On November 18, 2021, the Virginia State Corporation Commission (“SCC” or “Commission”) approved a settlement in Dominion Energy Virginia’s first triennial base rate case, the first time the SCC has reviewed the rates Dominion charges its customers since 2015 and the passage of the legislation establishing a triennial review.
While news outlets around the Commonwealth and beyond hailed Dominion’s 2021 triennial review as likely “the powerful utility’s biggest battle of the year”[1], the evidentiary hearing held on October 25, 2021 lasted less than four hours and consisted of a review and discussion of a comprehensive settlement agreement entered into by Dominion, Commission Staff, the Office of the Attorney General of Virginia, and other parties. No case party opposed the settlement. All of the contested issues in the case that the Commission was required to decide pursuant to statute, including the allocation and application of bill credits to consumers in light of the utility’s almost $1 billion in excess profits between 2017 and 2020, were resolved by the proposed settlement agreement on October 18, 2021. As some respondents in the proceeding recognized, the settlement agreement left open other unresolved issues that will need to be addressed in future proceedings.
Under the settlement, customers will receive $330 million in refunds and a $50 million reduction in rates going forward. For a residential customer using 1,000 kilowatt hours (kWh) per month, the rate reduction will result in a decrease of approximately 90 cents per month.[2] The prospective rate reduction is the maximum amount allowed by law under the 2018 Grid Transformation and Security Act. As a result of this law and other favorable laws to the monopoly utility, the proposed settlement is about as good as current law will allow. As counsel to the Southern Environmental Law Center, representing respondent Appalachian Voices, recognized in his remarks during the hearing, “[c]ustomers are getting a $50 million rate cut when the rate cut they deserve is closer to $180 million” if other terms of the settlement agreement had been agreed upon.[3]
Additionally, using another mechanism created by the Grid Transformation and Security Act, $309 million in the company’s revenues over the past four years will be used to offset costs of the Coastal Virginia Offshore Wind pilot and expenses related to the rollout of smart meters and a customer information platform.
In short, as long as Virginia law permits monopoly utilities such as Dominion to overcharge its customers such astronomical amounts and to retain, rather than repay, some of those charges through various mechanisms, even productive settlements like the one approved by the Commission will fall short of what consumers deserve.
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[1] Sarah Vogelson, Virginia Explained: What’s a Triennial Review and Why Should You Care? Virginia Mercury (Apr. 9, 2021 12:02 AM), https://www.virginiamercury.com/2021/04/09/virginia-explained-whats-a-triennial-review-and-why-should-you-care/.
[2] See SCC News Release, SCC Approves Settlement in Financial Review of Dominion Energy Virginia Rates; Customers to Receive Refunds Totaling $330 Million and Rate Reduction of $50 Million (Nov. 18, 2021).
[3] Tr. 144:11-21. For example, if Dominion’s permissible return on equity (“ROE”) had been approved at 8.7 percent, rather than the proposed 9.35 percent. Id.
