June 28, 2008
SCC Approves Dominion Virginia Power’s 18% Rate Increase
By Carolyn Shapiro, The Virginian-Pilot, Norfolk, Va.
Jun. 27--The first significant jump in the region's electricity bills in more than a decade will kick in Tuesday, now that state regulators have approved Dominion Virginia Power's fuel rate increase.
The State Corporation Commission gave Dominion the go-ahead Friday to raise its fuel rate to 3.893 cents per kilowatt-hour, up from 2.232 cents. For residential customers using 1,000 kilowatt-hours of electricity per month, bills will rise by $16.61, or about 18 percent . Some commercial customers will pay more than 40 percent more.
The change will bring the power company, based in Richmond, an additional $1.1 billion in the next 12 months. It addresses recent spikes in energy prices.
The "fuel factor" covers Dominion's costs to buy the coal, natural gas, oil and uranium that fire power plants. State law allows the company to apply annually to adjust the rate and to pass those costs directly to ratepayers, with no markup for profit.
At the new rate, the fuel factor represents about 35 percent of the total charges on a resident's monthly bill. Dominion's base rates to procure and deliver power to customers hadn't changed since 1999.
The commission directed Dominion to take certain steps to keep its fuel expense -- and future rate increases -- as minimal as possible. For example, regulators called for an audit to ensure that the fuel Dominion buys from its affiliate companies, which operate unregulated, doesn't cost more than market prices. Dominion plans to spend almost $600 million for fuel from those sister subsidiaries owned by parent company Dominion Resources Inc., the commission indicated.
Dominion also must file reports that show it is selling as much excess power as "reasonably" possible back into the marketplace when it has more electricity than it needs to serve its customers, the commission ruled. Under state law, the company must credit 75 percent of the profits from those sales back to its customers.
More than 40 consumers, as well as the cities of Suffolk and Virginia Beach, wrote to the commission to oppose the increase. Sen. Jim Webb, D-Va., also sent a letter expressing his concerns about creating additional financial pressure on low-income families and businesses.
"We recognize the impact higher fuel prices will have on our customers," read a Dominion statement released in response to the commission's decision. "We will do everything we can to minimize the effect through increasing efficiencies, expanding conservation programs and helping those who need it through EnergyShare and budget billing."
The company said it would contribute an additional $5 million to the EnergyShare program, which assists low-income residents with their heating and cooling bills. Dominion also will make it easier for customers to switch to budget billing -- which divides their total annual electricity costs into a steady monthly amount -- by enrolling them automatically when they pay the budget amount listed on their bills.
Carolyn Shapiro, (757) 446-2270, [email protected]
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Copyright (c) 2008, The Virginian-Pilot, Norfolk, Va.
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