Panel Sees No Way Around Surge in Va. Power Rates

By Sandhya Somashekhar
Washington Post Staff Writer
Wednesday, June 25, 2008

RICHMOND, June 24 -- State regulators indicated Tuesday that they would approve the biggest one-time jump in Dominion Virginia Power electricity rates in three decades, saying they have no choice but to allow what they acknowledged would be a hardship on many low-income residents.

The three judges on the State Corporation Commission said they sympathized with the elderly and disabled ratepayers who spoke out against the 18 percent increase proposed by Dominion. But they said they are bound by a state law that allows Dominion to recoup through rate increases the cost of oil, coal and other fuels used to generate electricity.

"We are well aware, keenly aware, of the impact a rate increase like this is on people's budgets, particularly on people of limited means," said Mark C. Christie, who presided over a hearing here Tuesday. "We're also aware there's a law we have to follow."

According to Dominion, coal costs have risen by 95 percent in the past year, and oil and natural gas have also become more expensive. Prices have risen so sharply that the commission's analysts have warned that the increase requested by Dominion might in fact be too conservative.

The commission is expected to rule on Dominion's proposal in the next week. The company hopes the higher rates will take effect July 1. If approved, Dominion would be allowed to raise the average residential bill by about $17, to $107 a month, according to company estimates. Business customers could see much greater rate increases, as much as 44 percent for the biggest electricity users, according to an attorney for many of Dominion's business customers.

Dominion officials noted that despite the jump, their customers would pay less than the national average and substantially less than most Maryland ratepayers.

Consumer groups such as AARP have said a dramatic jump in electricity bills this year will hurt customers already struggling with rising gas and food prices. Dominion has pledged to help its neediest customers adjust to the higher rates with $5 million in emergency grants and other assistance.

Only a handful of Dominion customers attended Tuesday's hearing. Among them was Colleen Patten, 50, who said she suffered serious injuries when she was hit by a truck in 1985. The former engineer from Fairfax County said she lives on disability payments.

"For most people, $10 a month extra to pay for electric is not that much," said Patten, who now lives in Richmond. Not so, she told the judges, for "those of us on a fixed income."

But the debate Tuesday did not center on whether Dominion should be allowed to raise rates. Rather, the question was by how much.

Dominion is permitted under state law to raise residential rates by as much as 22 percent to make up for fuel costs. The company asked for a smaller increase to soften the impact this year, although it plans to continue raising rates in the coming years.

"The difference between 18 percent and 22 percent is significant," said Edward Flippen, Dominion's attorney. Moreover, he told the commission, delaying the full increase makes it easier for customers to budget for higher electricity bills.

Several groups have backed Dominion's reduced request, including trade associations representing industrial and retail businesses. The consumer protection arm of the state attorney general's office issued a statement calling the compromise "a positive action for Virginia's ratepayers."

Dominion officials said that the full 22 percent would not have offset the increased cost of fuel and that they intend to seek rate increases over the next three years. And if oil, coal and natural gas prices continue to skyrocket, the outlook for ratepayers could be even worse.

"If things continue on the way they have occurred the past year, there is a possibility that customers could see another big increase," said Glenn Richardson, a staff attorney for the commission.

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