Au ugust!5 5,!

2011

The Econ e nomic Impac of ct Dominion Capit Exp n tal pendit tures in Virginia V
The one-time con o nstruction ph hase of the c capital expen nditures by Do ominion Virg inia Power f nine pow generatin for wer ng projec can injec a total of $ cts ct $3.3 billion in the economy of nto the Vi irginia from 2 2007 to 2015. When all nine project are ts complete, the ong going operat tions of thes projects w have se will annua impacts of $291.8 milllion that sup al f pport 756 job in the bs state.

Prepared for

D Dominion V Virginia Pow wer

Richmond,!Virginia!
! ary!Street! 1309!East!Ca Richmond,!V Virginia!23219 9! 804.649.110 07!(phone)! 804.644.282 28!(fax)!

Clev veland,!Ohio o
1025!East t!Huron!Road d! Cleveland d,!Ohio!44115 5! 216.357.4 4730!(phone) )! 216.357.4730!(fax) )!

w www.chmuraecon.com! m

S Summary of Findings: Economic Impact of Do E ominion Ge eneration Pr rogram D Dominion Virg ginia Power (Dominion) has launche a major c ed construction program to increase its power ge enerating ca apacity and meet the gro m owing energy needs of V y Virginia cons sumers and the Commonwealth’s ec conomy. In January 201 Dominion contracted Chmura Ec J 11, n d conomics & A Analytics (C Chmura) to conduct a st tudy analyzing the economic develo opment impa in the Co mmonwealth of nine ma Dominio act ajor on ge eneration pr rojects now underway or planned for the near fu u r r uture. The nine projects, their estima ated co ompletion da ates, and tot capital inv tal vestment are listed belo in Table 1 They repr ow 1. resent total c capital ex xpenditures of $4.0 billio from 2007 through 20 on 7 015. The det tails of those projects ar described in e re d A Appendix 1.
Table 1: Dominion Capital Expend 1 C diture Summa ary Projects s Bear Ga arden Chesterf field Environme ental Virginia City Altavista Conversion a Hopewe Conversion ell Southam mpton Conversion Bremo Conversion C Halifax Warren Ye of Construc ear ction Completion 2011 2011 2012 2013 2013 2013 2014 2014 2014 To Investment otal t ($ Million) $619.1 $278.1 $1,800.0 $56.7 $54.4 $54.7 $52.3 $33.2 $1,091.0 Perman nent Increment tal Emp ployment After C Completion 25 0 80 0 0 0 0 0 30

Total $4,039.5 135 Note: No additional sta are planned for Chesterfie Altavista, H o affs d eld, Hopewell, Sout thampton, Brem and Halifax mo x projects. Source: Dominion Virg ginia Power

C Chmura uses the IMPLAN s NPro® mode 1 to simulat the econo el te omic impact of these pro ojects, for bo the oth 2 co onstruction and ongoing operation phases. The direct, indire and induced impact in spendi and a g p ect, ts ing jo creation are estimated ob a d.

1

IMPLAN Prof fessional was created in th 1970s by th U.S. Fores Service a is widely used by econ s he he stry and nomists to es stimate the im mpact of spec events on regional eco cific n onomies. 2 Direct impact is defined as the primary economic act t s tivity generate by the pro ed oject under co onsideration. F capital For ex xpenditure pr rojects, this re efers to the total amount sp pent by Domin nion to constr ruct the projects, including its g sp pending on la abor, construc ction materials equipment, professionall services suc as enginee s, , ch ering and fina ancial se ervices. Indir rect impact is the secondar economic activity gener ry a rated by the p project via dem mand for prod ducts from su uppliers. An example of an indirect impa is a new power station facility purch e n act p hasing coal fro area mine or om es, ut tilizing truck companies to transport sup c pplies and ma aterials. The i nduced impact is economi activity gen ic nerated w when the work kers at the pow station an their suppl wer nd liers spend th earnings a consumers. When Dom heir as minion

2!

D During this pe eriod of 2007 7-2015, the economic im mpact (in 201 dollars) o the constr 10 of ruction activities as ssociated with these nin projects is estimated to be $3.3 b ne s t billion, suppo orting a total of 14,220 jo in obs V Virginia. Begi inning in 201 the total annual econ 15, nomic impac of the ongoing operations of the n ct nine projects is estimated to be $291.8 million (measu ured in 2015 dollars), su 5 upporting a to of 756 jo in otal obs V Virginia.

