Under the terms of its agreements with PJM, Dominion would continue to protect its “native load” customers by not curtailing service to support capacity deficiencies elsewhere within PJM. Integration with PJM will open the doors to approximately 170,000 mW, ensuring that the reserve needs of customers are met into the future. Additionally, an independent consultant estimated that Dominion’s customers in Virginia would save nearly US$500 million by the company joining PJM.
“Dominion’s participation in PJM ultimately will give our electric customers, both wholesale and retail, broader opportunities in selecting a supplier,” said Thos. E. Capps, president, chairman and chief executive officer. “This structure will foster wholesale and retail competition by providing public utilities, independent power producers, competitive retail suppliers, and electric cooperatives greater access to the transmission grid. At the same time, by combining to form a larger, independently operated grid with expanded resources, reliability will be improved throughout Dominion’s service area.”
Dominion made its filing with the Virginia State Corporation Commission in accordance with Virginia law. The law requires transmission-owning utilities in Virginia to join regional transmission organizations no later than Jan. 1, 2005, subject to approval by the Commission. Dominion anticipates integrating its transmission assets into PJM by Nov. 1, 2004.
Dominion will retain ownership of its 6,100-miles transmission system, which will be integrated with the bulk electric power system throughout major portions of five Mid-Atlantic States and the District of Columbia and operated by PJM. Dominion’s electric service area will be administered as a separate zone, PJM-South, much as transmission service to Allegheny Power’s customers in northwestern Virginia is provided by PJM-West.
PJM is a non-stock company with roots going back almost seven decades. It has operated an interstate wholesale electricity market since 1993.
“The PJM-South structure contains safeguards to ensure that Virginia’s electricity needs are met reliably,” Capps said.
Additionally, Dominion’s participation in PJM will:
- Ensure the Continuation of Native Load Protection
Dominion’s electric customers (often referred to as “native load” customers) will continue to receive the same transmission service they receive today, but over a broader footprint, thereby enhancing the reliability of service. In the event of a regional capacity shortage, Dominion will not be required to reduce power to its customers in order to provide electricity to users in other states in the PJM system.
- Lead to Customer Savings
The cost-benefit analysis, performed by Charles River Associates of Boston that is included in Dominion’s application, concludes that Dominion’s participation in PJM will result in estimated savings of as much as US$477 million over a 10-year period to Virginia retail customers. These are savings in addition to the estimated US$871 million identified by Chmura Economics & Analytics of Richmond last year that Dominion’s customers will realize during the transition to full retail competition.
- Enhance Reliability
PJM’s broader region means increased generation resources to meet unexpected shifts in demand or supply leading to a higher degree of reliability. At the same time, local oversight will continue. Dominion’s System Operations Center — where the company monitors the flow of electricity along its transmission system — will continue to operate. Dominion’s local experts will work in conjunction with PJM’s central dispatching offices in Valley Forge, Pennsylvania, U.S.
- Improve Resource Adequacy
Dominion will continue to ensure it has a secure source of adequate reserves for its franchise electric customers in Virginia and its reserve margin will remain at the same level it stands today. Each utility or service provider in PJM must maintain an appropriate reserve level and any utility or service provider failing to maintain this level will be subject to significant penalties. This region-wide discipline will ensure there are adequate reserves today and well into the future.
- Assist in Promoting Competition, Customer Choice
Dominion and Virginia’s participation in PJM is necessary to promote competition and customer choice at the retail level. Regional transmission entities enhance wholesale competition and lay the foundation for effective customer choice at the retail level.