Remarks of T. F. Farrell II
President & COO
Dominion
CAIR/CAMR News Conference
November 22, 2005
Thank you, Bill, and good morning.
I want to echo what Bill said and thank you for making the trip to Chesterfield.
We chose this location to illustrate an important point: energy production and
the environment are interdependent and can co-exist successfully — with
proper stewardship and enlightened laws and regulation.
Virginians are reaping the benefits of cleaner
air as a result of reductions in our power station emissions, even as we have
increased electric generation to meet new demand. And thanks to the vision of
the General Assembly and the Virginia Electric Utility Restructuring Act of
1999, these air quality improvements have been achieved with virtually no change
in base electric rates.
That’s a remarkable accomplishment —
and a real positive for the Commonwealth’s environment and its economy.
Responsible stewardship of the environment is
an important part of Dominion’s business. It is a responsibility we take
very seriously. We operate in full compliance with environmental laws and regulations.
And we often exceed legal requirements when it makes scientific and economic
sense to do so.
A brief review of our record shows that Dominion
has been in the vanguard when it comes to “clearing the air.”
As the first utility to publicly support passage of the
Clean Air Act Amendments of 1990 — the first major legislation to address
acid rain — Dominion helped break a longstanding deadlock in Congress.
Dominion also was the first company to test the Clean Air
law’s innovative “cap and trade” provision, which gave utilities
more flexibility in meeting required emissions limits.
In 1994 and again in 2002, Dominion installed environmental
controls at its Mount Storm coal station in West Virginia — well ahead
of compliance deadlines — bringing air quality improvements to the Shenandoah
National Park and other wilderness areas.
In 2003, we converted two units at the Possum Point Power
Station in Northern Virginia from coal to natural gas and built a gas-fired
combined-cycle unit. That $400-million project grew out of a collaborative
effort with the Virginia Department of Environmental Quality to help Northern
Virginia reduce its ozone levels and help meet federal air quality standards.
Also in 2003, we signed a landmark agreement with the U.S.
Environmental Protection Agency — a comprehensive emissions control
program for our Virginia and West Virginia coal units. That $1.2-billion investment
by Dominion is the most ambitious environmental commitment ever made by a
Virginia corporation. And, I might add, it will be achieved without raising
our customers’ base electric rates, which are capped through 2010.
Those and other steps Dominion has taken to help
improve air quality in Virginia are having the intended effect.
A report issued in 2004 by a task force of the
Virginia State Advisory Board showed significant improvements in the Commonwealth’s
air quality over the past decade. These improvements resulted from a noticeable
drop in sulfur dioxide, nitrogen oxide and particulate matter concentrations.
And that’s not all: more improvements are
on the way.
In March of this year, the U.S. EPA issued two
new rules — the Clean Air Interstate Rule and the Clean Air Mercury Rule.
The Clean Air rule applies to 28 states, most of which are east of the Mississippi
River, plus the District of Columbia. The Mercury rule is national in scope.
Here in Virginia, the new Clean Air rule calls
for a 79 percent reduction in sulfur dioxide and a 57 percent reduction in nitrogen
oxide below 2003 levels. EPA studies show that implementation of this rule will
bring all regions of the Commonwealth into compliance with federal ozone standards
by 2015.
In addition, the Clean Air rule will enhance
air quality and visibility in Virginia’s state and national parks. It
will also bring about significantly lower pollutant levels in the Chesapeake
Bay.
The federal mercury rule calls for a 70 percent
reduction in mercury emissions from power stations. It is the first federal
rule to regulate mercury.
Some are gearing up to fight these new regulations.
Dominion is not among them.
We support the EPA’s new rules and are
taking aggressive steps to comply with them. We believe their reliance on market
mechanisms to leverage emissions reductions is the most cost-effective approach.
And the new rules provide a degree of regulatory certainty that helps business
planning.
To achieve these emission reductions, Dominion
plans to install scrubbers on Units 3-6 here at Chesterfield…
on Units 1-4 at the Chesapeake Energy Center… and on Unit 1 at the Yorktown
Power Station — all by 2011. We are also planning to install a scrubber
on Yorktown Unit 2 by 2015.
Scrubbers remove more than 90 percent of the
sulfur dioxide contained in the exhaust before it leaves the stack.
We also have already installed selective
catalytic reduction equipment, or SCRs, on various coal units in our system
and are evaluating other SCR installations by 2015. SCRs help convert nitrogen
oxides into nitrogen and water. The technology is similar to the catalytic converter
used to cut automobile emissions.
A list of Dominion’s previous
and current environmental upgrades is shown on one of the charts you see
next to me. You also have a copy of this and other charts in your press kit.
To comply with these new rules, Dominion will
invest $500 million more in state-of-the-art pollution control equipment to
reduce emissions from its Virginia generating units.
This major investment in clean air follows more
than $2 billion that Dominion has already spent or committed to spend since
the 1990s. The vast majority of these expenses have been borne by the company,
not customers, thanks to capped electric rates.
I call your attention to the chart
with the multi-colored lines. It shows the dramatic decline in smokestack
emissions we have achieved since 1998 and expect to achieve — even as
the demand for power — the green line — grows by more than 30 percent.
That downward trend in emissions will continue
under the new clean air and mercury rules.
Once we have completed all of the environmental
construction, Dominion will have cut sulfur
dioxide emissions by an average of more than 80 percent at its coal stations
serving Virginia. Nitrogen
oxide emissions will decrease by 70 percent. And mercury
emissions will drop by about 87 percent below 2000 levels.
Dominion is proud of its long history of environmental
stewardship. The construction projects we are announcing today set a new standard
in our pledge to be a national leader in the effort to improve air quality.
Coal is and will remain an important part of
Dominion’s energy mix. It is a vital resource for fueling the Commonwealth’s
future growth.
This new capital investment will infuse significant
dollars into Virginia’s economy over the coming decade, ensuring that
coal will continue to help meet Virginia’s growing electricity needs —
and do so in a way that safeguards public health and the environment.
We see this as another major step forward in
“clearing the air” for the benefit of all Virginians.
On behalf of Dominion, I again want to thank
you for joining us for this important announcement.
