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Virginia Power Wins Dispute with IPP
Virginia Power emerged the winner in a lawsuit filed by an independent power producer (IPP), Doswell Limited Partnership, involving payments for wholesale electricity. The disputed payments total more than $100 million over a 25-year contract. Doswell owns a large nonutility power plant north of Richmond, VA, with a capacity of 726 megawatts, and sells electricity to Virginia Power. A portion of the IPP contract is based on a fixed
fuel-transportation charge for natural gas supplies. Virginia Power calculated its transportation payment to Doswell at 44 percent of the cost of pipeline and storage improvements needed to bring natural gas to Virginia Power's Chesterfield 7 power plant, as part of determining the utility's avoided cost. Doswell argued that the payment should have been based on 100 percent of the costs of the pipeline improvements at the Chesterfield site. Virginia Power asserted that only 44 percent of the gas was consumed at the Chesterfield facility by Virginia Power. "We thought the contract was unambiguous and clear, and the judge agreed," said Virginia Power spokesman Bill Byrd. A Doswell spokesman said the IPP was "very disappointed" with the judge's ruling. Doswell Limited Partnership includes Diamond Energy Inc., an affiliate of Mitsubishi Corp.; ESI Energy Co., a subsidiary of FPL Group Inc.; and North Anna Power Co.
Virginia Power faces a second lawsuit involving independent power contracts. LG&E Power, which operates the Roanoke Valley pulverized coal plant in North Carolina, contends that Virginia Power is improperly withholding capacity payments to the independent producer. Virginia Power argues that the contract gives the utility authority to withhold capacity payments whenever the plant cannot dispatch power as needed, such as for mechanical problems. A trial date has been set for October.
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