Virginia Power spending $4 billion on reliability

VIRGINIA CITY, VIRGINIA - Dominion Virginia Power says it is spending $4 billion over three years to improve its ability to provide reliable service.

In a letter to its 2.3 million customers, Dominion Virginia Power CEO Paul D. Koonce said the company is focusing on electric circuits and areas where service reliability does not meet its system-wide average.

The electric utility, the state's largest, said its average system reliability was 99.97 percent in 2009 — an average customer would be without power for a total of about 2.6 hours in a year.

Dominion Virginia Power said the $4 billion is being used for:

• major generation projects, such as the $1.8 billion Virginia City plant being constructed in Wise County and the $619 million Bear Garden power station under way in Buckingham County;

• major electric transmission lines, such as the $255 million Meadow Brook-to-Loudoun and the $223 million Carson-Suffolk 500-kilovolt lines now under construction; and

• overall distribution system improvements.

Last year, Dominion Virginia Power "reconditioned over 350 miles of electrical circuits, including installing more than 1,000 new poles, 3,500 new lightning arrestors and other devices," Koonce said.

The utility said its distribution system's reliability has been improving since 2004, primarily through finding and fixing circuits where interruptions are more frequent.

Dominion Virginia Power's announcement of the spending on reliability measures comes as the State Corporation Commission takes up the regulated company's request for a $250.2 million rate increase. That would raise the typical residential customer's monthly bill by $5.22.

The SCC staff has said the company's rates should instead be cut by $365.3 million annually, lowering the typical residential customer's bill by $12.80 a month.

"While utilities are always capital-intensive businesses, we are and have been in a major building phase to accommodate growing demand on our system," company spokesman David Botkins said. "We have to plan ahead and spend now for the future."

Dominion Virginia Power needs 4,600 megawatts of new generating capacity by 2019 to meet energy demand, the company said.

State policy calls for ensuring the availability of reliable energy at reasonable cost. Virginia's electric-utility regulation law encourages power companies to invest in system improvements to ensure reliable service and provides for a fair return on those investments.

The company, the state attorney general's office and a group of large customers have also proposed a deal that would repay a Sept. 1 interim base-rate increase to customers and freeze rates at the pre-September 1 level, a one-year deal worth $397 million to ratepayers.