A map of the proposed Chickahominy Pipeline. (Henrico County)
Virginia Mercury | Sarah Vogelsong - February 14, 2022 11:05 am
Chickahominy Pipeline says it will “press pause” on the development of a pipeline through five Central Virginia counties to supply a planned natural gas power plant in Charles City County known as Chickahominy Power.
Beth Minear, a spokesperson for Chickahominy Pipeline, confirmed Monday that Chickahominy Pipeline had notified all five counties of the change in plans.
The company attributed the halt to a decision by the regional electric grid manager, PJM, to remove the 1,600 megawatt natural gas Chickahominy Power from its planning queue because of its failure to meet development deadlines.
In a filing with the Federal Energy Regulatory Commission, PJM said it had canceled Chickahominy Power’s interconnection service agreement — a plan for how new electric generation will be incorporated into the broader grid — because the company “failed to meet its milestones,” including one requiring that 20 percent of the site construction be completed by November 2021.
Furthermore, PJM said it had rejected the company’s request to extend those milestones “because Chickahominy has demonstrated no diligence or meaningful progress on the Chickahominy Project since entering the queue in October 2016.”
On Friday, FERC upheld PJM’s decision, finding that it had been reasonable and that “in light of the continued regulatory uncertainty facing the project, Chickahominy’s proposed project development timeline appears speculative at this juncture.”
In its communication to the five affected counties of Louisa, Henrico, Hanover, New Kent and Charles City, Chickahominy Pipeline said that “in light of this regulatory set-back as well as the uncertainty remaining with the [State Corporation Commission], Chickahominy Pipeline needs to press ‘pause’ on its pipeline efforts until its sole end-user, Chickahominy Power, is in a position to move forward.”
In December, against the arguments of the pipeline, the SCC determined that Chickahominy Pipeline should under state law be considered a public utility, a designation that would make it subject to state oversight.
In the same letter, the developers said Chickahominy Power would be evaluating its next steps.
“It never made sense to invest in so-called ‘natural’ gas at a time when Virginia has committed to a clean, zero-carbon energy grid, much less to construct what would have been one of the largest gas plants in the state,” said Greg Buppert, an attorney with the Southern Environmental Law Center.
A behind-the-scenes dispute FERC filings offer a glimpse of several months of wrangling between the regional grid operator and the power plant and pipeline developers.
Under development since 2016, the 1,600 megawatt natural gas-fueled Chickahominy Power Station has triggered controversy in recent years as Virginia energy policy has shifted away from fossil fuels and toward renewables. Exacerbating some local concerns in Charles City County, where the plant is planned to be built, was a proposal to construct another large natural gas plant known as C4GT roughly a mile away from the Chickahominy Power site.
Both C4GT and Chickahominy Power received the blessing of local officials but have struggled to obtain regulatory approvals for their gas supply as well as sufficient financing.
C4GT sought to secure gas through a proposed expansion of Virginia Natural Gas’ pipeline infrastructure. However, those plans were stymied when the State Corporation Commission conditioned its approval on the company meeting three criteria, including confirmation that the project’s “financial close is scheduled, certain and imminent.” Virginia Natural Gas later notified the commission that the conditions couldn’t be met, and C4GT canceled plans for the plant in July.
That same month, Chickahominy Pipeline began sending letters to landowners along an 83-mile swathe between Louisa and Charles City indicating interest in developing a pipeline to supply Chickahominy Power.
In a January filing with FERC, Chickahominy Power said it had originally anticipated getting its fuel supply from the expanded pipeline infrastructure Virginia Natural Gas proposed for the C4GT project.
The State Corporation Commission’s rejection of that pipeline expansion “required Chickahominy to identify alternative pipeline options for the delivery of gas,” wrote the developers.
Chickahominy Power told FERC it had entered into negotiations with Virginia Natural Gas, but talks proved unsuccessful. (In a “Responses to Questions” document provided by Chickahominy Pipeline to Hanover County earlier this year, the company stated that VNG “had originally agreed to supply natural gas to the Chickahominy Power Plant” but “didn’t have the firm capacity available for the continuous supply needed.” However, VNG spokesperson Rick DelaHaya told the Mercury in January that those statements were “incorrect” and the Virginia Natural Gas expansion “was never intended to serve the Chickahominy Power Plant.” Asked about the discrepancy, Minear said Chickahominy had “initially talked” with the utility and pointed to a Bay Journal story about the proposed expansion.)
Consequently, the company told FERC, “Chickahominy made the reluctant determination that it would have to undertake independent development of a gas pipeline to service the project.”
Grid deadlines, however, were looming. Under the interconnection agreement between Chickahominy Power, PJM and transmission owner Dominion Energy, Chickahominy was required to have 20 percent of its site construction completed by November 2021, with a planned operation date of March 1, 2023.
Chickahominy had previously obtained a one-year extension for the project from FERC, and on Aug. 17 it asked for more leeway of up to two years, citing not only gas supply delays but the need to reexamine what grid upgrades it might be responsible for given the cancellation of C4GT.
PJM, however, refused to allow the project’s planning to be paused or its deadlines extended, saying the company’s plans were “too thin, aspirational, and speculative to merit milestone extensions, especially given Chickahominy’s consistent lack of progress in moving the project forward.”
In particular, PJM argued that allowing the project to linger in the planning queue longer could negatively impact other generation projects that have a better chance of coming online sooner.
The grid operator has been struggling to keep up with the pace of energy projects developers are proposing within its footprint. So great is the backlog that this winter PJM proposed a two-year pause on reviewing more than 1,200 projects under development in its territory.
Chickahominy appealed the decision to FERC, calling it “an outcome driven by PJM’s willful disregard for changed circumstances affecting the Chickahominy Power Project’s development schedule, circumstances which not be reasonably foreseen and were precipitated by actions outside of Chickahominy’s control.”
FERC sided with the operator Friday, ruling that it had acted reasonably and canceling Chickahominy Power’s interconnection agreement effective Sunday.
This breaking news post has been updated to add additional information.
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February 14, 2022
Chickahominy Power, LLC has been notified by its legal team that the Federal Energy Regulatory Commission has upheld PJM’s decision to remove Chickahominy Power from the permitting queue. PJM has opined that other projects in its queue are nearer to operation-readiness, so it needs to devote attention to those projects in its already-crowded docket.
Although Chickahominy Power may reenter the PJM queue in the future, in light of this regulatory set-back as well as the uncertainty remaining with the SCC, Chickahominy Pipeline needs to press "pause" on its pipeline efforts until its sole end-user, Chickahominy Power, is in a position to move forward. The planned Open House for February 21, 2022 is cancelled.
As such, Chickahominy Pipeline will be suspending its project at this time, while Chickahominy Power evaluates its next steps. Chickahominy Pipeline extends our sincere appreciation and gratitude to those entities and individuals who were critical thinkers and either early supporters or lately-supporters for this much-needed and critical infrastructure project. We also appreciate those governmental officials who gave the project an open mind and fair shot, and hope that, if Chickahominy Power resumes its place in the PJM queue, that you will again support the Chickahominy Pipeline effort to fuel it.
Beth Minear, Project Outreach