Power & Coal - Rates and Tariffs
| Dominion reaches settlement eliminating Virginia base rate increase |  |
November 06, 2009 6:03 PM ET
By Andrew Engblom
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Dominion Virginia Power said Nov. 5 that it has reached a "comprehensive proposed settlement" with Virginia's state consumer advocate and groups representing large-industrial customers under which it would drop a proposed base rate increase and return at least $397 million to customers. If approved, Dominion's base return on equity would remain at 11.9%, including a 60-basis-point performance incentive, although it would be permitted to earn a 12.3% return on equity for its proposed Bear Garden and coal-fired Virginia City Hybrid power projects. Specifically, Dominion would return $268 million of 2008 earnings to customers through the end of 2010. The company would also credit $129 million of prior-period financial transmission rights and fuel expenses to customers. All revenues earned based on an interim rate increase implemented Sept. 1 would be returned with interest. For customers who are not Virginia jurisdictional customers but have agreed to pay rates either approved by the Virginia State Corporation Commission or based on the same ratemaking methodology, the settlement would provide approximately $31 million in credits. The agreement, if approved by the corporation commission, would resolve both the pending base rate proceeding as well as an ongoing fuel case proceeding. The settlement, filed with Virginia regulators Nov. 5, was reached between Dominion, the Office of the Attorney General of Virginia, the state Division of Consumer Counsel, Wal-Mart Stores East and Sam's East, Kroger, Chaparral (Virginia) Inc., MeadWestvaco Corp., International Paper Co. and the Apartment and Office Building Association of Metropolitan Washington. According to a Dominion statement, the typical residential customer who uses 1,000 kWh per month would see savings of about $80 under the settlement. That includes a one-time credit of approximately $24 and monthly bill adjustments totaling $56 through December 2010. The monthly bill for a typical customer would be $103.83 if proposed energy conservation programs are approved by the corporation commission, about a 4.5% reduction compared to a bill of $108.73 per month for the same customer in March, when Dominion proposed the base rate increase and other rate adjustments. Dominion's original rate increase request would have resulted in a $116.27 bill for that same customer. Dominion Chairman, President and CEO Thomas Farrell II said in a statement the company was "pleased" to reach an agreement. "It keeps base rates stable while recognizing the need to invest in Virginia's energy infrastructure to meet the needs of our customers," he said. Farrell also affirmed the company's 2009 operating guidance range of $3.20 to $3.30 per share and its 2010 operating outlook of $3.20 to $3.40 per share. "The proposed settlement was within the range of possible outcomes we anticipated when we revised our operating earnings outlook in July," Farrell said. "We will be in a better position to provide details for 2010 after we receive a final order in the Virginia base rate case proceeding." The proposed settlement requests that the corporation commission reschedule hearings for the 2009 rate case proceeding to the earliest practical date. Dominion Virginia Power is the trade name of Virginia Electric and Power Co., a unit of Dominion Resources Inc. (PUE-2009-00011, PUE-2009-000116, PUE-2009-00017, PUE-2009-00018, PUE-2009-00019, PUE-2009-00081) | 
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