Coal and Energy Commission/
House Mining and Mineral Resources Committee
The Coal and Energy Commission
and House Mining and Mineral Resources committee held a joint meeting,
during which members heard testimony on low-income energy assistance and
natural gas prices and discussed coalbed methane legislative proposals.
Low-Income Energy Assistance
The chairman of the Consumer
Advisory Board of the Electric Utility Restructuring Act presented the
commission with an overview of low-income energy assistance and unmet
need. The Consumer Advisory Board was created to assist the Legislative
Transition Task Force in its work, including ensuring that residential
and small business electricity customers benefit from competition. The
board is in its third year of studying low-income energy assistance, including
LIHEAP, weatherization, and private-sector programs. One of the board's
recommendations for 2001 was introduced as HB 2473.
As introduced, the bill created
the Home Energy Assistance Fund, provided for funding through income tax
refund checkoffs and contributions to the Neighborhood Assistance Act,
and provided for the centralization of administration of low-income assistance
programs. Included in the centralization was the requirement that the
Department of Social Services collect information regarding the amounts
of assistance provided in Virginia and the amount of unmet need. Budget
concerns in the 2001 Session led to most funding mechanisms and data collection
requirements being removed from the bill, and the board is examining the
possibility of renewing these recommendations for the 2002 Session. The
current economy and possible changes in federal funding could have an
impact on the need for assistance. The chairman noted that the commission
will continue to monitor the board's recommendations through the task
force and the General Assembly.
Natural Gas Prices
A representative of the Virginia
Oil and Gas Association briefed the commission on what has happened to
natural gas prices over the past several years. High prices last winter
led to the introduction of SJR 481, asking the commission to study the
rise in natural gas prices. Since February, prices have dropped dramatically.
Producers mine the gas at the wellheads, transmission companies operate
the pipelines to move the gas, and local distribution companies (LDCs)
deliver the gas to customers. Most gas consumption is in the winter months,
but production is all year long, so companies typically store a substantial
amount of gas and release it when demand increases. LDCs sell the gas
at no profit and are required to act as a prudent purchaser.
Last year, gas prices at the
wellhead and to consumers were historically high. Depressed prices over
the several years prior to 2000 led to a decrease in development of new
gas wells. The unusually hot summer of 2000 also required more gas to
be taken out of storage to fuel electric generation plants, leaving less
stored gas available for winter consumption. Much of the price of natural
gas is dependent on activity outside the Commonwealth, since Virginia
produces less than one-half of one percent of the gas produced nationwide.
The nation has seen a record number of wells drilled this year, so prices
are now back down to where they were for the seven or eight years prior
to last year.
A proposal from of the Virginia
Oil and Gas Association is a substitute version of Delegate Bryant's HB
2868 from the 2001 Session. The substitute (i) permits a coal operator
to require a well operator to move the location of a proposed coalbed
methane well to an alternate location within 800 feet of the original
location, (ii) creates a hearing process before the Department of Mines,
Minerals and Energy to resolve coalbed methane well location issues, and
(iii) provides that consent for wells more than 750 horizontal feet from
active areas of a coal mine shall be deemed to be granted if the applicant
has obtained consent to stimulate from any coal owner holding at least
a 50 percent interest in the acreage for each coal seam. Currently, coal
operators must give consent to stimulate a coal seam before a permit for
a new well can be heard by the department. This bill would provide for
operators to object during the permitting process, rather than refusing
consent before the permitting process may begin.
Members discussed the proposal
at length, with several expressing concern about safety issues, particularly
related to the hydraulic fracturing used to stimulate a coal seam. If
the roof is damaged in the hydraulic fracturing process, the methane may
migrate through the rock into other coal seams. Some members were concerned
about taking away the operator's right to consent to hydraulic fracturing.
A DMME representative confirmed the unpredictability of hydraulic fracturing
and the lack of federal or state standards. Consensus among board members
was that more information about the science of hydraulic fracturing was
needed, and the commission did not vote to recommend any legislation.
Senator Watkins, as chairman
of the commission's Energy Preparedness Subcommittee, expressed concern
about the adequacy and reliability of Virginia's energy infrastructure
and has worked with the SCC to develop the details of what information
may be needed to understand the state of Virginia's energy resources and
infrastructure. The chairman authorized the subcommittee to meet and discuss
the issue further, and their meeting will be held December 19, at 1 p.m.
in Richmond. The chairman indicated that he would send a letter to Senator
Norment, chairman of the Legislative Transition Task Force studying electric
utility restructuring, to apprise him of the Energy Preparedness Subcommittee's
The next full commission meeting
will be in January in Richmond before the beginning of the legislative
session. Additional information about the commission and any meeting materials
may be obtained at http://dls.state.va.us/cec.htm.
The Honorable William C. Wampler, Jr., Chairman
Legislative Services contact: Maureen Stinger
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