Dominion Va. Customers Are Bracing for Bigger Bills

RICHMOND -- Beginning next month, millions of Dominion Virginia Power customers will probably see their electric bills rise by at least 18 percent, the largest one-time rate increase in three decades, to pay for soaring fuel costs.

And it won't stop there.

Dominion is looking to make up for hundreds of millions of dollars spent on fuel last year that it was not allowed to pass on to customers because of a state-imposed cap. As a result, rates are expected to keep rising for at least three more years.

Some Virginians, saddled with the rising cost of gas, food and other items, say this year's increase is too steep. It would raise a resident's average monthly bill from $91 to $107 starting July 1.

"The rates are high enough," said Irene Leech, a Virginia Tech consumer studies professor and president of the Virginia Citizens Consumer Council. "But given how long it's been, I'm afraid that not a lot can be done."

The three-member State Corporation Commission is expected to vote on Dominion's proposal soon after a public hearing June 24 in Richmond. Historically, the commission has approved fuel-rate increases when companies prove that their costs for coal, oil, natural gas and other materials are going up.

Dominion was allowed to ask for an increase of more than 22 percent this year, but company officials say they limited the increase to 18 percent to lessen the impact on residents and businesses. Last week, SCC staff members told commissioners that the law mandates them to approve the full increase.

State law requires that fuel costs, which make up about a quarter of a customer's bill, be passed on to customers with no profit.

"Like a lot of our customers, we're subject to a spike in global energy prices," said Robert Blue, a senior vice president at Dominion, which serves about 2.3 million homes and businesses statewide, including 800,000 customers in Northern Virginia.

Across the state and across the nation, electric companies are seeking rate increases as a result of a global spike in energy prices, driven by Wall Street maneuvering and increased consumption in the United States, China and India. In the past year, Dominion estimates, coal costs have risen 95 percent; oil, 55 percent; natural gas, 20 percent; and purchased power, 28 percent.

The Washington region's other major utilities, Pepco and Baltimore Gas and Electric, have also cited rising fuel costs in applying for recent rate increases. In Maryland and the District, run-ups in fuel costs are embedded in electricity prices that have soared since the switch from regulation to a competitive market for power. Utilities buy power in auctions in which energy companies' bids to supply power include their fuel costs. Electricity prices have gone up more than 80 percent in the Washington-Baltimore region under deregulation.

A week ago, Appalachian Power, which has 500,000 customers in southwest Virginia, applied for a 25 percent rate increase.