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Dominion Energy places nine regulated units into 'cold reserve'

https://www.platts.com/commodity/coal

Houston — Nine regulated units at five power plants in Virginia with combined capacity of 1,208 MW will be put into "cold reserve" later this year, Dominion Energy said Wednesday.

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The Richmond, Virginia-based holding company also said it will be eliminating about 295 positions at its Power Generation Group and about 100 positions at its nuclear facilities.

"We will not know the exact number of colleagues who will be leaving the company until the salaried pooling and union bumping processes are completed," the company said in a release.

Dominion's Power Generation Group, which manages Dominion's 21,500 MW of regulated generation and its 4,700-MW merchant portfolio, said it conducted an assessment of its generating units "to identify those facing competitive challenges in the current energy environment."



The cold reserve units "will not run but could be restarted if necessary," the company said.

The nine units being placed into cold reserve are "all on our regulated side," Dan Genest, a company spokesman, said Thursday.

"While they are regulated, we are part of PJM. PJM determines which units run based on the cost of the electricity they produce -- lowest cost goes online first. The units we have placed in cold reserve are older, smaller and less efficient and very seldom able to make the cut against new, highly efficient combined-cycle gas and more efficient renewables," Genest said.

The company noted that natural gas prices remain "historically low" and forecasts call for power supplies to "remain plentiful."

"Natural gas and renewables have displaced coal and older, smaller gas units on dispatch, while the cost to build large-scale solar has dropped 90% in the last six years," the company noted.

Natural gas is Dominion's dominant fuel source, with natural gas-fired capacity making up 39% of Dominion's regulated capacity resource mix in 2017, with coal at 19.9% and nuclear at 16.5%.

It said that "policies and incentives" are supporting cleaner, more environmentally sustainable energy and the state of Virginia is considering potential carbon reduction, "which could impacts us."

Dominion has said it is investing $1 billion in its solar fleet in Virginia and North Carolina, which has grown to 1,350 MW of solar in service, under construction or in development.

Dominion is building or will build solar facilities in Virginia that will supply Amazon Web Services and a Facebook data center. The Amazon project is 280 MW at several different sites that will be merchant facilities. The Facebook renewable deal is still under development.

"We have put out an RFP for up to 300 MW. Facebook solar would likely be on the regulated side of our business," Genest said.


HIGH HEAT RATES, LOW CAPACITY FACTORS


Two units -- 3 and 4 -- with combined nameplate capacity of 260 MW located at Dominion's roughly 1,270-MW coal-fired Chesterfield Power Station are being put into cold reserve.

Dominion in May discussed closing those two units by 2022 in its 2017 Integrated Resource Plan. Unit 3 had an average heat rate of 12.37 MMBtu/MWh in 2016, while Unit 4's heat rate was 10.45 MMBtu/MWh, according to Virginia Electric and Power data.

Chesterfield's Units 5 and 6, with combined capacity of 1,006 MW and similar heat rates, remain in operation.

There are also two combined-cycle units at Chesterfield, with combined capacity of 397 MW and average heat rates of 7.40 MMBtu/MWh in 2016.

Also being put into cold reserve are two natural gas peaking units, Bremo 3 and 4, that have combined capacity of 227 MW and are located in Bremo Bluff, Virginia.

The units, which were commissioned in the 1950s, were converted to gas from coal in 2014, but operated at net capacity factors below 19% in 2017.

The 267-MW combined-cycle Bellemeade intermediate facility near Richmond will also go into cold reserve.

Commissioned in 1990, it operated at a 39.9% net capacity factor in 2016, according to VEPCO data, and at 14.1% in 2017.

Mecklenburg units 1 and 2 in Clarksville and Possum Point units 3 and 4 in Dumfries will also go into cold reserve.

--Jeffrey Ryser, jeffrey.ryser@spglobal.com
--Edited by Jason Lindquist, newsdesk@spglobal.com