The State Corporation Commission has approved a new fuel rate requested by Dominion Virginia Power that will take effect on July 1. The SCC accepted a plan that will spread the higher costs for fuel over a two-year period instead of the normal one-year recovery period. Ratepayers are not charged the financing costs of spreading the payment over two years.
For the average residential customer, the fuel rate increase means the monthly bill for 1,000 kilowatt hours of electricity will increase $4.86 from $103.91 to $108.77. If the full increase was recovered in one year, the monthly bill of a residential customer would increase $8.17 to $112.08.
According to Dominion Virginia Power, the increase was driven, for the most part, by rising fuel prices and the effect of last year’s hotter-than-normal summer and colder-than-normal winter.
The fuel rate is the portion of the electric bill that pays for the fuel used to generate electricity and the purchase of power from the wholesale market. Dominion Virginia Power is statutorily entitled to recover its prudently incurred fuel costs. This is a dollar-for-dollar recovery, and the company can make no profit on recovery of fuel expenses.
The fuel rate is reviewed annually by the SCC and re-set, as necessary, to reflect actual fuel expenses for the previous year and projected fuel expenses for the coming year.
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