Virginia’s Energy Future

Rich Meagher:

Welcome to RVAs Got Issues, the show that brings you the people and ideas that are reshaping Greater Richmond. I’m your host, Rich Meagher. Dominion Energy delivers electricity to millions of homes and businesses in Virginia, but these days there’s tremendous pressure on the company with skyrocketing energy demands. How will Dominion meet the Commonwealth’s energy needs while meeting our clean energy goals and keeping rates affordable? Today we’re sitting down with the chair, president and Chief Executive Officer of Dominion, Bob Blue, to find out

Bob, welcome,

Bob Blue:

rich. Thanks very much. I’m glad to be here.

Rich Meagher:

So, Bob, let’s start here. How has Virginia’s energy needs changed over even just the last 10 or 20 years?

Bob Blue:

Well, you know, for much of the last 10 or 20 years, Virginia’s demand for electricity has not risen rapidly because people’s lighting is more efficient, their heat pumps are more efficient. So energy efficiency has kept that demand from growing as much, however, in the last couple of years. And what we are seeing going forward, we’re going to see demand increase, uh, along the lines that it did in the years after World War ii, when there was a great period of electrification in this country. Mm-hmm.

Rich Meagher:

And so what’s driving that? Is that just expansion or, or, or something in particular?

Bob Blue:

It is a combination of population growth. Yeah. More electrification of the economy. For example, people using electric vehicles Mm. As opposed to, uh, combustion engine vehicles. And then a big chunk of it here in Virginia is data centers, which are really important to our economy. We all use them. Everyone who’s listening to this podcast is benefiting from a data center, and those centers use, uh, a lot of electricity. And so that’s what’s driving the demand going forward.

Rich Meagher:

So what does that mean for Dominion? What kind of challenges does that bring for the company?

Bob Blue:

Well, it means that we need to build the infrastructure necessary to serve that load. We’re going to need to build new generation, and we’re going to need to build new, uh, transmission the, the big wires. Yeah. Uh, that sort of interstate highways of the electric system. And we’re gonna need to continue to modernize the distribution system, the smaller wires that go through your neighborhood. Uh, and we’re doing all of that, and we’ve been doing all of that for some time. Uh, we’re gonna have to do more of it going forward.

Rich Meagher:

So adding to that pressure course is this state law that sets net neutral carbon emissions goal for dominion by 2045. Right. How do we get there with all this increasing demands for energy?

Bob Blue:

Right. Well, so 2045, we’re still 20 years away from that.

Rich Meagher:

Right.

Bob Blue:

Um, a lot of the demand that’s coming is in the earlier, uh, periods. Uh, so we need to be able to invest in infrastructure that’s gonna serve demand today, and then continue to think about how we’re gonna achieve that net neutral, carbon free grid by 2045. I think it’s really important for people to understand a little context too. Our company since 2005, so in the last 20 years, we’ve reduced carbon emissions from generation, uh, by 53%.

Rich Meagher:

Mm-hmm

Bob Blue:

So we’ve done a lot and we know how to, uh, build infrastructure in ways that are as clean as possible. The, the mission of our company. Ask anybody who works at Dominion, what’s Dominion’s mission? They will tell you it’s to provide the reliable, affordable, and increasingly clean energy that powers our customers every day. It’s gonna require technological advances, maybe small modular nuclear reactors, maybe so-called carbon capture and storage, maybe hydrogen. There are things out there. Those are all possibilities. In the nearer term, we’re gonna need additional natural gas, which does emit, uh, carbon the longer term. Uh, we’re very committed to the goals that we’ve set out.

Rich Meagher:

Yeah. So you are laying out this big picture. I want to get into the details a little bit, right? Yes. Infrastructure can be a very squishy word. Right. It can mean a lot of things

Bob Blue:

Not to us.

Rich Meagher:

Yeah, sure, sure. For you.

