The Virginia Poverty Law Center, federal and state agencies, and Walmart have joined together to speak out against Dominion Energy’s proposal to increase the profits its shareholders can earn, the Virginia Mercury reports.
Dominion has asked the State Corporation Commission to increase its permitted return on equity (ROE) from 9.2% to 10.75%, which would allow shareholders to reap higher profits in return for their investments, at the expense of Dominion customers.
Most of Dominion’s critics in the matter did not pull any punches. The U.S. Navy called the proposal “excessive and unwarranted,” the Virginia Office of the Attorney General’s Division of Consumer Counsel said it was based on “highly unrealistic assumptions,” and the VPLC called it “unjustified and unreasonable.” Walmart was less aggressive in its criticism, simply saying Dominion’s request was “counter to broader electric industry trends.”
ROE rates fluctuate in the private market, but since Dominion has a monopoly on electric utilities, its rate caps are determined by the State Corporation Commission.
As originally reported by the Mercury, the SCC approved a 9.2% return on equity for projects paid for via rate adjustment clauses, or “riders,” in November 2017. This allowed the utility giant to recoup the costs of construction of new facilities or environmental clean-up efforts.
But now, Dominion says the rate should be increased to 10.75% because of shifts in the market and its plans to spend $11 billion in capital expenditures between 2019 and 2021.
The Mercury reported that Robert Hevert, a company witness, said the company’s planned spending is “above average” and would “place additional pressure” on Dominion’s cash flow, “making regulatory support more important in terms of [the company’s] ability to finance these expenditures and earn a reasonable return on its planned investments.”
Dominion’s critics all suggested a revised ROE rate of between 9.32% and 9.38% and J. Randall Woolridge, who testified on behalf of the Office of the Attorney General’s Division of Consumer Counsel, argued that Dominion’s ROE rates have been “more than necessary to meet investors’ required returns” over the last decade and that customers already pay more than they should.
The average residential bill for Dominion customers already rose from $90.59 in 2007 to $115 in 2018, with the largest part of the increase ($15.08) attributable to riders, according to a 2018 report from the SCC.
The SCC also reported that Dominion had an ROE of 13.84% in 2017, far above the approved 9.2% rate.
While Dominion says it hasn’t calculated the impact its increased ROE rate would have on ratepayers, the Mercury reports that the SCC estimated Dominion residential customers could see their monthly bills jump by an additional $30 per month on average by the end of 2023. VPLC witness Karl Rabago said a 10.75% rate would “cause serious economic and social harm” to ratepayers.
The SCC will hear the case on September 10.