The monthly bills of typical Dominion Virginia Power residential customers could fall by about 4 percent by Sept. 1 thanks to significant reductions in fuel and transmission-related costs.
The larger of the two decreases proposed by the company on May 2 is a $5.83 drop in the monthly bill of its typical Virginia residential customer because of lower-than-expected prices for fuel used to generate electricity, abnormally mild weather and the performance of new generating units. If approved by the Virginia State Corporation Commission (SCC), this would be the fifth decrease in the fuel rate in the last three years and the largest single fuel rate decrease since 1998.
If the SCC approves all pending adjustments, the monthly bill of a residential customer who uses 1,000 kilowatt-hours each month would decline from an estimated $110.24 this month to $105.90 on Sept. 1 – a 3.9 percent decrease – and lower than the typical monthly bill was on Jan. 1, 2009.
The fuel rate decrease itself will more than offset three small rate increases. The other rate adjustments to the typical bill between now and September are:
The fuel rate is a pass-through cost with no profit to Dominion. This rate is adjusted annually, usually on July 1, to recover what Dominion Virginia Power spends on fuel at its nuclear, biomass, coal, natural gas and oil electricity-generating units as well as power it purchases from the wholesale market. The rate also includes the projected cost of fuels during the next 12 months.
To illustrate the change in fuel prices, Dominion’s SCC application shows that the 12-month forward price for natural gas last March 31 was $4.84 per 1 million British thermal unit (mmBtu), while the same fuel this March 31 was $3 per mmBtu. More recently, the price has fallen to the $2/mmBtu range.
Between 2011 and 2016, Dominion Virginia Power has added or plans to add about 3,200 megawatts of new natural-gas fired generation. The newest natural gas-fired power station under construction, Warren County Power Station, is projected to provide customer savings of approximately $1.187 billion over its life.
Dominion Virginia Power residential customers can expect a slight increase of 43 cents per 1,000 kilowatt-hours of monthly use effective April 1. The company makes annual adjustments in what it collects to pay for the financing costs of economical generation to meet the growing demand for electricity. The Virginia State Corporation Commission approved this adjustment.
The adjustment means the typical bill for customers who use 1,000 kilowatt-hours each month will be $109.90, a less-than-1-percent increase from $109.47. The adjusted amount is still well below the national and regional average.
The amount and power station projects that comprise the adjustment are:
Annual rate adjustment clauses – also known as "riders" – allow the company to recover financing costs for SCC-approved projects, spreading the costs over a longer time period and reducing rate impact when such projects begin serving customers.
The Virginia State Corporation Commission completed its biennial review of Dominion Virginia Power’s financial and operating performance in 2009-2010 and issued a ruling in late November that requires customer refunds starting in February.
The commission ruled that customers were due $78.3 million in refunds because Dominion Virginia Power earned more money than authorized during the two years. The company argued in the rate case proceedings that it did not exceed the earnings threshold.
To comply with the commission’s order, a typical customer who used 1,000 kilowatt-hours of electricity per month during 2009 and 2010 will receive an average monthly refund of approximately $2.84 for six months, beginning no later than the February 2012 billing cycle.
Dominion Virginia Power made a required biennial filing with the Virginia State Corporation Commission on March 31, 2011. The case gave Virginia regulators and other interested parties an opportunity to review the company’s earnings for 2009 and 2010 and set a new authorized rate of return on equity (ROE) for the company going forward.
Dominion Virginia Power’s base rates will remain unchanged at least through December 1, 2013, according to the terms of a settlement agreement among the company and all participants in a 2009 rate case which froze the company’s base rates for four years.
The biennial review process was established as part of Virginia’s re-regulation law, which gave the SCC the authority to order refunds or bill credits if the commission deemed it necessary. Prior to this law, there had been no provision for the return of company earnings to customers. The mechanism to share earnings is a central feature of the 2007 law.
Use the links below for additional information. If you do not find what you need, please e-mail us or call 1-866-DOM-HELP (1-866-366-4357).
Dominion Virginia Power submitted a set of proposed energy conservation and management programs to the Virginia State Corporation Commission on Sept. 1, 2011. These include:
> View the Filed Application and Testimony: Volume 1 | Volume 2
The SCC-approved annual rate adjustment for the company's transmission system became effective on Sept. 1, 2011. The company is already investing to improve and expand existing transmission projects. The transmission rate covers replacing aging equipment, adding new infrastructure, and covering the costs of services for the regional grid operator. For a customer using 1,000-kilowatthours of electricity each month, the monthly bill increases by $3.54, from $108.77 to $112.31. The SCC approved this annual adjustment on July 19.
