the billion-dollar cable known as the Atlantic Wind Connection to help carry wind-generated electricity to land for a fee. Presumably, Dominion wants to construct and manage its own delivery lines. Furthermore, advocacy groups note, offshore wind is not listed by Dominion in its 15-year plan for meeting the electricity demands of its customers. These groups worry that if Dominion gains control of wind resources and infrastructure, the utility could keep competitors at bay and bide its time in constructing turbines until market conditions are ripe - perhaps over the next 25 years. Instead, the groups want Virginia and other Atlantic states to fast-track offshore wind farms so they are up and running within five or six years, regardless of the economics, in order to speed the transition from a fossil-fueled economy to one with more emphasis on clean energy sources. To that end, environmental groups last week delivered a 10,000-signature petition to Dominion urging quick wind action. They also plan a demonstration today in which activists are to encircle Dominion's headquarters in Richmond in a human chain. "We have real concerns about Dominion's attempts to monopolize the process," said Beth Kemler, state director of the Chesapeake Climate Action Network. "They want to hold all the cards. And if history is any guide, they usually get what they want in Virginia." A wind farm in the Atlantic area approved by the federal government off Virginia Beach is estimated to cost between $1 billion and $3 billion. Almost all Atlantic states north of Virginia are pursuing wind energy as well. But because of differing regulations there, utilities in those states would buy the resulting electricity and let other companies build the farms. North Carolina still is waiting to hear where the federal government wants to designate offshore wind activity. Dominion declined to comment or take questions about its ambitions, but in public statements and published reports, the utility calls offshore wind a tremendous opportunity. "The potential of wind energy blows us away," the company says on its website. Its director of alternative energy programs, Mary Dos-well, has said Dominion is interested in erecting as many as 400 ocean turbines off the Virginia coast, a network capable of generating enough electricity to power 500,000 homes. She has not offered a timeline. The high cost to produce wind energy today, compared with traditional sources such as coal, natural gas and nuclear power, all staples of Dominion's portfolio, is the biggest concern, Doswell has said. "This is a long-term project," she said in a statement posted on the website. "The challenge remains the high cost of building this generation and bringing it to customers." There are no offshore wind farms operating today in the United States. Dozens are up and running in Europe, almost all with substantial government subsidies, and others are being built off China. The U.S. government under President Barack Obama is eager to get moving and has adopted programs such as "Smart from the Start" to hasten permitting requirements, which still can take years to complete. Gov. Bob McDonnell, who has close ties to Dominion and its CEO, Thomas Farrell, a former school roommate, campaigned for offshore wind as a dynamic source of domestic energy and new jobs, especially in maritime-rich Hampton Roads. Conrad Spangler III, McDonnell's appointed director of the Virginia Department of Mines, Minerals and Energy, supports the idea favored by Dominion that a single entity should develop all designated wind areas off the coast - a position few other states have endorsed. The administration also favors bypassing the Atlantic backbone cable project. In a letter to the federal Bureau of Ocean Energy Management, which is overseeing offshore wind permitting, Spangler wrote that the lone-developer approach would stretch construction out in phases, cut costs and avoid a "boom, then bust" effect of multiple companies rushing to build their farms as quickly as possible. "Phased development of a single, large lease could ensure a steady market demand for turbines, foundation support structures and array cables," Spangler wrote. Maureen Matsen, McDonnell's senior energy adviser, said the administration is not playing favorites with Dominion but, like the utility, is focused on seeing costs contained and a sober business approach. "We don't see much good in rushing out there just to say we did it first," Matsen said. "We are working to support development of this important resource in a way that will be cost-effective." The Bureau of Ocean Energy Management set a deadline of March 19 for accepting bids from interested offshore-wind developers in Virginia. A spokesperson said this week that a list will be posted soon on its website. At least one other company is known to have applied for offshore leases - Apex Offshore Wind, a start-up enterprise, based in Charlottesville. Apex already is working with shipping giant Maersk Line Ltd. on a project to develop utility-size offshore-wind facilities and is part of another group building a wind farm in Oklahoma, said president Tim Ryan. Ryan said that "it's really bizarre" to be competing with a conglomerate like Dominion for the rights to offshore wind in Virginia. He added, however, that a single-developer idea "makes sense," noting that Apex, too, is asking the government for most, but not all, of the available leases. "We are highly motivated to move as quickly as we can," Ryan said. Environmental groups and some local officials also are edgy over how a new state panel, the Virginia Offshore Wind Development Authority, is doing business. They complain that working documents are not shared with the public and that citizens and industry representatives not on the board of directors are often left in the dark. The authority was created in 2010 and has been meeting to hasten offshore wind since then. Furthermore, activists who attend the meetings say, the deck is stacked in favor of Dominion, which has a seat on the board. "Nothing is passed unless Dominion goes along with it," said Eileen Levandow-ski, Hampton Roads director of the Sierra Club. Bob Matthias, an assistant city manager from Virginia Beach who sits on the board, said he was uncomfortable with how the authority tried to recently push through a letter supporting Dominion's position on the Atlantic Wind Connection project with little debate. He described Dominion's presence on the board as "very aggressive." The Sierra Club complained last month that working conditions at the authority "are untenable," and that board members should be encouraged, not discouraged, to discuss questions and policy options with anyone they choose. The authority was created with the support of "developers, supply chain businesses, utilities, local government and the environmental community," the Sierra Club wrote. "It cannot possibly represent all of these interested parties, as well as the public at large, if it operates under a cloak of secrecy." By Scott Harper, 757-446-2340 , scott.harper@pilotonline.com

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