Bob Blue:

Where we, we, we have a very clear idea of what infrastructure means to our company, so happy to talk about that

Rich Meagher:

Point taken. Right. So, so let’s make it a little more specific. So for example, a technology like wind. Yes. That seems to be a, a, an area of opportunity. It’s a, an a very old technology like windmills going back hundreds of years. But the, the new big turbine, it’s like what’s happening with, with wind in

Bob Blue:

Virginia? Well, the wind resource in Virginia, uh, that is the, the most beneficial is offshore.

Rich Meagher:

Hmm.

Bob Blue:

So we are currently constructing a large wind farm, the largest to be constructed in the United States, among the largest in the world that at peak would serve about 650,000 homes and businesses in Virginia generate enough electricity, uh, to do that. Um, the project is going extremely well. We expect to complete it by the end of 2026 next year. Uh, but we don’t have to wait till the end to start putting electrons on the grid. Uh, we would expect to start putting electrons on the grid from that project in early 2026.

Rich Meagher:

I don’t know that people really, who, who haven’t been at one of these wind turbines really understand the scale that we’re talking about here.

Bob Blue:

Right. It’s very, very difficult to grasp the scale unless you are there. But to give you a sense, uh, and, and even when I describe it, it doesn’t quite

Rich Meagher:

Do

Bob Blue:

It justice. When the blade is vertical, the tip of the blade will be about 820 feet above the ocean. Yeah. Which

Rich Meagher:

Is a, a very,

Bob Blue:

Very, very

Rich Meagher:

Tall building.

Bob Blue:

It is a, it is a very tall building.

Rich Meagher:

Yeah. Have you, have you actually gone to visit these or, oh, yeah. Are you, like in the boats? Do you get to climb up them at all, or?

Bob Blue:

They haven’t let me climb up yet. <laugh>. Um, because in order to get off the boat onto a turbine, there’s a certain amount of training that you need to do safety training. But thanks for reminding me. I need to follow up. And, uh, apparently they, you know,

Rich Meagher:

What, what is the point of being CEO of Dominion Energy if you can’t go climb around on a giant

Bob Blue:

Wind turbine? I agree with you completely. Uh, and I don’t mind if they, you know, throw me in the pool <laugh> and, uh, make me prove that I can swim. I’m comfortable with

Rich Meagher:

That. All right. Good. So let’s shift from wind to a, another kind of technology. Uh, you mentioned this, uh, nuclear, right?

Bob Blue:

Yes.

Rich Meagher:

There’s a lot of excitement, new technology.

Bob Blue:

Yes.

Rich Meagher:

I think a little apprehension. People still have, uh, concern about nuclear power. How is it being used in, in Virginia?

Bob Blue:

Well, we operate in Virginia, four nuclear units today at two different plants. One at North Anna Lake Anna,

Rich Meagher:

Mm-hmm

Bob Blue:

Uh, and one in Surry, uh, Virginia. And we’ve been operating them since the 1970s. They are the workhorses of our fleet.

Rich Meagher:

Mm-hmm

Bob Blue:

And they are carbon free. And they have been great investments for our, uh, customers. So we are very pleased about the performance of those units. And in fact, they were originally licensed for 40 years. We, uh, obtained extensions, and now we’ve licensed the surry, North Anna plants, or the Nuclear Regulatory Commission has at our request out to 80 years. So those plants will be operating now into the 2050s.

Rich Meagher:

Right. And so the, the but the, the idea going forward, right, is that there may be these new technologies, like for example, the SMRs, right? Yes. These small

Bob Blue:

Correct.

Rich Meagher:

Modular reactors. Right. Governor Kin is a huge fan of them. Yes. He’s been talking about them a lot. Yes. But they’re very unproven. Right. We don’t necessarily have any of those in the country at the moment. Right.

Bob Blue:

We do not.

Rich Meagher:

You see a future for this in Virginia.

