Dominion North Carolina wants wider coal latitude in VPEM deal

Following a similar application recently at the Virginia State Corporation Commission, the Virginia Electric and Power (d/b/a Dominion North Carolina Power) unit of Dominion Resources (NYSE: D) has asked North Carolina regulators to allow it to buy and sell a wider variety of coals with Virginia Power Energy Marketing (VPEM).

In a June 13 application filed at the North Carolina Utilities Commission, Dominion North Carolina Power said it is currently operating under a 2007 agreement approved by the commission that generally limits its trades with VPEM to coal from “international sources” and “non-traditional supply regions,” with some allowance for only the occasional buying or selling of Central Appalachia (CAPP) coal. But, times have changed, and those restrictions should be removed, and the buy-sell deals should be allowed “regardless of whether the coal at issue is CAPP, [Northern Appalachia], or internationally (or other non-traditionally) sourced coal,” the utility wrote.

The utility said it will continue to file quarterly reports with the commission about its dealings with VPEM. Coal transportation services would continue to be provided by VPEM to Dominion North Carolina Power at cost. The proposed effective date for this new agreement is Jan. 1, 2013.

VPEM is a Dominion Resources unit that buys and sells coal with both affiliated and nonaffiliated companies.

Dominion Virginia Power, which is the operative name for Virginia Electric and Power in Virginia, applied May 14 at the Virginia State Corporation Commission for a similar change. It is seeking approval of a revised Fuel Purchase, Sale and Services Agreement for affiliate transactions regarding the purchase and sale of “Fuel,” as well as the “Transportation” of fuel and for “Emission Reduction Products,” as those terms are defined in the revised agreement.

“As proposed, the Revised Agreement is substantially similar to the Operative Agreement, which was approved in Case No. PUE-2006-00067 as being in the public interest, and which has resulted in reduced costs for the Company and its customers,” said the company in the May 14 filing. “However, while the Operative Agreement does not discuss specific types of Fuel – i.e., it relates to coal, but not to specific types of coal, such as Central Appalachian coal (‘CAPP’) or Northern Appalachian coal (‘NAPP’) – it was proposed in 2006 at a time when CAPP prices had risen dramatically, meaning that there were opportunities for the Company to purchase lower-priced international coal from VPEM for consumption at the Company’s coal-fired power stations.”

The companies added: “However, since 2006, CAPP prices have fallen. Recognizing that coal – like other fuel commodities – is subject to transient (and potentially sudden) price swings, the Company and VPEM want to clarify that the Revised Agreement applies in scope to the purchase and sale of all types of coal used at the Company’s facilities. In other words, if there are opportunities for the Company to buy lower priced coal from VPEM, or to sell higher-priced coal to VPEM, for the economic benefit of the Company’s customers, then the Company should be authorized to transact with VPEM under the Revised Agreement – regardless of whether the coal at issue is CAPP, NAPP, or internationally (or other non-traditionally) sourced coal.”

Virginia Electric and Power, headquartered in Richmond, Va., is a regulated public utility that generates, transmits and distributes electricity for sale in Virginia and North Carolina. In Virginia, it conducts business under the name Dominion Virginia Power. In North Carolina, it conducts business under the name Dominion North Carolina Power and serves retail customers located in the northeastern region of the state, excluding certain municipalities.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.