Coal and Energy Commission
September 24, 2001, Richmond
Senator Wampler called the meeting to order and gave a brief overview of the goals of the commission for the coming year. The chairman expressed concern about U.S. dependence on foreign entities for 40 percent of its energy sources and stressed that the commission needs to look at supply, consumption, and all types of energy infrastructure in the Commonwealth to identify ways of stimulating the domestic energy supply and ensuring reliability of energy distribution throughout Virginia.
A representative of the Department of Mines, Minerals, and Energy (DMME) gave a detailed report on production of traditional and alternative energy sources, consumption of energy, and energy efficiency measures in the Commonwealth. Coal production in Virginia has increased slightly, totaling over 33 million tons last year, at a value of $875 million. The average coal miner is more than 50 years old, so mine employment will continue to be a problem in the industry. Virginia's natural gas production declined slightly in 1999-2000, with just over 71 million mcf produced for a value of $284 million, but production should increase this year. Virginia has seen a large increase in the number of wells, and while the price of natural gas is higher than in 1998 and 1999, the price seems to be dropping. Oil production remains limited in Virginia, but has increased in recent years from 8,804 barrels to 12,418.
Data from the federal Energy Information Administration (EIA) indicate that 40 percent of energy used in Virginia comes from petroleum, with the remainder of consumption divided almost equally among coal, natural gas, nuclear power, and electricity. However, these numbers vary greatly depending on the sector of consumption. Residential and commercial sectors get most of their energy from electricity, while the industrial sector is more evenly balanced among energy sources, and the transportation sector consumes 99 percent of its energy from petroleum. Virginians consume 324.1 million Btu, and the national average is 350.9 million Btu per state.
Virginia has a number of programs encouraging the use of alternative energy. In the area of business development, there are solar manufacturing grants and wind projects to encourage businesses to locate in Virginia and produce equipment that fosters the use of alternative energy sources. Net metering, park power, VHDA loans, and solar easements are some of the other programs Virginia supports, and private companies engage in poultry litter projects and municipal solid waste plants for the generation of energy through biomass. Finally, the Virginia Energy Plan has two main goals: to operate state government as a model of energy efficiency and to ensure the sustainable use of energy in Virginia. Many state agencies have implemented their own programs to use energy more efficiently, and DMME is currently conducting a study of energy conservation public education.
Senator Watkins gave the commission an overview of the recent activities of the Southern States Energy Board (SSEB). The SSEB just approved the Energy Policy in the South, which was completed as a result of the National Energy Policy promulgated by the President earlier this year. The Energy Policy in the South is designed to provide guidance to southern states about energy production and consumption, based on five guiding principles: (i) ensuring the diversity of domestic energy resources, (ii) addressing energy supply for stability and reliability, (iii) increasing conservation and energy efficiency, (iv) expanding and strengthening infrastructure capacity, and (v) advancing research and development and use of clean energy. Delegate Stump asked if there was an interest in clean coal technology, and Senator Watkins replied that it is of great interest, and it is incumbent on Virginia to leverage as much of the federal funding for that technology as possible.
The commission was briefed on current activity in Congress affecting the coal industry. Virginia's Rick Boucher of the 9th District is the ranking Democrat on the House Commerce Committee. In 1999, the Virginia Coal Association adopted a resolution urging Congress to support research and development for clean coal technologies. A number of bills have been introduced in Congress and have gone through some of the committee process, but none has passed yet. A hearing on one major bill was to be heard September 11, and has not yet been rescheduled.
The State Corporation Commission (SCC) presented the commission with an overview of current and planned energy infrastructure in Virginia. Virginia currently has around 20,000 megawatts (MW) of electric generating capacity, plus one 540 MW plant under construction. Plants that have obtained a certificate from the SCC comprise between 5,628 and 7,043 MW of generation, and another 7,430 MW of generation have been announced, but applications for certificates for those plants have not been filed. AEP's 90-mile, 765-kV power line has been granted a certificate but is not yet under construction, and Dominion Virginia Power has applied for certificates for two new power lines: one 500-kV line of 101 miles, and one 230-kV line four miles in length.
Dominion also has a natural gas pipeline with a certificate from the SCC, and two other companies have filed applications for their pipelines. Other significant natural gas projects include Dominion's Greenbrier and Mid-Atlantic pipeline projects, Duke Energy's Patriot pipeline, the Saltville natural gas storage facility, Columbia Gas's Homestead Expansion project, and Williams Cos.' Transco Pipeline Expansion. Senator Wampler noted that the end point of many new gas pipelines is an electric generating plant. The commission needs to look at ways of getting some of that gas dropped off to consumers along the pipeline. The chairman also noted that the commission looks to the SCC to see whether Virginia has an adequate energy infrastructure and expects timely decisions from the SCC based on what is best for the Commonwealth.
The commission received its annual update on the Low-Income Home Energy Assistance Program (LIHEAP) from the Department of Social Services. More than 84,000 families were served by LIHEAP this season due to increased federal funding of the program, and between five and 10 percent of funds were used for cooling assistance. The chairman noted that most crisis funds are used to pay heating costs in winter months, but summer heat is just as much a health risk when low-income persons, particularly the elderly, do not have adequate cooling in their homes. Senator Watkins noted that the SSEB looked at LIHEAP funding this year, and most funding goes to the Northeast to pay for heat in winter, despite the fact that the instance of fatalities resulting from extreme heat in summer is equal to or greater than that in winter. Senator Watkins indicated that the SSEB passed a resolution asking the federal government to reexamine funding allocation methods, taking new census data into account, and suggested that DSS pass a similar measure and communicate it to Congress. Senator Wampler stated that LIHEAP has been underfunded at the state level and suggested that the commission recommend allocating TANF dollars in the upcoming budget to supplement LIHEAP funds.
The Department of Housing and Community Development gave a brief update on the Weatherization Assistance Program. Funding levels increased in FY 2000-2001, but the number of homes served did not increase dramatically because of turnover among skilled weatherization workers. The costs of training are high, and the Department of Energy has increased funding for safety training, but retention of employees is very difficult. The chairman asked if the weatherization program had any funding challenges, and the DHCD representative indicated that the federal funding picture looks good. The funding may not increase, but she does not expect it to decrease this year.
The Chairman asked Senator Watkins, as chair of the Energy Preparedness Subcommittee, to examine the federal energy plan, the SSEB Energy Policy in the South, and energy infrastructure within the Commonwealth. Senator Watkins estimated that the subcommittee would need two meetings to examine these issues.