Bob Blue:

Yes. Yes, I do. Let’s start off with the fact that we already have small modular reactors in Virginia. They’re floating around Hampton Roads on submarines and aircraft carriers every day. The nuclear navy has been using these smaller reactors for some time. They’re not commercial reactors. So, uh, we need to think a little bit about the right kind of technology for a, a commercial small modular reactor. Um, so our company has been evaluating technologies. We issued a request for proposals from these companies, uh, back in the summer of last year. And we’ve been evaluating the technologies, and we announced that, uh, last summer, that if we move forward with a small modular reactor, we would expect to cite it at North Anna, which is where we’re operating two of the bigger units today. We also announced, uh, memorandum of understanding with Amazon, uh, to work together on paying for it, financing it.

Rich Meagher:

Right.

Bob Blue:

And that’s where, uh, uh, we’re also focused. So we’re focused on the technology, and then we need to be focused on, uh, the cost and how you’ll finance it. The first machines are gonna be more expensive than the 12th or 13th. That’s the theory behind small modular reactors, is you’ll gain economies of scale by producing these machines in a factory, one after the other. So we’re looking at that. We need to figure out a way, uh, to make sure that our customers and our company, our shareholders, are not taking on outsized risk of, uh, investing in a new technology and the potential cost overruns that can happen, uh, with a project like that. So that’s where maybe this partnership with Amazon will come in. We’re sort of investigating all possible ways to try to do this if we’re going to Right. In a way that makes financial sense for our company and our customers.

Rich Meagher:

So the other kind of technology we’ve been hearing about is fusion.

Bob Blue:

Yes.

Rich Meagher:

Right? The the big announcement

Bob Blue:

Yes.

Rich Meagher:

About having this fusion reactor in Chesterfield, that’s another company doing that. But Dominion is providing some resources for this, right. Uh, I think people are still asking like, is this really gonna happen? Right. Yeah. Because Fusion has been on the horizon for such a long time. And what’s your, your view on that?

Bob Blue:

Well, I just can tell you this, and, uh, a political science professor, and, you know, my background is a lawyer, the two of us talking about plasma physics might be a short conversation. But I have visited, uh, their test facility twice. So this company is called Commonwealth Fusion Systems. It’s spun out of MIT. Their CEO, Bob Mum Guard has a PhD from MIT in plasma physics. So these are very serious people. Uh, they’re well funded, uh, and they’ve made some advances in material science related to the magnets that are part of what’s called a tomac, which creates this mm-hmm <affirmative>. This plasma, you know, sun sort of, uh, mini sun. So they’re well along in this demonstration project. They expect by 2027 to have that online where they will demonstrate that they can, uh, create this incredible amount of heat. And then once that’s done, then they would come to Virginia, to Chesterfield County and build a commercial facility where we would work with them, take that heat, use it to create steam and spin a turbine. There has not been, to date an example of fusion on a, on a scale right. Or time, you know, that there have been some, uh, lab experiments where they’ve generated more energy than they input. This is on a much larger scale, but they’re, uh, quite confident in their ability, and we think they’re very impressive. Uh, we’re excited about the opportunity to work with them, uh, on a commercial project in the late 2020s, early

Rich Meagher:

2030s. So, one other technology I wanted to ask about is solar. I think people understand solar panels, and I know Dominion owns some solar panels do, but a lot of them are, are, are private, right? They’re my neighbor putting panels on their roof or a, a, a developer that develops their own farm. How do you harness all that stuff?

Bob Blue:

Well, uh, that we have a variety of ways, uh, that if a customer puts solar panels on their roof or a commercial building on their roof, they can sell that electricity back to the grid.

Rich Meagher:

Mm-hmm

Bob Blue:

You do raise a, a complicating factor if you think about a company where you’ve gotta estimate your expected demand. But now add on that if people are generating electricity in their homes, we’ve gotta accurately predict what the production side of the equation is. And in most companies, that part you have total control over. So, uh, we have a variety of programs that allow people to sell back to the grid, and we take that into account. We do also develop solar ourselves, uh, on a pretty significant scale. And I think that’s one thing about our industry that’s hard for people to grasp. We were talking about the scale of just the offshore wind turbines themselves. Yeah. But our whole business, uh, it’s hard for people sometimes to get their head around scale. And in our business, given that we’re serving in Virginia, you know, 2.7 million homes in businesses, scale is important. So larger solar installations are more cost effective than a ton of smaller ones.

