Dominion reports positive earnings growth in 1st quarter

Dominion of Virginia posted strong earnings in the first quarter, top executives said in a morning conference call, and is poised for growth, including at its round-the-clock electricity-producing plants in New England.

Those plants include the Waterford-based Millstone Power Station, which has two operating nuclear reactors and which owners feared could have shut down under a proposed new tax. However, Thomas F. Farrell II, chairman, president and chief executive officer of Dominion, said the company can manage Connecticut Gov. Dannel P. Malloy's "more reasonable" plan.

"Dominion is off to a very good start in 2011," Farrell said. He touted improved safety performance and financial performance that "delivered results that met or exceeded expectations."

During the first quarter, Dominion posted operating earnings of 93 cents per share. In the second quarter, those earnings could be in the range of 50 to 60 cents a share, down slightly from 72 cents a share in 2010, said Mark McGettrick, executive vice president and chief financial officer.

Net income this quarter was $479 million, or 82 cents per share, up when compared with $174 million, or 29 cents per share, for the same quarter a year ago.

The next several years, 2013 through 2015, show "an encouraging trend" in the power market, he said. The company continues to expect annual earnings growth of 5 to 6 percent beginning in 2012, according to a slide accompanying the presentation.

The principal source of income for unregulated merchant generation comes from the company's New England baseload plants like Millstone, as well as coal, they said.

Malloy's proposed tax on electricity produced by Millstone, at $2.50 a megawatt hour, would result in after-tax costs to the company of $24 million, said Farrell. The company has estimated pre-tax costs at $40 million.

Farrell said Dominion can accommodate Malloy's tax, which the governor recommitted to Wednesday over new variations proposed by fellow Democrats. An earlier plan by Democrats leading the legislature's Energy & Technology Committee, now dead, would have taxed Millstone more than $332 million a year.

Malloy's two-year tax proposal ends in 2013.

Even as Farrell and McGittrick said they are seeing an "uplift" in New England power prices, they said they will sell the Kewaunee reactor in Wisconsin, because Dominion was not able to purchase similar plants in the Midwest.

"While we were correct in believing other plants would become available we were unsuccessful in winning the auctions for those plants," said Farrell. "Without other units, the strategic rationale to own Kewaunee is diminished and we believe it is time to pursue a sale."

Dominion's nuclear fleet, which includes two reactors at Millstone, one at Kewaunee and four at Surry and North Anna in Virginia, operated at a net capacity of 99.3 percent, meaning they operated at maximum output 99 percent of the time, excluding refueling outages, Farrell added.

 

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