NCSL Utility Business Model Session

NCSL Utility Business Model Session

Electric utility service has three components: generation, transmission, and distribution 2

Natural gas utility service has transmission and distribution components 3

4 Differences among states Are utilities vertically integrated (do they own power plants)? What is the current rate environment? What is the current fuel mix? What regulatory challenges are there to this fuel mix? How robust is the state s natural gas pipeline capacity? What are the state s most cost effective renewable energy options? 4

Dominion Virginia Power: fully integrated utility with low cost, clean, diverse fuel mix Electric Production by Fuel Type* 2007 2013 2020~ (projected) 5% 2% 1% 2% 3% 41% 51% 20% 37% 39% 27% 41% 31% Coal Nuclear Natural Gas Renewables/ Other Oil * Electric Production by fuel proportions exclude non-utility generation (NUG) under contract and pumping. ~ 2020 estimate based on 2014 Integrated Resource Plan filed August 29, 2014. 5

Dominion industrial rates: lower than statewide averages in any CNBC Top 10 for Business state (cents per kilowatt hour) ( /kwh) 9 8 7 6 5 Dominion s 2008 rate was 6.2 cents/kwh 6.1 6.2 6.3 5 2 6.6 6.7 6.8 3 10 6 7.0 7 8.2 8.2 8.2 8 4 1 4 3 2 1 0 Dominion Virginia Power North Carolina Texas Utah North Dakota Minnesota Washington Colorado Nebraska Georgia CNBC rankings as of June 2014 shown in red. Virginia was tied for eighth place. Source: EEI Typical Bills and Average Rates Reports: Summer 2014 for rates effective July 2014 (based on 1,000 kw demand, 650,000 kwh monthly usage) NE: U.S. EIA: Electric Power Monthly: September 2014 for rates effective July 2014 DVP: Company information for rates effective September 1, 2014 6

Dominion Virginia Power residential rates are second lowest in the Commonwealth $140.00 $120.00 $116.84 $117.99 $115.12 $117.85 $119.87 $120.63 $123.35 $121.54 $123.57 $124.47 $131.50 $132.64 $134.81 $136.84 $139.02 $100.00 $100.25 $80.00 $60.00 $40.00 $20.00 $- Source: State Corporation Commission survey of electric rates as of July 1, 2014 * DVP rates effective September 1, 2014 7

8 Residential rates vary widely among states 25.0 20.0 17.7 17.9 18.1 19.5 19.7 15.0 10.8 11.5 12.0 12.4 12.9 13.4 13.9 14.3 14.9 15.4 10.0 5.0 0.0 OR Dominion IL AZ MN IA PA WI MI ME MA VT CA NY CT Dominion Virginia Power bill: Rates effective September 1, 2014 shown as centers/kilowatt hour. Source: Edison Electric Institute, Typical Bills and Average Rates Report: Summer 2014. Rates effective July 1, 2014. Annualized, monthly residential bills, 1,000 kwh usage. 8

Dominion: low carbon intensity 2,500 100 Largest U.S. Power Producers (Pounds CO2 per MWh Output) 2,000 1,500 1,000 Dominion 500 0 Dominion is among the lowest for CO2 emissions for the largest U.S. power producers. Source: Benchmarking Air Emissions Report: May 2014 (2012 data). Study supported by NRDC and others. 9

Dominion Virginia Power is closing or converting seven coal plants Conversions: Altavista (coal to biomass) 51MW Bremo (coal to natural gas) 227MW Hopewell (coal to biomass) 51MW Southampton (coal to biomass) 51MW North Branch Closures: North Branch (WV) 74 MW Chesapeake Energy Center 595MW Yorktown, Units 1-2 323MW Bremo Yorktown Hopewell Southampton Altavista Chesapeake Energy Center 10

$/MWh Levelized Cost of Energy from EIA 2014 Report 11 $250 EIA - Estimated Levelized Cost of New Generation Resources (COD 2019) $200 $204 $150 $147 $130 Transmission Investment $100 $80 $96 $103 $104 Variable O&M (w/fuel) Fixed O&M Capital Cost $65 $50 $- Advanced CC On Shore Wind Nuclear Biomass Advanced CT Solar PV IGCC w/ CCS Off Shore Wind Based on the 2014 EIA Annual Energy Outlook. All numbers are 2012 dollars. 11

Generation resources in perspective Generation Type Capacity Factor Carbon-free? Dispatchable? Solar PV Onshore Wind Offshore Wind Biomass 25% YES NO 34% YES NO 37% YES NO 83% YES* YES Advanced Combine Cycle Natural Gas 87% NO (1/2 carbon of coal) YES Advanced Nuclear 90% YES YES *EPA has viewed biomass as carbon free but is reviewing this determination Source: U.S. Energy Information Administration 12

Clean Power Plan goal varies among states (lbs/mwh) 2,000 1,800 1,600 1,620 1,763 1,400 1,200 1,000 810 992 1,163 1,187 800 600 400 200 - VA NC TN MD WV KY Source: U.S. EPA Clean Power Plan, Technical Supporting Document State Goal Computation 13

U.S. has growing domestic natural gas production (trillion cubic feet) Source: U.S. Energy Information Administration: Annual Energy Outlook 2014 14

Polar Vortex Winter of 2014: Pipeline capacity was a key constraint ($/MMBtu) 125 (Average natural gas prices during January 2014) Transco Z5 (DOM Zone) Henry Hub $118.10 105 $89.50 85 $72.62 65 45 25 5 $4.58 $4.92 $5.25-15 1/7/2014 1/8/2014 1/9/2014 1/7/14 1/22/14 1/28/14 Henry Hub: Energy Information Administration, Henry Hub Natural Gas Spot Price. prices pulled from ICE: https://www.theice.com/marketdata/reports/reportcenter.shtml?reportid=76#report/76 Weather (Low Temperature F) from WSI Trader: http://www.wsitrader.com/historical/queries/historicaldailyobserved#historicaldailyobserved/?r=0&_suid=139040361553307459083507692854 15