Dominion Virginia Power 15-Year Plan Targets Reliable, Cost-Effective Solutions for Growing Energy Needs

RICHMOND, Va., Sept. 1, 2011 /PRNewswire/ -- Dominion Virginia Power plans to use a mix of cost-effective generation -- including biomass, new natural gas-fired units and coal-fired units converted to natural gas -- coupled with additional conservation and load management programs to meet growing customer demand for electricity over the next 15 years.

In an update of its Integrated Resource Plan filed today with the Virginia State Corporation Commission (SCC), Dominion said it expects total electricity demand to increase by nearly 30 percent by 2026, even after conservation measures are implemented. Along with new generation, retrofitting and repowering existing units and conservation initiatives, the update includes plans to erect new transmission lines and upgrade others.

Because of upcoming changes in federal environmental regulations, including those currently in draft form, Dominion also incorporated in the Plan the following likely actions:

• The coal-fired Chesapeake Energy Center in Chesapeake, Va., would likely close by 2016. Two of the four units are expected to be shut down by 2015 and the remaining two units likely would be shut down a year later.
• One coal-fired unit at the Yorktown Power Station in Yorktown, Va., would likely close by 2015 and a second coal-fired unit would likely be converted to natural gas.
• New air emissions controls may need to be installed on Yorktown Unit 3 and Possum Point Unit 5 in Northern Virginia, two large oil-burning units that provide power primarily during peak demand times, depending on the final versions of federal regulations.

"This is the most cost-effective course to meet expected environmental regulations and maintain reliability for our customers," said Dominion Chairman and CEO Thomas F. Farrell II. "The spending is consistent with the company's previously discussed capital expenditure plans and is considerably less than what many other utilities are facing because of the efforts Dominion has undertaken in recent years to install necessary controls at its other stations."

The Integrated Resource Plan is based on current assumptions regarding load growth, commodity price projections, conservation programs and many other regulatory and market developments that are expected to occur. The Plan is not a request to state regulators to build each project. Those individual decisions would be made at a later date with appropriate applications brought to the commission.

Also today the SCC-approved annual rate adjustment for the company's transmission system takes effect. The company is already investing to improve and expand existing transmission projects. The transmission rate covers replacing aging equipment, adding new infrastructure, and covering the costs of services for the regional grid operator. For a customer using 1,000-kilowatthours of electricity each month, the monthly bill increases by $3.54, from $108.77 to $112.31. The SCC approved this annual adjustment on July 19.

Preferred Plan Option Meets Needs at Lowest Reasonable Cost

In preparing the Integrated Resource Plan, Dominion Virginia Power examined a number of options to meet customers' needs. Some options, for example, relied more on renewable resources or on retrofitting the coal units at Chesapeake and Yorktown with emissions controls to meet federal environmental requirements. The preferred Plan selected by the company meets reliability and environmental needs at the lowest reasonable cost.

Among the projects included in environmental-related expenditures would be a new 1,300-megawatt, natural gas-fired, combined cycle power station to be built at a location to be selected. If approved by regulators, the new station would be in service by 2016. Improvements in the transmission grid are planned to maintain reliability in the Hampton Roads area following expected actions at Chesapeake and Yorktown stations.

Other generation facilities in the preferred Plan include: another 1,300-megawatt, natural gas-fired power station to be put in service by 2019; a third nuclear unit at North Anna Power Station in Mineral, Va., to be in service in 2022; and 12 smaller natural gas-fired combustion turbine units coming in service between 2020 and 2026.  These projects are in addition to ones now under construction or development, including the 585-megawatt Virginia City Hybrid Energy Center in Wise County, Va., the repowering of the two coal-fired units at Bremo Power Station in Fluvanna County to natural gas and the approximately 1,300-megawatt natural gas-fired Warren County Power Station near Front Royal, Va., the application for which is pending before the SCC.

"Regarding North Anna 3, we believe nuclear energy must play an important part in providing for our nation's energy security, reliability and affordability," Farrell said. "We have not committed to move forward with the North Anna project, but are continuing the preliminary development work to enable us to make the right decision. We expect to receive approval of our combined construction and operating license from the Nuclear Regulatory Commission in 2013, and plan to reassess the project schedule around that time."

More Renewable Energy on the Way

Farrell reiterated that the company remains committed to meeting the Virginia renewable energy goal of 15 percent of base year sales by 2025.

Dominion Virginia Power has more than 400 megawatts of renewable generation in its portfolio. In addition:

• Dominion is preparing to request regulatory approval of a Solar Distributed Generation Program in which the company primarily would lease large commercial rooftops to install solar panels and add this form of renewable energy to its generation mix. The Virginia General Assembly passed enabling legislation this year. The company supports the state's desire to understand the additional benefits that distributed solar systems may have beyond their renewable attributes.
• Dominion is seeking permission to convert three coal stations to use biomass as fuel.
• The new Virginia City Hybrid Energy Center, expected to come online during the summer of 2012, will be able to burn biomass for up to 20 percent of its fuel.
• The company is pursuing plans for a 4-megawatt solar facility in Halifax, Va.

The company is studying the possibility of adding on-shore and off-shore wind generation; however, both are presently challenged by projected high construction costs, uncertain federal regulations and timetables and the intermittent characteristics of wind generation.

"We remain especially interested in the potential for offshore wind projects off the Virginia Coast and look forward to completing our study on the feasibility of connecting the projects to the Virginia power grid via an underwater transmission cable," Farrell said.

New Energy Conservation, Load Management Programs Proposed

The company also submitted to the SCC today its next set of proposed energy conservation and management programs:

• Residential Bundle Program – A package of four conservation programs for residential customers. They are a home energy check-up, duct testing and sealing, heat pump tune-up, and heat pump upgrade.
• Residential Lighting Program – A second phase of a program that promotes the installation of energy-saving CFL and LED light bulbs, which exceed minimum efficiency standards.
• Commercial Energy Audit Program – An energy auditor will perform an on-site audit for commercial customers and provide a report of potential cost savings of various actions to reduce energy use.
• Commercial Duct Testing & Sealing Program – Qualifying customers will receive incentives to have a contractor seal ducts in existing buildings to reduce energy loss.
• Commercial Refrigeration Program – Qualifying customers will receive incentives to install approved refrigeration measures.
• Commercial Distributed Generation Program – Qualifying customers will be given incentives to curtail load, up to 120 hours a year, by operating back-up generation when called by the company to do so.

A copy of the Integrated Resource Plan is available at: http://www.dom.com/about/integrated-resource-planning.jsp. A copy of the Demand Side Management filing is available at: http://www.dom.com/dominion-virginia-power/customer-service/rates-and-tariffs/virginia-electric-rates-update.jsp. A copy of the SCC's order approving the transmission rate adjustment is available at: http://www.dom.com/dominion-virginia-power/customer-service/rates-and-tariffs/pdf/transmission_rider_072011.pdf.

Dominion Virginia Power is a subsidiary of Dominion (NYSE: D), one of the nation's largest producers and transporters of energy, with a portfolio of approximately 28,200 megawatts of generation, 11,000 miles of natural gas transmission, gathering and storage pipeline and 6,300 miles of electric transmission lines.  Dominion operates the nation's largest natural gas storage system with 947 billion cubic feet of storage capacity and serves retail energy customers in 15 states. For more information about Dominion, visit the company's website at www.dom.com

SOURCE Dominion Virginia Power