Dominion Energy’s inability to accurately predict its annual fuel budget in three of the last five years burdens its Virginia customers with billions—with a b—in surprise add-ons to their electric bills.
Its latest forecasting shortfall rang in at $922 million for the year between July 2025 and June.
Recovering that sum over one year, as is customary in the industry, would saddle the average residential ratepayer with a $21 monthly charge—or $252 annually.
That alone would more than cancel out the shareholder-funded bill credit rebate Dominion is now touting as an affordability measure if Florida-based NextEra’s $67 billion bid to buy the Virginia utility is greenlighted.
To fix its blown fuel budget and ease the sticker shock of that monthly $21, the utility has asked the Virginia State Corporation Commission for permission to instead spread that $922 million across either seven or 10 years.
Over seven years, customers would pay an estimated extra total of $258, according to SCC calculations. That total payment would go up to roughly $265 if stretched over a decade.
Either way, the payments exceed the announced merger rebate of $240—or $10 a month for two years.
Critics of Dominion’s longer-term payback options, which involve bonds secured by the utility, understand the attempt to soften the blow to customers. Still, they say it’s equivalent to asking ratepayers to settle old credit card debt based on somebody else’s math mistakes.
“No doubt fuel costs are insane and keep going up,” Grayson Holmes, senior attorney at the Southern Environmental Law Center, told the Virginia Center for Investigative Journalism in an interview. “But that $10 merger rebate they have come up with is relative chicken feed compared to what customers would be paying to recover fuel costs.”
Each spring, utilities estimate their annual fuel costs for the upcoming July-through-June cycle.
Dominion has had a history of severely underestimating its fuel costs. The latest example, now being reviewed by the SCC, stems from Dominion gauging in spring 2025 that fuel costs would be $3.5 billion between July 2025 and June 2026, Holmes said. Dominion ended up spending $4.4 billion—a shortfall of almost $1 billion.
“Their true-up was really bad,” Holmes said. “And this comes at a time when residential utility bills are spiking.”
Dominion blamed surging fuel expenses on Winter Storm Fern in January and factors such as ballooning natural gas prices and soaring demand for power. A spokesman did not comment when asked to compare the potential merger payment with the fuel cost charges.
$1.78 billion “an opening offer”
Delegate Richard “Rip” Sullivan, D-Fairfax, was the key House sponsor of the landmark 2020 Virginia Clean Economy Act.
“Dominion loves to talk about how their rates are the lowest in the country,” Sullivan said in an interview. “But their bills are not.”
As a combined company, NextEra and Dominion have proposed issuing $2.25 billion in bill credits to their roughly 4 million customer accounts in Virginia and North and South Carolina. About $1.78 billion would be destined for Virginians.
Sullivan quizzed Dominion Energy Virginia President Ed Baine about the origin of the Virginia portion during a June hearing of the Energy Commission of Virginia.
“It’s not a magic number,” Baine told Sullivan. “We wanted to make sure that there was something meaningful in the short term for bill credits because affordability is front of mind for all of our customers.”
That figure should be considered an “opening offer,” Sullivan said in an interview. “It’s not settled. It will be up to the SCC to decide if that is sufficient.”
Dana Wiggins, an economic justice specialist at the nonprofit Virginia Poverty Law Center, said it’s fair and legal for customers to cover Dominion’s annual fuel costs.
What irks her is that those mounting expenses would shrink if the utility maximized energy efficiency and its clean energy transition, she said. Also, because residential energy use is basically flat, households are subsidizing the extra power required by the data center boom propelled by the rise of artificial intelligence.
“Our lowest-income customers really need a lot more than $10 a month,” Wiggins said about the merger rebate. “It isn’t a permanent reduction and it isn’t going to prevent an electricity shutoff.”
She agreed with Sullivan that the merger bill credit will be “eaten up” by whichever fuel cost payback program regulators settle on.
“It’s a tricky widget when people’s wages aren’t keeping up with inflation,” Wiggins said. “Then the question is, what happens to future fuel costs when there’s another storm?”
A history of underestimates
Virginia utilities seeking to finance and recover fuel-cost underestimates on an incremental basis must receive SCC approval. In this Dominion case, commissioners have until the end of September to issue a decision. Last week, an SCC hearing examiner recommended the seven-year option.
Carol Myers, part of SCC’s Division of Utility Accounting and Finance staff, testified in mid-July that Dominion has fallen short because it didn’t account for rapidly rising electricity usage, especially in Northern Virginia’s “Data Center Alley.”
For instance, she provided figures revealing that Dominion’s actual fuel and purchased power rose more than doubled in five years—from about $1.7 billion in 2020 to $4.4 billion in 2025.
Myers noted that Dominion has asked commissioners to recover fuel cost shortages from customers two other times in the last five years. In 2022 and 2023, the utility blamed missing the mark on global energy price shocks after Russia invaded Ukraine and the effects of COVID-19 on energy use, said Holmes, the SELC attorney.
For the next four years, residential customers will also continue paying about $2.90 a month to cover Dominion’s underestimates that began in 2022 and flowed into 2023, Holmes said, as part of an SCC-approved seven-year payback plan.
That type of borrowing by Dominion “on an ongoing basis is untenable,” Myers wrote.
Myers also recommended that commissioners direct Dominion to conduct a root-cause analysis of the rising quantities and prices of the fuel it is buying. In addition, she said Dominion needs to figure out how to better balance the effects of severe weather on fuel factor payments and customer bills.
A Dominion executive told the SCC in July that the company is willing to perform such an analysis, but warned it could not have accounted for the historic energy demand caused by Winter Storm Fern.
Carmen Bingham, VPLC clean energy project coordinator, said she is annoyed that mounting fuel factor payments can become “like a never-ending car lease” for Dominion ratepayers.
It’s a pass-through cost to customers that lets utility shareholders off the hook, she said. Instead of backing the building of gas-powered generation plants that operate on a volatilely priced fuel, utilities should put resources into cheaper renewable energy.
Legislators passed two bills this year aimed at tempering Bingham’s fuel-cost concerns, Holmes said. For instance, HB 1360 would deny Dominion from charging customers if the utility is generating power with coal- or oil-fueled electric equipment when that isn’t an economical choice.
“Dominion doesn’t bear the brunt of the cost or any risk if they use more fuel than expected,” Holmes said. “Customers do. These laws are trying to make the utility have skin in the game.”
Reach Elizabeth McGowan at Elizabeth.McGowan@whro.org.