Virginia Law Requiring Use of Virginia Coal May Be Unconstitutional
RICHMOND, Virginia, March 21, 2008 (ENS) – A state law passed last year to encourage construction of a power plant in southwestern Virginia requires the plant to burn Virginia coal. This provision makes the law unconstitutional, the Southern Environmental Law Center said in a filing with the State Corporation Commission, SCC, challenging the law.
By requiring such a facility to use Virginia-mined coal, the state law violates the U.S. Constitution’s Commerce Clause, the law center contends.
The State Corporation Commission is reviewing a request by Dominion Power to build a 585 megawatt power plant in Wise County and raise consumer rates to pay for construction and a profitable rate of return for the corporation.
The law at issue prohibits Dominion Power from purchasing out-of-state or foreign coal, preventing the company from seeking out the least-polluting fuel available for its proposed Wise County power plant.
In 1992, the U.S. Supreme Court struck down a similar Oklahoma statute requiring utilities to use at least 10 percent Oklahoma-mined coal.
The proposal has triggered a growing opposition movement across the state involving conservationists, the faith community, and student groups.
The Southern Environmental Law Center filed its brief late last week on behalf of the Southern Appalachian Mountain Stewards, Appalachian Voices, Chesapeake Climate Action Network, and the Virginia Chapter of the Sierra Club. The State Corporation Commission is expected to rule by mid-April.
The law center points out that “critically, the Virginia law allows Dominion to seek a rate hike from the SCC immediately. A power plant not using Virginia coal would be prohibited from seeking a rate increase until 2009, when Virginia’s caps on electricity rates expire.”
“The statute gave Dominion a constitutionally impermissible head start, and they’ve been scurrying to fast-track this coal plant ever since,” said Cale Jaffe, staff attorney at the law center.
The law center also points out that an analysis by SCC staff reveals the plant will actually harm Virginia’s economy, because higher electric bills will leave families with less to spend on consumer goods and services.
Based on Dominion’s estimate of $1.62 billion cost of the plant, the SCC staff estimates 1,474 jobs would be lost.
But the utility now puts the cost at $1.8 billion, an increase of 225% from when the plant was first proposed.
By comparison, a Westar Energy facility in Kansas was tabled after cost estimates grew by $200 – $400 million in 18 months. Dominion’s costs have grown by five times this rate in 19 months.
“Even worse,” Jaffe said, “Dominion has failed to account for any costs for controlling carbon dioxide,” the primary greenhouse gas responsible for global climate change.
“Dominion candidly admits that carbon costs are coming down the pike, but fails to do anything to plan for it. The disconnect is stunning,” he said.
In hearings before the SCC in February, Dominion witnesses conceded that a federal law regulating carbon emissions is “inevitable.”
The Virginia Attorney General’s office estimates the cost to offset the carbon emissions from the Wise County plant as high as $265 million per year.
These costs are critical, SELC noted, as leading Wall Street institutions such as Citigroup, Inc., J.P. Morgan Chase & Co., and Morgan Stanley, now require utilities to prove that new plants will be economically viable even under potentially stringent federal caps on carbon dioxide.