Dominion Va. Customers Are Bracing for Bigger Bills

"Utilities across the country are grappling with the challenge of higher fuel costs. It's not just Dominion," said Jim Owen of the Edison Electric Institute, an association of U.S. shareholder-owned electric companies that represents about 70 percent of the nation's electric power industry.

Dominion is expected to ask to raise rates again in July 2009 to begin a three-year plan to recoup $700 million it was not allowed to collect last year, when the General Assembly capped the increase at 4 percent. But the company is not allowed to seek $1.8 billion it spent when legislators froze fuel rates between January 2004 and June 2007.

"We're not asking for that entire balance, and the reason for that is we are trying to soften a dramatic increase," Blue said.

Next year, Dominion will be able to ask for an increase in its base rate, which pays for delivery, power lines, plants and company profit and makes up the remaining 75 percent of a customer's bill. The General Assembly froze those rates in 1999 when legislators embarked on an ambitious rewriting of utility law, but those restrictions expire this year.

Many expect Dominion to ask for a base rate increase, but Blue said it would be a "mistake to speculate on future rate filings."

Critics say Dominion was able to survive years of state-imposed caps and freezes because it had been charging unjustifiably high rates since before 1999.

Tony Hylton of AARP Virginia, which has more than 1 million members, said the group is concerned that Dominion is using this year's fuel rate increase to try to make up for years of caps and freezes. "We're extremely concerned about how our members on fixed incomes will be able to pay for these increases," he said.

Dominion disputes that, saying its rates were frozen in 1999 at a 1993 level and still will be below the national average. "We believe our rates are fully appropriate, and those people who criticize us should also take into account that we were not collecting our full fuel expenses for several years," Blue said.

In Virginia, a business-friendly state with a small consumer voice, few groups have organized to oppose this year's proposed rate increase.

Leech and other consumer advocates say people do not usually get involved in electric rate cases because it requires having an attorney, finding an expert witness and understanding complicated utility laws. And, they say, few see the point of going up against Dominion, considered one of the most powerful and influential companies in the state.

"That's been the problem," Leech said. "It's hard for anyone to get involved."

Last week, Sen. James Webb (D-Va.), who has received dozens of letters and calls about the rate increase, sent a letter to the commission expressing concern that it would disproportionately affect low-income families.