Dominion offshore wind power tied to Virginia SCC approval

While Dominion (NYSE: D) recently won an Interior Department auction for wind power acreage off the coast of Virginia, the State Corporation Commission (SCC) will still have to approve any big offshore wind investment, Dominion Chairman, President and CEO Thomas Farrell II told the Barclays Capital conference Sept. 12 in New York.

Dominion outbid Apex Virginia Offshore Wind LLC on Sept. 4 by offering roughly $14 per acre for more than 112,000 acres on the Outer Continental Shelf.

But Dominion plans to develop it as a utility asset under subsidiary Virginia Electric and Power Co., so it will require SCC approval, Farrell said.

“We will see how this goes,” Farrell said. “We are very interested in it. But it’s going to have to be approved by our regulators.” The Interior Department believes the wind area has the potential for 2,000 MW of wind generation. Dominion listed plans for extensive offshore wind development in its most recent resource plan filed with the state.

Dominion already plans to invest $4.6bn in “growth” capital expenditures on utility generation between now and 2018. That does not include spending on commercial offshore wind or additional natural gas combined-cycle power plants to be deployed beyond 2019, Farrell said.

Just before Farrell’s New York appearance, the SCC approved conversion of Dominion’s Bremo coal plant in Fluvanna County, Va., to natural gas, the CEO noted. By the end of the year, Dominion will have also finished converting three small coal plants in Virginia – Southamption, Altavista and Hopewell – to biomass.

Also construction is well underway on Dominion’s 1,300-MW Warren County combined-cycle project in northwestern Virginia. The SCC recently approved the similar-sized Brunswick County gas plant in southern Virginia.

Transmission project investment detailed

The company is also spending roughly $3.2bn in growth capex on electric transmission infrastructure between now and 2018, Farrell said. The Cannon Branch to Cloverhill and Mt. Storm to Doubs lines are being completed in the next couple of years, according to Farrell’s slide presentation.

The Skiffes Creek transmission project, which involves a 500-kV overhead line crossing the James River, will help make up for retirement of various coal power plants, Farrell indicated. The Dominion charts showed Skiffes Creek being completed in the 2015-to-2016 timeframe.

Dominion will also spend $300m to $500m over the next five-to-10 years to upgrade security at certain transmission substations. This hardened security, including anti-climb fencing and other protection for critical equipment, was sparked by a shooting incident in California, Farrell said.

Finally Dominion is looking seriously at potential competitive electric transmission projects in the PJM Interconnection, Farrell said.

CEO touts growing gas potential in Dominion’s ‘backyard’

At the same time that Dominion is building many combined-cycle natural gas power plants in Virginia, the non-utility side of the company is also busy tapping the growing gas potential in its “backyard,” Farrell said.

Shale gas development is increasingly occurring in Mid-Atlantic in Midwest states not far from Dominion’s Virginia base.

The Dominion Energy subsidiary is playing a growing role in gas transmission and gathering projects, pipeline infrastructure, a midstream joint venture and a proposed major facility to export liquefied natural gas (LNG).

The Dominion CEO noted that only a day earlier, Dominion received U.S. Department of Energy (DOE) approval for natural gas exports to non-Free Trade Agreement countries from its Dominion Cove Point LNG facility on the Chesapeake Bay in Lusby, Md.

In 2014, Dominion hopes to get final FERC approval for the Cove Point LNG facility, as well as Maryland approval for a gas-fueled, 130-MW power generating unit at the LNG export station, Farrell said.

Growing production of natural gas from Marcellus shale provides much opportunity for Dominion’s gas business, Farrell said. As part of this effort, Farrell announced formation of Dominion Gas Holdings. It becomes the parent of several Dominion gas-related subsidiaries. Dominion also plans to create a master limited partnership (MLP) for natural gas.  

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.