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 even higher."
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 its proposal. 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.
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