Dominion updates construction issues, Kewaunee sale

Having completed what it expects will be one of the last new coal-fired power plants built in the United States for years, Dominion (NYSE: D) updated Wall Street analysts Aug. 1 on issues concerning existing and planned generating units.

During its regular quarterly earnings call, Dominion said it has finished its new hybrid coal-and-biomass plant in southwest Virginia, is working to sell a merchant nuclear plant in the Midwest and is developing significant new natural gas-fired generation in its Virginia home base.

The Richmond, Va.,-based company also said that it could have something definitive to say by the end of the year on its planned sale of the Kewaunee nuclear power plant in Wisconsin.

“We expect to have a resolution on Kewaunee this year,” said Dominion CFO Mark McGettrick. “And we will certainly not carry it as a non-operating expense beyond the end of this year, and we hope to have the auction complete and results announced by year end.”

When questioned by analysts, McGettrick said Dominion is at the “midpoint” in the Kewaunee sale. He added that the “data room’s open and bidders are evaluating information.” Dominion purchased the 550-MW nuclear plant, located 35 miles from Green Bay, in 2005.

So far this year Dominion has already sold or closed a couple of power plants.

The coal-fired State Line power station in Indiana was shut down in late March and the property was sold to a company that will demolish the plant. On June 29, Dominion executed an agreement to sell the Salem Harbor plant in Massachusetts to Footprint Power, which will run the station until it is removed from service in June 2014. Footprint has said it might build a natural gas plant at the Massachusetts site. Salem Harbor currently has coal- and oil-fired generating units.

“In our Generation segment, the 585-MW Virginia City Hybrid Energy Center was placed into commercial operation on schedule and on budget after four years of construction” in Wise County, Va., said Dominion Chairman, President and CEO Thomas Farrell II.

Following a recent groundbreaking ceremony, construction is proceeding on a 1,329-MW, gas-fired power station in Warren County, Va. The facility is scheduled for completion in late 2014. 

“Our other generation projects are also moving ahead as scheduled.  Following the receipt of air permits, the conversions of Altavista, Southhampton, and Hopewell power stations from coal to biomass are now under way with completion expected next year,” Farrell said.

“We are planning to file regulatory applications in the fourth quarter of this year for our next gas-fired generating facility, in Brunswick County, Va. It will be a 3-on-1 combined cycle plant capable of producing more than 1,300 MW of electricity and projected to come online in 2016,” Farrell said.

Dominion Energy recently filed a request with the Federal Energy Regulatory Commission (FERC) and received approval to initiate the Pre-filing Process for our Cove Point Liquefaction project, Farrell said. The CEO is optimistic that Dominion will get the project licensed despite a legal challenge in Maryland. This proposed facility will be designed to liquefy an average of 750 million standard cubic feet per day of inlet feed gas.

In addition, the Appalachian Gateway Project, transporting natural gas produced in West Virginia and Pennsylvania, is slated for completion in September.

Second-quarter 2012 operating earnings for Dominion were 59 cents per share compared to guidance of 55 cents to 65 cents per share. Quarterly earnings were depressed somewhat by mild weather in Virginia. At the end of June, a series of powerful storms moved through Virginia and northeastern North Carolina, disrupting service to more than one million Dominion customers, the company said.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.