Who gets the best of Dominion deal?

The deal proposed by Dominion Virginia Power, the Attorney General's Office and several large industries last week certainly sounds good. Customers would see a reduction in their electric bills and get a refund to boot. A household using 1,000 kilowatt-hours of electricity per month would see bills decline by $6.33 to $102.90, wiping out a rate increase that began in September. A one-time credit of $24 offers a small but welcome bonus.

But is this the best deal possible for Dominion's 2.3 million customers?

That's a much harder question to answer.

The compromise proposal comes after a finding by the Attorney General's Office that Dominion collected $268 million in excess profits last year. What's being lost in the haste to ink a deal is a more extensive analysis by experts at the State Corporation Commission.

They've spent months auditing Dominion's revenues and expenses - the first such review since the utility's last rate case 17 years ago. SCC experts are scheduled to file their findings on Dec. 8, and they are due to testify before a three-judge panel in January.

Dominion is now asking for an accelerated hearing to consider an 11th-hour compromise. Before any decision is made, however, SCC judges should first review the findings of their staff experts. That analysis should be posted on the SCC's Web site and fully vetted in a public hearing.

It may be true that the proposal announced last week is the best deal possible for Dominion's customers, but what if SCC experts conclude that the rates should actually be even lower?

Finance experts employed by the U.S. Navy have raised serious questions about Dominion's original rate request.

A filing by the Navy this week sharply criticizes state legislators for adopting a law that allows utilities to collect excessive returns on equity using outmoded and inaccurate criteria.

According to the Navy, the state law requires the SCC to grant Dominion a return on equity of at least 10.55 percent, above its capital costs of 9.5 percent.

The Navy contends that the utility's return on equity should equal its cost of capital. Because state law sets a higher return, it allows more than $70 million in excess earnings annually for Dominion.

The compromise offered by Dominion rolls back some of the performance incentives skewered by the Navy, but the deal requests an 11.9 percent return, exceeding the profit level that attracted the Navy's wrath. Dominion originally sought a 14 percent return, which the Navy predicted would result in $300 million in excess annual costs to customers.

The Navy has not signed off on Dominion's offer of an immediate rate reduction and refund, although several large industries support the deal.

The offer has strong appeal because it would help families and businesses that are struggling to right themselves in the lingering aftermath of a devastating recession.

However, that short-term benefit must be weighed against any long-term unintended consequences. Once new rates are adopted, they cannot be lowered by the SCC until a utility has collected excess profits for four years.

Dominion's attorneys agreed to the procedures and schedules now in place for the current rate case. Indeed, they wrote much of the law that guides the process.

That process calls for the SCC to gather and publicize all available information before making the best decision, one that puts the public's interest above all else. That process needs to be preserved, and it needs to occur in the open.