Dominion (NYSE:D) announced Friday that Virginia regulators have approved the construction of a 1,358 MW natural gas power plant.

"The Brunswick Power Station will produce significant customer benefits in helping to keep power costs low and reliability high," said Chairman, President, and CEO Thomas F. Farrell II in a statement. "It also will benefit Virginia in terms of cleaner air and providing a major economic boost for the region."

The combined cycle station will help Dominion's Virginia utility meet increasing customer demand, offsetting lost capacity from retiring coal plants. In the first year, Dominion expects to save around $96 million in fuel costs.

Coinciding with the approval, the Virginia State Corporation Commission also gave the thumbs-up for necessary transmission connections, as well as a rate increase to recover the $1.3 billion in construction costs. Beginning in September, average residential customers will see an additional $0.81 on their monthly bill.

Dominion will begin construction immediately and expects the plant to be operational by mid-2016.