Dominion offers details on Salem Harbor plant closure

Dominion said it will cease operating two of the four units at Salem Harbor Power Station by the end of 2011 and plans to retire all four units on June 1, 2014. It said pending environmental regulations and market conditions are making the power station uneconomical to operate.

Company officials today told ISO-New England, the independent system operator for the region's electric grid, that it will not seek to negotiate an agreement that could keep the station operating beyond existing commitments.

"This was a decision we had to make given the significant costs required to keep the station in compliance with pending environmental regulations and the falling margins for coal stations selling electricity in New England," said David A. Christian, chief executive officer of Dominion Generation.

Dominion has operated Salem Harbor ssince it purchased the power station in 2005.

Dominion said in 2010 that it would not invest the funds needed to comply with new environmental regulations that would go into effect in 2014 and beyond. The company said it would have been required to spend millions of dollars on new controls at the power station to comply with new regulations from the U.S. Environmental Protection Agency.

Dominion said last fall it submitted a permanent "delist bid" for all four Salem Harbor units in the ISO-New England's Forward Capacity Auction 5, covering June 1, 2014 to May 31, 2015. ISO-New England rejected that bid and offered a mitigated price that did not guarantee full cost recovery of the environmental controls. In response, the company submitted a non-price retirement bid for all four units in February. On May 10, the ISO told Dominion it had accepted those bids for Units 1 and 2. It rejected the non-price retirement bids for Units 3 and 4 because they were needed for system reliability during the FCA5 commitment period. ISO New England proposed transmission upgrades that would allow Units 3 and 4 to retire. That proposal would need state regulatory approval.

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