We grapple regularly with two goals that might seem contradictory — vigorous environmental protection and reliable, affordable electric and natural gas service that drives the economy and sustains daily life.

In reality, these two goals are not at odds. They are interdependent and mutually supportive. A healthy environment supports our business mission. It is a key measure of the quality of life in the communities where our customers and employees live and work. And a robust economy generates the resources needed to address environmental concerns and reduce the impact of human activity on the natural world.

Slightly under half of our total electric production comes from emissions-free nuclear and hydro power. Natural gas and biomass contribute about seven percent. The remaining half of our electric output comes primarily from coal and a small amount of oil.

Renewable energy sources, conservation and energy efficiency will play an increasingly important role in the way we meet our customers' future energy needs and minimize our environmental footprint.

The installation of state-of-the-art emissions control equipment at our fossil stations supports our stewardship commitment with concrete actions and positive results.

When this capital spending program is completed in 2015, we will have invested about $3.4 billion across our generation fleet to clean the air.

At our regulated Dominion Generation facilities, for example, our environmental investments are achieving notable reductions of nitrogen oxide (NOx), a source of ozone problems; sulfur dioxide (SO2), which produces acid rain; and mercury emissions, which can cause health problems at high concentration levels.

Since 1998:

• NOx emissions have fallen by 50 percent;
• SO2 emissions have declined by 52 percent; and
• Mercury emissions have dropped by 41 percent.

Sustaining a healthy environment — for this and future generations — is a key part of Dominion’s long-term commitment to the communities where our customers and employees live and work.

• NOx emissions will fall by 74 percent;
• SO2 emissions will decline by 80 percent; and
• Mercury emissions will drop by 86 percent.

• NOx emissions will decline by 77 percent;
• SO2 emissions will fall by 84 percent; and
• Mercury emissions will drop by 86 percent.

Advanced pollution controls on fossil stations are an expensive but effective way to contain the emissions mentioned above. Greenhouse gases, particularly carbon dioxide (CO2), present a new set of challenges. No proven, commercial-scale technology currently exists to capture, transport and store the CO2 emitted by coal-fired, and to a lesser degree, gas-fired generating units.

Development of various carbon control technologies is underway. Testing and commercial use at large power stations remain years away.

Coal is our most abundant and inexpensive domestic fuel source. For the foreseeable future, Dominion believes that any realistic attempt to improve our nation’s energy security and independence must include coal. The issue with coal is three-fold: CO2 must first be separated from the power station emissions stream, piped to an appropriate location, and then permanently stored, or sequestered, underground.

With that in mind, Dominion has a number of initiatives underway. We are:

• Partnering with the Virginia Center for Coal & Energy Research at Virginia Tech to test large-scale carbon storage in unmineable coal seams of central Appalachia.
• Participating in the Midwest Regional Carbon Sequestration Partnership, a research organization working to develop technological solutions to the carbon challenge.

• Hosting a pilot program at our Brayton Point Power Station in Massachusetts to test a new technology that converts coal into pipeline-quality natural gas with the potential to separate and capture the CO2 emissions.
• Evaluating ways to use our expertise in power station and pipeline operations and natural resource extraction to address the greenhouse gas problem.

As this research proceeds, we are working in other ways to offset our carbon emissions, at the same time as we respond to growing customer demand for energy. A sustainable and cost-effective approach for achieving these goals requires us to work both sides of the energy equation: supply (production) and demand (customer conservation).

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As part of our commitment to renewable energy and a reduced carbon footprint, Dominion operates a growing fleet of alternative-fuel vehicles, including about 60 Dominion Virginia Power vehicles and work trucks powered by biodiesel fuel.

On the supply side, we start by maintaining a balanced and diverse system fuel mix.

According to a report issued in 2006 by the Natural Resources Defense Council, Dominion’s carbon intensity — the amount of carbon emitted per unit of energy — was about 13 percent below the national average in 2004. This survey listed Dominion as the seventh largest electric generator in the nation, but our carbon emissions were 70th in terms of pounds of carbon released per megawatt-hour of power produced. That puts Dominion in the top third in terms of carbon efficiency — the amount of CO2 produced per megawatt-hour of output.

Second, we are increasing our renewable energy investments to bring even more diversity to our power supplies and further reduce our carbon footprint.

The company is committed to expanding its renewable portfolio to help Virginia meet its 12-percent renewable generation target by 2022 and North Carolina’s 12.5 percent renewable target by 2021. We are already in compliance with renewable energy standards in five other states where our Dominion Retail unit does business.

One recent addition to our renewable portfolio is a wind power development in Grant County, W.Va., where we are a 50-percent partner with Shell WindEnergy, Inc. Upon completion, the facility’s 132 turbines will produce 264 megawatts of power — enough to serve about 66,000 homes. In January 2008, we acquired a 50-percent interest in the 650-megawatt Fowler Ridge Wind Farm in Indiana from BP Alternative Energy North America. The first phase of the project should be operational by the end of the year.

Renewable energy sources, conservation and energy efficiency will play an increasingly important role in the way we meet our customers’ future energy needs and minimize our environmental footprint.

