COMMONWEALTH OF VIRGINIA AT RICHMOND, OCTOBER 19,2011

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1 COMMONEALTH OF VIRGINIA STATE CORPORATION COMMISSION AT RICHMOND, OCTOBER 19,2011 cc APPLICATION OF 7 0i 110 VIRGINIA ELECTRIC AND POER COMPANY CASE NO. PUE D/B/A DOMINION VIRGINIA POER For approval and certification of electric facilities : Hollymead 230 kv double circuit transmission line project FINAL ORDER On February 18, 201 1, Virginia Electric and Power Company d/b/a Dominion Virginia Power ("Dominion Virginia Power" or "Company") filed with the State Corporation Commission ("Commission") the Application of Virginia Electric and Power Company for Approval and Certification of Electric Facilities for the Hollymead 230 kv Double Circuit Transmission Line, Application No. 251 ("Application").' The Company proposes to replace its existing 230 kilovolts ("kv") Line #2054 radial single circuit transmission line tap ("Hollymead Tap line"), located entirely in Albemarle County, Virginia, with a double circuit 230 kv transmission line. The existing Hollymead Tap line runs a total of approximately 8.4 miles from the Line #2054 tap point at Cismont Junction to Rappahannock Electric Cooperative's Proffit Delivery Point and on to Dominion Virginia Power's existing Hollymead Substation, where it terminates. In addition to the proposed replacement of the Hollymead Tap line, the Company proposes to expand the existing Hollymead Substation in Albemarle County within the existing property lines and to add one 230 kv breaker and associated equipment (collectively, "Project"). According to Dominion Virginia Power, the Project is necessary to assure that reliable electric service will be provided to the customers served from the Company's Hollymead I Corrections and revisions to the Application and accompanying materials were filed by the Company on May 18, 201 1, May 31, 201 1, and June 13, See Ex. 2, 3, 4.

2 Substation and from Ra pahannock Electric Cooperative's Proffit 0 p Delivery Point consistent with mandatory North American Electric Reliability Corporation Reliability Standards for ca transmission facilities and the Company's planning criteria. 2 The Company initially estimated the cost of the Project as $40.7 million, based on the original proposal to use Aluminum Conductor Composite Reinforced conductors. 3 However, the estimated cost of the Project was lowered by $6.3 million, to $34.4 million, after the Company subsequently recommended using Aluminum Conductor Steel Reinforced conductors. 4 On March 17, 201 1, the Commission issued an Order for Notice and Hearing that, among other things, scheduled a public hearing to commence on July 14, ; established a procedural schedule for the filing of comments, notices of participation, and prepared testimony and exhibits ; and assigned a Hearing Examiner to conduct further proceedings and to issue a report. As noted in the Commission's Order for Notice and Hearing, the Commission's Staff ("Staff") requested the Department of Environmental Quality ("DEQ") to coordinate a review of the Project by state and local agencies and to file a report on the review. On May 18, 201 1, the DEQ filed its report ("DEQ Report"), which was admitted at the public hearing.' The DEQ Report contained the following recommendations with regard to the Project : 2 Ex. I at 1-2. Conduct an on-site delineation of all wetlands and streams within the [P]roject area with verification by the U.S. Army Corps of Engineers (Corps), using accepted methods and procedures, and follow DEQ's recommendations to avoid and minimize impacts to wetlands and streams (Environmental Iml2acts and Mitigation, item I (d), pages 9-10). 3 The initial estimate included $38.4 million for transmission and $2.3 million for substation work. Ex. I at 2. 4 This change affected only the estimate of transmission costs and did not affect the estimated cost for substation work. Ex. 2 ; Ex. 14 at 12. ' Ex. 12.