Nine major power generation and environmental protection projects recently completed, under way or planned for the near future by Dominion Virginia Power will produce more than $3.3 billion in economic benefits for the state by 2015, a study of the projects’ economic impact reports.
The projects are part of the company’s "Powering Virginia" program to assure the state has adequate and reliable electric power now and in the future.
"These projects are economic engines and are some of the most significant construction efforts in our history to meet the present and future energy needs of the Commonwealth," said David A. Christian, chief executive officer of Dominion Generation. "They will help power Virginia’s economic recovery, in addition to meeting the growing demand for electricity of homes and businesses and improving environmental quality."
The program will support more than 14,200 construction jobs in Virginia from 2007 through 2015, reports the study by the Richmond-based economic research and consulting firm of Chmura Economics & Analytics.
Additionally, once the projects are completed, their ongoing operations will produce annual economic benefits of more than $290 million and generate more than 750 jobs beginning in 2015, the study found.
View the Virginia Deferred Fuel Balances:
On June 27, 2011, the State Corporation Commission (SCC) approved a new fuel rate requested by Dominion Virginia Power that will take effect on July 1. The SCC accepted a plan that will spread the higher costs for fuel over a two-year period instead of the normal one-year recovery period. Ratepayers are not charged the financing costs of spreading the payment over two years.
For the average residential customer, the fuel rate increase means the monthly bill for 1,000 kilowatt hours of electricity will increase $4.86 from $103.91 to $108.77. If the full increase was recovered in one year, the monthly bill of a residential customer would increase $8.17 to $112.08.
The increase was driven, for the most part, by rising fuel prices and the effect of last year’s hotter-than-normal summer and colder-than-normal winter.
The fuel rate is the portion of the electric bill that pays for the fuel used to generate electricity and the purchase of power from the wholesale market. Dominion Virginia Power is statutorily entitled to recover its prudently incurred fuel costs. This is a dollar-for-dollar recovery, and the company can make no profit on recovery of fuel expenses.
The fuel rate is reviewed annually by the SCC and re-set, as necessary, to reflect actual fuel expenses for the previous year and projected fuel expenses for the coming year.
In addition to Dominion Virginia Power's request to increase its fuel and transmission rates (referenced above), the company also asked the SCC on May 2nd for initial funding for a new power station in Warren County. If approved, the increase for the new power station would take effect on April 1, 2012, and be $0.75 a month.
For more details on the rate request, please see our original news release on the rate filing, as well as the company's filing letter to the SCC.
Dominion Virginia Power's electric vehicle recharging pilot program received the approval of the Virginia State Corporation Commission on July 11. The pilot is designed to test whether electric vehicle owners will choose to recharge their vehicles during off-peak hours – typically overnight – in exchange for lower electricity costs.
Interested customers will be able to sign up for the pilot program beginning Oct. 3. The company intends to partner with car dealerships and charger installation vendors to build customer awareness. View our news release for more details.
Dominion Virginia Power on June 27, 2011, asked the State Corporation Commission for approval to convert three Virginia electricity-generating power stations from using coal to biomass, a renewable energy source. If approved, a slight increase to cover initial costs of the project would take effect in April, 2012. The conversions of the power stations in Altavista, Hopewell and Southampton County would increase Dominion's renewable generation capacity by more than 150 megawatts, enough to power 37,500 homes.
The company also filed on the same day its annual updates and rate adjustment requests for the Bear Garden Power Station, which began commercial operation in May, and the Virginia City Hybrid Energy Center, which is more than 88 percent complete and on schedule for a summer 2012 startup. For more information, view our news release.
| Dominion Virginia Power has laid out investment plans for the next five years to ensure its customers continue to have ample supplies of reliable power, its chief executive officer is telling customers in a letter being mailed next month.
Going beyond the three-year horizon he discussed in a similar letter last January, Paul D. Koonce, president and chief executive officer of Dominion Virginia Power told customers the company plans to invest $7.6 billion over the next five years for new power stations and other electric infrastructure to meet growing demand. The investments also cover reliability enhancements and new technology that will allow customers to save money on their energy bills. |
In addition to these investments, the company will continue its plan to spend more than $2 billion to improve the environmental performance of its fossil-fueled power stations and anticipates that additional investment may be necessary to meet pending federal regulations.
The Virginia State Corporation Commission has approved new rates for Dominion Virginia Power electric customers which will add $1.05 a month to the bill of a typical homeowner using 1,000 kilowatt-hours a month. (These new rates are unrelated to the Biennial Rate Filing, detailed above.)
The new rates are designed to cover the company's costs of two new power stations — the Virginia City Hybrid Energy Center and Bear Garden Power Station — and a series of energy efficiency and conservation programs.
