On December 12, 2012, the Virginia State Corporation Commission issued an Order for Notice and Hearing in relation to Dominion Virginia Power’s application for various regulatory approvals associated with the construction and operation of a 1,358 MW natural gas fired and related transmission facilities.

The power station would be located in Freeman, VA.  It would be fueled by natural gas provided by Transco through its Virginia Southside Expansion Project.  The estimated cost of the project (excluding financing costs) is estimated to be just under $1.3 billion.

As part of the application, Dominion requested approval to recover, through rates proposed to be effective September 1, 2013, an annual revenue requirement of approximately $44.6 million in project financing costs and allowance of funds used during construction of the plant and related infrastructure.  In calculating the $44.6 million revenue requirement, Dominion proposes to add a 100 basis point enhancement to its 10.4% general rate of return on common equity (ROE), as currently authorized by Virginia law.

Also in the application, Dominion proposed several potential routes for siting and building transmission facilities necessary to transmit the electricity from the power station to the electric grid.

The Commission’s published schedule includes the following key deadlines:

• Persons or entities desiring to participate in the proceeding as a “Respondent” must file a notice of participation on or before February 1, 2013.
• Respondents must file any testimony and exhibits they wish to use in support of their positions on or before March 1, 2013.
• A hearing on the Dominion application is scheduled to begin on April 24, 2013 at the Commission’s offices in Richmond.

Notably, the Commission’s order comes on the heels of Attorney General Cuccinelli’s recent report in which he raised issues with the ROE adders, such as the 100 basis point adder in this proceeding.  Another issue in the case could be the Commission’s recent directive that Dominion address market alternatives in future cases involving new generation.

For more information, please contact GreeneHurlocker.

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