Rich Meagher:

Yeah.

Bob Blue:

Uh, given the advantages of scale,

Rich Meagher:

So all of these new technologies, right? You’ve got solar, you’ve got wind. We talked about nuclear. They’re cool, they’re carbon free, generally.

Bob Blue:

Yes.

Rich Meagher:

Right. But are they enough to meet this future energy demand that we’re talking about?

Bob Blue:

They’re enough to meet a lot of it.

Rich Meagher:

Yeah.

Bob Blue:

Uh, that’s what I mentioned. You know, sort of when we set this goal for our company of, you know, net zero carbon is the phrase people use. We said those technologies are gonna get us sort of 80% of the way there. Now, fusion, if it works, you know, works both physically and financially, by the way, those can generate fusion and, and fission. So either smashing, uh, atoms together or separating them. Right? Right. Um, those can generate a great deal of electricity, uh, carbon free, and they can be around the clock, solar and wind. Uh, the challenge there is that they are not around the clock. Right.

Rich Meagher:

The sun goes down.

Bob Blue:

Correct. Sun goes down. Sometimes the wind doesn’t blow.

Rich Meagher:

Yeah.

Bob Blue:

Uh, batteries can help supplement there. Um, but those technologies can get us a lot of the way there. Uh, there’s probably gonna need to be more to get us all the way there.

Rich Meagher:

Yeah. So you mentioned, for example, this new, uh, natural gas plant Yes. And chess field that you’re proposing. I think people wonder, right, dude, that’s so 1950, aren’t we done with that? Like, why are we still doing this old technology? Right? Shouldn’t it be a wind plant or a, you know, I think that’s the, the sense that people that,

Bob Blue:

Right. And, and you know, I think people often approach, I, they probably approach a lot of issues this way. I just happen to be most first in energy.

Rich Meagher:

Mm-hmm

Bob Blue:

They tend to approach energy, uh, with their philosophical or ideological hat on first.

Rich Meagher:

Yeah.

Bob Blue:

And then dig into the facts later.

Rich Meagher:

This is what I want to happen, as opposed to what can actually happen.

Bob Blue:

And we approach it a different way. We approach it as what do we need to do to provide reliable, affordable, increasingly clean energy. So if we look at wind and solar, incredibly valuable. We’re constructing a lot of both, but they don’t operate all the time. And so as we think about this mix, it’s gonna be important to continue to have natural gas for some period of time to operate the grid reliably. And that’s why we’re adding natural gas and Chesterfield. And we would expect, if you look at our long range plan to add more natural gas beyond that.

Rich Meagher:

So, given that, and again, I just wanna clarify this, and given the, the state goal for, um, carbon-free by 2045, are these realistic goals, right? Can, is it possible to, to get that far by that timeline based on what we know?

Bob Blue:

Well, uh, here’s what I’d say. Our industry in some senses moves slowly.

Rich Meagher:

Yeah.

Bob Blue:

But our industry in other senses moves pretty quickly. So as I mentioned, I suspect that if in 2005 you had asked me, Bob, do you think that you all can reduce carbon emissions by 53% in 20 years? Is that a realistic goal?

Rich Meagher:

Mm-hmm

Bob Blue:

I might have said, you know, that’s a challenging goal. Uh, and yet that’s exactly what we did. So I would describe it as a challenging goal, but not an unrealistic goal. And we are very committed to all three parts of that mission, reliable, affordable, and increasingly clean. All three,

Rich Meagher:

We’ll have more about the future of energy from Dominion, CEO, Bob Blue, when we come back on RVAs Got issues, this is RVAs got issues. We’re back with Dominion, CEO, Bob Blue, talking about the future of energy in Virginia. Bob, we’ve been talking about all the cool technology and investments you guys are making. Now, if you were a normal company, as I think you’ve, you’ve talked about, right? You could just pass on the costs through your pricing. Uh, dominion is not a normal Company.

