Dominion Energy Inc., the U.S. utility giant that came under fire for overcharging its customers by almost $380 million, wants to keep the money and spend it on grid upgrades.
The Virginia power company proposed using some of the extra cash to help install almost 1 million smart meters, create an online "customer information platform" and add more devices to the grid that could help prevent blackouts. It's part of a plan the state rejected in January, calling it too costly. On Monday, the utility returned with a more modest proposal and a smaller price tag of $594 million, down from more than $1 billion.
It's the latest twist in the saga over Dominion's overcharges in 2017 and 2018, which were flagged in a Virginia state report in August. Consumer advocates have unsuccessfully called on the company to return the money, and one ratepayer group staged a "Rally for Our Refunds" in Richmond three weeks ago.
Like most power companies, Dominion is allowed to earn only a certain amount. Some utilities have returned extra cash to customers in the past if earnings exceed the threshold. The latest fight in Virginia is centered on a state law passed last year that allows electricity providers to keep some excess profits so long as they spend the money on renewable projects or grid upgrades.
Dominion has already said that it plans to spend some of the funds on an offshore wind demonstration project on which it broke ground this summer. "What a great way to fund the first utility offshore wind project -- to be able to do it without having a rate increase," Thomas Wohlfarth, Dominion's senior vice president of regulatory affairs, said in a phone interview.
Using the company's over-earnings to pay for such projects will limit rate increases and cut down on financing costs, saving money for customers in the long run, he said.
There is a hitch: Under the new law, Virginia will review utilities' excess earnings over four years, with the first assessment scheduled for 2021. If Dominion doesn't earn as much as it did in the past two years, there's a chance the extra cash it has over-collected shrinks or disappears altogether, wiping out the money it's proposing to set aside for grid improvements and renewable power.
"The two-year look is not the final story," Wohlfarth said. "We have to see what happens in the next two years."
Analysts attributed much of Dominion's excess income to warmer-than-normal weather in Virginia last year, which led to stronger electricity sales. The state report showed that the money came from Dominion's power-generation business, rather than its distribution system.
Dominion's $594 million grid plan will need approval from the Virginia State Corp. Commission.
Business on 10/04/2019