3 H Consider DEQ's recommendations, including reuse of CO vegetative waste in lieu of open burning, regarding air quality 40 protection (Environmental Iml2acts and Mitigation, item 4(f), page 14). Reduce solid waste at the source, reuse it and recycle it to the maximum extent practicable, and follow DEQ's recommendations to manage waste, as applicable (Environmental Impacts and Mitigation, item 5(e), page 15). Coordinate with [the Department of Conservation and Recreation] for updates to the Biotics Data System database if a significant amount of time passes before the [P]roject is implemented Environmental Impacts-and Mitigation, item 6(e), page 16). Coordinate with the Department of Game and Inland Fisheries regarding its recommendations for protected species and other wildlife (Environmental Impacts and Mitigation, item 7(c), pages 17-18). ork with the Department of Historic Resources and other appropriate parties regarding its recommendations to protect historic and archaeological resources, as applicable (LEnvironmental Impacts and Mitigation, item 9(d), pages 21 and 22). Coordinate with the Virginia Department of Transportation regarding its recommendations (Environmental Impacts and Mitigatio item I O(d), page 22). Coordinate with the Federal Aviation Administration (FAA) to ensure compliance with aviation regulations and with the Department of Aviation (DOAv) regarding its recommendations to ensure safety during construction at airports (Environmental Impacts and Mitigation, item I I (c), page 23). Coordinate with the Virginia Department of Health regarding its recommendations to protect water supplies, including implementation of best management practices Environmental Impacts and Mitigation, item 12(c), page 24). Follow the principles and practices of pollution prevention to the maximum extent practicable Environmental Impacts and Mitigation, item 13, page 24). OM 3

4 Limit the use of pesticides and herbicides to the extent practicable (Environmental Impacts and Mitigation, item 14, page 24) PA 00 Timely notices of participation were filed in this proceeding by Ronald L. Kerber ("Kerber"), G. David Phelps Hamar ("Hamar"), Leila Fiery Hamar, Marie B. LaRobardier, Scott H. Bolin, Raffaele Coscia, and Clara Coscia. 7 Nine (9) interested persons filed written comments, which raised concerns about the need for the new line ; environmental impacts ; route and structure selection ; use of overhead, rather than underground, construction ; and rate impact. The public hearing was convened on July 14, 201 1, before Hearing Examiner Michael D. Thomas. itnesses for the Company presented testimony and exhibits on the need for the Project, construction plans and process, and the impact of the project on the environment. The Staff offered testimony and exhibits on its review of the Project and concluded that the Company has reasonably demonstrated the need for networking the Hollymead Tap load to comply with the Company's reliability planning criteria. 8 The Staff testified about the criteria of the underground pilot program established by Chapter 799 of the 2008 Virginia Acts of Assembly ("HB 1319") and the unsuitability of the Project for this program. 9 Additionally, the Staff provided analysis on nine (9) alternatives to the Project.10 Finally, the Staff analyzed the height, costs, and right-of-way requirements associated with using different structure types for the segment of the line running from Cismont Junction to Proffit Delivery Point ("Cismont- 6 Id. at Respondents Leila Fiery Hamar, Marie B. LaRobardier, Scott H. Bolin, Raffaele Coscia, and Clara Coscia did not attend the hearing or otherwise participate in the formal proceeding. 8 Ex. 14 at Id. at '0 Id at , 33. 4

5 Proffit"), which traverses the Southwest Mountains Rural Historic District. The Staff s analysis focused on three structure types that would require the acquisition of no new right-of-way : (1) paired poles, as proposed by the Company ; (2) monopoles ; and (3) an H-frame design presented by the Staff." This comparison was illustrated by the Staff as folos :12 Double-circuit Double-circuit Double-circuit paired-pole monopole H-frame Av[erage] height (ft.) Project cost ($M) Incremental cost () Incr[emental] cost ($M/mile) Respondent Kerber presented testimony and exhibits on the aesthetic and historic value of the Southwest Mountains Rural Historic District where he lives and in which the Hollymead Tap line is located, his involvement in a citizen advisory group convened by the Company regarding the Project, and requirements that he recommends be placed on the Company if the Project is approved. Additionally, Respondent Kerber stated his preference for an alternative route and his concerns about the collocation of transmission lines. 13 Respondent Hamar presented testimony on recent projections of national load growth, which are lower than earlier national projections, the Southwest Mountains Rural Historic District in which he lives, and his concerns about the existing right-of-way. If the Project is approved, Respondent Hamar stated his preference for the paired-pole or H-frame design. 14 One public witness, Robert Marmet, testified at the hearing on behalf of the Piedmont Environmental Council ("Piedmont"). Piedmont testified that, while it prefers to advocate " Id at 20-23, Id. at 34 (option titles omitted). 13 Ex. 9 ; Tr Ex. 13 ; Tr