Bob Blue:

Well, we like to think of ourselves as a normal company.

Rich Meagher:

Well, you seem, very normal

Bob Blue:

But I think I understand where you’re going,

Rich Meagher:

Right? Yeah. I mean, you’re a Fortune 500 company, but you also provide this essential public service. And as a result, like, so you are proposing rate increases, but those rate increases have to be approved by this government body, this state corporation commission. So what’s the impact on the company if you don’t get the approvals you need from the SCC?

Bob Blue:

Well, uh, if we don’t get approvals that we need from the SCC, then it makes it more difficult for us to attract capital to build the infrastructure that we’ve been talking about. So like every other company, we need investors to invest capital. Uh, either equity or we borrow money. We borrow a lot of money, um, as all utilities do from the debt markets. Uh, if our regulators don’t allow us to recover costs, then our investors start to take a dim review mm-hmm  Of our company, and they might turn somewhere else. So that’s why it’s important for us to be able, uh, to have a, a successful outcome in a rate case so that we can raise the capital that we need to in order to invest and make our system better and provide more value for our customers so that their, um, lights are staying on more. Uh, although our reliability is quite good, uh, and that we’re able to invest to meet future demand and help the state grow and help our economy continue to churn along.

Rich Meagher:

So you are proposing rate increases, and I want to unpack them a little bit because I, I think, you know, people experience electricity often just through the bill. I mentioned to a listener, uh, that I was talking to you, uh, and the question that came right outta their head was, am I gonna have to pay for all these data centers, right. And, and I think that’s a big concern for, for folks. So are we all gonna have to pay for these data centers?

Bob Blue:

No. No. Uh, so let that, I think that’s a really important question. I’m glad you asked it, and I hear that too.

Rich Meagher:

Yeah.

Bob Blue:

So let’s start with where we are today and then talk about where we’re going forward. So where we are today, our company sells more electricity to data centers than any other similar company in the country by a long shot.

Rich Meagher:

Right?

Bob Blue:

Northern Virginia is the largest data center cluster in the world, bigger than the next five in the world combined. So we are already selling a lot of electricity to data centers. In fact, about 27% of the electricity that we sell today is to data centers. So as part of this rate case that you and I have been talking about, we’ve proposed a new rate structure for customers that are large and use electricity almost around the clock.

Rich Meagher:

Mm-hmm

Bob Blue:

Many data centers fall into that category because they tend to operate around the clock. And that new rate structure is designed to ensure that those customers do pay their fair share and that they’re gonna be here for a long time so that we don’t build infrastructure for them today. And then five years from now, they’ve moved on and all of our other customers are left paying for that infrastructure. So now the regulators have that proposal in front of them. This has been an issue in, uh, regulatory proceedings relating to companies like ours forever. Every rate class, and I, I, I don’t wanna bore everybody here and get into regulatory discussions, but think of it as residential customers. Your home or apartment commercial customers, your office buildings and industrial customers sort of divide customers into those classes. There are representatives of all of those customer classes who argue that their customer class is subsidizing some other customer class. Okay. And then the, the regulators sort that out. They’ve been doing that for a long time, and they’ll do that here. In this case, we have a proposal that we think is pretty good to help make sure that we stay as we are today, without customers, residential customers, homes and businesses subsidizing data center customers, um, I feel very confident that we’re gonna land, uh, in a good spot there.

Rich Meagher:

So if, uh, you know, your standard residential customer maybe doesn’t have to worry so much about paying for the data centers, right? They’re still gonna be paying more. You’re asking for a rate increase, isn’t it? A lot to ask at particularly this point, this economy of rate payers to pay 15% more in a, in a rate increase.

