Dominion filed a request for a $458 million base rate increase beginning January 1, 2026 and an additional incremental increase of $173 million beginning January 1, 2027 in Virginia (excluding capacity expense) on March 31, 2025.
Order for Notice and Hearing issued April 24, 2025
DVP Application filed March 31 2025
Dominion filed its 2025 Biennial Review pursuant to Virginia’s updated ratemaking statute, the Affordable Energy Act. The Company is proposing a 10.09% Return on Equity which is well above industry medians, with a capital structure that relies on more than 52% equity. This proposed capital structure increases Dominion’s revenue requirements and shifts financial risk onto customers. Dominion has proposed a fundamental shift in cost allocation using the Average & Excess (A&E) methodology. This change disproportionately reallocates fixed and demand-related costs onto commercial rate classes, especially GS-3 and GS-4. A new GS-5 rate class is being introduced for exceedingly large customers with more than 25 MW of load, offering long-term contracts, minimum bills, and exit fees that shield the Company from usage volatility.
Revenue Rebalancing and Rate Increases
In addition to the above, Dominion characterizes its $67 million revenue shift from generation to distribution charges as “revenue neutral,” which is only true from the utility’s perspective. For customers, particularly commercial customers, the revenue shift results in real and material bill increases. Overall, the combined proposed distribution and generation rate increases for all customer classes is as follows:
| Virginia Electric and Power Company | ||||
| Base Distribution and Base Generation Revenue Changes to Customer Classes[1] | ||||
| Class | 2026 | 2027 | ||
| Residential | 23.8% | 31.6% | ||
| GS-1 | 24.3% | 30.4% | ||
| GS-2 | 21.3% | 30.0% | ||
| GS-3 | 30.8% | 36.6% | ||
| GS-4 | 29.7% | 44.1% | ||
| GS-5 | NA | 55.1% | ||
| Special Contract | 0.0000% | 0.0000% | ||
| Church | 33.5% | 40.4% | ||
| Outdoor Lighting | 31.0% | 37.3% | ||
These increases are not based on new service costs but instead reflect Dominion’s internal revenue reshuffling, and do not include the changes in the fuel rate and the anticipated capacity charges from PJM procurement.
Efficiency Disincentives and Market Distortion
The Dominion proposal penalizes conservation by increasing reliance on fixed charges. It weakens price signals that support energy efficiency and demand-side management, undermining the Virginia Clean Economy Act. Low-usage customers may see their bills increase, while high-consumption customers, especially those in GS-5, may benefit.
Statutory Conflicts and Ratemaking Deviations
The rebalancing proposal circumvents Va. Code § 56-585.1A, which prohibits rate increases during a biennial review. Dominion’s filing applies changes across nearly all tariffs, including adjustments not tied to class cost-of-service analysis. The 2021 rebalancing referenced by Dominion was part of a non-precedential settlement and tied to customer credits, not comparable to this proposal.
Disproportionate Impacts on Commercial Customers
Mid-sized commercial customers are caught between the protections of GS-5 contracts and residential rate smoothing. These legacy customers bear increased risk and cost exposure without meaningful offsets. Dominion’s proposal prioritizes its financial insulation over customer cost stability and affordability.
Conclusion
Dominion’s proposal is not merely a technical rate adjustment; it represents a fundamental shift in risk allocation. Commercial customers are being asked to subsidize speculative load growth while absorbing new pricing instability. AOBA intends to urge the Commission to reject these changes and preserve fairness and affordability in the ratemaking process for AOBA members.
[1] Dominion Witness C. Alan Givens, CAG, Schedule 1, pages 3 and 6.