Dominion Energy Virginia (Dominion) requested proposals from qualified bidders to conduct recycling or beneficial use projects for coal combustion residuals (CCR) facilities in the Chesapeake Bay watershed.

The objective of the Request for Proposals (RFP) was to provide the following information:

· Viable options for recycling of the ponded ash
· The quantity of CCR that may be suitable for recycling or beneficial use, including but not limited to encapsulated beneficial uses such as bricks or concrete
· The cost of recycling or beneficial use
· The potential market demand for material recycled or beneficially used

Five ash ponds at four Dominion power stations and other ash facilities at the Chesapeake Energy Center were considered in the RFP. Exhibit ES-1 shows the distribution of the CCR among these facilities; all quantities are shown in cubic yards (CY).

This Business Plan presents a discussion of the RFP process and summarizes the information received from the bidders, including viable options for recycling of the ponded ash, recycled/beneficiated product market demand, quantity of CCR that can be recycled/beneficiated, and related costs. As discussed in an earlier study (SB 1398 CCR Ash Pond Closure Assessment Report, November 2017), closure by removal and recycling the CCR material is one of several options to close the ash ponds in compliance with the CCR Rule. The decision to recycle should be considered along with other closure options, including closure-in-place (with groundwater remediation if necessary) or closure by removal and landfilling. Considerations including stakeholder input, time to achieve closure, regulatory compliance, risk, feasibility, and cost should all be taken into account in this decision process.

CCR Recycling/Beneficial Use Requirements

The Federal CCR Rule defines how CCR can be beneficially used (recycled), requiring beneficial use applications to meet the criteria shown in Exhibit ES-2.

The RFP required the encapsulated beneficial use of CCR materials due to the increased environmental protections provided by encapsulation. The CCR Rule defines encapsulated beneficial use as “a beneficial use of CCR that binds the CCR into a solid matrix that minimizes its mobilization into the surrounding environment". The types of encapsulated recycling processes that may be appropriate for the ponded ash include the creation of building/construction products such as brick or aggregate, and processing of the CCR to meet fly ash standards for Portland cement (PC) substitute in concrete. Unprocessed ash can also be encapsulated when used as direct kiln feed for cement manufacturing.

RFP Process

Dominion developed a solicitation process to request bids from qualified contractors to perform this scope of work at each of the four CCR sites. The solicitation process included identifying and informing qualified contractors; preparing comprehensive RFP packages with the goal of obtaining accurate, competitive pricing and market conditions; evaluating the information provided by the bidders; and summarizing the market-driven responses in this Business Plan. The full scope of work required to complete the recycling/ beneficial use project comprises both civil/ construction and recycling/beneficial use tasks. The RFP defined specific project requirements to ensure environmental protection is provided for recycled/ beneficiated CCR materials while meeting the conditions of the CCR Rule and all other regulatory requirements. These project requirements included meeting the CCR Rule definition of encapsulated beneficial use, closure of the CCR facilities within the required timelines (7 years for the Chesapeake Bottom Ash Pond and 15 years for the other ash facilities), and achieving regulatory closure of all CCR facilities, to include landfilling of materials that are unable to be recycled/beneficiated within the project timeline.

The solicitation process and related timeline are summarized in Exhibit ES-3.

Following receipt of bidder proposals, a rigorous review of the offerings was conducted, incorporating the evaluation factors shown in Exhibit ES-4.

Table ES-1 provides a summary of CCR Rule beneficial use compliance criteria and whether the individual bidders meet each of the criteria. Four of the ten bidders provided complete responses which met the encapsulated beneficial reuse criteria required in the RFP.

Proposed Recycling/Beneficial Use Technologies and Products

Bidders proposed a range of recycling/beneficial use scenarios for each facility, including encapsulated products and unencapsulated alternative use approaches, as summarized in Exhibit ES-5.

A flow diagram depicting the full scope of work that would typically be required to complete the recycling/beneficial use project resulting in encapsulated beneficial use products is provided in Exhibit ES-6. The full scope of work required to complete the project comprises both civil/construction (Bid Item A) and recycling/beneficial use (Bid Item B) tasks, including ash excavation and preparation for recycling/beneficial use (dewatering with water treatment, excavation, drying, screening, transporting to the recycling process, etc.), recycling/beneficial use processing as required, distribution of the final product to the market, landfill disposal of CCR that is unable to be beneficiated, and regulatory closure of all CCR facilities.

