Dominion Signs Environmental Agreement at Salem Harbor

May 26, 2005

SALEM, Mass. – Dominion (NYSE: D), one of the nation’s largest energy producers, said Thursday it had reached agreements to reduce emissions at Salem Harbor Power Station and to continue to generate electricity at the station.

At a news conference near the power station, Massachusetts Lt. Gov. Kerry Healey announced that the commonwealth, Dominion and about 60 other stakeholders have agreed to a plan that will ensure the 745-megawatt coal-and-oil fired power station complies with Massachusetts air regulations.

The plan includes two agreements -- one approved by Massachusetts and the stakeholders and the other filed with the Federal Energy Regulatory Commission. Under the plan, Dominion will reduce sulfur dioxide, nitrogen oxide and mercury emissions at Salem Harbor by burning low-emissions coal and will install an improved fuel handling system while continuing to operate the station to provide the necessary reliability to the New England electric transmission system.

"We are happy to have reached a solution at Salem Harbor that will provide improvements to air quality while allowing the station to continue to generate electricity for New England," David A. Heacock, Dominion’s senior vice president-Fossil & Hydro, said at the news conference.

With the plan in place, Dominion has committed to keeping the power station in operation through Sept. 30, 2008, and possibly longer depending on business needs, future environmental control measures and economical operations.

Dominion, Massachusetts, and the other stakeholders worked together for five months to achieve an Amended Administrative Consent Order that sets limits on the station’s emissions of sulfur dioxide, nitrogen oxide and mercury and the Settlement Agreement filed with FERC Thursday.

Dominion purchased Salem Harbor and two other power stations, Brayton Point in Somerset, Mass., and Manchester Street in Providence, R.I., from USGen New England on Jan. 1. Prior to the sale, USGen, which was in the midst of bankruptcy proceedings, said it could not justify the cost of environmental improvements at Salem Harbor.

However, ISO-New England, which is responsible for the operation of New England's bulk power generation and transmission system, said closing Salem Harbor would adversely impact the stability of the system and blocked the station’s closing.

The FERC settlement will provide Dominion with $6.75 million. Dominion will spend about $6.5 million through 2007 on the improved fuel handling system that will allow Salem Harbor to use a variety of low-emissions coal.

Dominion is one of the nation's largest producers of energy, with an energy portfolio of about 28,100 megawatts of generation, about 6 trillion cubic feet equivalent of proved natural gas reserves and 7,900 miles of natural gas transmission pipeline. Dominion also operates the nation's largest underground natural gas storage system with more than 965 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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