The Virginian-Pilot
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Gas prices are up. Food prices, too. And now comes electricity.
Dominion Virginia Power, the primary electricity provider in Hampton Roads, has asked state regulators to approve a fuel rate increase that would boost the average bill for residential customers by about 18 percent.
The change, which would take effect July 1, would increase the bill for a customer using 1,000 kilowatt hours of electricity per month to $107.20, from $90.59, or an extra $200 per year.
In its filing to the State Corporation Commission late Tuesday afternoon, Dominion attributes the need for the increase on the escalating costs of commodities, particularly coal and natural gas, needed to run power plants.
"We are in a skyrocketing commodity-price environment," said Mark McGettrick, president and chief executive officer of Dominion Generation, the utility company's sister division that operates power plants.
"This is a large increase. We realize that."
The company passes the "fuel factor," which reflects its costs to buy the fuel, directly to customers with no markup for profit. Dominion projects it will spend $1.1 billion more on fuel to run its plants during a 12-month period beginning in July.
The fuel factor would increase to 3.893 cents in July, from 2.232 cents per kilowatt hour now, if the state commission approves it. The fuel rate represents a portion of the supply charges on Dominion's bill and, with the proposed change, would amount to about 35 percent of a customer's total monthly payment.
State law allows Dominion to apply annually to adjust its fuel factor. Last year, Dominion raised its fuel factor by about 4 percent, the maximum allowed under a 2007 law that returned the power company to a regulatory structure.
Before that, from 2004 to 2007, Dominion operated under a rate freeze - including the fuel factor - as part of the state's previous plan to transition to a deregulated electricity industry. Under the 4 percent limit, Dominion had to defer $697 million in actual fuel expenses that the company incurred since 2004, McGettrick said.
Starting in July 2009, Dominion has proposed to recoup that deferred amount through incremental fuel factor adjustments over three years. The company's filing requests the recovery of a total of $1.8 billion to cover both the projected fuel costs for the next year and the deferred amount.
The State Corporation Commission now will review Dominion's application and probably will hold a public hearing in the next several weeks. The proposal also includes an expansion of existing programs to help customers manage higher bills.
Irene Leech, president of the Virginia Citizens Consumer Council, said she wondered whether the plan to defer a bulk of the fuel costs would benefit consumers in the long run, as energy prices probably will continue to climb.
"It may mean that we're just delaying the day when we have a huge increase," Leech said. "I don't see any reason that prices will go down."
Other than the fuel factor, Dominion has operated under the same rates since 1999 and has earned more than it should as a regulated monopoly, Leech argued. With those excess earnings, she suggested, the company could absorb a bulk of the fuel expenses it has proposed to pass to consumers.
Dominion Resources Inc., the Richmond-based parent company of Dominion Virginia Power, had earnings in 2007 of $2.54 billion, or $3.88 per share, compared with net income of $1.38 billion, or $1.96 per share, for 2006.
Energy costs have risen sharply in the past four years. The spot market price of coal has risen about 46 percent since May 2005, according to the Energy Information Administration, the research division of the U.S. Energy Department. Natural gas has climbed almost 31 percent between January 2004 and January 2008, the agency's data show.
Of the total megawatts produced by Dominion's plants, the largest percentage comes from coal, at 37 percent. Nuclear plants produce 29 percent of its electricity. Natural gas accounts for 7 percent, though the growing use of natural gas in the Northeast has influenced commodity prices nationwide.
"We have had fuel rates that are significantly below current market for the last four years," McGettrick said.
Carolyn Shapiro, (757) 446-2270, carolyn.shapiro@pilotonline.com
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Looks like
It looks like we are going to need the Democratic Party more in more in the next coming years. We are all going to need food stamps, renters/foreclosure assistance, and energy assistance programs. That also applies to the middle class.
Pathetic
Do you really believe that they won't raise rates by 18% if given permission? Are you that naive? And I love the comments about cell phones and cable tv. I use a cell phone, but I don't use a landline, and do you want to know why? The cell phone service is not as an expense as a landline. And thank you very much for assuming what I rent or own is unnecessary. Do I have your permission to eat dinner tonight? In your words, pathetic. Get off your high horse sir.
Types of Power Generators
Dominion has 37 Different Power Generating Stations total
11 Coal, 2 Nuclear, 11 Gas, 9 Oil, 3 Water, and 1 Other... Now whats with the need for so much diversity? Maybe so that whenever any one fuel type goes up they can raise rates on all the rest? How about we pay for increases only on those generators that pretain to us and let Dominion get the rest of them switched over nuclear for cheaper rates all around.
Does some good
This is another example of the inflation we have experienced over the last three years. Goverment agencies such as the fed and the media will tell you it does not exist, but we know better. The good news is that inflation hurts the rich more than those of you complaining. Eventually, all prices including income will surge, thus reducing the value of your debt. Now get out there and raise the price of your products!
GA
Our GA assembly quietly passed legislation to allow these rate increases last year. VP makes huge political donation to get sweet deals from the GA like this.
Nuclear Power
About forty percent of the energy produced by Dominion comes from their nuclear facilities in Surry and North Anna, Virginia; Millstone, Connecticut; and Kewaunee, Wisconsin.
The other sixty percent is derived from coal fired, natural gas fired, hydroelectric, or oil fired plants.
Energy Assistance Programs
Where do I apply?? I can't afford to eat, drive and pay higher power bills, not to mention my prescriptions.
Nuclear Power?
Isn't Dominion Power powered by nuclear power plants?
Power bill increase
When I talk to my doctor I will tell him not to give me any more meds. Then I can pay my power bill. There are enough bills for people to worry about without having this one increase. I got rid of my car because I couldn't afford the gas or ins. due to utility bills. Now I guess I can go without my meds too; or at least the ones I can afford to get now. There are people out here that have ins. and still can't afford the RX copays. This increase will make that choice for us. We can suffer and pay our utilities instead. Thanks folks. If you get this increase are you going to help pay for my funeral when I can't afford my meds? I don't so. Why don't you think about us little people once in a while instead of your wallets. Oh I forgot. That would make you humans and we can't do that.
Offer a thank you.....
All of you who are complaining must recognize that the course this nation has followed for the past 7 years has resulted in the housing mess, the oil prices, and now Dominion Power's request to pass on their fuel costs. Therefore, each of you should find someone who voted for the current president in 2000 and again in 2004 and pass on a heart felt "thank you". You get what you vote for.