Dominion President Advocates Preservation
Of Restructuring Act To Benefit Consumers
Supports Capped Rate Extension Proposed by
Governor & Attorney General
RICHMOND, Va. - Dominion President and Chief
Operating Officer Thomas F. Farrell II Tuesday supported preserving the Virginia
Electric Utility Restructuring Act and urged the General Assembly to extend
the capped rate period for an additional three years, as outlined in a proposal
by the governor and attorney general.
"Dominion believes the act is making substantial
progress by producing major savings for Dominion Virginia Power customers,"
Farrell told the Virginia Commission on Electric Utility Restructuring. "We
strongly oppose any and all proposals to suspend the act, re-impose the old
cost-of-service framework, or push retail choice into the indefinite future.
These proposals could potentially bring about many new rate cases—and rate
increases—between now and the end of the decade for Virginia customers."
Farrell pointed to an updated economic study
showing substantial customer savings of up to $1.1 billion as a direct result
of the act's rate caps until 2007, and even more savings—as much as $700
million—under the proposed extension to 2010. Other proposals before the
Commission are less consumer friendly.
"Such proposals, including several before
you today, are simply anti-consumer legislation that will eliminate the significant
benefits our customers have enjoyed under the act," said Farrell.
He also noted that more than 80,000 Dominion
customers have volunteered for the latest retail access pilot program, which
has been approved by the State Corporation Commission.
Farrell highlighted other strengths and benefits
of the act:
No base rate increase; residential customers paying 25
percent less than a decade ago;
The careful transition period to competition;
Default service, under State Corporation Commission supervision,
to protect consumers from market disruptions once rate caps are removed;
Improved company efficiencies because of the act's prohibition
against passing higher costs on to customers through base rate increases;
and
Development of retail customer choice pilot programs that
currently have more than 80,000 volunteers.
"We believe the act should be allowed to
work. There's no need for suspension, rebundling, re-imposition of cost-of-service
rate making or other drastic measures, which would have very damaging implications
for our customers and company and for the Commonwealth as a whole," said
Farrell.
"An extension of the capped rate period
is a vastly preferable option. It protects our customers from price volatility
and would allow three more years for retail markets to develop," Farrell
continued.
Farrell also showcased the shifting of financial
risk from customers to company shareholders under the act, requiring utilities
to work harder and smarter to meet obligations because the act prohibits the
company from seeking rate increases from customers. Dominion Virginia Power
alone will have to cover more than $2 billion in additional costs and investments
during the capped rate period. These costs include:
More than $600 million for generation projects to keep
up with Virginia's growth;
More than $700 million for advanced environmental controls,
including new emissions control equipment for our coal-fired power stations;
Approximately $780 million for transmission and distribution
projects, and for connecting new customers, especially in high growth urban
and suburban areas; and
Approximately $200 million for projects to ensure the continued
safe and efficient operation of our nuclear units, which continue to supply
much of Virginia's low-cost energy.
"We also cannot ask for higher base rates
to pay for the massive restoration effort we launched in the wake of Hurricane
Isabel," said Farrell. "We've estimated the after-tax cost of restoring
power and rebuilding our system as at least $128 million. Without the tax adjustment,
the cost is approaching $200 million. This is many times greater than our expenses
for dealing with any other storm in our corporate history. But it will not lead
to higher rates."
Dominion is one of the nation's largest producers
of energy with an energy portfolio of more than 24,000 megawatts of generation.
Dominion also serves 5.3 million retail energy customers in nine states. For
more information about Dominion, visit the company's Web site at www.dom.com.
