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EPSA, VIPP and VEPA Urge Commission to Uphold Competitive
Bidding for Power Procurement in Virginia to Protect Consumers

Richmond, Va. - A coalition of owners, operators, marketers and developers of competitive electric power plants last week urged the Virginia State Corporation Commission to block Virginia Power's attempt to unilaterally abandon its competitive bidding program for new electric power generating supplies. In testimony filed with the Commission Thursday, January 15, the Competitive Bidding Group urged regulators to uphold the existing Virginia statutory requirement for competitive procurement policy and reject the effort by Dominion subsidiary Virginia Power to undermine wholesale competition in Virginia. Competitive procurement is a process that allows competitive electricity suppliers to bid on an equal basis with the utility's power plants to supply electricity to serve ratepayers. The Commission has scheduled a hearing for February 25, 2009, to consider this matter.


John E. Shelk, president and CEO of the Electric Power Supply Association, a member of the Competitive Bidding Group coalition, said, "Virginia Power's disregard for the interests of consumers in seeking to end the competitive bidding process would unjustly deprive customers of the right to be assured they are getting the best possible deal on their power supplies. Residential rates in Virginia are already up almost 20 percent in the past year. What would be best for Virginians is a rigorous, open, transparent, fair process that considers all suppliers and the cost discipline, performance track records and innovations they bring to benefit consumers and the environment." Shelk said that the Federal Energy Regulatory Commission and the National Association of Regulatory Utility Commissioners have formed a collaborative that produced a report in 2008 that outlines best practices for competitive procurement and examines its implementation in numerous states, "Competitive Procurement of Retail Electricity Supply: Recent Trends in States Policies and Utility Practices."


David Svanda, an expert witness for the Competitive Bidding Group and former President and Chairman of NARUC, testified that, "Competitive procurement is the standard by which acquisitions are made in the public interest by local, state and national governments." Svanda said Virginia Power "should not be allowed to sacrifice time-tested and publicly-trusted methods of competitive energy procurement." "Despite the Company's efforts to undo the current competitive energy procurement system, there is nothing major broken that needs to be fixed. It is not clear to me why the Company [Dominion/Virginia Power] or anyone else for that matter would wish to alter a system and market that has delivered such tangible benefits to Virginia consumers. Killing an active, well established wholesale power market in the state cannot be justified on public policy or public interest grounds. Neither can it be justified on economic or environmental efficiency grounds. It does harm to customers in all classes."

Also testifying on behalf of the Competitive Bidding Group, R. Peter Lalor, a power industry expert and consultant, stressed that the outcome of this proceeding will determine how efficiently and cost-effectively future power supplies will be procured on behalf of the citizens of the Commonwealth of Virginia. Lalor cited Virginia Power's estimated need for 1,900 Megawatts (MW) of new capacity in its regulated markets over the next 5 years and 4,000 MW over the next 10 years, with estimates for capital expenditures for new generation from 2008 - 2010 over $3.4 billion and more than $12.3 billion in the next 10 years. "The members of the Competitive Bidding Group strongly believe that these resources should be procured in the most economical and efficient manner on behalf of electricity consumers," the group stated. These assurances can only be provided through competitive procurement.


In its testimony, the Competitive Bidding Group pointed out that Virginia Power is subject to a statutory requirement to use competitive bidding for its wholesale power purchases and that requirement is binding on Virginia Power for all future capacity and energy resource decisions.


The Competitive Bidding Group is an ad hoc coalition of three trade associations that represent the interests of non-utility owners, operators, marketers and developers of generation resources located in the Commonwealth of Virginia, the surrounding region, and elsewhere around the Nation: the Virginia Independent Power Producers, Inc., the Virginia Energy Providers Association and the Electric Power Supply Association.


-EPSA-


EPSA is the national trade association representing competitive power suppliers, including generators and marketers. These suppliers, who account for nearly 40 percent of the installed generating capacity in the United States, provide reliable and competitively priced electricity from environmentally responsible facilities. EPSA seeks to bring the benefits of competition to all power customers.

CONTACT: JOHN SHELK
(202) 349-0154or 703-472-8660

EPSA is the national trade association representing competitive power suppliers, including generators and marketers. These suppliers, who account for nearly 40 percent of the installed generating capacity in the United States, provide reliable and competitively priced electricity from environmentally responsible facilities serving global power markets. EPSA seeks to bring the benefits of competition to all power customers.