Dominion, American Electric Power update Virginia lawmakers on grid plan

01 July 04 - Virginia's two largest electric utilities hope to turn over their transmission wires to a regional operator by this fall, the companies told legislators.

A state legislative commission that oversees electric deregulation heard updates yesterday from Dominion Virginia Power and American Electric Power on their efforts to join the PJM Interconnection. Pennsylvania-based PJM operates the largest electricity grid and electricity market in the country.

Lawmakers did not hear from critics of utility plans to join PJM, although parts of those plans have been criticized by the State Corporation Commission staff and others.

Utility officials said Virginia stands to benefit from increased grid security and reliability and lower power costs by joining the regional company. A Virginia Power study concluded that joining PJM will save consumers $255m to $464m by the end of the state's capped electric rate period in 2011.

Lawmakers gave scant attention to Virginia Power's controversial plans to defer and collect from customers after the end of capped rates roughly $280m in PJM-related costs. Some critics feel such a deferral makes a mockery of capped rates. Virginia Power, on the other hand, has said consumers, who will benefit from the utility joining PJM, should bear the costs.

Sen. John C. Watkins, R-Powhatan, said he still has a problem with Virginia Power attempting to collect $40m in startup costs for joining a regional system but said the utility should get a chance to make a case before federal regulators for passing $40m in yearly PJM costs onto consumers.

The law requires the utilities to join a regional transmission system by Jan. 1.

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