RICHMOND — The State Corporation Commission (SCC) has approved an application from Dominion Virginia Power to build a new coal-fired power plant in Wise County, Virginia. The SCC’s approval is subject to certain cost control measures designed to protect Virginia ratepayers from potential construction cost overruns.

Recognizing that the General Assembly has already determined by law that a coal-fired plant in Southwest Virginia was in the public interest, the SCC was precluded from revisiting that issue. The SCC also noted that by law its environmental review authority is limited, and that it had no authority to require environmental protections related to matters governed by permits that may be issued by the Virginia Department of Environmental Quality.

The SCC approved a rate increase to finance the construction of the new plant consistent with an agreement among the company, the Office of the Attorney General’s Division of Consumer Counsel, and the staff of the SCC. The agreement addressed several cost aspects of the plant, including the cost of capital. The return on equity that Dominion Virginia Power will receive for its cost of capital needed to construct the plant is 12.12 percent. The company had requested 13.75 percent.

The SCC put in place cost control measures relative to the plant’s construction. The company estimates that the construction cost will be $1.8 billion. The SCC found that any costs over that amount would not be automatically chargeable to ratepayers. Instead, Dominion Virginia Power must prove in future proceedings that any cost overruns are “reasonable and prudent” expenditures under state law before they can be charged to ratepayers.

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Case Number PUE-2007-00066
View Final Order