E Economic Impact of Dominion Capital Exp D C penditure o the Com on mmonwealth of Virgi inia
From 2007 to 2015, the to Dominio capital ex o otal on xpenditures iin nine proje ects are estim mated to be $4.0 billion. Based on data from Dominion 13.1% of the capital ex d n, xpenditures will be spen on soft cos nt sts—such as architectur engineering, and other professional services s re, s—38.7% will be spent o equipmen and on nt m materials, and the remain d ning 48.2% will be spent on construc w t cting the pla facilities. ant N every pro Not oduct and se ervice necessary for the construction of the pow generatin stations is n wer ng s av vailable in Virginia. Consequently, some of the capital expe V s c enditures for these nine p projects will be spent outside the st tate. Based on data from Dominion, 6.4% of cap m pital expenditures on equipment are e ex xpected to be spent with Virginia and 73.0% of constructio and soft c b hin a o on costs are ex xpected to be spent e w within Virginia This implie that $1.9 billion of the total $4.0 b a. es e billion in cap pital expenditures will be spent in e V Virginia. Table 2 details the estima ated econom impact of the Dominiion capital e mic f expenditures on the s C Commonwea of Virgini From 200 to 2015, it is estimate that the co alth ia. 07 ed onstruction a activities of t nine the projects will generate a to economic impact (in g otal ncluding dire indirect, and induced effects) of $3.3 ect, d billion (in 2010 dollars) 3 in Virginia, which can su w upport 14,22 0 jobs. Amo the total economic im ong mpacts, $1.9 billion will be direct spending by Dominion within the sta with dire jobs amo s w ate, ect ounting to 8,8 from 853 20 to 2015. The indirec impact in Virginia will total $523.5 million and support 1,7 jobs during the 007 ct V 5 753 co onstruction phase in industries serving construc p ction. The ind duced impac in the sta during th cts ate he co onstruction period are ex p xpected to be $882.6 million with 3, 614 jobs concentrated in consumer serviceb r re elated indust tries. On an annual aver rage basis fr rom 2007 to 2015, the to construc otal ction impacts of the s D Dominion cap pital expenditures will be $367.8 mill e lion that can support 1,5 Virginia jobs. n 580

hi ires more wor rkers, the incr reased house ehold income will benefit re etail, restaura ants, and doct tor’s offices in the n re egion where those employe live or wo ees ork. 3 Dominion pro ovided all futu investmen in 2010 dollars. As a resu economic impact figure in this repo are ure nt ult, c es ort ex xpressed in 2010 dollars. 2

3!

Table 2: Economic Impact of Do e c ominion Capit Expenditur on Virginia tal res a Year One-Time Construction Prior to 2010 2010 2011 2012 2013 2014 2015 Total (2007-2015) Annual Av verage Ongoing Operation O 2015 Onward Spending ($ Million) g Employm ment Note: Num mbers may not sum due to rou s unding Source: IM MPLAN Pro 200 Dominion, and Chmura 09, a $175.0 135 $78.7 449 $38.1 172 $ $291.8 756 Spending ($Million) g Employm ment Spending ($Million) g Employm ment Spending ($Million) g Employm ment Spending ($Million) g Employm ment Spending ($Million) g Employm ment Spending ($Million) g Employm ment Spending ($Million) g Employm ment Spending ($Million) g Employm ment Spending ($Million) g Employm ment $934.5 1,258 $271.0 3,128 $141.2 1,833 $270.2 1,095 $204.9 1,066 $73.6 467 $9.1 7 $1,904.5 8,853 $211.6 984 $254.5 346 $74.1 546 $38.7 318 $75.3 232 $57.6 217 $20.8 92 $2.5 3 $523.5 1,753 $58.2 195 $ $431.0 631 $ $125.1 1,188 $65.4 693 $ $126.1 465 $96.1 442 $34.6 190 $4.2 5 $ $882.6 3,614 $98.1 402 $1,620.0 2,234 $ $470.3 4,861 $ $245.3 2,843 $ $471.6 1,793 $ $358.6 1,725 $ $129.0 748 $15.9 15 $3 3,310.6 1 14,220 $ $367.8 1,580 Dir rect Ind direct Induced Total

The ongoing economic im mpacts of the Dominion capital expe e enditures are measured after the nin e ne projects listed in Table 1 are online in 2015. To simulate the economic im d n s mpact for ongoing opera ations, IM MPLAN sect 31 is chosen, corresp tor ponding to th North Am he merica Indust Classifica try ation System m (N NAICS) code 2211—electric power generation, transmission and distrib e g t n, bution.4 The total annual economic impacts (d direct, indire and indu ect, uced) of the o ongoing ope erations of th nine he D Dominion pro ojects are estimated to be $291.8 mi b illion (measu ured in 2015 dollars) which can supp 756 5 port to jobs in Virginia. This is the incremental impa on top of the econom impact ge otal V s act f mic enerated by the y

4

F biomass ge For eneration plant data from Dominion indica that these p ts, ate plants will use m more supplies f from Virginia fir rms than tra aditional fossil fuel plants. As a result, the IM MPLAN model multipliers wer modified to a re account for the increased utili e ization of Vi irginia supplier rs.

