Boston (Platts)--24Mar2008

Five environmental groups opposed to Dominion Virginia Power's plan to
build a 585-MW coal plant in Wise County, Virginia, are arguing that the 2004
state law encouraging the project's development is unconstitutional because it
discriminates against out-of-state coal providers.

The Southern Environmental Law Center, Appalachian Voices, the Chesapeake
Climate Action Network, the Sierra Club, and Southern Appalachian Mountain
Stewards said in a Friday filing with the State Corporation Commission that
the 2004 law -- enacted to encourage the development of a coal plant in
southwestern Virginia that would burn Virginia coal -- violates the US
Constitution's Commerce Clause and is anti-competitive.

The law encourages plant construction by granting the utility a
rate-of-return bonus of up to 200 basis points. Dominion recently agreed with
the SCC staff and the state attorney general's office that the utility would
only seek a 100-basis-point bonus because its project would not be
"carbon-capture ready."

Dominion spokesman Dan Genest said the utility's attorneys have closely
examined the 2004 law and have found no constitutionality problems.