6 non-transmission alternatives wherever they are feasible, it is not in a position to dispute the Company's need analysis on the Project. Piedmont also testified about its participation in the 43 PA community advisory group on the Project and the importance of the Southwest Mountains Rural Historic District. Piedmont recommended adoption of the paired-pole or H-frame design and asserted that the incremental cost of adopting one of these two options, rather than the monopole design, is de minimis and justified by the location of the line. 15 On August 22, 201 1, the Hearing Examiner issued his report ("Hearing Examiner's Report"). The Hearing Examiner provided a summary of the evidence on the need for the Project, electric alternatives to the Project, alternative structure options for replacing the existing Hollymead Tap line with a double-circuit line, and the Project's environmental impacts. Following his analysis, the Hearing Examiner made the following findings : (1) The Company's load growth forecasts support the need for the proposed facilities ; (2) The proposed facilities meet the need for reliability at the Hollymead Substation and the Proffit [Delivery Point] ; (3) The Company's [demand-side management ("DSM")] programs will not eliminate the need for the proposed facilities ; (4) The proposed facilities have the least impact on the environment and adjoining landowners, and is the most cost-effective alternative to meet the Company's operational and reliability needs ; (5) The proposed facilities use existing rights-of-way to the maximum extent practicable ; (6) The proposed facilities are necessary for continued economic development in the area served by the Hollymead Substation and Proffit [Delivery Point] ; " Tr

7 P-t PA (7) The Staff s double circuit H-frame design (without cross-braces) a reasonably mitigates the Project's visual impact on the PA Southwest cc Mountains Rural Historic District ; (8) There are no adverse environmental impacts that would prevent the construction of the proposed facilities ; (9) The I I recommendations in the DEQ Report are desirable or necessary to minimize adverse environmental impact associated with the Project ; (10) The proposed facilities do not represent a hazard to human health, which finding is consistent with the Virginia Department of Health's report entitled Monitoring of Ongoing Research on the Health Effects of High Voltage Transmission Lines (Final Report) dated October 31, 2000 ; (11) There is no benefit to "reverse phasing" the Project's transmission lines ; (12) The proposed facilities do not represent a hazard to safe air navigation ; (13) The proposed facilities do not meet the criteria to be considered as an underground pilot project under HB 1319 ; (14) The Company's communications outreach program is adequate ; and (15) A certificate of public convenience and necessity should be issued for the Company to construct and operate the proposed facilities. 16 Based on his findings, the Hearing Examiner recommended that the Commission adopt the findings and issue a certificate of public convenience and necessity to the Company to construct and operate the proposed facilities. 17 The Hearing Examiner further recommended that the Commission : (1) approve the type of conductor proposed by the Company, rather than non-reflective conductors ; (2) require the Company to restore the right-of-way that crosses agricultural lands to its pre-construction condition, if requested by a landowner ; and (3) require the Company to provide the services of its forester to : (i) assist the landowner in delineating the 16 Hearing Examiner's Report at " Id. at

