Elements of Dominion Energy Virginia’s residential cost, effective July 1 and pending increases. Source: SCC Click for larger view.

by Steve Haner

Residential customers of Dominion Energy Virginia will soon be paying 55% more for electricity than they were when the Virginia General Assembly took over micromanaging utility regulation in 2007. The Western Virginia customers of Appalachian Power will have seen their electric bills rise by 92%.  Underlying inflation for the period has been about 43%.

If that customer uses a steady 1,000 kilowatt hours per month, buying that from Dominion costs $600 more per year than it did in 2007 and buying it from Appalachian costs $736 more.

The figures come from an annual update by the State Corporation Commission staff, posted on its website Sept. 1. Since passage of the landmark 2007 legislation, the Commission has been directed to file updates on its implementation. Of course that original law has been changed so often that only shards of it remain, but the report continues.

It was the 2007 legislation that laid the groundwork for the proliferation of individual rate adjustment clauses or “RACs” you can see on that illustration of Dominion’s bill elements. Even that is not the full list as there are actually four different RACs for energy efficiency, which the staff consolidated. Most of those details do not appear on individual monthly bills, at least not for residential users.

It is impossible for the lay person to keep up with all the moving parts, and this consolidation by the staff is useful. Some of the charges go up and some down regularly, but the steady trend is clearly on the upside.

Residential bill elements for Appalachian Power customers in Virginia, as of July 1 and with pending increases. Source: SCC  Click for larger view.

RACs on the Dominion bill that we know are going to grow rapidly include the new charge for offshore wind (unless the company pulls the plug on the project because of the performance requirements), the coming Percentage of Income Payment Plan (PIPP) where all customers pay to subsidize bills for low income Virginians, and the continuing expansion of solar and battery storage projects.

The Dominion RAC for the carbon tax imposed by the Regional Greenhouse Gas Initiative was also slated to grow, but the company decided to withdraw its request for an increase when new Governor Glenn Youngkin (R) promised to rapidly withdraw the state from the RGGI compact. Then Dominion withdrew the separate charge entirely, asking to move the expense into its base rates. You are still paying this.

Much of this is directly tied to efforts by the General Assembly, with many (but not all) of the bills actually instigated by the utility. From the Virginia City coal plant to offshore wind to the coal ash removal programs and programs to bury residential distribution lines, these are expenses that before 2007 would have been subjected to the traditional reasonable-and-prudent standard for utility regulation. The SCC’s authority has been gutted.

At the very end of the report, the SCC gently reminds the legislature of a huge risk it has created. The legal morass that is the Virginia Clean Economy Act removed the SCC’s oversight on utility reliability. The law allows the utilities, and only the utilities, to ask for permission to keep a fossil-fuel generator online if closing it creates reliability risks. It writes:

The Commission appreciates the General Assembly’s awareness of the importance of reliability and security of electric service to end-use customers. That said, the above provisions leave it to the utility’s discretion whether to seek relief from VCEA requirements. The utility still has the ability to decide to retire and/or impair generating units even though customers may still be required to pay for such units. An after-the-fact review or finding of harm to reliability and/or security of electric service would leave the Commission with few options to protect customers.

If the General Assembly intends to leave this discretion solely in the hands of utilities, that is what the current law accomplishes. The General Assembly may wish to consider a required update or analysis from the Commission in close proximity and prior to unit closure.

Let’s translate the legalese: The day is quickly coming when it will be obvious to all that solar and wind power need reliable baseload backup, but we the official regulators have no authority to preserve that backup. Unless you restore that to us, legislators, the failure is on you.

Given that the legislature has been substituting its political decisions for the regulators’ independent and professional approach for fifteen years now, the warning may be ignored.

The report also touches on the financial condition of the utilities. Neither faces a full rate case again for a while. Last year, 2021, was the first year in Dominion’s three-year review period, and by its own reporting it earned about $150 million beyond what its allowed 9.35% return on equity would be. No need in reviewing again here how the legislature has acted to 1) protect Dominion’s excessive base rates from reduction; and 2) offer the utility numerous ways to avoid making refunds. Moving the RGGI tax into base rates furthers both goals.

