State regulators on Tuesday approved a base rate increase for Dominion Energy that will raise the average residential customer’s monthly bill by $13.60, or about 9%, over the next two years.
The Virginia State Corporation Commission said the company initially applied for a rate increase that would have raised the average bill by $19.57 over two years, which means the approved amount is about 30% lower than Dominion’s request.
The approved increase will come in two phases, with the average residential monthly bill rising by $11.24 in 2026 and by $2.36 in 2027.
An average residential customer uses 1,000 kilowatt-hours of electricity per month, and as of July 1, that monthly bill stood at $149.92.
As part of the same regulatory case, the SCC also approved the creation of a new rate class for large users of electricity, such as data centers.
In its final order Tuesday, the three-judge commission said it understood the public’s concerns about rate increases, particularly as food, housing and other items have become more expensive in recent years.
“However, 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,” the commission said.
The SCC said that Dominion “is not immune from current and projected increases in costs associated with raw materials and labor” and commissioners are legally obligated to allow Dominion to “recover reasonable and prudent projected costs and earn a reasonable rate of return.”
“In this case, that has resulted in an increase in rates, but not to the extent requested by Dominion,” the SCC said.
Dominion Energy spokesperson Jeremy Slayton said in a statement that the new rates “reflect inflationary pressures and the increasing cost of grid equipment such as utility poles, wires and transformers” and noted that Dominion residential customers’ bills remain below the national average.
“We recognize the impact this will have on our customers. We are offering more energy-saving programs and assistance options than ever before. Every month, thousands of our customers benefit from programs that help lower their bills and get the support they need,” Slayton said.
Slayton said that early next month, the utility will launch an online hub that puts all of its assistance programs in one place.
[Disclosure: Dominion is one of our donors, but donors have no say in news decisions; see our policy.]
The approved increase will allow Dominion to earn an additional $565.7 million in revenue in 2026 and $209.9 million in 2027, down from its request of $822 million and $345 million, respectively.
Furthermore, the SCC on Tuesday approved a return on equity — essentially a regulated utility’s profit margin — of 9.8%, lower than the 10.4% that Dominion requested.
In its application to the SCC in March, Dominion proposed a scenario where it would shift certain costs related to peak energy usage — known as capacity costs — to the fuel factor portion of customers’ bills, which covers the cost of fuel and purchased power and which is passed on to customers without profit.
The utility said that would make its base electric rates more stable. The plan would have raised base rates by $10.51 over two years and fuel costs by $10.92 during that same time, for a total of $21.43.
The SCC on Tuesday rejected that idea and authorized a base rate increase that continues to include those capacity costs. Commissioners are currently holding a separate regulatory case to finalize the company’s annual fuel factor.
New rate class covers data centers, other large customers
As part of its biennial review of Dominion’s base rates, the SCC approved a new rate class for Dominion customers who require 25 megawatts of power or more.
That new rate class will be effective beginning Jan. 1, 2027.
These large customers will be required to sign 14-year commitments to pay at least 85% of their contracted distribution and transmission demand and at least 60% of their generation demand, even if they end up using less than that, the SCC said.
The SCC said those provisions are “to help insulate ratepayers from the costs around the rapid build-out and construction of infrastructure to support businesses such as data centers.”
Slayton, the Dominion spokesperson, said the SCC’s decision is “a win for Virginia consumers and will prevent data center costs from being passed onto other customers in the future,” he said.
Years of flat to low growth in electricity demand have recently been upended by forecasts that predict Virginia’s power consumption nearly tripling in the next 15 years under some scenarios, largely driven by the growth in the data centers that power online services such as Amazon and Google.
Dominion serves approximately 450 data centers, primarily in Northern Virginia, the largest data center market in the world.
“The size of individual large-load customers, their number, and the speed with which they are seeking to connect to the system, jointly present challenges for the Company, existing customers, and the grid at large not seen in decades, if ever,” the commissioners wrote in their order.
A number of business and advocacy groups participated in the regulatory review case, including Amazon, Google, Microsoft, the Data Center Coalition, the Piedmont Environmental Council, the Sierra Club, Walmart and Appalachian Voices.
Appalachian Voices, a nonprofit that often advocates for ratepayers in Virginia utility regulation cases, applauded the new large-customer rate class and accompanying requirements.
“Data centers and other large energy users create a special set of risks, and we are pleased to see the commission engage with these emerging issues here,” Peter Anderson, the group’s director of state energy policy, said in a news release.
Piedmont Environmental Council President Chris Miller said in a statement that the SCC should do more to require data centers to pay for transmission lines and other infrastructure required to supply their electricity and that Tuesday’s decision “does not go far enough to protect the average Virginian ratepayer.”
Richmond-based Dominion Energy has more than 3.6 million customers in Virginia, North Carolina and South Carolina. Of those, more than 2.5 million are in Virginia, including in Central and Southside Virginia and the Alleghany Highlands.