CCR Recycling/Beneficial Use Market Demand

The RFP asked for separate proposals for each individual power station, and also provided an opportunity for bidders to provide optional bids for a combination of all stations. Three bidders provided optional bids for combining multiple stations, with two bidders proposing to combine all four stations; a third bidder proposed combining either two or three power stations. These optimized approaches from established national ash beneficiation/marketing firms demonstrate the maximum regional product market for recycled/beneficiated ash. This includes the local market (generally defined as Virginia and a 200-mile radius from the power stations) and regional market (approximately 1,000 miles by rail or barge).

Based upon the proposals received, the beneficiation firms will typically require Dominion to grant them exclusive rights for all of their ash when using it as a PC substitute. These rights prevent multiple firms from competing in the same marketplace with Dominion’s ash, which could either drive the price down or oversupply the market (or both). Because of these rights, two firms manufacturing PC substitute could not be awarded beneficiation contracts. Rather, if multiple firms were to be awarded, they would have to provide different encapsulated products such as lightweight aggregate, direct cement kiln feed, brick pavers, etc.

When analyzing current and anticipated demand, the bidders generally avoided the North and South Carolina markets due to the uncertain impact of product supply from CCR beneficiation facilities currently under construction by utilities in those states. Some South Carolina utilities are beginning to see a market impact due to PC substitute production in North Carolina. A higher quantity of supply into the market could potentially decrease the sales price for beneficiated ash in the region.

Based on the responses from the bidders, the general quantity and geographic demand for recycled/beneficially used products in the market are summarized in Exhibit ES-7.

CCR Recycling/Beneficial Use Quantity

The RFP requested stand-alone proposals for individual power stations, with an option to combine multiple stations into a bundled offering. Exhibit ES-8 shows the maximum portion of CCR material from Dominion’s facilities that bidders declared could be recycled into an encapsulated beneficial use product, assuming they have exclusivity for the PC substitute component. For the purposes of this Business Plan, the remainder of the CCR that could not be beneficiated would be disposed of in landfills to achieve closure by removal.

Transportation Considerations

Bidders have proposed to transport recycled/beneficiated products to market and CCR as waste to landfills using a combination of truck, rail, and barge options with a range of project durations, as summarized in Exhibit ES-9.

CCR Recycling/Beneficial Use Project Costs

A summary of the responsive and compliant bid offerings for each individual station is provided in Exhibit ES-10, including price, percentage of CCR able to be recycled, and duration proposed by each bidder. These proposals are based on executing each station individually; therefore, the individual station costs cannot be added together to determine an overall system-wide cost. Similarly, the recycling volumes/ percentages for individual stations cannot be added for a total volume able to be recycled. Combinations of multiple stations are presented after Exhibit ES-10.

The RFP required bidders to include revenue from sales of the beneficiated products in their pricing, and to attain regulatory closure of the ash ponds within 15 years, including landfill disposal of CCR materials that are unable to be recycled within that timeframe. Based on the level of design provided in the RFP packages, the available information provided to the bidders, the proposed recycling/beneficiation technologies, and the uncertainty of predicting construction and market pricing as much as 15 years into the future, the pricing provided by the bidders should be considered as Class 4 estimates (approximately +50%, -30%). Additionally, costs provided in this Business Plan are direct bidder prices and do not include Dominion costs for engineering and management of the projects.

Exhibit ES-11 indicates price ranges from qualified bidders who provided proposals to bundle the four stations and maximize the quantity of CCR that could be used to create encapsulated beneficial use products and placed into the market, including ranges for total project cost as well as cost per cubic yard of ponded ash.

The information presented in this Business Plan represents additional refinement of the recycling cost estimates and options that were evaluated during the previous study completed in November 2017 (presented in the SB 1398 CCR Ash Pond Closure Assessment Report). Recycling the CCR material is one option that should be considered to close the ash ponds in compliance with the CCR Rule, along with closure-in-place (with groundwater remediation if necessary) or closure by removal and landfilling. Considerations to be taken into account in this decision process include stakeholder input, time to achieve closure, regulatory compliance, risk, feasibility, and cost.