4!

ex xisting opera ations.5 In te erms of direc impact, the ongoing op ct e perations of the nine pro f ojects are es stimated 6 7 to have annual gross reve o enues of $175.0 million and employ 135 new p y permanent w workers. An ad dditional ind direct impact of $78.7 million and 449 jobs per ye will bene other Vir 9 ear efit rginia busine esses that su upport powe plant oper er rations. The number of jo created due to the induced impa amounts to 172, obs act s w associate spending of $38.1 million per yea with ed g ar.

5

F biomass co For onversion proje ects, such as Altavista, Hopew A well, and South hampton, the in ncremental imp pact is the total impact of l th biomass plan minus the total impact of the existing coa he nts t t al-firing plants. For new plant such as Virginia City, Bear Garden, . ts an Warren, the impact of the existing operat nd e tion is zero.
6

T direct spending repres The sents gross sales of the ge enerating stat tion estimated by the IMPL d LAN model ba ased on pr rojected employment. As a result, the $175.0 million includes spe ending on labo equipment depreciation fuel, and or, t n, ot ther inputs an profits. nd 7 S Source: Dominion Virginia Power.

5!

A Append 1: Descript dix tion of Project ts
D Dominion’s co onstruction program is designed to address critiical and ong p d a going deficiencies in Virg ginia’s electric gener ration resour rces. PJM Interconnect tion LLC, ope erator of the regional ele e ectric transm mission sy ystem, estim mates the we eather-norma alized load forecast in D f Dominion’s zone will incr rease by more than 4,500 megaw watts by 2021 Dominion’s forecasted annual ave 1. d erage growt in summer peak dema of 2.1 th and pe ercent is the highest in the 13-state area served by PJM. e t d A Additionally, Virginia impo from out of state mu of the el ectricity nee V orts uch eded to serve homes, e businesses, and other cu a ustomers in the Common t nwealth. Dur ring 2008, V Virginia imported a total o about of 32 million megawatt-ho 2.5 m ours of electr ricity from ou ut-of-state so ources, excluding power produced b r by D Dominion-ow wned units in other states according to data from the U.S. Energy Inform s, m mation Administration (E EIA). Virginia ranked sec a cond only to California in the amoun of power s n nt supplied by r resources in others n st tates, accord ding to EIA data. d D Dominion and other elect utilities also face incr d tric a reasingly str ringent feder air quality regulations ral y s, re equiring sign nificant inves stments to re educe emiss sions or conv to altern vert native fuel so ources. The nine projects analy yzed in this report are de esigned to meet the nee of growin demand and federal air m eds ng quality regula ations. B Bear Garden n Lo ocated in Bu uckingham County, this intermediate combined -cycle facilit will genera approxim C e, ty ate mately 58 megawat of electric once ope 80 tts city erational. Th natural ga he as-powered facility is es stimated to c cost approximately $619.1 mil y llion and will produce en nough electriicity to serve about 145, e ,000 homes. The . st tation began commercia operation in May 2011. n al i C Chesterfield Environme ental D Dominion is currently inst c talling a flue gas desulfu urization sys tem, commo only known a a scrubbe to as er, re educe emiss sions from Units 3, 4, and 5 at Chest terfield Powe Station in Chesterfield County. T er n The sc crubber is ex xpected to provide a 95% reduction in sulfur dio p % oxide (SO2) emissions a a reduction in and m mercury emis ssions. The scrubber is expected to enter servic in 2011. P s e ce Previously, th company installed he y a scrubber on the 693-me n egawatt Unit 6. Units 3- at Cheste t -6 erfield are po owered by co oal. V Virginia City Hybrid Ene y ergy Center r The Virginia City Hybrid Energy Cent (VCHEC) located in Wise Count will produ about 58 C E ter ), ty, uce 85 m megawatts of electricity once operatio f o onal. The ba load fac ility is expec ase cted to cost a about $1.8 b billion and w produce enough electricity to pow more tha 146,000 h will e wer an homes. Its p primary fuel s source will b coal. be S Secondary fu sources include waste coal and biomass. VH uel b HEC is expec cted to begin commercia n al operation in the summer of 2012.

