A contentious natural gas pipeline slated to cross Prince William County hit a roadblock Friday when the State Corporation Commission imposed strict provisions on the project aimed at protecting utility customers from being “stuck with the bill” for the project.
The Virginia Natural Gas Header pipeline project would add 24 miles of new gas pipeline in central and northern Virginia and two new compressor stations that will bring natural gas from the Transco pipeline in Prince William County to the proposed C4GT power plant in Charles City County. The project includes several miles of new pipeline in Prince William County as well as a new compressor station in Nokesville.
The proposed pipeline has drawn criticism from local environmental groups and area lawmakers who say new natural gas energy infrastructure is contributing to the global climate crisis. The Northern Virginia police academy in Nokesville has also raised objections to the project over concerns the pipeline will disrupt its high-speed driving course, delaying the graduation of new police recruits.
The SCC issued a list of financial conditions June 26 aimed at protecting ratepayers who could be impacted by the project. The conditions must be met before the Header pipeline project can move forward. Foremost among them is a requirement that VNG include proof that the pipeline’s only customer, C4GT, has a firm financing commitment for construction costs.
“Put simply, if C4GT is built, we find that the [Header] project is needed. If C4GT is not built, the project is not needed,” an SCC spokesman said Friday.
In addition to providing proof of financial backing, the SCC is also requiring C4GT to reconfirm all contractual obligations to VNG necessary to pay its share of the Header project, and is requiring VNG to agree to a strict cap on the costs that can ever be shifted to residential and other business customers.
C4GT is supposed to pay for the majority of the costs of the Header project, according to the SCC. But because C4GT is a merchant plant, the owners will pay 100% of the cost to construct the power plant and have primary responsibility for approximately 95% of the cost of VNG’s pipeline project.
“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,” commissioners said.
Earlier this year, a spokesman representing C4GT said the project’s construction schedule is experiencing a “slight delay” due to “uncertainty in the gas supply and financial markets caused by the spread of the novel coronavirus.”
The SCC set other conditions that must be satisfied, including compliance with all environmental requirements set by the Virginia Department of Environmental Quality. The SCC noted that before the project could proceed, VNG would have to apply for and receive multiple environmental permits.
In addition to complying with conditions set by state environmental agencies, the SCC also required VNG to file additional information on environmental justice issues beyond that currently contained in the Commission’s case record.
Environmental groups have raised environmental justice concerns about the placement of C4GT in Charles City County, which is a rural, majority-minority community.
On or before Dec. 31, VNG is required to make additional filings with the SCC when the company believes it has complied with all conditions required before approval. Upon submission of such filings, the SCC will conduct an additional proceedings to address them.