Appalachian, on the other hand, is falling below its authorized return on equity. But recently the Virginia Supreme Court gave it a fresh chance to raise its base rates by overturning an SCC decision in the last review. The utility wanted to charge off the expense of coal plant retirements in one rate cycle, and the SCC ordered it to amortize the costs for several cycles. The Virginia Supreme Court looked at the anti-consumer Code of Virginia sections approved by our legislature and agreed with the utility.

Watch that 92% APCo increase over the past 15 years now convert into an actual doubling of the residential rate. Don’t complain to the utility. Don’t whine at the SCC which ruled for you. Call your local legislator and ask them if they voted for it (that 2018 bill had bipartisan support). The politicians want to be in charge, so they should explain.

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25 responses to “When Politicians Run Power Companies”

  1. Dick Hall-Sizemore Avatar
    Dick Hall-Sizemore

    As usual, an informative report. I did not know about the utilities’ discretion to shut down facilities, regardless of the need to ensure reliability. The folks who run Dominion strike me as pretty savvy people. Would they run the risk of significantly decreasing reliability in order to save some operating costs by shutting down some facilities? If they shut things down too prematurely and we run into a situation in which the utilities are unable to provide enough power to cool or heat our homes, I would think that would hurt their credibility terribly and result in political repercussions.

    I have another question. Other than Lee Ware, who in the General Assembly understands and appreciates the extent to which the SCC has been defanged?

    1. Stephen Haner Avatar
      Stephen Haner

      Sally Hudson from Charlottesville gets it and has put in several bills. I don’t doubt Tommy Norment and Dick Saslaw and Terry Kilgore fully understand it, and in this past session Norment and Kilgore reversed course and voted for some good bills. FYI, I guess this is no secret, the House Commerce and Energy Committee has a retreat coming up and I understand this issue will be front and center. Unfortunately I’ll be out of state those days.

      1. Dick Hall-Sizemore Avatar
        Dick Hall-Sizemore

        Has Commerce and Energy had retreats in the past? I have never heard of any committee, other than Appropriations and Senate Finance, having a retreat. That is heartening. It sends a signal they are making an effort, outside the chaos of a Session, to understand the complex issues they deal with.

        1. Nancy Naive Avatar
          Nancy Naive

          Or, it’s a “company paid” vacation… but I’m certain since this is Virginia the retreat will be a withdrawal to the library within the Richmond halls of government and not held at, oh say, the Greenbriar. I am certain, is I not?

    2. Sadly, Dominion has so many lobbyists waiting to tell legislators what to do – and most don’t want to cross Dominion – that legislators have no incentive to understand. Few have been willing to stick their necks out in decades and some who have, paid a price.

  2. It would be interesting to see how price increases for electric coops stack up to the big boys. That data is not in the linked report. Is there an easy way to get it?

    1. Coops have similar situations – partially because we must buy from the big boys. We pay a higher wholesale rate than their retail rates. Excuse is market. Most coops depend on the market. Some years ago coops had to take the big boys to court to get them to even sell to us.

      Craig Botetourt Coop has long had the highest rates in the state, largely because we are small and serve difficult terrain that has fewer people per mile of line. When the territories were set, the big boys did a good job of claiming the easy to serve and leaving the costly behind.

      The AG’s folks publish rates every year.

      1. Stephen Haner Avatar
        Stephen Haner

        The coops were smart enough to get themselves exempted from the offshore wind costs! Talk about cost shifting!

        1. how_it_works Avatar

          The coops work for and are owned by their customers.

      2. Tks, I’ve been an Rappahannock Electric Coop member for almost 50 years and I forgot how the rates compare to Dominion. REC is a part owner of North Anna, dunno how that affects rates. Y’all in Craig Botetourt make me feel almost urban.

        Staying out of the offshore wind debacle was a wise move.

        1. If I remember correctly, your rates are a tad higher than Dominion’s but given all, could soon be lower.

  3. f/k/a_tmtfairfax Avatar

    Here are links to the Wake Electric Membership Corp.’s commercial and residential rates.

    Small Commercial https://wemc.com/commercial-and-industrial-services/
    Large Commercial https://wemc.com/commercial-and-industrial-services/
    Residential https://wemc.com/residential-member-rates/

    Wake Electric

    “Wake Electric Cooperative is an electric distribution cooperative owned and controlled by thousands of people just like you—the consumer-members. Your co-op is a not-for-profit electric utility with a customer service center in downtown Wake Forest, Wake County at 100 S. Franklin Street.

