Virginia’s leading electric utilities disclosed last Thursday that they have formed a consortium to explore the development of an approximately $1 billion coal-fired electric power station in southwestern Virginia.

The consortium members are Dominion, Appalachian Power, Old Dominion Electric Cooperative, the Virginia Municipal Electric Association and the Blue Ridge Power Agency.

The Virginia Electric Utility Restructuring Act encourages the development of a coal-fired power station in the state’s coalfield region that would utilize Virginia coal to provide electricity for the companies’ native load and default service customers. The act provides a broad “safety net” for default service customers, including rates set by state regulators. Default service protections authorized by the act will continue indefinitely.

Dominion will undertake the initial power station development activities, which include the evaluation of available coal-burning technologies, siting and regulatory activities. A possible timeline has station site evaluation beginning this year, construction starting in 2008 and commercial operation beginning in 2012.

The non-binding agreement is an expression of the companies’ joint interest in exploring the development of the power station. It does not commit them to undertaking the actual construction or operation of the project.

If a decision were made to build the station, each of the companies then would have to decide if it wanted to be a partner, and definitive agreements outlining the role and responsibility of each would be drafted and agreed upon. The construction costs and the generation output would be shared proportionately by those parties signing the definitive agreements.

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