Dominion Virginia Power proposed holding its base rates unchanged for at least another two years despite encountering more than $450 million in costs in 2011 and 2012 related to major storms, an earthquake and other factors.
Base rates make up about 60 percent of a typical residential bill and cover the company's non-fuel operational costs, salaries and part of its earnings. This part of the bill can only be adjusted every two years and has not increased since 1992.
"Holding down our base rates over this 20-year plus period reflects our continuing focus on operating as efficiently as possible," said Paul D. Koonce, CEO.
The total Dominion monthly bill for a typical residential customer who uses 1,000 kWh is now $107.22 — only two cents higher than it was in July 2008. This same bill has gone up 25 percent since 1992, while fuel oil has increased 325 percent, gasoline 198 percent and the average national electricity rate 57 percent over the same period.
All changes in the company's electric rates must be approved by the Virginia State Corporation Commission. The biennial filing made today, which is required under state law, allows the SCC to review the company's base rates for 2011 and 2012.
Other components of rates, including the cost of fuel for power stations, energy conservation programs, transmission facilities and new power stations, comprise the remaining 40 percent of a typical residential bill and are adjusted periodically during the year.
For example, an increase of 98 cents, or 0.9 percent, on a typical 1,000 kWh residential bill will go into effect in April to cover an increase in the cost of four separate power projects. The company sought the increases last June and they were approved earlier this month.
Over the past two years, the company experienced significantly higher costs from damage primarily caused by Hurricane Irene in August 2011, the earthquake that shutdown North Anna Power Station, and severe summer storms, including the derecho in June 2012. The planned closing of six coal-fired generating units because of new environmental regulations also caused impairments to company earnings.
In spite of these challenges, the company made major infrastructure investments, achieved superior generating unit performance, improvements in reliability, faster storm response and overall enhanced customer service. Over the next three years the company plans to invest about $8 billion to continue infrastructure improvements and meet ever-growing customer demand.
With the filing and the non-base rate adjustments expected to occur over the rest of the year, the company's electric rates would still be among the lowest in Virginia and well below national and regional averages. Current company projections place the impact of all other rate adjustments this year at about 3 percent.
Dominion (NYSE:D) is one of the nation's largest producers and transporters of energy, with a portfolio of about 27,500 MW of generation. Dominion operates one of the nation's largest underground natural gas storage systems and serves retail energy customers in 15 states.