Dominion’s other renewable generation includes one of the largest biomass generating units on the East Coast. Located in Hurt, Va., the Pittsylvania Power Station burns waste wood that would otherwise go to landfills to generate 80 megawatts of power — enough to serve 20,000 homes.

Third, we are laying the groundwork for a possible expansion of emissions-free nuclear power at our North Anna station in central Virginia. Dominion has always viewed nuclear power as a safe, reliable and clean energy source. Currently, North Anna and Surry, our other nuclear station in Virginia, provide more than a third of the state’s electricity.

Fourth, we are pursuing development of an advanced clean-coal facility in Southwest Virginia. This station will be designed to accommodate carbon capture controls when they are commercially available.

It will use advanced circulating fluidized-bed technology, a flexible, proven clean-coal combustion process that can burn waste coal and up to 20 percent renewable biomass, such as wood chips.

Fifth, we are evaluating our options for complying with RGGI, the Regional Greenhouse Gas Initiative. This is a program by Northeastern and Mid-Atlantic states to reduce CO2 emissions. Central to the initiative is a multi-state, cap-and-trade program with a market-based emissions trading system. Cap-and-trade programs set a limit, or cap, on the amount of a pollutant that can be released to the environment. The cap is typically lowered over time to meet the desired emissions reduction.

Companies are issued permits, or credits, allowing them to emit a specific amount up to the level of the cap. These emission permits can be bought and sold to help achieve the least-cost way of meeting the overall target reductions.

Beginning in 2009, Dominion’s New England fleet will be subject to carbon regulation in Massachusetts and Rhode Island under the initiative. Our coal stations in Massachusetts are already complying with existing state regulations governing CO2 emissions.

On the demand side, we are expanding our efforts to help customers use energy more efficiently, achieve sustainable dollar savings and protect natural resources.

Dominion has long offered its residential and business customers a range of conservation and demand management programs that help us defer the need for new generating capacity, maintain stable electric rates and encourage wise energy use.

In 2007, we created a new Energy Conservation group within Dominion Virginia Power to consolidate and oversee efficiency programs provided by outside vendors. Our goal is to put more information and technology in the hands of customers and help them cut their energy consumption, especially at times when power demand is highest — and most expensive. Tapping the potential of conservation requires new approaches that call for the active participation of our customers. Bottom line: the more kilowatt-hours they can save, the less power has to be produced in our power stations.

Dominion’s wind farm partnership project in the Allegheny Mountains in Grant County, W.Va., will produce enough electricity to supply about 66,000 typical homes.

In partnership with retailer Home Depot, Dominion began offering its customers deeply discounted prices for energy-saving compact fluorescent light bulbs (CFLs) in 2007. CFLs use about 75 percent less energy and last 10 times longer than traditional incandescent bulbs.

The program’s initial three-year sales target of 1.4 million bulbs has been increased to 5 million bulbs after customers bought about 600,000 CFLs in three months.

Dominion customers could save more than $280 million and cut CO2 emissions by nearly 1.5 million tons — the equivalent of removing almost 270,000 cars from the road for a year — if they purchase the 5 million CFL bulbs to replace 60-watt incandescent bulbs.

In September 2007, we filed an application with Virginia regulators to create several new energy conservation pilot programs that would begin in 2008 and run through 2009:

• Four different residential energy-saving programs designed to control air-conditioning use during peak-demand times, educate customers about their real-time energy use patterns, promote programmable thermostats to help manage electricity use, and inform customers about the value and impact of conservation during periods of peak demand.
• Free energy audits and energy efficiency kits for residential and small business customers.
• New incentives that complement existing load-reduction programs for large commercial and industrial customers to cut their energy demand.

These proposed initiatives support Virginia’s Energy Plan and the state’s attempt to trim electricity use by 10 percent by 2022 as outlined in electric utility re-regulation legislation adopted in 2007. The efficiency pilot programs also will help us learn more about what our customers are willing to do to achieve sustainable energy savings.

Dominion is actively involved with conservation initiatives at the national level as well. Most notable is Dynamic Energy Management, a research partnership with the Electric Power Research Institute. In conjunction with 30 other utilities, we are evaluating best practices around the country and sharing information about which conservation measures have worked, and why.

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The North Anna Power Station in Louisa County, Va., is one of four nuclear stations in the Dominion fleet providing safe, reliable and clean energy to customers.

The company is pursuing regulatory permits for a possible future expansion of emissions- free nuclear power at the North Anna station.

In addition, we have teamed up with the North American Energy Standards Board to develop measurement and evaluation standards for energy efficiency programs. And we are working with the Environmental Protection Agency on a National Action Plan for Energy Efficiency.

Conservation, efficiency and peak-load management programs are increasingly important resources for meeting growing energy needs and society’s environmental goals. We intend to introduce more energy-saving offerings as we gain experience and share best practices with others. Stay tuned for future updates.

		Environmental Report
		Dominion Foundation Environmental Efforts

Dominion East Ohio, the company's retail natural gas division, operates a number of service vehicles fueled by compressed natural gas.