Dominion To Shutter Wisconsin Nuclear Plant After It Failed To Sell

| About: Dominion Resources, (D)

Dominion Resources (NYSE:D) has announced its intention to shut down and decommission its Kewaunee Power Station in Carlton, Wisconsin, following failures to find a suitable buyer for the 556-MW nuclear facility.

The Midwest Independent Transmission System Operator will conduct a grid reliability review, and then the station will likely stop active power production in the second quarter of 2013 to begin the shutdown process.

Back in April last year, Dominion expressed intentions to sell Kewaunee as part of standard assets review. The sale, however, was unsuccessful.

From the Sacramento Bee:

"This was an extremely difficult decision, especially in light of how well the station is running and the dedication of the employees," said Thomas F. Farrell II, Dominion chairman, president and CEO. "This decision was based purely on economics. Dominion was not able to move forward with our plan to grow our nuclear fleet in the Midwest to take advantage of economies of scale. In addition, Kewaunee's power purchase agreements are ending at a time of projected low wholesale electricity prices in the region. The combination of these factors makes it uneconomic for Kewaunee to continue operations."

The Nuclear Regulatory Commission will continue to oversee the station through its last days. Afterward, Dominion will respond to the two utilities supplied by Kewaunee via market purchases until those agreements expire at the end of December.

Dominion will also see an after-tax charge of $281 million in the third quarter of 2012 that is related to the Kewaunee decommissioning; the charge will not figure in operating earnings, which Dominion uses as the primary performance metric and for internal accounting practices.

Dominion is presently a leading energy producer and transporter, with around 27,400 MW of generated power, 11,000 miles of natural gas transmission, and 6,300 miles of electric transmission lines. It also operates the largest domestic natural gas storage system with 947 billion cubic feet of storage capacity, and it has retail presence in 15 states.