Dominion recognizes that
there is growing concern about increases in emissions of greenhouse
gases and potential impacts to the earth’s climate. For this reason,
Dominion has been following the science and public policy debate on
climate change for more than a decade.
While scientists continue to enhance
their understanding of the science and possible impacts of global climate
change, policy makers are contemplating potential greenhouse gas mitigation
measures.
In 2003, the company retired two oil-fired
units at our Possum Point Power Station in Northern Virginia,
replacing them with 550 MW of new state-of-the-art combined
cycle technology. We also converted two coal-fired units (322
MW) at Possum Point to natural gas firing.
Since 2000, Dominion has added more than 2,900
MW of new gas-fired generation (excluding Possum Point), more than
2,500 MW of non-greenhouse gas emitting nuclear generation. It
also has added 80 MW of renewable biomass, 63 MW of biomass co-fired
with coal and a 164 MW wind project (50% ownership) to its generation
mix.
Climate Change Policy Principles
Dominion
believes that Congress is likely to pass legislation that imposes requirements
on greenhouse gases. We believe that climate change policy must be developed
hand-in-hand with a sound U.S. energy policy that provides fuel diversity, a
reliable energy supply and affordable electric service. The optimal approach
should effectively promote the development and deployment of technology-based
solutions, including renewable energy, advanced nuclear, gas and clean coal technologies
as well as energy efficiency and conservation.
Accordingly, any policy
should be designed and implemented in such a way that slows the current trend
of increasing greenhouse gas emissions and then gradually reduces emissions
over time to allow for the development and deployment of new non- and less
carbon intensive technologies in the marketplace that will be necessary to
augment the nation’s existing generation fleet. This is crucial to sustaining and enhancing
economic, social and environmental progress domestically and globally.
Dominion is meeting the growing energy needs of our customers
through our well-balanced portfolio of assets including electric generation,
gas exploration and production, transmission and distribution. With
this diverse portfolio, Dominion should be well-positioned under a reasonably
implemented domestic climate policy.
If carbon emissions are to be reduced, costs will increase
to some assets. However, there will be increased pressure on the demand for
natural gas. This in turn will increase prices for both natural gas and electric
power. Dominion's substantial nuclear fleet and natural gas businesses act
as natural offsets against such increased costs.
As of the end of 2005, our generation business’s greenhouse
gas emission rate is well below the industry average, primarily due to our
diverse generation portfolio. We remain committed to our non-emitting
nuclear and hydro-electric assets. Dominion either has completed or is in the
process of renewing operating licenses for its existing nuclear and hydroelectric
units. In addition, the company recently acquired a 50 percent interest in
a 164-MW wind turbine facility in West Virginia. These efforts, coupled
with the deployment of new, highly efficient technologies to meet future energy
demands, will continue to diversify our generation portfolio.
In addition, we have undertaken a number
of other initiatives to reduce or avoid greenhouse gas emissions, including
projects to sequester carbon, reduce gas transmission pipeline emissions, improve
efficiency in exploration and production and electric generation operations
and reducing emissions of sulfur hexafluoride (SF6) in electric distribution
operations.
Dominion is actively participating
in several voluntary programs including the U.S. Department of Energy’s
(DOE) Power Partners and the DOE’s Voluntary Reporting of Greenhouse
Gas Emissions and Reductions Program.
Learn
more about carbon dioxide emissions from Dominion operations.
Greenhouse Gas Requirements
Dominion will fully comply with all applicable greenhouse
gas emission reduction requirements. We already report our emissions
to states where such reporting is required, and we voluntarily disclose emissions from generation and our gas transmission and delivery operations in this report. In
addition, we are or soon will be subject to CO2 emission caps at our Brayton Point, Salem Harbor and Manchester Street power
stations (see below).
Two of our stations, Brayton Point and Salem Harbor Power
Stations, are subject to the Massachusetts multi-pollutant regulations that
established a cap on emissions of CO2, which became
effective in 2006, and impose a 1,800 lb/MWhr rate limit effective in 2008.
The regulations allow the use of greenhouse gas offsets for compliance.
Dominion is already meeting
the initial emission caps and plans to comply with the emission rate requirements
of the Massachusetts regulations through a combination of strategies, including
but not limited to eligible greenhouse gas offset procurement. In early
2007, Dominion joined with several other energy companies in a collaborative
process to identify and procure high quality greenhouse gas emission reductions
and/or carbon sequestered from projects located in the U.S. for use as offsets
for compliance with current and future climate change programs.
Called
the U.S. GHG Offset Acquisition Initiative, the process is intended to facilitate
the continued development of the U.S. emission trading markets through the
financing and implementation of projects that reduce and/or sequester greenhouse
gas emissions.
On December 20, 2005, the states of Connecticut, Delaware, Maine, New Hampshire,
New Jersey, New York, and Vermont announced an agreement to implement the Regional
Greenhouse Gas Initiative (RGGI) to reduce CO2 emissions from electric generating
units through a regional cap-and-trade program. The agreement was signed by
the Governors of the participating states through a Memorandum of Understanding
(MOU). Since then, legislation has passed in Maryland that requires Maryland
to join RGGI. In addition, the Governor of Massachusetts has officially
signed Massachusetts onto RGGI and the Governor of Rhode Island has announced
that it will join as well.
The RGGI, if ultimately adopted into law by each
of the states, will cap CO2 emissions at current
levels in 2009 through 2014, with a 10 percent reduction by 2019 (2.5 percent
per year decline over the period 2015-2018). A
Model Rule detailing specific compliance requirements and implementation mechanisms
of the RGGI cap-and-trade program that states can adopt was developed and finalized
in 2006. Most of the RGGI states are now engaged in the process of developing
regulations at the state level that largely adopt the major elements of the
Model Rule, including provisions for allowance allocations and auctions.
Dominion
owns and operates five generating facilities in the RGGI region. The
Brayton Point and Salem Harbor stations in Massachusetts, which burn coal and
oil, and the Manchester St. Power Station in Providence, RI, which burns natural
gas and limited oil, will be subject to RGGI.
Although specific details
are unknown at this time, we expect that the reduction requirements of the
CO2 provisions of the Massachusetts multi-pollutant
rule and RGGI will be merged in some way to avoid a requirement to meet two
separate regulatory programs to address CO2 emissions The Millstone Generating Station in Groton,
Connecticut is a nuclear generating station and will not be subject to the
reduction requirements of the RGGI program. The electric generating units at
Dominion's Cove Point facility are exempt from the RGGI requirements due to
their size.
