Virginia Law Regarding Use of Coal May Be Unconstitutional

Virginia Law Regarding Use of Coal May Be Unconstitutional

April 2008 - A state law passed last year to 
encourage construction of a power plant in southwestern Virginia requires 
the plant to burn Virginia coal. This provision makes the law 
unconstitutional, the Southern Environmental Law Center said in a filing 
with the State Corporation Commission, SCC, challenging the law. 
By requiring such a facility to use Virginia-mined coal, the state law 
violates the U.S. Constitution's Commerce Clause, the law center contends. 

The State Corporation Commission is reviewing a request by Dominion Power 
to build a 585 megawatt power plant in Wise County and raise consumer 
rates to pay for construction and a profitable rate of return for the 
corporation. 
The law at issue prohibits Dominion Power from purchasing out-of-state or 
foreign coal, preventing the company from seeking out the least-polluting 
fuel available for its proposed Wise County power plant. 
In 1992, the U.S. Supreme Court struck down a similar Oklahoma statute 
requiring utilities to use at least 10 percent Oklahoma-mined coal. 
The proposal has triggered a growing opposition movement across the state 
involving conservationists, the faith community, and student groups. 
The Southern Environmental Law Center filed its brief late last week on 
behalf of the Southern Appalachian Mountain Stewards, Appalachian Voices, 
Chesapeake Climate Action Network, and the Virginia Chapter of the Sierra 
Club. The State Corporation Commission is expected to rule by mid-April. 
The law center points out that "critically, the Virginia law allows 
Dominion to seek a rate hike from the SCC immediately. A power plant not 
using Virginia coal would be prohibited from seeking a rate increase until 
2009, when Virginia's caps on electricity rates expire." 
"The statute gave Dominion a constitutionally impermissible head start, 
and they've been scurrying to fast-track this coal plant ever since," said 
Cale Jaffe, staff attorney at the law center. 
The law center also points out that an analysis by SCC staff reveals the 
plant will actually harm Virginia's economy, because higher electric bills 
will leave families with less to spend on consumer goods and services. 
Based on Dominion's estimate of $1.62 billion cost of the plant, the SCC 
staff estimates 1,474 jobs would be lost. 
But the utility now puts the cost at $1.8 billion, an increase of 225% 
from when the plant was first proposed. 
By comparison, a Westar Energy facility in Kansas was tabled after cost 
estimates grew by $200 - $400 million in 18 months. Dominion's costs have 
grown by five times this rate in 19 months. 
"Even worse," Jaffe said, "Dominion has failed to account for any costs 
for controlling carbon dioxide," the primary greenhouse gas responsible 
for global climate change. 
"Dominion candidly admits that carbon costs are coming down the pike, but 
fails to do anything to plan for it. The disconnect is stunning," he said. 

In hearings before the SCC in February, Dominion witnesses conceded that a 
federal law regulating carbon emissions is "inevitable." 
The Virginia Attorney General's office estimates the cost to offset the 
carbon emissions from the Wise County plant as high as $265 million per 
year. 
These costs are critical, SELC noted, as leading Wall Street institutions 
such as Citigroup, Inc., J.P. Morgan Chase & Co., and Morgan Stanley, now 
require utilities to prove that new plants will be economically viable 
even under potentially stringent federal caps on carbon dioxide.

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