Dominion Energy customers in Virginia have seen incremental increases in their energy bills in recent years, which help the utility pay for investments such as its offshore wind farm and exploration of small modular nuclear reactors.
The utility is now proposing its largest rate hike in more than three decades, in tandem with soaring electricity costs across the Mid-Atlantic region.
Dominion submitted its biennial rate review to the State Corporation Commission earlier this year. State regulators will soon hold a public hearing.
The company’s proposals would raise the average customer’s monthly bill by about 15%, or $21, within the next two years.
Dominion says it needs to build more capacity and keep the lights on while facing surging demand and increased construction costs.
Ed Baine, president of utility operations, said in an April statement that the company delivers “uninterrupted power 99.9% of the time,” outside of major storms.
“This proposal allows us to continue investing in reliability and to serve our customers’ growing needs.”
But environmental groups argue Virginians are paying for power-hungry data centers, and subsidizing the continued burning of fossil fuels that drive climate change.
Here’s what you need to know.
Bill changes by the numbers
Households in Virginia currently pay about $140 per month, according to Dominion. That’s based on an average consumption of 1,000 kilowatt-hours of electricity.
Dominion’s request to the SCC would increase that by $8.51 starting Jan. 1, and by another $2 in January 2027.
It would be the first change to the fixed, “base” rate since 1992. Increases in recent years often came in the form of riders, separate line items associated with a specific project.
Separately, Dominion is also seeking to change what’s called the fuel factor rate, which covers the costs for fuel when generating electricity.
The utility’s proposed change would increase monthly bills by about $10.92. The SCC already approved an interim change resulting in $8.95 per month, which took effect in July. Commissioners will consider a final adjustment alongside the base rate proposal.
Finally, Dominion is requesting that state regulators increase the percentage it earns from its return on equity, a sort of profit margin on money invested by shareholders, from 9.7% to 10.4%.
The utility says its capital investment needs are “unprecedented in the company’s history,” necessitating higher profitability to attract investors.
Why costs are growing
The changes sought by Dominion highlight the same issues dominating any current discussion of energy in Virginia: data centers and electricity prices.
Dominion says it needs more money for projects that produce and transmit more energy to meet exploding demand, largely from data centers, which require massive amounts to cool warehouses full of computers.
That includes new natural gas plants, transmission lines and other infrastructure.
The company has also been affected by “persistent inflationary trends in the costs of goods and labor,” Dominion officials wrote in their filing.
The utility proposes addressing demand from data centers by creating a separate rate classification for them and other high-energy customers.
The goal is to make them pay more and commit to a 14-year contract, ensuring they’ll pay for their requested amounts of electricity, even if they don’t use it all.
Environmental and consumer advocacy groups say it’s a good first step, but argue officials need to do more to shift the costs of building new power plants to the entities using the most power.
Another factor behind Dominion’s requested increases is the utility’s participation in a regional capacity market run by PJM Interconnection. PJM is the grid operator for 13 states, including Virginia, acting like “air traffic control” for electricity in the Mid-Atlantic.
The organization holds an annual auction to determine the upcoming energy needs of its service area. Power operators, such as Dominion, submit bids outlining the amount of energy they can supply in emergencies and the lowest amount they’re willing to be paid for it.
Electricity prices have skyrocketed at the auction in recent years, including a 22% jump since just last summer.
Dominion customers have largely been shielded from sudden PJM-related increases because the utility generates most of its power and sells electricity back into the market.
But rising demand and a notoriously slow process in getting new projects connected to the regional grid, are making participation in PJM more volatile and expensive.
In an April news release, Dominion stated the $10.92 increase to the annual fuel rate reflects power capacity costs set by PJM and fuel costs of extended cold weather in January.
Next steps
The SCC will hold a public hearing on Dominion’s plans on Sept. 2 in Richmond, where members of the public can share their comments. The hearing is at noon in the SCC’s second-floor courtroom at 1300 E. Main St.
People can also submit written public comments through Aug. 26 on the SCC website.
Commissioners will then make their decision by the end of the year.
