Dominion starts building Virgina City coal plant

NEW YORK, July 1 (Reuters) - Dominion Virginia Power began construction of the $1.8 billion Virginia City Hybrid Energy Center in Southwest Virginia on Monday, the company said in a release.

Dominion Virginia, a subsidiary of Dominion Resources Inc (D.N), of Richmond, Virginia, expects construction of the 585-megawatt coal plant to take about four years.

Dominion started building the plant immediately after the Virginia Department of Environmental Quality issued the necessary air permits on June 30 following unanimous approval by the State Air Pollution Control Board last week.

The Virginia State Corporation Commission approved the project on March 31.

The company said the plant was needed to meet projected growth in demand for electricity of 4,000 megawatts from its customers by 2017. That is enough electricity to power about a million homes.

Dominion said Virginia City is a circulating fluidized bed plant and can use up to 20 percent biomass in addition to coal for its fuel.

The station will provide nearly 1,000 jobs during construction and require a permanent staff of more than 75 people once it begins operating. It will also create about 350 mining jobs.

It will generate about $440 million a year in tax revenues and other benefits for Wise County, according to a Virginia Tech economic impact study.

Dominion owns and operates more than 26,000 MW of generating capacity, markets energy commodities, and transmits and distributes electricity and natural gas to customers in 11 states. (Reporting by Scott DiSavino; Editing by John Picinich)