January 29, 2019

David Turnbull, david [at] priceofoil [dot] org
Lorne Stockman, lorne [at] priceofoil [dot] org

Report: The Vanishing Need for the Atlantic Coast Pipeline
Growing Risk That the Pipeline Will Not Be Able to Recover Costs From Ratepayers

Oil Change International & Institute for Energy Economics and Financial Analysis (IEEFA)

Diminishing consumer demand coupled with more affordable renewables are casting doubt on the overall feasibility and potential profitability of the Atlantic Coast Pipeline, according to a report released today by the Institute for Energy Economics and Financial Analysis (IEEFA) and Oil Change International.

The report, The Vanishing Need for the Atlantic Coast Pipeline, raises new questions about the future viability of the pipeline,  a multi-billion-dollar project to deliver natural gas from northern West Virginia to Virginia and North Carolina

“The demand outlook for gas has changed dramatically since the project’s inception and much of the original justification for the pipeline has evaporated,” said Cathy Kunkel, IEEFA energy analyst and co-author of the report.

The pipeline is a joint venture of three companies — Dominion (48%), Duke Energy (47%), and Southern Company (5%) — that was approved by the Federal Energy Regulatory Commission in October 2017. Originally projected to cost $5.1 billion,have raised projections by about 30% to $6.5 to $7 billion, excluding financing costs.[2] But cost overruns are only the beginning of the challenges faced by the project.

“Dominion and Duke’s electric utilities are major customers of this pipeline, whose primary developers are Dominion and Duke. While the business case for the pipeline was predicated on the idea that Dominion’s and Duke’s utility subsidiaries would be able to recover the pipeline’s costs from their customers, the growing evidence that the original ‘need’ for the project was overstated increases the risk that utility regulators will not approve some or all of these costs,” said Kunkel. “This outcome would jeopardize the profitability of the project.”

Key findings of the report include:

  • In its most recent long-term integrated resource plan (IRP), four out of five of Dominion’s modeled scenarios show no increase in natural gas consumption from 2019 through 2033.
  • Dominion’s 2018 IRP was rejected by Virginia state regulators, in part for overstating projections of future electricity demand. This implies that future natural gas consumption will likely be even less than forecasted in its IRP.
  • The most recent IRPs of Duke Energy Progress and Duke Energy Carolinas show that previously planned natural gas plants have been delayed further into the future.
  • Over the next decade, it is likely that the demand for natural gas in Virginia and North Carolina erode further as renewable energy and storage technologies continue to rapidly decline in price.

Lorne Stockman, Senior Research Analyst at Oil Change International and co-author of the report said, “The business case for this project has always been on shaky ground. But with renewable energy disrupting power markets around the country, it is now clearer than ever that the large gas power plants this project was supposed to supply no longer make sense. The project’s partners should be changing course on gas rather than doubling down.”

The report follows prior IEEFA analysis on the likelihood of overbuilding pipeline infrastructure in the Appalachian region.

The report can be found here:


The Institute for Energy Economics and Financial Analysis conducts research and analyses on financial and economic issues related to energy and the environment. The Institute’s mission is to accelerate the transition to a diverse, sustainable and profitable energy economy.


[1] Atlantic Coast Pipeline, “Abbreviated Application for a Certificate of Public Convenience and Necessity and Blanket Certificates: Volume 1,” Federal Energy Regulatory Commission Case No. CP15-554, September 18, 2015, p. 2.

[2] S. Layag, “Dominion raises Atlantic Coast-related cost estimate by $500M, citing snags,” S&P Global Market Intelligence, November 1, 2018.


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