Dominion Virginia Power has developed the new power stations and conservation programs as part of its ongoing program to make sure Virginia has the reliable energy it needs to meet growing customer demand with diverse energy sources. It will also reduce dependence on energy produced outside the state, adding to better long-term price stability.
The new rates begin on April 1, 2011. For more information, see Powering Virginia.
Starting Jan. 1, 2011, electric bills for Dominion Virginia Power residential customers increased about 4.6 percent. This change took the typical 1,000 kilowatt-hour monthly residential bill from $98.36 to $102.86.
The company’s rates did not actually go up. The increase occurred because a series of credits that were being returned to customers were completed, effective Dec. 31. The credits resulted from a rate settlement approved by the Virginia State Corporation Commission last March (details below).
Under the settlement, $268 million was returned to customers through the end of 2010. The credits were primarily related to new generation and transmission projects. Additional credits totaling $132 million from the settlement will continue being refunded to customers during 2011 and 2012.
Dominion announced on Jan. 13, 2011, that it, the Virginia State Corporation Commission (SCC) Staff, the Office of the Attorney General of Virginia, Division of Consumer Counsel, MeadWestvaco Corp., Wal-Mart Stores East, Chaparral (VA) and Utility Professional Services, Inc., have filed an agreement that supports the deferral of the company's biennial review of rates from 2011 to 2012.
The agreement also would continue to support the authorized return on equity (ROE) for the Bear Garden Power Station and the Virginia City Hybrid Energy Center and establish base rate credits for customers associated with 2009 revenues.
A new, lower fuel rate went into effect July 1, 2010, as a result of a ruling by the Virginia State Corporation Commission. The rate lowered the typical, 1,000 kilowatt-hour monthly residential bill $1.24, or 1.2 percent, to $98.36 from the previous level of $99.60.
This is the fourth reduction in the fuel rate in the last 12 months, making the new fuel rate 28 percent lower than the one in effect June 30, 2009.
Dominion Virginia Power requested the lower rate based primarily on the cost of fuel for its power stations going down. The SCC put the new rate into effect on an interim basis, pending a final order.
The SCC held a public hearing on the fuel rate change on Sept. 10, at the Commission headquarters in Richmond. Written comments on Dominion's proposal were required to be submitted to the Commission by September 2. The Commission has the authority to put the interim rates into effect permanently or alter them in its final order.
The fuel rate is a pass-through cost with no profit to Dominion.
Lower base rates are now in effect for Dominion Virginia Power customers as a result of the comprehensive 2009 rate settlement recently approved by the Virginia State Corporation Commission.
A base rate case refund and interest are also being returned to Virginia customers as part of the settlement. This refund and interest will begin appearing on customer bills as two separate line items, starting on May 3.
Additionally, a fuel credit was recently returned to residential customers under the terms of the settlement. Non-residential customers will have this credit applied to their electricity usage from May 1 through June 30, so the fuel credit will be reflected in a separate line item on their bills covering that period. The exact amount received by each individual customer depends on their historic or current usage.
Two new charges for energy efficiency programs go into effect May 1. These charges, called "Rider C1" and "Rider C2" on customer bills, will collectively add about 53 cents per month to the bill of a typical residential customer using 1,000 kilowatt hours a month. These riders are being used to pay for five new energy efficiency programs recently approved by the SCC.
For additional rate comparisons, see Supplemental Charts, below.
The total amount being returned to Virginia customers under the settlement in the form of credits and lower rates is $726 million or about $153 for a residential customer who uses 1,000 kilowatt-hours a month. In addition, this typical residential customer will also receive an estimated $42 in refunds, plus interest.
On April 21, the company lowered its base rates to pre-Sept. 1, 2009 levels as directed by the SCC. The SCC approved the new lower base rates and the fuel and base rate credits on March 11 as part of the comprehensive rate case settlement agreed to by the parties in the case, which included the SCC staff, consumer representatives, major business customers and others.
On June 25, Dominion Virginia Power filed an update with the SCC to the portion of electric rates (called riders) that cover its two generating stations under construction: Virginia City Hybrid Energy Center in Wise County and Bear Garden in Buckingham County.
As part of the update, the company requested an increase of $1.39 to the monthly bill of a typical 1,000 kilowatt-hour residential customer. If approved, the increase would take effect April 1, 2011.
The SCC approved construction of the Virginia City power station in 2008 and the Bear Garden facility in 2009. The company is recovering financing costs as the stations are being built. The SCC adjusts these rates annually.
Both projects are on schedule and on budget. For more information on this topic, please see the company’s news release.
Educational Information on Rates
To help limit price increases in the future, Dominion is adding renewable generation such as wind power; other new generation based on clean coal, emissions-free nuclear and natural gas; and improvements to the transmission and distribution infrastructure.
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