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House of Delegates panel: Dominion can charge for nuclear plant upgrades

Dave Ress
Contact Reporterdress@dailypress.com

The multibillion-dollar cost of extending the life of Dominion Virginia Power's nuclear plants is on track to be part of the bills consumers pay, after a key House of Delegates committee voted to recommend it.

Under current state law, it isn't absolutely clear if the cost of improvements needed to keep the company's two nuclear stations running past mid-century could be recovered, House Commerce and Labor Committee Chairman Terry Kilgore, R-Gate City, told that committee shortly before it approved the measure.

Dominion was the first American utility to decide to ask federal regulators for a second extension of nuclear power plants, when it began working last year on what is likely to be a $30 million effort to convince the U.S. Nuclear Regulatory that it should allow the four-decade-old plant's two units to keep operating until 2052 and 2053. Its current license expires in 2032 and 2033.

It plans to do the same for its slightly newer Louisa County nuclear station as well. If the NRC approves, the company would spend about $3.5 billion to upgrade both stations, Dominion lobbyist Jack Rust said.

He said the company wanted the new language to clarify the law, which now says the cost of major modifications to a power plant can be passed along to ratepayers, if the State Corporation Commission approves.

But whether that applied to investments like new control room equipment and new turbines to drive the generators necessary to extend the life of the plants wasn't clear, Rust said.

In response to concerns from manufacturers and Newport News Shipbuilding, Kilgore told the committee it needed to amend his bill to make clear that it did not call for a boost to the profit rate Dominion was entitled to earn when it invests in improving a plant.

The official summary of the bill said it would provide that utilities that make modifications to certain generation facilities had the right to an enhanced rate of return on common equity.

The committee amended to bill to say that enhanced profit would apply only for new facilities, not modifications needed to keep nuclear plants running.

Kilgore said he thought he had made that clear in his first draft of the bill, but that the summary might have confused some people.

"This part of the code is awfully complicated," he said afterward.

Rust, the company lobbyist, said it was not the company's intention to see an enhanced profit on any investment to extend the life of the nuclear plants.

Though the utility's big customers, who often object to bills changing how electricity rates are regulated, didn't object, the Sierra Club said it would hurt ratepayers.

"This bill gives Dominion a blank check," Erica Gray, of the Sierra Club's Virginia chapter, told the committee, adding that it would block the State Corporation Commission from doing its job to protect ratepayers.

Arlen Bolstad, senior counsel at the commission, said the law as it now stands leaves it up to the SCC to determine if the work needed to extend a nuclear plant's life was a major modification for which Dominion could seek an adjustment to its rates.

"So the commission has all the expertise and you're asking us to make this decision?" Del. Lee Ware, R-Powhatan, asked before commenting that he expected the bill to move ahead. Ware was one of the 18 committee members to vote for the measure. None objected, although Del. Peter Farrell, R-Henrico, abstained. His father is chief executive officer of Dominion Resources, the utility's parent company.

Kilgore said the bill would not affect plans Dominion is still considering to add a new unit to its Louisa County nuclear power station.

Gray said the bill would also let Dominion avoid requirements to consider other ways to generate electricity, such as solar or wind power, before proceeding with a major generating project.

Rust, the company lobbyist, said extending the life of the nuclear plants would allow the company to use a fuel that is much cheaper than the natural gas that would likely be used if Dominion had to build new power plants to replace the nuclear stations.

Ress can be reached by phone at 757-247-4535.

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