RICHMOND, Va. (WRIC) — Dominion Energy is increasing monthly bills in response to rising fuel prices and Appalachian Power is pursuing a similar rate hike.
The utility companies say they’re taking steps to cushion the blow but some advocates argue customers in Virginia are still shouldering too much of the burden because of the state’s current law.
When fuel costs fluctuate, state law allows utility companies to pass on those expenses entirely to customers as long as they are deemed “just and reasonable” by regulators, according to State Corporation Commission (SCC) Spokesperson Andy Farmer.
An average residential customer with Dominion Energy Virginia using 1,000 kilowatt-hours of electricity per month can expect to see their bill increase by $14.93, according to an SCC press release. The fuel rate hike took effect provisionally on July 1, 2022, but the SCC officially approved it last week. Regulators are expected to revisit the rate in July 2023.
Craig Carper, a spokesperson for Dominion, said the increase is the result of higher costs for coal, natural gas and oil that utilities purchase to generate electricity.
“It’s inflation, it’s the war in Ukraine and supply chain issues. All of these things factor into the price that we pay for fuel and that we pass on to the customers,” Carper said. “We were looking hard at other areas where we could save customers money at the same time to make that a little bit less. So, while the fuel charge went up by about $15, we were able to cut about $6 from the rest of the bill.”
Last week, Appalachian Power applied for a similar increase that is expected to raise monthly bills for average residential customers by $20. That will take effect provisionally on Nov. 1, 2022, and, if approved by the SCC, that rate will remain at least until Nov 2023, according to Appalachian Power spokesperson Teresa Hamilton Hall.
Hall called this the largest proposed fuel rate hike from Appalachian Power in at least a decade.
“We recognize these are challenging financial times for many people and families,” said Chris Beam, Appalachian Power president and chief operating officer. “We strive each day to keep fuel costs as low as possible, continuously monitoring energy markets for opportunities to purchase fuel and energy at prices that are advantageous to customers.”
To decrease the impact on customers, Dominion Energy will spread out the recovery of additional fuel costs over three years and Appalachian Power has proposed to do so over two years.
But advocates argue many low-income customers are already paying more than they can afford.
In a recent op-ed, Kendl Kobbervig, advocacy and organizing manager at Clean Virginia, and Kidest Gebre, energy justice organizer at Virginia Interfaith Power and Light, said state law shields utilities from paying the price for cost increases resulting from an “over-reliance on fossil fuels.”
“Because regulators are powerless to prevent the utility from passing fuel costs to customers, Dominion has no incentive to make cost-conscious investments, minimize fuel use or transition to renewables,” wrote Kobbervig and Gebre. “Now that fossil fuel prices are soaring amidst global turmoil, the utility is only adding to the energy burden by forcing Virginians to shoulder those costs alone, leaving its profits, executive pay, and shareholder dividends untouched.”
In an interview on Tuesday, Gebre said several other states have held utilities accountable by requiring companies to split fuel costs with customers. She said Virginia should do the same.
“That would encourage more customer-focused utility performance and a swift, affordable transition to renewables because it will give our utilities a skin in the game,” Gebre said.
In a press release, Appalachian Power noted that incorporating more renewable sources into the company’s energy mix is another step in reducing customer fuel costs.
The Virginia Clean Economy Act, which passed under Democratic leadership, requires 100% carbon-free electricity generation by 2050.
In the meantime, Gebre is hoping Governor Glenn Youngkin’s administration will focus on risk-sharing reform, rather than withdrawing from the Regional Greenhouse Gas Initiative. She said that will have a much larger impact on energy bills.
In a statement, Youngkin didn’t comment directly on calls for cost-sharing reform but he doubled down on removing Virginia from RGGI, an interstate pact to reduce carbon emissions.
“Hardworking Virginians are having to do more with less as inflation steals a historic amount from their paychecks and the failed Biden Administration energy policies are costing Virginians more at the pump and in their homes. We have to work to reverse the regressive impact of policies — like the RGGI carbon tax — which raise rates on consumers,” Youngkin said.
A report Youngkin’s office released earlier this year found compliance costs associated with RGGI will increase a typical residential customer’s bill by $2.39 per month.
Carper said, in response to Youngkin’s regulatory effort to withdraw from RGGI, Dominion eliminated the compliance fee from energy bills earlier this summer to offset the fuel rate hike. He said they expect the withdrawal to be successful, even as critics argue Youngkin is overstepping his authority by acting without General Assembly approval.