Dominion Energy Virginia tentatively settles pending base rate case
Dominion Energy, Virginia’s largest electric utility, announced Monday that it has reached a tentative settlement agreement in its pending base rate case with staff at the Virginia State Corporation Commission (SCC), the Office of the Attorney General, and several other parties.
Under the Richmond, Va.-based power company’s proposed agreement in the four-year rate case — which still requires approval from the full SCC — Dominion Energy customers would see a total of $330 million in one-time refunds and a $50 million rate reduction.
“I appreciate the thoughtful effort of all parties in reaching an agreement that puts our customers’ interests first,” said Ed Baine, president of Dominion Energy Virginia, on Monday. “This settlement enables us to continue to keep rates affordable while creating new jobs through the development of offshore wind, solar and energy storage expansion, transformation of the grid and energy-efficiency enhancements.”
The total $330 million in one-time refunds on customer bills would be made up of $255 million over a six-month period and $75 million over three years, resulting in a total proposed refund of roughly $67 for a typical residential customer, according to a statement released by Dominion Energy, which serves seven million customers across 16 states.
The $50 million going-forward rate reduction, which is the maximum amount permitted by law under the 2018 Grid Transformation and Security Act, would result in a proposed monthly bill reduction of about 90 cents for each residential customer, according to the company.
And if approved by the SCC, Dominion also would receive a higher return for its shareholders, rising from the current 9.2 percent rate to a 9.35 percent return on equity. Dominion had requested a 10.8 percent rate.
Another key component of the settlement agreement includes the use of $309 million in revenue to offset costs of developing the Coastal Virginia Offshore Wind pilot project, considered the largest on the East Coast, as well as expenses related to the rollout of smart meters and a customer information platform.
The SCC staff and the state attorney general previously alleged that Dominion garnered almost $1 billion in excess profits between 2017 and 2020, spurring regulators to start a review in March to evaluate the power company’s earnings during the last four years and to assess whether its future rates should be adjusted. The parties have been working on an agreement during the last few weeks, according to a Dominion spokesperson.
In addition to the SCC Staff and Office of the Attorney General, the settlement agreement is joined by the Apartment and Office Building Association of Metropolitan Washington, Costco, Direct Energy, Kroger, Harris Teeter, Walmart, and the Virginia Committee for Fair Utility Rates, according to Dominion.
Nine other groups that participated in the review did not sign the agreement but do not oppose it, including Appalachian Voices, the U.S. Department of the Navy, Microsoft, and Shell Energy North America, among others.
Southern Environmental Law Center Senior Attorney Will Cleveland, who represented Appalachian Voices, said Monday that the settlement agreement “would refund nearly as much money to customers as Virginia’s utility-friendly laws would allow.”
“As long as our laws continue to allow Virginians to overpay, even productive settlements like this one will fall short of the least-cost transition that our Commonwealth must make to a zero-carbon electricity grid by 2050,” Cleveland said in a statement.
In the same vein, Charlotte Gomer, spokeswoman for Virginia Attorney General Mark Herring’s office, said earlier Tuesday that “Herring believes that this is as fair a settlement as possible under the existing law” that aims to maximize “the allowable rate cut and will return hundreds of millions to consumers in the Commonwealth.”
Dominion Energy called the settlement agreement “a balanced, reasonable and cost-effective approach” that supports its continued capital investments in Virginia, including those to grow its solar portfolio, nuclear relicensing, energy storage and grid modernization that will help the utility reach 100 percent clean energy by 2045 in Virginia and net-zero emissions by 2050 across its nationwide footprint.
“We have a lot of work ahead as we continue to build a clean energy future in Virginia,” said Dominion’s Baine.
Dominion Energy customers could start to see hundreds of millions of dollars in refunds and a lower electricity bill over the next couple of months.
