New York — Power generator LS Power has raised concerns with state regulators over the competitiveness and ratepayer impact of a Dominion Energy Virginia request for proposals to procure roughly 1,500 MW of incremental peaking resources within the utility's territory.
Doswell Ltd., a company owned by LS Power, recently sent a memo to William Stephens, director of public utility regulation at the Virginia State Corporation Commission, and Virginia Attorney General Mark Herring outlining the company's concerns.
"Our aim is to highlight awareness of the flaws in this solicitation process, as it does not serve the best interests of the affected communities who already have sufficient generation to meet the grid's reliability needs," Nathan Hanson, LS Power's senior vice president, said Friday in an email.
Dominion in early November issued the RFP soliciting proposals from bidders for up to about 1,500 MW of new peaking dispatchable unit firm capacity. Dominion is conducting the solicitation because its recent Integrated Resource Plans projected a capacity and energy gap between the company's future generation resources and projected customer load requirements, according to the RFP.
Proposals must be submitted by December 19 and the RFP concludes in the March to April 2020 time period. Dominion Energy Virginia is part of the PJM Interconnection.
RFP LIMITATION IS TOP CONCERN
Doswell's top concern is that the RFP is limited to new resources only, while it along with other power generators own existing resources that could meet the RFP's requirements. Doswell argues the RFP is not needed because PJM's power markets are currently oversupplied with resources that can competitively supply ratepayers.
"There are sufficient existing resources in PJM, including combined cycle and peaking generation in Dominion's service territory, some of which commenced operation in 2018, that are excluded from the RFP that are able to provide Dominion ratepayers reliable energy supply at competitive prices," according to the memo.
Additionally, the RFP is structured such that bidders must compete with generation projects proposed by Dominion and Dominion is the only party analyzing the bids, according to Doswell.
"The RFP requires bidders to compete against Dominion's 'self-build alternatives' with Dominion performing the analysis of the bids in secret," Doswell said, and as such, they are calling for more transparency in the process.
"Adding 1,500 MW into a market that is 22,000 MW long doesn't make much sense," Hanson said, adding they are only seeking a transparent and competitive process be conducted. The anticompetitive nature of the Dominion RFP restricts competition in favor of a Dominion self-build option, he said.
In evaluating a 10- or 20-year power purchase agreement, terms provided in the RFP, compared to a self-build alternative that will assume to have a useful life of about 40 years "creates an inherent benefit for the self-build alternative," Doswell said.
The RFP structure makes it doubtful that ratepayers will get the benefit of a truly competitive process and it could likely result in higher rates than they otherwise need to be, the memo said.
As a result, Doswell has asked that an independent third party under the direction of the Virginia SCC be retained to evaluate the bids.
When asked for Dominion's reaction, spokesman Jeremy Slayton said Friday the company is reviewing the letter from LS Power.
--Jared Anderson, firstname.lastname@example.org
--Edited by Valarie Jackson, email@example.com