COMMONWEALTH OF VIRGINIA LRK,'S UNCE AT RICHMOND, SEPTEMBER 7,2012 TRUL CE.. P 112 : 51 APPLICATION OF FINAL ORDER

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1 COMMONWEALTH OF VIRGINIA STATE CORPORATION COMMISSION LRK,'S UNCE AT RICHMOND, SEPTEMBER 7,2012 TRUL CE.. P 112 : 51 APPLICATION OF VIRGINIA ELECTRIC AND POWER COMPANY For approval and certification of electric transmission facilities for the Lexington-Cloverdale 500 kv Transmission Line Rebuild pursuant to and et seq. of the Code of Virginia CASE NO. PUE LM FINAL ORDER On May 2, 2012, Virginia Electric and Power Company d/b/a Dominion Virginia Power ("Dominion Virginia Power" or "Company") filed with the State Corporation Commission ("Commission") an application for approval and certification of electric transmission facilities ("Application") under and et seq. of the Code of Virginia ("Code") to rebuild, entirely within existing rights-of-way, its 500 kv Lexington-Cloverdale Line #566 in Rockbridge County, which runs approximately 7.4 miles from the Company's Lexington Substation to a point of interconnection with a 500 kv transmission line owned by Appalachian Power Company ("APCo").' The Company further proposed to construct and install associated facilities at its Lexington Substation. 2 Construction of Line #566 began in the early 1960s and was completed in It is part of the first 500 kv transmission system built in North America. Dominion Virginia Power has proposed to remove Line #566's existing weathering steel lattice towers, which support the line's 500 kv conductors, and replace them with new galvanized steel lattice towers. The Company ' Application at2. From this point of interconnection, at APCo's Structure #11151, APCo's 500 kv line runs approximately 37.1 miles to APCo's Cloverdale Substation in Botetourt County. 2 id.

2 also wishes to replace the existing two kcmil bundled AAAC conductors with three triple-bundled kcmil ACSR 45/7 phase conductors. According to the Company, rebuilding Line #566 as proposed would increase the transfer capability of its portion of the line from 1810 MVA to 4325 MVA. Dominion Virginia Power also proposed to replace one existing 500kV breaker and install one additional 500 kv breaker and associated equipment within the existing substation fence at the Lexington Substation, in order to accommodate the termination of the rebuilt Line #566.3 The projected in-service date for the rebuilt line is May The estimated cost is approximately $17.0 million, of which approximately $14.1 million would be spent on transmission line construction and approximately $2.9 million would be spent on modifications at the Lexington Substation. 4 Dominion Virginia Power stated in its Application that these changes are necessary because power flow studies it conducted with PJM Interconnection, L.L.C., forecast that by Spring of 2014, during periods Of light system load, the loading on Line #566 will violate mandatory North American Electric Reliability Corporation ("NERC") Reliability Standards during certain contingencies and that the failure to address these projected NERC violations could lead to service interruptions and could potentially damage Dominion Virginia Power's electrical facilities in this area. 5 On May 30, 2012, the Commission entered an Order for Notice and Comment that, among other things, docketed the Application, established a procedural schedule, provided interested persons the opportunity to become a respondent, file written comments, or request a ' Id. at Id. at 4. 5 Id. at

3 hearing on the Application, and directed the Commission's Staff ("Staff") to investigate the Application and present its findings in a report ("Staff Report") As noted in the Commission's Order for Notice and Comment, the Staff requested that the Department of Environmental Quality ("DEQ") coordinate a review of the Company's proposed project by state and local agencies and file a report on the review. On July 19, 2012, DEQ filed its report ("DEQ Report") with the Clerk of the Commission. The DEQ Report offers ten general recommendations for the Conunission's consideration that are in addition to any requirements of federal, state, or local law. Specifically, the DEQ Report contains the following recommendations to Dominion Virginia Power regarding the Project. The Company should : Conduct an on-site delineation of all wetlands and stream crossings within the project area with verification by the U.S. Army Corps of Engineers, using accepted methods and procedures, and follow DEQ's recommendations to avoid and minimize impacts to wetlands and streams. Follow DEQ's recommendations regarding air quality protection, as applicable. 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. Coordinate with the Department of Conservation and Recreation ("DCR") regarding DCR's recommendations, as well as check for updates to the Biotics Data System database if a significant amount of time passes before the project is implemented. Coordinate with the DCR Karst Program regarding its recommendations to protect karst features. Coordinate with the Department of Game and Inland Fisheries regarding its recommendations for wildlife protection. Coordinate with the Department of Historic Resources regarding its recommendations to protect historic and archaeological resources. 3

4 Coordinate with the Department of Aviation regarding its recommendations. Follow the principles and practices of pollution prevention to the maximum extent practicable. Ln Limit the use of pesticides and herbicides to the extent practicable. 6 On August 7, 2012, Staff filed its Staff Report summarizing the results of its investigation of the Company's Application. Staff concluded that the Company reasonably demonstrated the need for the proposed rebuild of the 500 kv Lexington-Cloverdale Line #566 and for the 7 associated substation work. The Staff recommended that the Commission issue the necessary 8 certificate of public convenience and necessity for the proposed project. On August 14, 2012, Dominion Virginia Power filed comments ("Comments") with the Clerk of the Commission stating that it agrees with and supports the recommendations set forth in the Staff Report, including the Staff s findings and conclusions concerning the need for the project. The Company further noted in its Comments that two hearing requests were filed in the form of public comments in this proceeding. However, since the hearing requests were originally filed, one of the requests was retracted and it has been determined that the other request actually pertained to a different transmission facility. NOW THE COMMISSION, upon consideration of this matter, is of the opinion and finds that the public convenience and necessity require that the proposed Lexington-Cloverdale 500 kv transmission line be constructed and that the associated work at the Company's existing 6 DEQ Report at Staff Report at I I - 8 Id. 4

