Virginia’s Dominion Energy customers will get $330 million in refunds due to a settlement. On Thursday, the Virginia State Corporation Commission (SCC) approved the settlement put forward in October, closing the agency’s triennial financial review of the utility. SCC staff found that the company may have overcharged customers as much as $1.1 billion, according to a September report. Dominion Energy can deduct some items from that before issuing refunds, including a $309 million Customer Credit Reinvestment Offset (CCRO) that allows reinvestment in offshore wind, solar, and grid transformation projects.
The settlement also includes a rate reduction that will reduce customers’ bills.
“Through its order, the Commission approved customer refunds totaling $330 million and the statutory maximum annual rate reduction of $50 million. For a residential customer using 1,000 kilowatt hours (kWh) per month, this rate reduction will result in a decrease of approximately 90 cents per month beginning within 60 days of the SCC final order,” the SCC said in a press release. “In addition, a residential customer using 1,000 kWh per month will receive refunds totaling approximately $67 over the 2022-2023 period.”
In an October press release, Dominion Energy said, “The settlement agreement provides a balanced, reasonable and cost-effective approach that supports continued capital investments in Virginia in order to meet the Commonwealth’s public policy priorities and the needs of our customers.”
The $309 CCRO will go to the Coastal Virginia Offshore Wind project, according to the release.
The settlement also includes a return on equity of 9.35 percent. The SCC sets the fair ROE to make sure Dominion Energy is able to attract investment, compensate investors, and protect the company’s financial integrity while protecting the public interest. In 2019, the SCC ruled that the fair ROE should be 9.2 percent. In March, Dominion requested an ROE increase to 10.8 percent, arguing that was necessary for future investment needs. The September SCC report found that Dominion Energy earned a 13.61 percent ROE during the 2017 through 2020 earnings test period.
Dominion Energy had disputed that report, based on costs from early retirement of coal-fired generation units. The utility wanted to deduct those costs from the excess profit, but the SCC report argued for a 25-year amortization period over future years. That adjustment affects when those costs are applied to the books; spreading the loss out over future years instead of applying it to the 2017-2020 would technically increase the amount of excess profit the utility had earned in the test period, triggering larger customer refunds in the near-term. The settlement provides for those costs to be amortized through December 31, 2023.
“I appreciate the thoughtful effort of all parties in reaching an agreement that puts our customers’ interests first,” Dominion Energy Virginia President Ed Baine said in the October release. “We have a lot of work ahead as we continue to build a clean energy future in Virginia. This settlement enables us to continue to keep rates affordable while creating new jobs through the development of offshore wind, solar and energy storage expansion, transformation of the grid and energy-efficiency enhancements.”