Dominion Virginia Power Reaches Tentative Settlement In Fuel Rate Case
RICHMOND, Va. - Dominion Virginia Power on Thursday reached
a tentative settlement of its 2003 fuel rate case with the Virginia Attorney
General's Office of Consumer Counsel, the State Corporation Commission staff
and others that would minimize the impact on typical residential bills to a
3.4 percent increase.
If approved by the SCC judges, the bill of a typical residential
customer using 1,000 kilowatt-hours of electricity would increase from $82.51
to $85.29, effective Jan. 1. The original request filed July 1 would have raised
bills by about 8.7 percent, to $89.69.
The fuel rate increase request—the company's first in
three years—is because of higher fuel costs and higher electricity use
during extreme winter weather conditions in 2002-2003. If accepted, the residential
rate would be less than 1 percent higher than it was 10 years ago when it was
$84.77. In contrast, the Consumer Price Index rose by more than 26 percent from
January 1994 through August 2003.
"This settlement is a major benefit to our customers,"
said Thomas F. Farrell II, president and chief executive officer of Dominion
Energy, which operates the company's power stations. "This settlement allows
the company to recoup costs associated with skyrocketing fuel prices, while
minimizing the impact on consumers."
In its original request, the company offered a two-year recovery
period to lessen the impact of the proposed increase. The recovery period in
the tentative settlement is 3 ½-years, ending July 1, 2007, which is
when the transition period for electric utility restructuring ends in Virginia.
The total amount of the proposed increase is $386 million—about
$56 million less than the original $441.7 million request. The reductions include
a $46 million decrease in projected fuel costs and a $10 million net decrease
in the balance of deferred fuel costs from the July filing. About $171.1 million
of the $386 million would be recovered in 2004, $85 million in 2005, $87 million
in 2006 and $43 million for the first six months in 2007. Dominion still expects
to seek annual adjustments—up or down—to its fuel rates until July
1, 2007.
The bills of Dominion's Virginia electric customers are composed
of two rates, one for base charges, and the other for fuel. The base rate—which
is about 74 percent of the typical residential bill—remains capped until
July 1, 2007, by the Virginia Electric Utility Restructuring Act. The fuel rate
is a regulated dollar-for-dollar pass-through that pays for the fuel used to
produce electricity. Dominion is not permitted to make a profit on fuel expenses.
Joining the company, the Attorney General's office and the
SCC staff in the tentative settlement were the Virginia Committee for Fair Utility
Rates, which represents the company's largest industrial customers, Chapparal
Inc., and Food Lion, LLC.
Dominion is one of the nation's largest producers of energy,
with a diversified and integrated energy portfolio that includes 24,000 megawatts
of generation and 6.3 trillion cubic feet equivalent of proved natural gas reserves.
Dominion also serves 5 million retail energy customers in nine states. For more
information about Dominion, visit the company's Web site at www.dom.com.
