Dominion Power 2011 Annual Report Download - page 14

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As a result of continued demand growth,
we expect to invest about $8 billion from 2012
through 2016 — to serve our customers. Here
are some of the near-term projects:
• The$1.8billioncoal-andbiomass-red
Virginia City Hybrid Energy Center in
Southwest Virginia is expected to come
onlineinsummer2012.The585-megawatt
facility is on budget and on time.
• A$1.1billion,1,300-megawattgas-redpower
station in Warren County, Va., is expected
to be operational in late 2014. It is one of three
largegas-redplantsthatthecompanyplans
to construct over the next decade. We have
proposed building one of them in Brunswick
County, Va., and are seeking a location for the
third facility.
• Another500-kilovolttransmissionline,
the$350millionMountStorm-to-Doubs
modernization project that would increase
line capacity by 67 percent, serving Northern
Virginia,isplannedforcompletionin2015.
It is one of 40 electric transmission projects
totalingnearly$3billionaimedatensuring
reliability in the Dominion Virginia Power
systemoverthenextveyears.
Theseprojectshelpsustaintheeconomic
vitality of local communities. According to
Chmura Economics & Analytics, our growth plan
will support more than 14,200 construction jobs
inVirginiathrough2015andproduceannual
economicbenetsofmorethan$290million.
Whencompletedby2015,theseprojectsshould
addmorethan750newfull-timelocaljobs.
Recovering Investments, Earning Fair Returns
Thesuccessoftheseprojectsdependsinpart
on earning a fair return on these investments.
At the end of 2011, the Virginia State Corporation
Commission reviewed Dominion Virginia Power’s
earningsfrom2009–2010andsetanauthorized
returnonequityof10.9percentonbaserates
going forward — which, under Virginia law,
allows the company to earn up to 11.4 percent
before triggering any potential refunds or rate
reductions. Equity for new nuclear or renewable
generating stations would earn 12.4 percent;
equity for new plants powered by coal or natural
gas would earn 11.4 percent.
Thestate’sconstructiveregulatoryenvironment
is important in allowing our company to continue
to access cost-effective capital for new and
ongoing construction projects. We continue to
work with our regulators to ensure that Dominion
Virginia Power’s rates remain responsible,
competitive and fair. As of January 2012, our
residential rates were about 10 percent below
thenationalaverageand19percentbelowthe
East Coast average.
Renewed Focus on Natural Gas,
Natural Gas Markets
AsIwroteyoulastyear,wearebenetingfrom
our past experience in E&P in the Appalachian
Basin — not as producers, but as a developer of
infrastructure, a business with which we have
hadsubstantialsuccess.Totakeadvantageof
signicantnaturalgasndsandproductionin
theMarcellusandUticaShaleformations,we
are investing in new transmission pipelines,
gathering, storage and processing facilities,
andarereconguringexistingpipes.Weare
working with customers who need our pipelines
to transport the natural gas they produce to
diverse markets and with those who need our
processing plants to prepare the gas for transport.
Overall, we are planning to spend $2.2 billion
on natural gas transmission infrastructure over
thenextveyears,withthepotentialforan
additional $1 billion.
TheUticaShaleandthewesternportionsof
theMarcellusShaleformationsproduce“wet”
gas, meaning the natural gas contains heavy
hydrocarbons or natural gas liquids that can be
According
to Chmura
Economics &
Analytics, our
growth plan will
support more
than 14,200
construction
jobs in Virginia
through 2015.