8 safe planting area for a visual buffer ; and (ii) provide the landowner with a landscape plan of Q PA 18 cc native trees and shrubs that may be safely planted next to an electric transmission right-of-way. (A In the only filed response to the Hearing Examiner's Report, the Company generally supported the Hearing Examiner's recommendations and findings but clarified that erosion and sediment control specifications may require temporary seeding with seed mix that best holds soil during construction. The Company further recommended that any Commission requirement for the Company's forester to provide services to landowners be clarified and limited to : (1) landowners whose property is actually crossed by the right-of-way for the Project and who request such assistance within six (6) months following the Project's in-service date ; and (2) the Company's forester assisting any such landowners in delineating safe planting areas and providing the Company's "Suggested Species Planting List."' 9 NO THE COMMISSION, upon consideration of this matter, is of the opinion and finds that Dominion Virginia Power's application to construct and operate the proposed double-circuit 230 kv transmission line in Albemarle County is justified by the public convenience and necessity, and a certificate of public convenience and necessity should be issued authorizing the construction and operation of the proposed Project, subject to the findings and conditions discussed below. Approval The statutory scheme governing the Company's application is found in several chapters of Title 56 of the Code of Virginia ("Code"). Section A of the Code provides that "[ilt shall be unlawful for any public utility to construct... facilities for use in public utility service, " Id. at 40. '9 Comments of Virginia Electric and Power Company on Hearing Examiner's Report, September 12, 201 1, at

9 without first having obtained a certificate from the Commission that the public convenience cc and necessity require the exercise of such right or privilege." (D Section of the Code further directs the Commission to consider several factors when reviewing the Company's application. Subsection A of the statute provides that : henever the Commission is required to approve the construction of any electrical utility facility, it shall give consideration to the effect of that facility on the environment and establish such conditions as may be desirable or necessary to minimize adverse environmental impact.... In every proceeding under this subsection, the Commission shall receive and give consideration to all reports that relate to the proposed facility by state agencies concerned with environmental protection ; and if requested by any county or municipality in which the facility is proposed to be built, to local comprehensive plans that have been adopted.... Additionally, the Commission (i) shall consider the effect of the proposed facility on economic development within the Commonwealth,..., and (ii) shall consider any improvements in service reliability that may result from the construction of such facility. Section B of the Code further provides that : "[a]s a condition to approval the Commission shall determine that the line is needed and that the corridor or route the line is to follow will reasonably minimize adverse impact on the scenic assets, historic districts and environment of the area concerned." The Code further requires the Commission to consider existing right-of-way easements when siting transmission lines. Section C of the Code provides that "[i]n any hearing the public service company shall provide adequate evidence that existing rights-of-way cannot adequately serve the needs of the company." In addition, C of the Code provides that "[plrior to acquiring any easement of right-of-way, public service corporations will consider the feasibility of locating such facilities on, over, or under existing easements of rights-of-way." 9

10 PA FA Finally, for inclusion of a project in the underground pilot program established by FIB 1319, the project must satisfy the following three criteria : Need (1) An engineering analysis demonstrates that it is technically feasible to place the proposed line, in whole or in part, underground ; (2) The estimated additional cost of placing the proposed line, in whole or in part, underground does not exceed 2.5 times the cost of placing the same line overhead, assuming accepted industry standards for undergrounding to ensure safety and reliability. If the public utility, the affected localities, and the State Corporation Commission agree, a proposed underground line whose cost exceeds 2.5 times the cost of placing the line overhead may also be accepted into the pilot program ; and (3) The governing body of each locality in which a portion of the proposed line will be placed underground indicates, by resolution, 20 general community support for the line to be placed underground. e agree with the Hearing Examiner and find that the Company's load growth forecasts support the need for the Project to ensure reliability at the Company's Hollymead Substation and at Rappahannock Electric Cooperative's Proffit Delivery Point. 21 No party or member of the Staff has disputed evidence in the record that peak demand on the Hollymead Tap line exceeded the Company's planning criteria for radial lines in 2009 and that peak demand on the line has increased at an annual rate of 5.5% over the period from 2001 to The Company's peak load forecasts presented in support of the Project are consistent with this historic trend and the undisputed addition of a large block load customer. 23 e agree with the Hearing Examiner that Va. Acts ch. 799, Enactment Clause 1, Hearing Examiner's Report at 31-33, Id. at ; Ex. 14 at Hearing Examiner's Report at 3 1 ; Ex. I at Appendix, Attachment I.B.3 and I.B.6. 10

