Virginia Energy Plan Highlights …

                                Virginia Energy Plan Highlights
                                      September 12, 2007

The General Assembly set out broad state energy policy statements and objectives, and called for
development of a 10-year energy plan. The resulting Virginia Energy Plan sets out four broad
goals that will help Virginians use energy more wisely by expanding conservation and efficiency
practices, providing needed energy resources to support our economy, and beginning to address
the challenges we face from greenhouse gas emissions. The four goals include:

   ·   Increase energy independence, with an emphasis on conservation and clean fuel
       technologies, by:
           o Reducing the rate of growth of energy use by 40 percent. This will reverse the
               projected growth in per capita energy use and result in a nearly level per capita
               energy use per year.
           o Increasing Virginia's indigenous energy production by 20 percent.
   ·   Expand consumer energy education to overcome barriers to implementing energy-
       efficiency and conservation actions.
   ·   Reduce greenhouse gas emissions by 30 percent by 2025, bringing emissions back to
       2000 levels.
   ·   Capitalize on economic development opportunities through business expansion and
       increased research and development in areas of strength, including alternate
       transportation fuels, nuclear technology, coastal energy production, and carbon capture
       and storage.

The Plan assesses where energy used in Virginia comes from and where it is used.

   ·   Virginia is a net importer of energy. The state produces coal, using about half in state for
       electric generation and exporting the other half for steel production and electric
       generation. Virginia produces natural gas equal amount to about 35 percent of total in-
       state use, and a small amount of renewable energy, principally from biomass and hydro
       power. All other sources of energy are imported from other states or countries.
   ·   The transportation sector accounts for 43 percent of the amount of energy consumed in
       Virginia measured at its end use. The residential sector is responsible for 17%,
       commercial sector for 15%, and the industrial sector for 25%.

Energy efficiency and conservation provide the least costly and most readily deployable energy
resource options available to Virginia. The Plan calls for state, local and federal policy actions
such as expanding the Energy Star sales tax holiday, addressing the need for stronger building
energy codes, and increasing federal CAFE and appliance standards. The Plan notes that all
individuals and businesses have a role in reducing energy use. Many small, easy steps will
together have a substantial effect on reducing energy use in Virginia.

   ·   Legislation enacted in 2007 set a conservation and efficiency goal to reduce electric use
       10 percent (of 2006 consumption) by 2022.
          o Reaching the 10 percent goal would defer or postpone the need for four to five
              generation stations. Virginia consumers would save in the range of $200 to $700


                                            -1-
               million (net savings after costs) through 2022 (average $15 to $50 million per
               year) savings.
           o The Commonwealth's electric utilities will need to invest in the range of $100 to
               $120 million per year to support energy conservation programs. This would
               include costs of incentives, consumer education, and administration of energy-
               efficiency and conservation programs. Utility customers will have to match this
               investment with $180 to $200 million per year to cover their share of up-front
               energy-efficiency costs.
   ·   Through aggressive programming and with a concerted investment in efficiency and
       conservation, Virginia could realize natural gas savings of approximately 7.5 percent
       over the next ten years. This would lower Virginian's natural gas costs by an average of
       approximately $125 million annually (net savings after program expenses based on 2007
       natural gas costs).
   ·   A national estimate of fuel oil conservation opportunities found that use could be reduced
       13 percent by 2015 through an aggressive program.
   ·   Transportation measures should be targeted at reducing vehicle miles traveled, increasing
       transportation efficiency, and increasing use of alternate transportation fuels. Reducing
       transportation fuel use by 5 percent through these measures would save 260 million
       gallons of gasoline per year, equivalent to the energy used by 300,000 cars in Virginia
       each year.

Virginia is home to significant electric generation and transmission, natural gas and petroleum
pipeline and storage, petroleum refining, rail and road, and marine import infrastructure. Virginia
will need to add energy infrastructure over the next ten years to continue to provide reliable,
lower-cost energy to its consumers and decrease the potential risk that consumers face from
disruptions in energy supplies.

   ·   Virginia's electric utilities will need to build new electric generation and transmission
       infrastructure to serve growing electric loads, particularly in the Northern Virginia and
       Hampton Roads areas.
   ·   Virginia natural gas utilities will need to build additional pipeline and fuel supply
       capacity such as the third pipeline crossing in Hampton Roads. Offshore natural gas
       should only be advanced consistent with Virginia policy calling for exploration only no
       closer than 50 miles from the coastline.
   ·   Petroleum supply infrastructure will need to be enhanced to provide alternative supplies
       such as ethanol and biodiesel fuels to Virginia consumers. The state's refinery in
       Yorktown should be expanded.
   ·   Virginia's energy suppliers must ensure that the state's energy infrastructure is secure
       from natural and human-made disasters.

Energy use and production can affect Virginia's land, air, and water quality as well as wildlife
and wildlife habitat. Energy production and consumption are significant factors in Virginia's air
quality challenges. Fuel consumption accounts for the overwhelming majority of Virginia's
sulfur dioxide, nitrogen oxides, mercury, and carbon emissions to the atmosphere. To meet the
target of bringing carbon emissions back to 2000 levels by 2025, the Plan recommends the
following:


                                           -2-
   ·   Create a Commission on Climate Change to make a more comprehensive assessment of
       greenhouse gas issues and develop a plan for how to reach a greenhouse gas emission
       reduction goal.
   ·   Require reporting of greenhouse gas emissions using The Climate Registry protocol.

Virginia's colleges and universities, federal laboratories, and businesses undertake a broad range
of world-class energy research and development (R&D). These have the potential to lead to
substantial new business activity in Virginia.

   ·   Virginia should increase investment in energy R&D by $10 million per year, with half
       from state resources and half from private and federal resources, targeted in four strategic
       areas of strength.
   ·   Virginia should establish public-private governance of energy R&D, named the Virginia
       Energy Research and Development Organization (VERDO), to set priorities for public
       energy R&D funding.
   ·   Virginia should host energy research showcases to connect technologies developed by
       Virginia's energy R&D organizations with venture capital firms and businesses with the
       resources to bring the ideas to market.

Virginia should support businesses wishing to make substantial new investments in energy
activities in the four energy areas where Virginia has strategic advantages.

   ·   Virginia should target its business development actions to those energy businesses that
       produce real employment and capital investment gains, with a focus on the four strategic
       areas of strength.
   ·   Virginia should support development of two to three energy technology business parks.
   ·   Virginia should provide workforce services that support development of adequate
       numbers of trained workers for energy businesses.

Taken together, these recommendations will result in a substantial investment in new energy
activities in Virginia. By heeding these calls to action, government, individual citizens, and
businesses will use energy more wisely, have increased security from energy-driven disruptions,
help ensure the availability of needed energy supplies to support the state's economy, and reduce
the future impacts of climate change.




                                           -3-