    “Engineering and Operations are located at 228 Park Avenue, Youngsville. Wake Electric provides electric service to approximately 43,500 members in Durham, Franklin, Granville, Johnston, Nash, Vance, and Wake counties.

    “Wake Electric is governed by a nine-member Board of Directors representing geographic districts throughout the service area. Directors are elected at-large for rotating three-year terms at the cooperative’s annual meeting.

    “While some of the service area remains rural, much has become suburban as the Raleigh-Durham and Research Triangle Park metropolitan areas have expanded.”

    1. energyNOW_Fan Avatar

      I think it says enormous discount for big users.

  4. energyNOW_Fan Avatar

    What I always point out is that electricity is not like gasoline:
    Gasoline/Diesel is equal opportunity- we all pay the cost- business and homeowners alike.

    Electricity, in general all USA, but particularly Virginia, businesses get a huge discount. So the burden is on the homeowners. Lots of our homeowners are Democrats ( at least by me) and they feel please double, triple, or quadruple tax and utilities bill$ to get where they feel we need to be, re: fossil fuel bans and quality of life minimums.

    Meanwhile as a business (or school?) you can own a Tesla or electric buses and get enormous business depreciation discounts on the vehicle and cheap electricity to fill it up. And you would be feeling you want to mandate green energy for low cost, and you as a business favor that the homeowners need to cover the high cost of that. What’s not to like?

    1. Stephen Haner Avatar
      Stephen Haner

      Someday I’m going to take on and destroy your assertion that the commercial and business rates are unfair to residential users. But it’s a dissertation and the accounting is very dense. 🙂

      1. I know you really believe this argument – but to many, it appears that the commercial and business communities don’t share in all the costs. I know it is said that they pay for things separately for their businesses and don’t want to pay again for things that they view mostly help residential folks. However, it’s hard to most to see how they fairly contribute to the joint costs that they are excused from, leaving residential folks with less ability to pay stuck with all of the cost.

      2. Nancy Naive Avatar
        Nancy Naive

        It’s not a 1-0 situation. It’s a 1, but only a matter of how unfair.

    2. Nancy Naive Avatar
      Nancy Naive

      Gasoline/Diesel is equitable? Section 179.

  5. “The politicians want to be in charge, so they should explain.” What, you believe they actually “want” responsibility, even with accountability? Don’t you think those with experience view their involvement in utility ratemaking and its consequences as the necessary risk they must take to get the campaign contributions? Of course, that risk encourages them (as well as the utility) to hide transparency beneath complexity, like those layers of RACs and pass-throughs and other “special” charges, rather than answer two simple questions: “is the service reliable?” and, “is the total cost of service reasonable?”

  6. Anyone who looks and does not see what Joe Biden democrats have done to cause most of this energy price increase is not looking.

  7. Nancy Naive Avatar
    Nancy Naive

    Well, they run the waterworks. What could go wrong?

  8. LarrytheG Avatar

    The charts are quite interesting. Thank for providing them, They really do demonstrate that all costs from gas plants to coal ash to re-licensing the nukes, to transmission lines as well as wind/solar/RGGI are all costs that Dominion is allowed to pass on to customers.

    In terms of reliability, the SCC is not PJM and PJM knows reliability and helps insure it. They seem to do
    that well so why does the SCC need to?

    Finally, Dominion buys power from other providers – when it needs it, when it cannot generate all that is needed with it’s own plants – whether they be nuke, gas, wind, or solar. And they pick the lowest cost sources that are available when they are available which means when wind/solar are available and the lowest cost fuel, it’s a no-brainer to use them, no different than when they are not and gas is used. It’s not a partisan thing. It’s an economic thing.

    1. Stephen Haner Avatar
      Stephen Haner

      Virginia Mercury gets the same stock talking GND points you do:

      Basic message: Future reliability? Nothing to see here…

      PJM does indeed provide oversight and information on reliability but does not have the regulatory authority that the SCC has, or should have. And the SCC will be focused on these service areas, not the entire region. PJM doesn’t care how much we pay. As PJM becomes more and more reliant on solar and wind, the reliability issues will become regional and just not local.

      1. LarrytheG Avatar

        PJM has the grid reliability expertise that SCC probably does not. Right?

        1. William Chambliss Avatar
          William Chambliss

          The SCC has more understanding of grid reliability than the General Assembly does….

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