Rate Adjustments and Regulatory Documents

Reliability, Environmental Enhancements, Lower Fuel Costs Key Factors In Dominion North Carolina Power Rate Request

• Service reliability improves by 41 percent since 2004
• Hurricane Irene and earthquake costs also included
• Rates would remain among lowest on East Coast

RALEIGH, N.C. – Dominion North Carolina Power filed an application with the North Carolina Utilities Commission (NCUC) on March 30, 2012, for an increase in base rates, largely to recover costs related to enhancements in service reliability as well as to improve environmental performance at its power stations.  The company expects the increase to be significantly offset by lower costs for fuel used to generate electricity.

"Our mission is to provide safe, reliable service every hour of every day, and we have made substantial investments in recent years to provide the best service possible," said Paul D. Koonce, Dominion North Carolina Power’s chief executive officer.  "We believe this investment is reflected in a significant improvement in service reliability.  These improvements contribute to the quality of life for our customers and the long-term economic development of North Carolina."

Koonce noted that service reliability has improved 41 percent from 2004 to 2011.

The net effect of the proposed change in base rates and current estimate of fuel charges would be to increase the bill of a typical residential customer by about 50 cents a day or $15 a month, to approximately $119 a month from the current level of $103.79 a month. If the proposed changes are approved by the NCUC, the company’s rates would still be among the lowest in North Carolina and the East Coast. A typical customer uses 1,000 kilowatt-hours of electricity a month.

The request for the base rate change was filed March 30 with the NCUC. The company plans to file the fuel-related application in August.  It will ask the NCUC for permission to implement proposed base and fuel rate changes on a temporary basis Nov. 1, subject to refund, and on a permanent basis Jan. 1, 2013.

The company has improved the reliability of electric service in North Carolina by upgrading both the transmission of electricity from generating stations to substations and the distribution of electricity to homes and businesses.  This includes work on the Kitty Hawk-to-Nags Head and Winfall-to-Trowbridge transmission line projects.  The company also improved circuits in Elizabeth City and Roanoke Rapids and upgraded overhead equipment in Elizabeth City, Ahoskie and Albemarle.

Additionally, the company is generating more electricity to meet customers’ needs.  The Bear Garden Power Station began operations last year, and Virginia City Hybrid Energy Center is scheduled to begin operations this summer.   Bear Garden is providing, and the not-yet-operational VCHEC is planned to provide, power to customers in North Carolina as well as Virginia. In addition to enhancing reliability by providing new sources of electricity, these highly efficient facilities are expected to save customers of the two states more than $1 billion over the long term by reducing the need for purchased power.

The proposed recovery of the North Carolina portion of costs for capital improvements to improve reliability makes up most of the net increase in requested fuel and non-fuel rates.

The company is also seeking to recover costs related to the two natural disasters of Hurricane Irene and the earthquake last August and for complying with new environmental rules that the U.S. Environmental Protection Agency implemented last year.  During Hurricane Irene, 90 percent of the company’s customers in North Carolina lost power.  Their service was restored in about half the time it took to restore service following Hurricane Isabel in 2003.

Overall, the company is asking for an increase in base revenue of approximately $63.7 million. When taking projected fuel reductions into account, the total increase is expected to be approximately $37 million if approved.

Along with providing reliable electric service, Dominion for many years has sponsored programs benefitting the communities it serves.  Since 2007, more than 3,200 North Carolina families have benefitted from Dominion’s EnergyShare program, which helps families in need pay their heating bills, regardless of the type of their heating system.

In addition, contributions to the community by the company and the Dominion Foundation, its philanthropic arm, are extensive.  They include over $1.6 million in grants since 2007 to various North Carolina organizations, schools and universities, food banks and disaster relief funds. The company donated $500,000 in 2010 to fund alternative energy demonstrations at Jennette’s Pier in Nags Head.  Costs associated with these charitable and community activities are paid by the company, not by customers.

In North Carolina, the company provides electric service to approximately 120,000 customers.  The company has 220 employees in the state and operates the Rosemary, Gaston and Roanoke Rapids power stations.  In 2011, the company paid approximately $20 million in non-income tax payments in North Carolina.

• Cover letter for the Application
• Application 
• Frequently Asked Questions 
• North Carolina electric rate comparison (Typical Residential Monthly Bill, 1,000 kWh -- March 2012)

Media Contacts:

• David Botkins, (804) 771-6115, david.b.botkins@dom.com
• Bonita Harris (757) 857-2700, bonita.b.harris@dom.com

Analysts: 

• Nathan Frost (804) 819-2187, nathan.j.frost@dom.com