Winter's 'Polar Vortex' Contributes to Dominion Virginia Power Request for
Fuel Rate Increase
-- Extreme cold's impact on natural gas prices, purchased power driving 4.1
-- Proposal would spread increase over two years to ease impact on customers
-- Company earns no profit on fuel charge, only allowed to recover actual
-- Smaller increase sought for transmission costs, to be effective Sept. 1
RICHMOND, Va., May 2, 2014
RICHMOND, Va., May 2, 2014 /PRNewswire/ --Dominion Virginia Power today asked
the Virginia State Corporation Commission for a 4.1 percent increase in
residential customer rates to cover the higher cost of fuel used in its power
stations, primarily during this year's extremely cold winter.
If approved as requested, the increase would take effect July 1. A typical
1,000-kilowatt-hour residential bill would increase from $107.99 to $112.45
per month. Large business customers should expect to see a proportionately
higher impact because fuel makes up a larger component of their bills than it
does for residential customers.
"This winter we saw days and weeks so cold – driven by the 'polar vortex'
phenomenon -- that the price of natural gas and purchased power soared," said
Robert M. Blue, president-Dominion Virginia Power. "While gas was available,
there were pipeline constraints at certain points on the coldest days. Had it
not been for our diverse sources of generation, including nuclear and coal,
electricity shortages might have occurred and this proposed fuel increase be
Purchased power is electricity purchased off the grid from other utilities and
power producers. These prices fluctuate according to demand, weather and
other factors. At times this winter, natural gas –a major fuel for power
stations -- climbed far above normal prices, driven by the frigid weather in
the eastern half of the country.
The company proposal would mitigate the immediate impact on customers by
spreading part of the requested fuel increase over two years. Pending SCC
approval, the company would delay collection of $133.7 million in higher fuel
expenses until July 1, 2015.
Without the proposal, a typical residential customer's bill would be $2
higher, making it $114.45 or about 6 percent more. The interest cost of
delaying collection of the $133.7 million will be borne by the company under
In a second filing today, the company asked the SCC to allow it to increase
its transmission rider by $1.91, or about 1.7 percent, for a typical
residential customer. The increase is needed to support the company's
continuing efforts to strengthen its transmission network and ensure secure
and reliable delivery of power to customers. If approved, the increase would
take effect Sept. 1.
No rate changes – up or down – can occur without SCC approval. Under state
law, the company makes no profit on the fuel charge, only a dollar-for-dollar
pass through to cover the utility's actual costs for fuels such as coal,
uranium, natural gas and oil, and purchased power.
Even with the requested rate changes, the company's electric rates remain well
below national, regional and state averages. The latest information on the
company's rates, complete with comparison charts, filings and more, can be
found at www.dom.com/varates.
Electricity bills are made up of several components. The fuel charge normally
comprises about 27 percent of a typical residential bill and covers the
variable cost of fuel for the company's power stations and power purchases on
About 58 percent of a typical residential bill is made up of base rates, which
cover the company's operating expenses, such as storm recovery, system
maintenance, general business and personnel costs. Expenses for specific
infrastructure projects, such as new power stations, transmission lines and
substations, are covered by individual rate clauses called riders and make up
about 15 percent of the typical bill.
Dominion Virginia Power is a subsidiary of Dominion (NYSE:D), one of the
nation's largest producers and transporters of energy, with a portfolio of
approximately 23,600 megawatts of generation, 10,900 miles of natural gas
transmission, gathering and storage pipeline and 6,400 miles of electric
transmission lines. Dominion operates one of the nation's largest natural gas
storage systems with 947 billion cubic feet of storage capacity and serves
utility and retail energy customers in 10 states. For more information about
Dominion, visit the company's website at www.dom.com.
SOURCE Dominion Virginia Power
Contact: Media - David Botkins, 804-771-6115, David.Botkins@dom.com, or Le-Ha
Anderson, 804-771-6115, Le-Ha.Anderson@dom.com, or Charles Penn, 703-796-9308,
Charles.Penn@dom.com, or Bonita Harris, 757-857-2700, Bonita.B.Harris@dom.com
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