Dominion Virginia Power proposes 6.9 percent hike

If approved by the State Corporation Commission, the increase would be phased in over 14 months, eventually adding about $7.54 to the monthly bill of an average customer using 1,000 kilowatt-hours of electricity.

"We recognize this is a tough time for many of our customers," Dominion Virginia Power president David A. Heacock said. But the increase is necessary to raise generating capacity and expand energy conservation programs, which Heacock said will benefit Virginians in the long run.

"The bottom line here is this will allow us to keep rates lower in the future," he said.

Dominion passed along an 18 percent increase in fuel costs to customers last summer. Now that fuel costs have decreased, the utility proposes decreasing the fuel rate by 3.3 percent. That rollback is included in the overall 6.9 percent increase sought by Dominion.

The company has not had a base rate increase since 1992 but is entitled to an annual fuel-rate adjustment, which passes costs along to the customer without increasing Dominion's profit. Nearly two-thirds of a typical customer's bill comes from the base rate.

According to Heacock, the first change customers will see will be the fuel rate decrease on July 1. That will reduce the typical customer's monthly bill by about $3.64 per month. The base rate increase takes effect September 1, and a series of smaller increases tied to specific projects and conservation programs would be phased in through May 1, 2010.

Dominion says it plans to spend more than $7 billion between now and 2012 on environmental improvements, additional generation, reliability and service improvements and expansion of the electrical grid. The company has spent $10 billion on such projects since the last base rate increase in 1992. During that period, Heacock said, the company has added 567,000 new customers, a 31 percent increase.

Despite the economic downturn, Dominion expects demand to grow by 4,600 megawatts over the next decade — enough power for more than 1 million new homes. Virginia needs to generate more of its own power to meet that demand because it already imports more electricity than any state other than California, the utility says.

The company also emphasizes that its typical residential customer pays 9.3 percent less than the national average. According to Dominion, utility rates nationally have increased by 52 percent — slightly more than inflation — since 1993, while Dominions rate's have increased by 25 percent, virtually all of it for fuel costs.

Along with the base rate and fuel rate adjustments, Dominion is seeking separate increases for the Bear Garden Power Station in Buckingham County, $1.40 a month; transmission projects and related expenditures, $1.26 a month; the Virginia City Hybrid Energy Center in southwest Virginia. $1.78 a month; and new energy efficiency and conservation programs, 40 cents to 50 cents a month.

Dominion has nearly 2.3 million customers in Virginia.