RICHMOND, Va. — A multi-day hearing has begun in Richmond to determine whether Dominion Energy can raise customers' electric bills.
Two cases that will have significant impacts across Virginia are now underway before the State Corporation Commission (SCC), the entity that regulates the utility monopoly.
On day one of proceedings, the SCC heard from members of the public, many of whom called in by phone to voice concerns that they simply can't afford higher bills.
“I’m already stretched thin as it is. Dominion’s proposed rate hike would be devastating for my monthly budget," said one Richmond man, who identified himself as a VCU student.
“I don't know how I or my neighbors are going to afford these added costs," a customer in Dumfries said.
Callers described situations of living on fixed incomes while already grappling with escalating food and housing costs. Some stated that higher energy bills will lead to skipping out on other necessities such as meals.
“When you're living this close to the edge, every price increase hurts. Dominion says they need to raise prices, but I think they need to put people before profits," a Williamsburg resident said.
The issue at hand technically consists of two different rate hikes that combined would add $21 a month to the average residential bill over the next two years, which is about a 13% increase. One increase would impact the fuel factor, and the other would impact the base rate. These are the two most significant portions of a customer's bill.
Dominion said its proposed rate increases are due to costs of labor, materials, equipment, grid upgrades, and inflation.
In filings, the company contends it has underearned over the past two years and did not reach or get close enough to its maximum profit margin. While SCC allows Dominion to earn up to 9.7% return on equity, Dominion reported a 7.77% return on equity (ROE). The company attributed the underearning to higher capital investments than projected, the elimination of $350 million in rider fees in 2023 which saved customers about $6-$7 on their monthly bills, the inability to raise rates during its 2023 regulatory review, and fossil plant retirements.
Along with the rate increases, the company is also asking the SCC to expand its ROE to 10.4%. However, SCC staff have called Dominion's proposed ROE "above a reasonable estimate for the market cost of equity" and recommends a 9.8% ROE instead.
In a report responding to Dominion's filings, SCC staff said the company's requests “come at a time of historic load growth in Dominion’s service territory stemming from growth in the data center industry in Virginia.”
The expansion of data centers in the commonwealth, according to staff's report, adds "complexity" to the proceedings in ensuring a proper balance of the company's ability to recover costs and maintaining reasonable rates while ensuring any increase "does not result in undue subsidies or inequities between various customer classes."
Data centers were a hot topic during public comment, as some speakers expressed fears that residential and small business customers have been and will be footing the bill for high load customers.
“Data centers are driving enormous disruptive changes to Virginia's electric grid and its costs. Major changes are needed to protect residential ratepayers and others from unfairly varying costs of transmission, generation and capacity markets that benefit the richest corporations in the world," said a speaker who identified herself as an economist in Warrenton.
As part of its proposals, Dominion wants to create a new customer class for data centers so that they can pay their fair share for energy, which some speakers applauded.
“It ensures transparency. It provides price stability for households and small businesses, and it helps protect us from sudden cost swings," said a Bon Air resident.
But SCC staff have cast doubt on some of Dominion's projected revenue requirements for data centers, citing concerns with the company's forecasting and premature assumed capital costs for projects that are not reasonably predicted to occur.
In opening statements, the company's legal counsel Joseph Reid of McGuireWoods, said SCC staff and the Attorney General's Consumer Counsel proposed $850 million in disallowances, claiming that the projects are not mature enough.
However, Reid said the company intends to dispute those claims throughout the rest of the proceedings, and while acknowledging affordability concerns, said the company stands by its original proposals.
The remainder of the hearing could last for several more days as the company, and many other involved parties including big corporations like Google and Microsoft, data representatives, clean energy organizations, and consumer advocates, present their testimonies and evidence.
The SCC must approve any actions that impact rates. The commission is set to issue a final decision by December.
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