Dominion Proceeds on 1.3GW Project - Analyst Blog

Dominion Virginia Power, a subsidiary of Dominion Resources Inc. (D), received the required air permit from the Virginia Air Pollution Control Board for its 1,300-megawatt, combined cycle Warren County Power Station near Front Royal.

In conjunction with the air permit, Dominion has also made a treaty with the National Park Service, proposing to retire its 74-megawatt coal-fired North Branch Power Station in West Virginia before the start of operations at the Warren County power station. This agreement removes National Park Service's environmental concerns for the nearby Shenandoah National Park.

The Warren County Power Station is designed to be a 3-on-1, combined-cycle facility, with three gas-fired combustion turbines and one steam turbine. The station is designed to provide clean, reliable and affordable energy to meet Virginia's growing demand for electricity. With roughly 1,300 megawatts of projected capacity the facility will serve about 325,000 homes.

Dominion plans to file for regulatory approval of the new natural gas-fired power station in northwestern Virginia in early 2011. If approved by the Virginia State Corporation Commission, Dominion expects the power station to be operational by late 2014 or early 2015.

The Warren County project forms a part of Dominion's strategy to meet the projected need for 5,600 megawatts of new capacity in its service area by 2019, as identified by PJM Interconnection. PJM Interconnection is the regional independent operator of the transmission system in 13 states, including Virginia and the District of Columbia.

Dominion also continues to make progress on other projects under its regulated infrastructure investment strategy, which are also on schedule and on budget. The company's 580-megawatt combined cycle Bear Garden facility is 85% complete and is expected to start commercial operation in the spring of 2011. Also, Dominion's 585-megawatt Virginia City Hybrid Energy Center is 74% complete and scheduled to start in 2012.

Dominion expects its fourth-quarter 2010 adjusted earnings in the range of 59 - 69 cents per share. It expects adjusted earnings to be $3.30–$3.40 per share in fiscal 2010 and $3.00–$3.30 per share in fiscal 2011. The Zacks Consensus Estimates for fourth quarter 2010, fiscal year 2010 and fiscal year 2011 are 66 cents per share, $3.35 per share and $3.19 per share, respectively, in line with the company's guidance ranges.

Based in Richmond, Virginia, Dominion Resources, together with its subsidiaries, engages in producing and transporting energy in the United States. Through its primary subsidiary, Dominion Virginia Power, the company distributes power to nearly 2.2 million customers in Virginia and northeastern North Carolina. The company mainly competes with Nisource Inc. (NI) and Allegheny Energy Inc. (AYE).

Dominion Resources currently retains a Zacks #3 Rank (short-term Hold rating). We maintain our long-term ‘Neutral' rating on the stock.