Electric and natural gas supplier Dominion Resources Inc. (D) announced that its unit Dominion Virginia Power successfully converted Altavista Power Station from coal to renewable biomass as its fuel source. This power station resumed commercial operation last week, marking the first of three planned conversions of coal fueled units to renewable biomass.
In Apr 2011, Dominion received the approval to convert Altavista Power Station and two similar coal-fired stations in Hopewell and Southampton County to renewable biomass units. The company decided to invest $165 million for the conversion. The idea behind the conversion is simple – the reduction of green house gas emissions in the process of electricity generation. The other two units are expected to return to operations by the end of this year.
Dominion had acquired these coal fired units in 2001. Conversion of the 51 megawatt power stations will allow the company to supply greener power to 12,500 households. It will also help the company to meet Virginia's voluntary renewable energy goal of 15% by 2025.
Dominion Virginia Power has also taken initiatives under its Solar Purchase Program to assist customers to purchase, install and own solar generation system located on their property. The owner of the solar units will sell the electricity and the solar Renewable Energy Certificates (RECs) to Dominion at a premium rate of 15 cents per kilowatt-hour. The customers in turn have to purchase all of the electricity for their homes or businesses from the company on their current rate schedule.
The company continues to work on other growth projects, and has plans to invest $3 billion each year over the 2013 to 2017 period. In addition, Dominion is also working on its Cove Point liquefaction project. This project will facilitate import and export of LNG and put the company in an advantageous position, given the increasing usage of natural gas globally.
We expect second quarter earnings per share of the company to be 66 cents, which reflects year-over-year growth of 11.1%. The long-term earnings growth rate of Dominion is presently pegged at 5.89%.
Dominion Resources currently carries a Zacks Rank #3 (Hold). Other utilities like The AES Corporation (AES), DTE Energy Company (DTE) and Calpine Corp. (CPN) are performing well and currently have a Zacks Rank #2 (Buy).
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