Dominion Energy Virginia told state regulators this week that it expects customers’ bills to increase substantially as the result of dramatic increases in fuel prices.
The state’s largest electric utility filed an application Thursday with the State Corporation Commission seeking to revise the component of customers’ electric rates that covers fuel costs effective July 1.
The company said that it anticipates that by June 30, it will need to recover $1 billion more in fuel costs than previously expected. Without “steps to mitigate the effect of these costs,” the typical residential customer could see their bill increase by 20%, or about $24 a month, Dominion said.
“The Company’s current fuel factor rate, based on March 2021 commodity price projections, was set prior to significant increases in the price of purchased power, coal, and natural gas which have only been exacerbated by the war in Ukraine,” Edward Baine, the company’s president, wrote in a letter to the commission.
Instead of recovering the costs over one year, the company is proposing spreading it out over two or three. Its preferred option — the three-year plan — and separate rate revisions would increase the typical residential customer’s monthly bill by a net of approximately 7% or $9 a month over the longer period, if approved as filed, the company said.
Dominion said in supporting documents that the three-year plan “offers the smallest near-term fuel rate increase, promotes rate stability across the next several years, and offers the Commission flexibility next year if circumstances around commodity markets have improved.”
Because natural gas makes up over 40% of the company’s total generation mix, higher natural gas prices were a main driver of the increase, the company wrote.
Walton Shepherd, Virginia policy director for the Natural Resources Defense Council, said Dominion had gone on a building spree of natural gas plants over the last decade and now customers are “stuck paying the cost.”
Dominion is in the process of adding more renewables to its generation mix, which Baine wrote would help mitigate the risk of commodity price upheavals. But its enormous proposed offshore wind farm also would come with high capital costs.