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Dominion Virginia Power customers can expect a refund to come with their electric bill in the next few months, as the State Corporation Commission has determined Dominion earned above its legal limit in 2013 and 2014.
The SCC ordered the refunds after completing a biennial review of Dominion’s earnings. The review found Dominion earned a 10.89 percent return on equity on its generation and distribution services, also known as base rates.
The authorized rate of return on equity is 10 percent but law permits Dominion to keep 10.7 percent. Dominion can only keep 30 percent of earnings beyond the 10.7 percent and the remaining 70 percent, about $19.7 million, will be returned to customers in the form of a rate credit disbursed over six months.
The total refund for a typical residential customer will be between $4 and $5, based on electricity use in 2013 and 2014, according to the SCC.
Bonita Billingsley Harris, Dominion’s media and community relations manager, said while Dominion disagrees with the ruling, it will comply with the order to issue refunds. She said base rates, which comprise 60 percent of a customer’s bill, have not gone up since the early 1990s, yet Dominion has been able to invest in environmental controls as well as transmission and distribution reliability projects.
“We’re very proud that we’ve been able to keep our costs down for customers,” Harris said. “Despite billions of dollars in investments we’ve managed to keep the rates extremely stable. We want our customers to understand that.”
This is the last year the SCC can conduct a biennial review until 2022 – legislation passed in February by the General Assembly suspends base rate regulation while keeping that rate at a fixed value for five years.
Ken Schrad, a spokesman for the SCC, said the biennial reviews began in 2009 after a failed attempt to bring competition to Virginia’s electricity market. The reviews were designed to regulate the power service offered by Dominion, which is considered a monopoly company.
The fixed base rate does not mean the total on electric bills will not fluctuate, Schrad said. Fuel rates and issue-specific costs, such as the financing of a new power plant, are included in the remaining 40 percent of a customer’s bill, he said.
Harris said Dominion sees the fixed rate as a safeguard for customers as the state works to meet the U.S. Environmental Protection Agency’s Clean Power Plan, which calls on Virginia to cut carbon emissions by 37.5 percent by 2030.
“We’re basically trying to protect our customers from the expenses we know we will have to incur because of the new rules and financial risk with the Clean Power Plan,” Harris said.