September 14, 2006

RICHMOND, Va. – Thomas F. Farrell II, president and chief executive officer of Dominion (NYSE: D), said Thursday that the United States could be headed for an "energy train wreck" unless a realistic, balanced energy policy is created soon.

"Changing America’s notions about energy will take a huge commitment of time, money and cooperation among government, industry and the educational community. It could take decades to accomplish," Farrell told the World Affairs Council of Richmond. Dominion, one of the nation’s largest energy companies, is headquartered in Richmond.

"Obviously, we do not have that kind of time. We need realistic, balanced public policy now if we want to prevent an energy ‘train wreck’ from occurring."

Farrell, who became CEO of Dominion in January, said that because of the long lead time required to build new power stations and gas and electric transmission systems, steps need to be taken today. Otherwise, national employment, tax revenues, income growth, energy reliability, national security and global competitiveness could suffer.

"Diversification is the linchpin. We must utilize all of our energy sources — coal, nuclear, oil, gas, hydro, and renewable sources — together with more conservation and energy efficiency. We do not have the luxury of limiting ourselves to a few sources of energy and excluding others," said Farrell.

"Industry is ready and able to do its part in providing the energy our country needs. Government’s job is to provide reasonable, predictable regulations, financial incentives to stimulate investment, and laws that reflect the realities of today’s energy world — not yesterday’s."

Farrell also applauded the Virginia General Assembly for its passage of a comprehensive and forward-looking energy bill earlier this year that could serve as model legislation for federal lawmakers.

Educators and consumers must join the fray as well, he said, teaching and learning where energy comes from, how much it costs, how it is used, and how it affects the economy, the environment and national security. Common myths about who controls energy production and how — or even if — energy independence can be achieved must be replaced with facts and intelligent discussion that leads to concrete action.

Meanwhile, he decried the "Achilles heel" of American’s energy dilemma — current U.S. energy policy that restricts development of the nation’s domestic oil and gas resource base, including the Atlantic and Pacific outer continental shelves and federal lands in Alaska and the Rocky Mountain Basin.

"The value we Americans place in self-sufficiency is oddly absent when it comes to energy," Farrell noted. "We are a nation rich in natural resources, yet we restrict access to large tracts of it. I know of no other country with similar limitations."

Conservation and renewable energy sources have important roles to play, Farrell said.

Wind, solar, fuel cells, ethanol and bio-diesel fuels "hold great promise for the future," he said. But even with the intense efforts now under way, renewables’ share of the nation’s total energy output is expected to rise only from 6 percent now to 7 percent by 2030 because of the technology’s limitations and the continued increase in energy demand.

Regarding conservation, Farrell said history has shown that market forces and private enterprise do a better job than utility programs and government mandates.

Dominion is one of the nation's largest producers of energy, with an energy portfolio of about 28,100 megawatts of generation, about 6.3 trillion cubic feet equivalent of proved natural gas reserves and 7,800 miles of natural gas transmission pipeline. Dominion also operates the nation's largest underground natural gas storage system with more than 950 billion cubic feet of storage capacity and serves retail energy customers in nine states. For more information about Dominion, visit the company's Web site at www.dom.com.

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Editors: A copy of the speech is available online at: http://www.dom.com/about/speeches/091406.jsp