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Capping Carbon: What Does Dominion Think?



Gov. Terry McAuliffe declared his intention to regulate carbon emissions from power plants in light of what he called federal abdication of the job last week.

While environmental groups joined a chorus of praise, there was a notable lack of dissent from one big carbon emitter: Dominion Energy.

If Virginia follows cap-and-trade-style regulations put in other states, Dominion and Appalachian Power might one day need to buy carbon credits -- essentially, buy the right to pollute.

“This is a really big deal,” says Mike Town, director of the Virginia League of Conservation Voters. “It sets up a trade-ready plan and says that Virginia has to develop a cap to align with states already trading carbon.”

So what does Dominion think of all this, and why doesn’t it seem to be fighting? The politically active, state-regulated energy giant usually isn’t shy about opposing or supporting regulations that affect its profit margins. (It made $2.3 billion last year.)

“This puts them in a really tough place,” Town says. “They aren’t having the best of years from a public-relations standpoint.”

Town is referring to opposition to the Atlantic Coast Pipeline, revelations of coal ash spills at power plants and a rate-review case. Candidates on both political parties in the gubernatorial campaign have disavowed Dominion donations, as well as more than 60 House of Delegates candidates.

But Dominion’s response to McAuliffe’s carbon plan was tepid acceptance last week. The governor’s office even touted it in an email about positive responses to the plan.

In a similar kind of response, Dominion’s media director, David Botkins, emailed this statement to Style:

Dominion Energy has been preparing for carbon regulation for some time now and appreciates being a part of the Governor’s stakeholder engagement process. We have made tremendous progress reducing our carbon footprint, and have some of the strictest CO2 limits on record at our newest power stations, and are committed to bringing a much more renewable energy onto the grid -- as we announced on May 1. It looks like the regulatory uncertainty around carbon continues.

The nature of the plan was news to Dominion, Botkins says.

“We only learned of this decision from reading press reports,” he writes. “Dominion did not know what the governor’s announcement earlier this week would contain, but we provided input into the months-long process as several stakeholders did.”

The input occurred after McAuliffe’s first executive order on the topic last June. It directed his secretary of natural resources to come up with ways to reduce carbon that wouldn’t require legislative action.

Dominion participated in this first process, urging flexibility, realistic timelines and touting its existing efforts to reduce greenhouse gas emissions.

The next step, too, will try to stay away from the legislative branch. “We have the legislature we have,” says the governor’s spokesman, Brian Coy. “They do not share the governor’s enthusiasm for cleaner energy or the jobs that come with it.”

And Dominion also will participate in the creation of McAuliffe’s announced plan, which Coy hopes will be out for public comment before the end of the year.

But Dominion won’t have any special role, other than providing technical information to the state Air Pollution Control Board charged with developing a regulation, Coy says. “They’re not a decision-maker in this process.”

“If we were called to answer questions or testify in some form,” Botkins writes, “we would do so, if asked.”

Town thinks Dominion is likely OK with the announced plan in theory but interested in what the details are going to be. “My guess is, in details of the process, Dominion will have very different idea from environmental community in what constitutes a strong plan,” he says.

And he notes that carbon credit auctions like in other states also would require legislative action, as it is essentially a tax. Dominion may be banking on the idea that such a thing would never come to pass in a Republican-controlled legislature whose candidates receive campaign donations from the power giant.

“It’s too soon to speculate on any legislation,” Botkins writes. “It appears that this will be mostly an agency/executive branch action through the [Department of Environmental Quality] and the Air Board.”

It’s unclear what a carbon cap looks like without the trade and auction aspect.

Town speculates that Dominion is actually in a good place to benefit from any market-driven, cap-and-trade program. Solar investments give it an edge in selling its carbon credits.

But, like former President Barak Obama’s Clean Power Plan, an executive plan to reduce greenhouse gas emissions from 2015, which is on life support since President Donald Trump’s election, Dominion may be waiting out the year in hopes of a governor who would scuttle McAuliffe’s plan.

The Washington Post reported that company Chief Executive Tom Farrell sent a letter to the utility’s 76,000 employees earlier this month, urging them to consider gubernatorial candidates’ positions on the pipeline when they vote this year. Perhaps that letter will prove prescient in other ways.

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