Dominion Virginia Power Seeks SCC Approval to Convert Coal Stations to Biomass

RICHMOND, Va., June 28, 2011 /PRNewswire/ -- Dominion Virginia Power, a subsidiary of Dominion (NYSE: D), Monday asked the Virginia State Corporation Commission for approval to convert three Virginia electricity-generating power stations from using coal to biomass, a renewable energy source.

The conversions of the power stations in Altavista, Hopewell and Southampton County would increase Dominion's renewable generation capacity by more than 150 megawatts, enough to power 37,500 homes. The proposal has strong customer benefits and is part of the company's commitment to have 15 percent of its electricity come from renewable sources by 2025.

The switch to biomass – in this case, using primarily waste wood left over from regional timber operations – would reduce nitrogen oxides, sulfur dioxide, mercury and particulate emissions and meet stringent emissions standards established by the Virginia Department of Environmental Quality and the U.S. Environmental Protection Agency.

"The biomass conversions will benefit our customers, the environment and the state's economy," said David A. Christian, chief executive officer of Dominion Generation, the unit of the company that operates its power stations. "The converted units will provide low-cost, renewable, base load energy, while promoting economic development through the use of a locally produced fuel."

The cost of converting the stations would be about $165 million, or $55 million per station. The company is requesting an initial annual rate increase of 14 cents to the monthly bill of a typical 1,000 kilowatt-hour per month residential customer, effective April 1, 2012. Rate adjustment clauses allow utilities to collect financing costs over time as projects begin, lessening the larger rate impact that could occur when power stations go into service. The conversions would be complete by the end of 2013.

The power stations, which would generate about 51 megawatts each, are nearly identical. The incremental statewide economic benefit of converting the stations is estimated to be more than $120 million annually when compared to continued operations on coal, including the creation of more than 300 jobs in the forestry and trucking industries. The conversions would also create approximately 160 jobs during the construction period.

The stations have been primarily peaking power units, operating 25 percent of the time. If the conversions are approved, they would be more economic to operate and, therefore, would be expected to generate electricity about 90 percent of the time.

The company also filed its annual updates and rate adjustment requests for the Bear Garden Power Station, which began commercial operation in May, and the Virginia City Hybrid Energy Center, which is more than 88 percent complete and on schedule for a summer 2012 startup. The company has requested an increase in the existing rate adjustment clauses of $1.17 per 1,000 kilowatt-hours – 10 cents for Bear Garden and $1.07 for Virginia City. If approved, the two projects would account for $6.36 of the typical 1,000-kilowatt-hour residential monthly bill of $114.67 as of April 1, 2012.

Dominion is 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