Earnings almost triple for Millstone owner

Dominion on Thursday reported strong first-quarter earnings, and company officials said the energy company is poised for growth - including its electricity-producing plants.

Those plants include the Waterford-based Millstone Power Station, which has two operating nuclear reactors and could have shut down under a proposed new legislative tax that would have cost it more than $332 million. But the power station can manage under Gov. Dannel P. Malloy's "more reasonable" tax proposal, said Thomas F. Farrell II, chairman, president and chief executive officer.

The Unit 2 reactor is closed for refueling.

"Dominion is off to a very good start in 2011," said Farrell.

Improved safety, plus financial performance that he said "delivered results that met or exceeded expectations" could lead to annual earnings growth of 5 percent to 6 percent beginning in 2012, according to a slide accompanying the earnings presentation.

Net income during the first quarter was $479 million, or 82 cents per share, compared with $174 million, or 29 cents per share, for the same quarter a year ago, said Mark McGettrick, executive vice president and chief financial officer.

Operating earnings were $541 million, or 93 cents per share, down from $576 million, or 96 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 principal source of income for Dominion's unregulated "merchant generation" group comes from the company's New England energy plants such as Millstone, as well as coal plants, said Dominion officials.

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 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 manage Malloy's tax, which the governor recommitted to Wednesday over new variations proposed by fellow Democrats. An earlier plan - now dead -by Democrats leading the legislature's Energy & Technology Committee 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 see an "uplift" in New England power prices, they said they will sell the Kewaunee nuclear 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."

p.daddona@theday.com

By the numbers

$479 million
Dominion's 1st quarter profits, 2011

$174 million
Dominion's 1st quarter profits, 2010

82 cents
Dominion's per-share profits, 2011

29 cents
Dominion's per-share profits, 2011

Source: Dominion, Richmond, Va.

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