Virginia households will see their monthly electricity bills rise by an average of $13 over the next two years.
State regulators this week released their decision in the biennial review of Dominion Energy’s rates for customers.
The utility had requested the first increase to its fixed, or “base” rate, since 1992. (Increases in recent years often came in the form of riders, separate line items associated with a specific project.)
The company also requested a separate increase to its fuel factor rate, which covers the cost of fuel to generate power and a third increase to the percentage it earns from its return on equity, a sort of profit margin on money invested by shareholders.
The requests “reflect the investments and operating costs necessary to deliver on its obligation and mission to provide safe, reliable, affordable, and increasingly clean energy to customers,” Dominion wrote in its March application. “The financial health of the utility and the need for a constructive regulatory environment are crucial to enabling the necessary and cost-effective investments that will benefit the Company’s customers in the long run.”
In its order this week, the State Corporation Commission stated that regulators were sensitive to public concerns about the financial impact of higher rates on households already struggling with the rising costs of food and housing.
But the commission’s also legally obligated to allow the company to recover costs and earn a reasonable rate of return, it said.
“Many of the same inflationary, economic, and policy impacts that have affected other segments of the economy providing goods and services to consumers apply as well to companies providing electric service,” commissioners wrote.
In this case, the commission said, that means an increase in rates but not to the extent requested by Dominion.
Virginia households pay about $140 per month, based on an average consumption of 1,000 kilowatt-hours of electricity.
The SCC’s approved changes will raise that by $11.24 in 2026 — 23.7% below what the company sought — and by another $2.36 in 2027, which is 51.2% less than Dominion’s request.
The commission approved a slight increase to the utility’s authorized return on equity, from 9.7% to 9.8%. Dominion requested 10.4%.
Another change is meant to address the outsized impact of data centers on Virginia’s projected energy demand.
Regulators ordered Dominion to create a new rate class for the biggest users of electricity, customers that demand 25 megawatts or more, beginning in 2027.
That includes large industrial customers such as data centers, which are huge computer warehouses that require massive amounts of energy to power and cool equipment 24/7.
Those high-use customers will have to sign 14-year contracts to help pay for the costs of supplying energy expected to be necessary, even if they don’t end up using it.
For example, data centers would be required to pay at least 85% of their contracted distribution and transmission demand and 60% of their power generation demand.
The SCC also ordered Dominion to study more ways to shift the cost of data centers away from households.
Dominion spokesperson Jeremy Slayton said in a statement that the changes “are a win for Virginia consumers and will prevent data center costs from being passed onto other customers in the future.”
He said the commission’s approved rate increases will still keep residential bills below the national average, but that Dominion recognizes the impact they will have on customers.
In early December, the company plans to launch an online hub that will put energy-saving and assistance options in one place for people to more easily access.