6!

A Altavista, Ho opewell and Southamp d pton Biomas Convers ions ss D Dominion plans to convert three sma coal-fired units – the A all Altavista, Ho opewell and Southampto Power on S Stations – to biomass. Th overwhelm he ming majorit of the fuell used after t conversion will be w ty the wood w waste materia from the fo al orest produc industry. The three u cts units will hav a combine output of ve ed approximately 153 megaw y watts. The conversion is part of Dom c s minion’s effo to expand its use of renewable ort d re esources and will help meet the state’s voluntary goal of hav m y ving 15 perc cent of electr ricity supplie to ed cu ustomers produced by renewable so ources by 20 025. Compa studies a any also indicate wood waste will e e provide lower dispatch co for the three units tha coal. If th projects o r ost an he obtain regula atory approva the al, co onversions are expected to be comp a d pleted in 201 13. B Bremo The company plans to co y onvert its coa al-fired Brem Power St mo tation in Fluv vanna Count to natural gas, ty pe ending regulatory appro oval. The con nversion is part of the co p ompany’s eff forts to redu emission from its uce ns ex xisting gene erating fleet. The air perm issued fo the Virgini a City Hybrid Energy Ce mit or enter also re equires th Bremo’s fuel source be converte within two years of VC hat ed o CHEC’s com mmercial ope eration. The two units at Bremo curr t rently have a combined generating capacity of a c approximate 227 mega ely awatts. The re epowering is expected to be comple s o eted as early as 2014. Th conversio will reduc the compa y he on ce any’s emissions of sulfur dioxid nitrogen oxides and carbon dioxiide, while ma de, o c aintaining th Bremo sit as a he te ge eneration re esource. H Halifax D Dominion is planning a 4 megawatt solar develop p s pment in Ha lifax County This integrated solar a y. and ad dvanced ene ergy storage facility wou be the lar e uld rgest solar p project in Vir rginia. In Nov vember 2010, the H Halifax Count Industrial Development Authority received a $ million gr ty $5 rant from the Virginia Tobacco e lude the Uni C Commission in support of this Dominion project. Other partic f cipants in the project incl e iversity of V Virginia Cente for Electro er ochemical Science and Engineering and an adv S g vanced ener storage rgy m manufacturer Dominion expects to apply for Stat Corporati on Commiss r. e a te sion approva of the proj al ject in 20 012. W Warren Coun nty The company intends to develop an intermediate combined cycle gener y d i e, rating facility in Warren C y County. The natural gas-fired pow station is expected to generate m g wer s o more than 1,300 megaw watts of elect tricity. In D December 20 010, the Virg ginia Departm ment of Envi ironmental Q Quality appro oved an air p permit for the project. S Subject to the receipt of additional regulatory app e a provals, cons struction wo ould begin in 2012, with co ommercial operation exp o pected to be egin in late 2014. 2 P Possible Eco onomic Imp pact of Othe Projects er This study ev valuates the economic im mpact only fo projects th are eithe underway or committe to by or hat er ed D Dominion. It does not fore d ecast possib economic benefits fro other pro ble c om ojects that are under eva aluation but not comm mitted to by Dominion. D

7!

For example, the possible economic impacts of construction of a third nu e c uclear unit at the North A Anna P Power Station in Louisa County are not included in this study The comp n C n y. pany has obt tained an Ea Site arly P Permit (ESP) for the Nort Anna site from the U.S Nuclear R th S. Regulatory C Commission (NRC) and in e N November 20 filed an application with the NRC for a comb 007 a w C bined operat ting license ( (COL) for the third re eactor. Dominion, at this time, has not committed to building a third unit at North An s g t nna. In Nove ember 20 010, Domini announc its intention to slow the developm ion ced t ment of the p potential pro oject while co ontinuing to pursue the COL, along with engine o g eering and preliminary s ite developm p ment work. T company will The re eassess con nstruction prior to the exp pected issua ance of the C COL in 2013 3.

8!

Sign up to vote on this title
UsefulNot useful

Master Your Semester with Scribd & The New York Times

Special offer for students: Only $4.99/month.

Master Your Semester with a Special Offer from Scribd & The New York Times

Cancel anytime.