A subsidiary of Dominion Resources (D) recently submitted its long-term Integrated Resource Plan to the Virginia State Corporation Commission (VSCC). The plan primarily showcases the roadmap to cope with growing energy needs of the state over the next 15 years at the lowest possible cost.
Dominion plans to construct new generation facilities and launch various energy efficiency programs to support increasing energy demand. The company will require nearly 8,900 MW of additional electricity to meet the projected demand. Dominion targets around 7,900 MW from new generation facilities and around 950 MW from energy conservation.
Dominion plans a 640 MW combined-cycle gas facility in Warren County and a new 1,300 MW nuclear generating unit at the North Anna Power Station in Louisa. Moreover, it targets around 300 MW from renewable generation projects, including wind and biomass plants. Presently, the company has over 400 MW of renewable generation capacity in its portfolio.
On the energy conservation front, Dominion submitted 12 programs to the VSCC in July seeking regulatory approval. These programs will save around $1.2 billion over the 15-year period. The company is chalking out additional programs for deployment.
Virginia-based Dominion is a leading provider of electricity, natural gas and related services to customers in the energy-intensive Midwest, Mid-Atlantic and Northeast regions of the U.S. The company has the potential to drive bottom line growth in the near term on deregulated generation fleet benefits from higher realized energy and capacity prices.
However, the stock currently reflects a valuation commensurate with Dominion’s earnings growth profile, lower business risks after the sale of its E&P businesses and changes in the Virginia regulatory framework. Hence, we maintain our Neutral recommendation for the company.
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