The Myth of Virginia’s Rate Utopia: A Comparison of Rates, Riders, and Bills is a report by the Virginia Poverty Law Center attempting to answer one ultimate question: If our electricity rates are so low, why are our bills so high?
Virginia has the 10th highest average residential electricity bills in the nation, per the most recent data from the United States Energy Information Administration (EIA).
On its face, this is a worrisome statistic for anyone concerned about the burdens of low-income citizens in the Commonwealth. To the layperson, this is a vexing statistic considering numerous and repeated claims by utility representatives that Virginia has some of the lowest electricity rates in the country, especially compared to its peers.
Given these seemingly contradictory data points of low rates but high bills, this report compares the electric rates and bills of Virginia’s largest utility, Dominion Virginia Power, against the averages of peer states and their utilities. We also reviewed Dominion’s current energy efficiency savings and how it compares with its peers. We use information publicly available from national studies, utility filings at the State Corporation Commission (SCC), and EIA data.
We discovered that Dominion Virginia Power’s base rates are, at best, average compared with their peer sister utilities. In addition, the cause of the significantly higher bills is due to additional charges Dominion is allowed to pass on to the customers in the form of “RACs” — rate adjustment clauses. These “RACs” include Dominion’s cost to build new power plants, to ‘meet demand.’ However, we also found that Dominion lags significantly behind its peers in capturing savings through energy efficiency programs. Energy efficiency is a low-cost means of generation, and several of Dominion’s peer utilities are already saving nearly twice, if not more, than what Dominion saves through energy efficiency programs. Data shows that in 2015 Dominion Virginia Power’s potential energy savings in rental homes alone could have reduced energy bills in Virginia by over $10,000,000.