Today, electricity in Virginia is sold to commercial, industrial, and residential consumers (plus the Federal government's military installations) by investor-owned companies, publicly owned utilities, and cooperatives.
Dominion (the company formerly known as "Virginia Power" - it keeps merging and subdividing into new corporate components, splitting and lumping the power generation and distribution units to adapt to changing objectives and circumstances) generated most of the electricity to supply its service area using power plants located within the region. According to the National Energy Information Administration, there is only enough transmission capacity to import 3-4,000 MW into a region with a peak demand of 15,000 MW. Nationwide, there is a surplus of electrical generation capacity, due in part to energy efficiency measures to reduce demand - but inadequate power lines to distribute the electricity from areas with a surplus to areas with a demand for lower-cost power.
For decades, the State Corporation Commission (SCC), the successor to the Board of Public Works and the state railroad commission, has controlled the utility rates charged to customers. As part of the approval process, the SCC required the utility companies to build enough generating plants to ensure customers would have a reliable supply of power. In exchange, the companies got exclusive rights to sell electricity in certain portions of Virginia, along with rates that were set high enough to ensure a steady dividend was paid to the company stockholders.
The investment decisions by the private-sector companies were also affected by the government. In the 1980's, the Federal Government and the SCC encouraged purchase of power from non-standard sources rather than construction of new power plants. The "avoided costs" of not having to borrow money and build new facilities were incorporated into the contracts. By 1999, 20% of the electricity available to Virginia Power (now Dominion Resources) was from contracts with non-utility generators such as solid waste incinerators and pulp mills.
This approach appeared to minimize waste ("why put wood chips in a landfill if you can burn them for power?") and reduce the costs to rate-payers. However, it locked the utility company into long-term contracts for high-cost electricity. Proposals for deregulation threaten to change the rules of the utilities game.
According to former Secretary of Energy Spencer Abraham in a March 19, 2001 speech:
Virginia will have to build its share, 1-2 new plants each year. Maybe Internet-related activities are not consuming 10% of the current supply, but obviously Virginia has a hefty percentage of the "new economy." Visit a data center, and you will see rows of diesel backup generators, each the size of a tractor trailer and able to generate 2MW apiece. In Gainesville, west of Manassas, a data center "farm" is being constructed with its own power plant fueled by natural gas.
There are few - or no - remaining sites suitable for generating electricity by hydropower. The enviromental tradeoffs are too great, at least as we view them today. Windpower is still marginally utilized in the state, compared to pre-Depression days when windmills were common on farms - but wind turbines are "bird Cuisinarts" and Virginia is on the Atlantic flyway. Co-generation associated with chip mills or paper mills is a source of power as well as way to reduce the wood waste, but there's far too little power available from that source to meet a 45% increase in demand.
Coal is plentiful in Virginia. If the United States ever signs something like the Kyoto Protocol, utlilities and other users of fossil fuels would have to reduce carbon dioxide emissions substantially to reduce global warming. The Obama Administration, after several court rulings, decided to treat carbon dioxide as a pollutant to be regulated by the Clean Air Act restrictions (along with ozone, particulate matter, carbon monoxide, nitrogen oxides, sulfur dioxide, and lead).
Since World War Two, coal had been the most popular fuel for new power plants in Virginia. Coal was cheap and plentiful, easily transported by rail from mines to power plants in urban areas. In 1949, a coal-fired power plant was built on the shoreline of the Potomac River in Alexandria, and 20-plus years later the Possum Point plant was constructed downstream in Prince William County. However, use of coal to generate electricity will be limited in the future, due to both CO2 pollution concerns and basic economics.
After the development of shale gas resources, natural gas displaced coal as the low-cost source for generating electricity. Gas from the Gulf of Mexico and from shale beds in the Ohio River Valley is not as vulnerable to disruption due to overseas political conflicts. Most gas pipelines run from Texas and Louisiana through Virginia's Piedmont to New York, so new power plants east of the Blue Ridge can be supplied easily with natural gas.
The sleeper fuel for utilities is nuclear. Nuclear energy is never going to be "too cheap to meter" as promised in the 1950's, but Virginia has two nuclear power plants and their four nuclear reactors supply some of the cheapest power in Virginia now.
The world was awash in cheap uranium when nuclear weapons were being decommissioned, and Virginia has a massive uranium deposit in Pittsylvania Cunty at Coles Hill. The Fukushima disaster in 2011, Chernoble in 1986, and Three Mile Island in 1979 have all contributed to public opposition to building more nuclear reactors. Dominion has plans to construct a new reactor at North Anna in Louisa County, anticipating that the Federal government will finally construct a repository somewhere to store the radioactive waste and public fears of nuclear power can be overcome.
If the priority for building a new nuclear plant was to find a location downwind from population centers, then the Eastern Shore would be the most suitable site. However, nuclear plants have traditionally been sized to generate 800-1,000MW each, due to economies of scale. There is no demand for such a quantity of electricity on the Eastern Shore; it lacks urban centers and industry.