Dominion Power 2005 Annual Report Download - page 22

Download and view the complete annual report

Please find page 22 of the 2005 Dominion Power annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 104

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104

20 Dominion 2005
potential from 2007 through 2009. We call them structural
drivers. They are in place and not going away. We expect
them to work increasingly in our favor well beyond the
short-term negative drivers in 2006.
It’s appropriate to start with a scheduled adjustment of
our Virginia fuel-recovery factor in 2007 since we’ve written
to you about that before.
Revenue Certainty in Virginia Until 2011
Long-time owners of Dominion will recall that our Virginia
electric customers have enjoyed price stability under a
state law that freezes Dominion’s base rates until 2011. In
exchange for the rate and revenue certainty that benefit
both consumers and our company, the law required us to
accept fuel price risk from 2004 through 2010.
As a result, our customers pay a fixed rate for fuel costs
and the company pays for fuel cost over-runs or retains
under-runs. The fuel rate freeze will save the typical
residential customer about $260 during the two-year period
of 2005 and 2006. Commercial and industrial customers
will save even more. During the first two years of the
freeze—adopted by Virginia in 2004 with our support—
fuel prices soared: natural gas by more than 80 percent,
coal by more than 40 percent and crude oil by more
than 100 percent. Unless fuel prices decline dramatically,
we expect continuing shortfalls until mid-2007.
Jim Mauger, gas distribution construction leader, inspects welding work at a pipeline replacement job site in Rostraver, Pa.