Plant would keep juice flowing to growing rural areas

In June, Terremark Worldwide Inc. opened the first of what may be five big data centers in Culpeper to host Internet traffic for businesses and government agencies.

Another such server farm may locate soon in southern Virginia. These computer warehouses gobble huge amounts of electricity, contributing to a surge in demand in relatively rural areas of Virginia that get their power from Old Dominion Electric Cooperative.

To keep the juice flowing, Old Dominion has proposed building a coal-fired power plant in Dendron, a town in Surry County about 50 miles west of Norfolk and about six miles north of the Virginia Diner in Wakefield. The Cypress Creek Power Station would cost $4 billion to $6 billion and be one of the state's largest electricity plants, generating as much as 1,500 megawatts.

It would supply power to the 11 regional cooperatives that get electricity from Old Dominion. Those smaller cooperatives serve fast-growing areas around Fredericksburg and in the western outskirts of Hampton Roads, said Jackson Reasor, Old Dominion's president and chief executive. These areas are known as "exurbs" - where people have sought more-affordable housing and more open space than in urban centers and their surrounding suburbs.

Most of the growth stems from new developments of large homes equipped with the latest appliances and electronic devices that all plug into power outlets: wireless phones, laptop computers and big-screen TVs.

By the time Cypress Creek would begin operating in 2016, Old Dominion expects demand in its territory will have climbed more than 25 percent.

T he project still could be unplugged by environmental opposition, by changing costs or needs or by a failure to get one of the more than 50 permits it needs to operate. On Thursday, Brian Moran, a Democratic candidate for governor, said he would oppose construction of the plant, citing environmental and health concerns.

"We don't have enough assets now to meet all of our members' needs," Reasor said. "Even if you don't have the growth, we could still use this asset to meet our needs today."

Old Dominion, based in Glen Allen, was formed in 1948 by a consortium of small electricity cooperatives that deliver power to mostly rural communities. Investor-owned utility companies considered such communities too costly to serve.

Cooperatives are owned by their customers, or members, and are typically not for profit. Old Dominion is in turn a cooperative of its 11 members.

Unlike Dominion Virginia Power, the utility company owned by Dominion Resources Inc. that serves most of Hampton Roads, Old Dominion doesn't sell electricity directly to consumers. It generates power or buys it through contracts with other providers and sells it to its members - nine in Virginia, one in Maryland and one in Delaware.

Those members distribute the power to customers' homes and businesses, including those west of Hampton Roads served by Community Electric Cooperative in Windsor and Prince George Electric Cooperative in Waverly, and on the Eastern Shore by A&N Electric Cooperative.

The member cooperatives sign long-term contracts - one just inked a 45-year agreement - for Old Dominion to procure the power they need.

Building a $6 billion power plant would be a huge leap for Old Dominion, which reported $963 million in revenue in 2007. It likely will seek a partner to invest in the plant and share its capacity, Reasor said.

With its own power plants, Old Dominion generates 55 to 57 percent of its members' electricity demand during peak periods, the hottest and coldest days of the year. Within five years, Reasor expects that the cooperative won't meet more than half its members' demand, or "load," with its own generation.

The company owns about 11 percent of North Anna Power Station, Dominion's 1,786-megawatt nuclear plant in Louisa County, providing about 200 megawatts to the cooperative. It also shares with Dominion half the ownership of Clover Power Station, a coal-fired plant in Halifax County that generates 830 megawatts.

In the past decade, Old Dominion built three natural gas plants to run at peak periods. Those are designed to start up quickly, as needed. They aren't cost-effective to operate as "baseload" plants, which run all hours so consumers can turn on their lights, work on their computers, keep their food cold and dry their clothes.

Across Old Dominion's members' territories, the cooperative is projecting power usage to grow by an average of 2.9 percent per year over 20 years. That's slightly faster than projected growth for Dominion Virginia Power of 2.1 percent a year over the next decade, and much faster than national forecasts for 1 percent through 2030.

"Individual customers are using more electricity," said Chet Wade, a spokesman for Dominion Resources. "They may not realize it."

Buying extra power on the spot market or through long-term contracts costs Old Dominion much more than generating its own electricity, Reasor said. With the volatility of energy prices in recent years, the cooperative doesn't want to rely on market purchases.

"It comes down to: You've got to have the power, and it has got to come from somewhere," said C. David Hudgins, an Old Dominion spokesman.

Dendron is a tiny enclave of about 300 residents with homes clustered on or near Va. 31, between Wakefield and Surry. The small Municipal Building stands across the street from the post office and next to the Dendron Museum, which depicts the dominant role that the Surry Lumber Co. played in the town's history.

The lumber company used to own and take timber from the 1,600 acres of farmland and swamp between Va. 31 and Cypress Creek that the cooperative has optioned for the plant. A private partnership now owns the property and allows hunters there.

The property abuts the town. The plant, set back on the site, would tower above the landscape.

For baseload plants, coal remains the fuel of choice for most utility companies. It is plentiful and relatively inexpensive.

A new Dominion Resources plant, now under construction in Wise County, also will run largely on coal, with as much as 20 percent production from biomass. The 585-megawatt plant is projected to cost about $1.8 billion.

Cypress Creek would have one or two 750-megawatt units, using a powdered or "pulverized" form of coal burned at very high temperatures and high pressure. That increases efficiency, consuming about 30 percent less of the fossil fuel than a traditional coal plant and emitting fewer pollutants, said David Smith, Old Dominion's environmental, health and safety director. About 2 percent of the plant's electricity would come from biomass - wood chips or other wood materials.

Coal, however, draws the ire of environmentalists because it adds carbon dioxide and other pollutants to the atmosphere when burned, contributing to air quality problems and global warming.

Some groups already have raised objections to Cypress Creek.

The Sierra Club and other groups have sued state agencies to contest the permits granted to Dominion's Wise County plant.

Glen Besa, Virginia chapter director for the Sierra Club, said he has met with Old Dominion officials and encouraged them to look at energy conservation and efficiency programs to reduce demand, instead of building a new plant.

Recent studies show that efficiency measures can cut electricity usage by 19 percent, Besa said. Old Dominion could put its $4 billion to $6 billion investment in Cypress Creek toward incentives and funding for consumers to decrease their power consumption, he said.

"We think it'll be much cheaper for the ratepayers and more environmentally sound," Besa said. "They could spend a whole lot less money encouraging energy efficiency measures."

Even the best conservation efforts couldn't lower demand enough to offset future growth, Reasor said. Efficiency may reduce demand but cannot guarantee the needed megawatts as a power plant can, he said.

Still, he acknowledged, "we think we can do better and do more" to conserve.

Besa and other environmentalists also believe coal plants must capture their carbon dioxide emissions and keep them from dissipating into the air. Such carbon sequestration technology hasn't developed enough yet for practical use, but Cypress Creek's design includes room to include it when it is ready, Smith said.

Old Dominion did consider renewable options, Reasor said. The company recently agreed to buy 50 megawatts from a wind farm in northeastern Pennsylvania.

The power industry, however, considers wind and solar energy too unreliable for a baseload plant. Increased use of biomass would boost the cost to procure and transport the wood chips, making it too expensive, Old Dominion officials said.

For Cypress Creek, Reasor said, Old Dominion had to decide "what could we do in our area that our members could afford to pay,"

Carolyn Shapiro, (757) 446-2270, carolyn.shapiro@pilotonline.com