Bob Blue:

So we work very hard, uh, to keep our customers bills as low as possible. Our residential customers pay rates well below the national average. And in fact, if you compare our benchmark to the national average from a decade ago to today, we’re further below the national average than we were a decade ago. Even as we have been building this infrastructure and serving more data centers, inflation, general inflation that we’re all experiencing when we go to the grocery store Sure. Or anywhere else that affects us too. We buy equipment, we buy countless number of transformers, of miles of conductor, the wires that electricity goes across, and those costs are going up. And as we sort of started this conversation on the case, those costs, we need to be able to recover so that we continue operating well for our, our customers. But first and foremost, we should be tight with a nickel at our company on behalf of our customers. That’s what they expect us to do. Uh, we seek to do that all the time, and we continue to look for ways that we can be more efficient and still operate the system well.

Rich Meagher:

So I appreciate that assurance. Right. I think the concern, like the big worry might be for something like electricity, right? Which we have found we can’t really live without. Right. What if it becomes one of these things, like housing for example, that just seems more and more unaffordable, right? I think that’s a big worry for people. Sure. Well,

Bob Blue:

While you may see that the rate per kilowatt hour is higher, it’s gone up less than virtually everything else. So that the share of your wallet, the amount of any customer’s income that they’re paying towards electricity is actually lower today than it was 20 years ago. But I completely understand, and that concern is important to all of us at the company. The last line of defense, I guess so to speak, is the regulators. We don’t get to decide what we charge customers. Our regulators decide that we make a case to them. And, uh, we think we’re being very efficient in that process to keep those rates as low as we possibly can while continuing to provide a good service. And I also think it’s important for people to think a little bit about the value that we provide. So it’s not just, um, sort of keeping the system operating, it’s making it better.

We’ve put a lot of lines underground over the course of the last, uh, decade or so that has improved reliability markedly. If you look at, uh, a big storm event coming through our system, we get our customer’s lights back on in about half the time as it took before we started this undergrounding program. That’s good value for our customers. So when will these rates be decided upon? By the end of this year? The, uh, the deadline for our regulators at the State Corporation Commission is the 30th of November. The other component is the cost of fuel that we purchase to operate our power stations. That rate would go into effect sooner, but this, uh, this sort of overall case will be decided by the end of November.

Rich Meagher:

So you, you were thinking about affordability, um, but, uh, I’m wondering kind of what keeps you Bob up at night? Like, what do you think is the, the big challenge going forward for Dominion?

Bob Blue:

Well, let me start with, and this is not what you’re expecting, but, um, it’s the safety of our customers and our workforce. We operate, uh, a large system. We have employees. My colleagues are out working in incredibly difficult conditions, uh, sometimes conditions that most of us would rather not be even outside. And they’re not only outside, they’re up in a bucket truck working on electrical equipment. <laugh>, right?

Rich Meagher:

In a rainstorm. Yeah.

Bob Blue:

So our, we have a, we have a series of core values at our company, like most companies do. Our first one is safety. In fact, when we talk with investors on our quarterly earnings call, the first thing I report on is our safety performance, because that’s important to me. Uh, beyond that, uh, it is this sort of fundamental challenge that you brought up at the beginning, which is we have a lot of demand coming our way. That’s a good thing for the economy of Virginia. Yeah. For our company, all that’s valuable. We need to make sure that we serve that, uh, demand in a way that is reliable, that is, uh, fair to all our customers. So as I think about our challenges, it’s, you know, sort of two sides of the same coin. There’s this opportunity to meet this demand, and then there are the challenges associated with it.

Rich Meagher:

Bob Blue is the chair president and CEO of Dominion Energy. Thanks for being here. Bob. Thanks so much for having me. I really appreciate it. That’s our show. Thanks to our guest, Bob Blue. Find out more about our show and tell us about your issues at our website, rvas.issues.vpm.org. Remember to tell your friends about us, share a social media post or leave a review on your favorite podcasting platform. RVAs Got Issues is produced by Max Waserman and Rachel Dwyer. Script, editing by Rachel Dwyer. Audio mix by Steve Lack. Our intern is Cate McKenzie. Our theme music was composed by Alexander Hitchens. Meg Lindholm is our executive producer. Steve Humble is VP’s Chief Content Officer. I’m your host, Rich Meagher. Thanks for listening.