11 the record does not support a finding that the Company's DSM programs, all of which are voluntary for customers, can eliminate the need for the Proj ect.24 M Economic Development and Service Reliability The evidence submitted in this proceeding supports the conclusion that the Project is necessary to serve load growth that includes a large block load of government office and data center facilities that is expected to increase significantly over the next few years. 25 Routing and Right-of-ay e agree with the Hearing Examiner that "[tlhe proposed facilities use existing rights-of-way to the maximw-n extent practicable. "26 The rebuilt Hollymead Tap line will be located entirely on existing right-of-way that has been occupied by the existing line for over twenty-five (25) years. 27 Additionally, the substation work associated with the Project will occur within the Company's existing property lines. 28 Thus, Dominion Virginia Power was not required, in accordance with C of the Code, to demonstrate that existing rights-of-way could not adequately serve its needs. For the reasons provided by the Hearing Examiner, we agree that the Project, compared to other electric and routing alternatives reviewed in this proceeding, has "the least impact on the environment and adjoining landowners, and is the most cost-effective alternative to meet the Company's operational and reliability needs." 29 2' Hearing Examiner's Report at Hearing Examiner's Report at 34 (citing Tr. Ex. at 115 ; Ex. 1, Appendix at 3 ; and Ex. 14). 26 Hearing, Examiner's Report at ' Ex. 22 at 2-3. " Ex. 7 at Hearing Examiner's Report at 33-34, 4 1.

12 ~A HB 1319 The Commission agrees with the Hearing Examiner that the Project does not meet the 00 M criteria necessary for consideration as a HB 1319 underground pilot project.30 Scenic Assets and Historic Districts As discussed above, the existing line has occupied the right-of-way for over twenty-five (25) years, and the rebuilt line will be located along the same route as the existing line and entirely in the existing right-of-way. Additionally, as we discuss below, the H-frame design recommended by the Hearing Examiner will reasonably minimize the impact to scenic assets and historic districts for the longest segment of the proposed line. Accordingly, adverse impact on scenic assets and historic districts in the region will be reasonably minimized consistent with B of the Code. The Company agreed with the Department of Historic Resources to continue its impact evaluation, including appropriate mitigation in accordance with the Guidelinesfor Assessing Impacts ofproposed Transmission Lines and Associated Facilities 31 on Hisioric Resources in the Commonwealth of Virginia (2008). e find that appropriate steps to protect historic and scenic assets have been taken. Environmental Impact Under A and B of the Code, the Commission is required to consider the proposed Project's impact on the environment and to establish such conditions as may be desirable or necessary to minimize adverse environmental impact. e agree with the Hearing Examiner and find that the H-frame (without cross-braces) design will reasonably minimize adverse environmental impact for construction of the Cismont-Proffit segment of the proposed 30 Id. at 39 (citing Ex. 14). " Ex. 22 at 8. 12

