Town gets its terms on Dominion Power H2O

Dominion Power Director of Business Development John Ragone and Front Royal Town Councilman Shae Parker shake on a deal for central water and sewer to Dominion's billion-dollar business investment in this community.

Absent Conkey blasts county silence on help with corridor expenses

By Roger Bianchini
Warren County Report

After two weeks of intense negotiations the Front Royal Town Council approved a final version of a contract to provide central water and sewer service to Dominion Power/VEPCO’s gas-fired electrical generating facility in Warren County’s 522 North Industrial-Commercial Corridor. The planned power plant formerly known as CPV-Warren since being introduced as a means of helping meet future eastern, urban corridor power needs in 2002, is now targeted for a 2015 or 2016 opening following a 2-1/2 to 3-year construction period.

The vote came at a Special Meeting called for March 7th in the midst of a previously scheduled town council work session. The 5-0 vote, Tom Conkey was absent, came after some last minute closed session discussion. The only substantive change in the terms of the contract originally on the table since a Feb. 22nd work session was a wording change that the removed the description of the town water service as essentially an accommodation to the customer while the town has “excess capacity” in its water supply.

As explained by officials on both sides of the negotiation, that change was requested by Dominion, which did not want to go before a pending State Corporation Committee rate hearing with a utility contract essentially stating the plant’s water service could be terminated by the provider – the Town of Front Royal – at any time it deemed its water service as exclusively needed by in-town customers. The lifespan of the plant has been estimated by Dominion at half a century.

Despite not getting an additional five years of in-town service rates to compensate for a requested total of $5.4 million in up-front expenses, Dominion officials seemed relieved to get a contract guarantee in place that will allow them to explain their desired rate structure to the SCC and move development of the plant forward.

“I think we’re pleased with what happened tonight with the agreement that was reached,” Dominion spokesperson Dan Genest said following the vote. “We plan to be a part of this community for the next 40 to 50 years – and being a part of that community means getting along and working things out and settling our differences and I think the agreement tonight represents that.”

While Dominion had been seeking a reduction in up-front costs of $5.4 million, including $4 million in capital improvements to the existing system, in the end it agreed to pay those costs in exchange for a decade of reduced service costs. However, Dominion did not get the additional five years at the flat, in-town service rate it had been seeking in exchange for a $3.5-million contribution to implement a long-sought after looping system to assure service to all corridor water customers in the event of a break in the water line. Rather, the company will get the originally proposed five years at the in-town rate and an additional five years at 1.5 times the in-town rate before paying the full double rate to out-of-town customers.

While county Supervisor Tony Carter was again an interested observer to the evening’s developments, the county’s ongoing official silence on the matter of helping the town or Dominion defer their respective costs didn’t sit well with at least one councilman, Tom Conkey. Conkey and other town officials involved in the negotiation have pointed out the town will receive only its hook up and service costs, by law based solely on the cost of providing a municipal utility, while the county will realized between $3 million and $4 million per year in tax revenue almost exclusively profit.

“My only disappointment is that it seems that at least some members of the board of supervisors still see the relationship between the town and county governments as an adversarial one, rather than the partnership I believe it can and should be,” Conkey stated by way of a letter read into the record by Mayor Tim Darr. Darr explained Conkey was absent due to a previous out of town commitment. “The town’s discussions with Dominion were open and frank as partnerships should be. I think this was the perfect opportunity for our two bodies to work together to come up with an arrangement that would be mutually beneficial. As it is, we now find ourselves in the position of working our a deal with Dominion and hoping that we have done enough to ensure that this power plant is built in this community,” Conkey concluded in his letter sent to the mayor to be included as part of the meeting’s public record.

Background

The town’s exiting corridor water-sewer system began service about a quarter century ago when town utility was extended outside its boundaries to facilitate the location of the county’s first new industrial corridor client, DuPont, to build here. That utility service extension was seen as pivotal to this community attracting an increased commercial-industrial presence and tax base to keep residential costs and taxes down.

Following the 2009 legal challenge of meals tax-based fees tied to the town’s water-sewer bills by three chain corridor restaurants, the town lost a major portion of its “Corridor Agreement” fees. According to the judge’s comments, that legal decision came about in part at least due to the changing corridor tax landscape, primarily the county’s 2002 introduction of its own meals tax.

The town and county have only recently began “corridor committee” discussions of how to adjust the 1998 Corridor Agreement designed to compensate the town for its utility service allowing business and industry to locate on county land. That agreement, approved by a 3-judge state panel in 1998-99, likely headed off a contentious annexation fight between Front Royal and Warren County’s municipal governments.

Dominion had initially agreed to cover the full $490,000 cost of upgrading the system’s pumping system to assure its estimated average of 350,000 to 400,000 gallons of water per day without placing an undue strain on the system. However, it was seeking help in meeting the capital improvement expense of a looping system seen as a system-wide benefit to all corridor customers in Warren County. Some councilmen, obviously including Conkey, thought it would have been appropriate for the county to step into the recent negotiations after Dominion complained about all the additional rate and infrastructure costs it was being asked to shoulder.

The county did have a closed session “corridor contract” discussion with Dominion at its March 1st meeting. However, no announcement was forthcoming following that session.

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Published in: on March 8, 2011 at 2:37 pm  Comments (1)  

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One CommentLeave a comment

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