By Rich Heidorn Jr.
New customer connections in the first six months jumped 7% over 2016, and the company connected five new data centers between April and June, company officials said in their second-quarter earnings call Wednesday.
CEO Thomas Farrell said an anticipated increase in federal defense spending under the Trump administration would “provide strong support for the Virginia economy, which is the largest recipient of defense dollars in the nation.”
“All of these factors support our expectation that annual electric sales growth of at least 1% will continue,” Farrell added.
The company reported second-quarter earnings of $390 million ($0.62/share), a drop from last year’s $452 million ($0.73/share). Operating earnings for the quarter were $421 million ($0.67/share) versus $441 million ($0.71/share) for 2016. The main difference between reported and operating earnings were costs related to Dominion’s acquisition of Questar.
Operating revenue was $2.81 billion, up 8% from almost $2.6 billion a year earlier. The company is predicting earnings growth of at least 10% in 2018.
Transmission spending will contribute to that growth. Dominion added $327 million in transmission assets in the first half of the year, and the company plans to invest $800 million in transmission annually for at least the next decade.
Extensions for Va. Nukes, Subsidy for Millstone Sought
Farrell said company officials are “working very hard” to win financial support from Connecticut lawmakers for its Millstone nuclear plant. He did not respond to an analyst’s question on whether the company would share Millstone’s financials to rebut criticism that the plant is already profitable and doesn’t need assistance.
However, he said the company will participate in the study ordered by Gov. Dannel Malloy last month. The state’s Department of Energy and Environment and Public Utilities Regulatory Authority are to report to the legislature on the plant’s financials in January 2018. (See CT Gov Orders Financial Analysis of Millstone Plant.)
Paul D. Koonce, CEO of Dominion’s Power Generation Group, said that the timing of legislative action depends on the resolution of the Connecticut budget, which he hopes lawmakers will complete by Labor Day.
Meanwhile, the company has begun the process for winning license extensions for its North Anna and Surry nuclear plants in Virginia. Officials said state legislation will allow the company to recover through a rate rider the costs of extending the plants’ lives, which could be as much as $4 billion.
Company officials also provided updates on several projects:
- Farrell reiterated the company’s plans to add as much as 2,000 MW of offshore wind if two test offshore wind turbines planned for 26 miles off Virginia Beach “demonstrate that they work well in these waters and produce the kind of capacity that we expect.” (See Dominion Plans 12-MW Offshore Wind Project, 2nd in US.)
- The Cove Point Liquefaction Project is 95% complete, on target for the beginning of commercial service later this year.
- Construction of the Atlantic Coast Pipeline project should begin in November, assuming FERC restores its quorum by the end of September. “There’s certainly some vocal opposition in some isolated localities, but overall, folks in Virginia support the pipeline as they do in West Virginia [and] North Carolina, and we expect to get all the necessary permits later this fall,” Farrell said. Dominion won’t discuss potential expansion of the pipeline until it has the FERC permit in hand, he said.
- The 1,588-MW Greensville County combined cycle plant is almost half complete and is on time and on budget with commercial operations expected late 2018.
- The company said it expects to select sites later this year for one or more pumped-storage facilities in Southwest Virginia. The General Assembly approved recovery of the facilities’ costs through a rider.
The company said data centers, military installations and the state government are driving demand for renewables. Three facilities totaling 119 MW went into commercial operation in the second quarter. In total, the company expects to add 438 MW of solar this year and another 200 MW by the end of 2018, bringing its total to 1,800 MW. The company’s integrated resource plan calls for up to 5,000 MW of solar by 2032.
“Solar uses a lot of land, and that’s beginning to become obvious to people as maybe not quite as obvious to folks in the West, where vacant land is abundant,” Farrell said. “So we’re exploring all of our options to meet our customers’ demands for decades to come. That’s part of why we’re looking at the relicensing of North Anna and Surry as well, and pump storage in the Virginia mountains.”
On Thursday, the company announced it has acquired two 5-MW solar facilities and plans to purchase two other solar farms totaling 10 MW later in the third quarter from Strata Solar, of Chapel Hill, N.C.
[Editor’s note: Quotes from the earnings call are according to a transcript by Seeking Alpha.]