13 line. 32 As discussed by the Hearing Examiner, the H-frame design is materially shorter than the monopole design ; is less expensive than, but operationally equivalent to, the paired-pole design ; Q a PA ca is not opposed by the Company ; and reasonably protects the viewshed through the Southwest Mountains Rural Historic Distri Ct.33 Based on the specific facts of this case, the record supports conditioning our approval herein on construction with the H-frame (without cross-braces) design for the Cismont-Proffit segment of the Project.34 This finding is strictly limited to the facts of this case and, thus, does not serve as precedent for future transmission facilities proposed by Dominion Virginia Power or others. Section A of the Code further provides that the Commission shall receive and give consideration to all reports that relate to the proposed Project by state agencies concerned with environmental protection. As a requirement of our approval herein, the Company shall also comply with the recommendations from the DEQ Report, as recommended by the Hearing Examiner. 35 Finally, with respect to the additional conditions recommended by the Hearing Examiner regarding right-of-way restoration on agricultural lands and the provision of the Company's 32 For the other segments of the proposed line, we approve the structure types proposed by the Company. Additionally, we agree with the Hearing Examiner's finding that no benefit to "reverse phasing" has been demonstrated for this Project. Hearing Examiner's Report at 38 (citing Ex. 17). 33 Hearing Examiner's Report at e adopt the Hearing Examiner's finding that the additional cost of installing non-reflective conductors has not been justified. Hearing Examiner's Report at Although we agree with the Hearing Examiner that the record supports a finding that the Project does not represent a hazard to safe air navigation, we note that adoption of the DEQ Report recommendation that the Company coordinate with the Federal Aviation Administration will ensure compliance with any federal aviation regulations or guidelines applicable to the Project. Hearing Examiner's Report at

14 forestry services, we adopt those conditions subject to the clarifications and limitations cc 36 recommended by the Company and which we find to be reasonable. (A Accordingly, IT IS ORDERED THAT : (1) The Company is authorized to construct and operate the proposed 8.4 mile 230 kv double-circuit Hollymead Tap line on the route proposed in the Company's Application subject to the findings and conditions imposed herein. The Company is also authorized to expand its existing Hollymead Substation, as proposed in the Company's Application, and to operate the expanded substation. (2) Pursuant to , , and related provisions of Title 56 of the Code, the Company's Application for a certificate of public convenience and necessity to construct and operate the proposed double-circuit transmission line and associated substation work is granted as provided herein and subject to the requirements set forth in this Final Order. (3) Pursuant to the Utility Facilities Act, Chapter ( el seq.) of Title 56 of the Code, the Company is issued the following certificate of public convenience and necessity : Certificate No. ET-58k, which authorizes Virginia Electric and Power Company under the Utility Facilities Act to operate certificated transmission lines and facilities in Albemarle County, all as shown on the map attached to the certificate, and to construct and operate facilities as authorized in Case No. PUE , cancels Certificate No. ET-58j, issued to Virginia Electric and Power Company on September 27, 1984, in Case No. PUE (4) The Commission's Division of Energy Regulation shall forthwith provide the Company copies of the certificate issued in Ordering Paragraph (3) above with the detailed map attached. 36 Comments of Virginia Electric and Power Company on Hearing Examiner's Report, September 12,

15 I-A I-A (5) The transmission line and associated substation work approved herein must be constructed and operational by May 2014 provided, however, the Company is granted leave to apply for an extension for good cause shown. (6) As there is nothing further to come before the Commission, this matter is dismissed and the papers herein placed in the file for ended causes. ATTESTED COPY hereof shall be sent by the Clerk of the Commission to : Lisa S. Booth, Esquire, Senior Counsel, Dominion Resources Services, Inc., P. 0. Box 26532, Richmond, Virginia ; Stephen H. atts 11, Esquire, McGuireoods LLP, One James Center, 901 East Cary Street, Richmond, Virginia ; J. Randolph Parker, Esquire, Parker, McElwain & Jacobs, 2340 Commonwealth Drive, Charlottesville, Virginia ; Ronald L. Kerber, 3365 Stony Point Road, Charlottesville, Virginia ; Raffaele and Clara Coscia, 5045 Stony Point Pass, Keswick, Virginia ; Marie B. LaRobardier, 5284 Stony Point Pass, Keswick, Virginia ; G. David Phelps Hamar and Leila Fiery Hamar, 4025 Stony Point Pass, Keswick, Virginia ; and Scott H. Bolin, 3642 Stony Point Road, Charlottesville, Virginia ; and a copy shall be delivered to the Commission's Office of General Counsel and Division of Energy Regulation. 15