Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, February 24, 1993 TAG: 9302240428
SECTION: EDITORIAL PAGE: A10 EDITION: METRO
SOURCE: MARK P. BARRY
DATELINE: LENGTH: Medium
ECONOMIC-DEVELOPMENT BENEFITS LOST
WE AT Coastal Power were disappointed at the outcome of the recent Virginia Senate vote on House Bill 2129, which would have required Virginia Power to purchase electricity generated by a coal-gasification plant to be located in Southwest Virginia. Under provisions of the bill, the State Corporation Commission would have arbitrated price, terms and conditions of a contract between the developers of the Tom's Creek Energy Project and Virginia Power, such that Virginia Power's ratepayers would pay no more than they would have paid for power from a plant built by the utility.The energy project is a 186-megawatt power plant to be built at a cost of $450 million, including a $95-million grant from the U.S. Department of Energy. The heart of the project is a coal-gasification technology which, when commercial scale-up is complete, will eliminate virtually all pollutants known to cause acid rain and produce electricity up to 25 percent more efficiently than conventional coal-fired plants. Passage of the bill would have enabled construction of the plant and would have created up to 600 construction jobs, 140 jobs in permanent operations, and up to 140 coal-mining jobs. Estimated economic impacts on the community included $2.5 million per year in property-tax revenues and a payroll of $8 million per year. When the multiplier effect for payroll dollars recirculating in the community is included, the annual impact on the local economy is expected to be more than $40 million.
The coal-gasification technology proposed at Tom's Creek offers the lowest-cost means of ensuring Virginia Power's ratepayers against the risk of large increases in natural-gas prices and, in our opinion, represents the best hope for the future of the Virginia coal industry. Because of increasingly stringent regulations, it is becoming virtually impossible to obtain permits for and build coal-fired electric-generating plants in the United States. The federal government, the state of Virginia and Virginia Power should be very interested therefore in this new technology that promises to produce power from coal with significantly less harm to the environment. Failure to advance this technology jeopardizes not only the jobs created or retained by the Tom's Creek Energy plant, but the long-term future of thousands of jobs that currently exist in the coal industry of Southwest Virginia.
The support of many members of the House of Delegates, Senate and community leaders during the campaign to enact this legislation helped the bill advance as far as it did. But despite the many positive reasons for supporting HB 2129, as the following summary indicates, Virginia Power was able to defeat the bill by making false claims that it would be detrimental to the utility and its customers.
Virginia Power: We don't need the generating capacity now.
Fact: Roanoke-based Coastal Power Production Company, developer of the proposed plant, offered to delay construction of the plant until 2002, the year that Virginia Power's own forecast showed a need for a new coal-fired power plant.
Virginia Power: The bill would force Virginia Power's ratepayers to subsidize economic development in Southwest Virginia.
Fact: The price for power from the plant would be set at no more than the price Virginia Power's customers would have paid for electricity from a utility-owned plant. In addition, development of the IGCC technology offers benefits to all Virginians by mitigating gas-price risk, reducing environmental impacts of new generation and helping to preserve our domestic coal industry.
Virginia Power: An independent SCC study showed that the plant might cost ratepayers up to $75 to $150 million over its life.
Fact: Coastal disputes the conclusions of the SCC study and contends that the plant offers net savings to ratepayers, even before other benefits are considered. The SCC study in question was done behind closed doors without the opportunity to challenge figures submitted by Virginia Power, which were significantly lower than figures the utility made public in September in a different SCC proceeding. What HB 2129 required was for the SCC to give the issue a fair trial and act in one of its traditional roles to arbitrate a contract between the parties that would ensure that ratepayers would be protected.
Virginia Power: House Bill 2129 would create a dangerous precedent.
Fact: The legislation did not threaten Virginia Power's normal competitive-bid program. Rather, it would create a narrow statutory exemption for a project made possible by a $95-million federal grant to develop the clean-coal IGCC technology. To retain the grant, Coastal Power must obtain a contract for the sale of electricity from the plant by Dec. 31, 1993.
Our disappointment in the failure of the bill is heightened by the misinformation used by Virginia Power to fight against it and our continued belief that the benefits of the project would extend beyond the economic-development impacts on Southwest Virginia. Currently, we are evaluating our options for the future of the project.