5 Lexington Substation be perfon-ned as proposed in the Company's Application. Further, the Commission finds that certificates of public convenience and necessity should be issued authorizing the project. LM Approval The statutory scheme governing the Company's Application is found in several chapters of Title 56 of the Code. Section A of the Code provides that "it shall be unlawful for any public utility to construct... facilities for use in public utility service... without first having obtained a certificate from the Commission that the public convenience and necessity require the exercise of such right or privilege." 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 : Whenever 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 (a) shall consider the effect of the proposed facility on economic development within the Commonwealth... and (b) 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." 5

6 The Code ftu-ther requires that the Commission consider existing right-of-way easements when siting transmission lines. Section C of the Code provides that "[fln 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 "[p]rior 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." Need and Service Reliabilily We find that the Company's load growth forecasts support the need for the project. The need for the project to resolve projected violations of NERC Standards has not been questioned. Thus, the uncontroverted evidence in this case indicates that the proposed rebuild is necessary to ensure that reliable service is maintained. We therefore find that the proposed rebuild of the Lexington-Cloverdale Line #566 will effectively meet the Company's long-term transmission reliability needs. Economic Development We find that the proposed project will promote economic development in the Commonwealth of Virginia by maintaining the operational reliability of the transmission line and, in turn, continuing to ensure the delivery of sufficient supplies of electrical power. As an added benefit, the project will increase the transmission capacity for west-to-east power flows, thereby further supporting economic development in the area. Routing and Right-of-Way The Company did not consider any routing alternatives for its proposed transmission line since, if approved, the line would be located entirely on existing rights-of-way. Thus, Dominion Virginia Power was not required, in accordance with C of the Code, to demonstrate 6

7 that existing rights-of-way could not adequately serve its needs. Similarly, C of the Code is inapplicable to this proceeding because the Company seeks no additional easements associated with the proposed project. Scenic Assets and Historic Districts We find that the proposed project will have a minimal impact on scenic assets and historic districts consistent with B of the Code. As is discussed previously, the proposed rebuilt line will be located in existing rights-of-way. Due to the fact that the proposed project vall be constructed along the same route as the existing line, adverse impacts on scenic assets and historic districts in the region will be minimized as required by B of the Code. 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 impacts. The statute 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. We find that there are no adverse environmental impacts that would prevent the construction or operation of the proposed project. The DEQ Report, as well as the DEQ Supplement prepared by the Company as part of its Application, supports a finding that the Company's proposed route reasonably minimizes adverse environmental impacts, provided that the Company complies with the DEQ recommendations.9 We therefore firid that, as a condition 9 The DEQ recommendations are listed above and are discussed in the DEQ Report. 7

8 to our approval herein, the Company must comply with all of DEQ's recommendations as provided in the DEQ Report. We ftirther find that the proposed project does not represent a hazard to human health or LM safety. There is no evidence in this case that the project represents a public health or safety hazard. Accordingly, IT IS ORDERED THAT : (1) The Company is authorized to construct and operate the proposed Lexington-Cloverdale 500 kv transmission line, which runs approximately 7.4 miles from the Company's Lexington Substation to a point of interconnection with a 500 kv transmission line owned by APCo, on the route proposed in the Company's Application, subject to the findings and conditions imposed herein. The Company also is authorized to perform necessary construction and installations at the Lexington Substation as set forth in the Company's Application. (2) Pursuant to , , and related provisions of Title 56 of the Code, the Company's request for a certificate of public convenience and necessity to construct and operate the proposed Lexington-Cloverdale 500 kv transmission line and to perform necessary construction work at the Lexington Substation is granted as provided for herein, subject to the requirements set forth in this Final Order. (3) Pursuant to the Utility Facilities Act,'o the Company is issued the following certificates of public convenience and necessity : Certificate No. ET- I 07i, which authorizes Virginia Electric and Power Company under the Utility Facilities Act to operate certificated transmission lines and facilities in Rockbridge County, all as shown on the map attached to the certificate, and to construct 10 Va. Code Ann et seq. (Supp ).

9 and operate facilities as authorized in Case No. PUE , cancels Certificate No. ET- 1 07h, issued to Virginia Electric and Power Company. (4) The Commission's Division of Energy Regulation forthwith shall provide the Company copies of the certificates issued in Ordering Paragraph (3) with the detailed map attached. (5) The transmission line and associated substation work approved herein must be constructed and in service by May 1, 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 filed herein shall be placed in the file for ended causes. AN ATTESTED COPY hereof shall be sent by the Clerk of the Commission to : Lisa S. Booth, Esquire, and Charlotte P. McAfee, Esquire, Dominion Resources Services, Inc., 120 Tredegar Street, Richmond, Virginia, ; Stephen H. Watts, 11, Esquire, McGuireWoods LLP, One James Center, 901 East Cary Street, Richmond, Virginia ; and C. Meade Browder, Jr., Esquire, Division of Consumer Counsel, Office of Attorney General, 900 East Main Street, Second Floor, Richmond, Virginia ; and a copy shall be delivered to the Commission's office of General Counsel and Division of Energy Regulation. 9