State regulators want conditions met before approving contentious gas project

The State Corporation Commission
The State Corporation Commission regulates Virginia electric utilities. (Ned Oliver/ Virginia Mercury)

In an order Friday, the Virginia State Corporation Commission imposed conditions that must be met before a contentious natural gas expansion project can proceed.

Virginia Natural Gas has been seeking approval to expand its pipeline and compressor station infrastructure in Northern and Central Virginia, primarily to supply a natural gas-fired power plant proposed by C4GT, though that project remains stalled amid “market uncertainties,” the developers say, in the regional PJM power grid’s capacity market.

“Put simply, if C4GT is built, we find that the project is needed. If C4GT is not built, the project is not needed,” the commissioners wrote in the order.

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The SCC, which regulates utilities, says it won’t issue an approval for the Virginia Natural Gas project until the power plant it will serve provides proof that it has a “firm financing commitment” for construction. The commission will also require Virginia Natural Gas to recover costs for the expansion over “the same time period for which it has contracts with C4GT and other large customers to receive the payments necessary to pay for the project.” And C4GT must “reconfirm all contractual obligations to VNG necessary to pay its share of the header project.”

C4GT is planned to be a “merchant generator,” which means it will sell electricity on the PJM market.

“As a merchant plant, C4GT may operate for some years but, if it becomes unprofitable, may shut down, as many other merchant generators nationally have shut down when they became unprofitable. So it is imperative that VNG’s other customers not be left ‘holding the bag’ for the costs of the project should C4GT cease operating before those costs have been fully recovered,” the commission said.

The commission also required Virginia Natural Gas to agree to a “strict cap” on any costs it plans to shift to residential or business customers, comply with all environmental requirements imposed by the Virginia Department of Environmental Quality and file additional information on environmental justice concerns with the project.