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Town, Dominion discuss utilities for proposed plant

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Timothy W. Darr

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By Ben Orcutt - borcutt@nvdaily.com

FRONT ROYAL -- The town and Dominion Resources are in the process of negotiating a water and sewer rate agreement for a proposed gas-fired power plant on Kelley Drive.

On Monday, the Town Council postponed action on a potential rate structure that would have had Dominion paying an in-town water and sewer rate for the first five years, 11⁄2 times the in-town rate for the next five years and then double the in-town rate thereafter.
The panel postponed action on the water and sewer agreement until March 14.

"I do think the town is trying to work with Dominion in every way possible to try to make this happen," Mayor Timothy W. Darr said during Monday's meeting. "I mean it is going to be good for the town of Front Royal. It'll be good for the citizens of Warren County and it's going to be good as a whole for the business industry, which we promote here in the community.

"But, with that also being said, the water system of the town of Front Royal, it doesn't belong to this council. It belongs to the citizens of this community and we have to be very cautious as to how we delegate that and work with that. And we do need more time to discuss this."

Darr said town staff is trying to work with Dominion on a fair and equitable solution.
"We are absolutely trying to do the best we can for everybody involved," Darr said. "We understand the economic impacts of things, but we also understand the long-term projections and the impacts it may possibly have to the citizens who are the citizens of the town of Front Royal."

Interim Town Manager Steven M. Burke said Tuesday that Dominion has put in a request for a utility agreement.

"The town has reviewed that request and has forwarded through Dominion to Warren County a request for the county to help offset some of the lost revenue that the town would realize by agreeing to a rate agreement with Dominion," Burke said. "There's been two rate proposals presented. The first would be five years at the in-town rate and then five years at one and half times the in-town rate with Dominion providing connection fees as well as system improvements that were identified by an analysis of the town's utility system and Dominion's demand effect on that.

"The second proposal would be 10 years at the in-town rate with Dominion paying the connection fees, system improvements and a contribution towards a water system loop."
James E. Eck, vice president for generation business development for Dominion, told the Town Council on Monday that when Dominion factored in the first proposal of five years at the in-town rate and the next five years at one and a half times the in-town rate, it was using old water and sewer rate numbers.

As of Feb. 1, the new base rate for water increased 3 percent while the sewer charge jumped by 29 percent.

With the new rates in effect, Eck said Dominion would now prefer to pay the in-town water and sewer rate for the first 10 years of the power plant's operation and also contribute up to $3.5 million to a water looping system.

"There could be different ways that it could be reconciled [appropriately] and we hope that it can be reconciled to our mutual satisfaction," Eck said. "That's what we really want to work through."

Burke said Dominion has anticipated having the power plant on line by 2015.

Eck said that construction should take from 30 to 36 months to complete with 600 to 800 jobs expected during that phase. Once the plant is on-line, it would employ about 45 people, Eck said.

The capital outlay for the project is anticipated to be in excess of $1 billion, Eck said.
"We really do want to find a reasonable solution to the situation," Eck said. "Thank you for your consideration."

Jennifer McDonald, executive director of the Front Royal-Warren County Economic Development Authority, implored the Town Council to reach an agreement with Dominion.

"If you can't make a deal with them you get zero dollars," McDonald said. "So you're giving up 40 years of water and sewer fees from this company. You're also giving up a billion dollars worth of capital outlay from this company."

McDonald also said that she believes that the community could supply the majority of skilled labor necessary to build the power plant.

"The six to eight hundred jobs for three years, that is huge to this community and I just think we need to remember that," McDonald said.

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