Sep 16 - McClatchy-Tribune Business News Formerly Knight Ridder/Tribune Business News - Greg Edwards Richmond Times-Dispatch, Va.

A recommendation by a State Corporation Commission hearing examiner leaves the future of a proposed coal-fired power plant in Southwest Virginia in doubt.

Dominion Virginia Power requested assurances from the SCC that any investment in a plant would be protected before deciding to build it.

Hearing Examiner Deborah V. Ellenberg has recommended that the agency decline the utility's request.

The recommendation disappointed Dominion Virginia Power, spokesman David Botkins said. "This is an important project for the long-term energy supply needs of the commonwealth. We will review the ruling and consider our options."

Despite the ongoing deregulation of electric-power generation in Virginia, the company wants an allowance for a 12 percent return on the money it spends while building the plant, to be recovered after electric generation begins. It also wants a 2 percent premium, which would cover regulatory risks, added to the financial return on which power-distribution rates are based.

In an exception to electric deregulation, the 2004 General Assembly provided incentives -- including the recovery or construction costs and a fair rate of return on investment -- for any company willing to build a power plant in the state's coal-field counties that would burn Virginia coal. Dominion Virginia Power announced in May that it had joined with Appalachian Power and other potential partners to explore building a $1 billion plant near St. Paul in Wise County that would produce enough electricity for 150,000 homes.

The Virginia Committee for Fair Utility Rates, which represents large industrial power consumers, objected to the company's request for preliminary decisions regarding the proposed plant. Such determinations would violate the commission's rules and the state's electric-restructuring law, the industrial group said.

Ellenberg agreed that the restructuring law, which covers deregulation of power generation, does not provide for isolated preliminary decisions by the agency. The law instead requires a petition for approval to build a plant that includes the information needed to consider all issues that could arise, she said.