Three years since a controversial law froze base rates and locked in big windfalls for Virginia’s two large utilities, customer refunds are on the horizon.
The State Corporation Commission, which regulates Virginia utilities, issued a pair of orders Monday that outline how nearly 3 million ratepayers of Dominion Energy and Appalachian Power will get money back as a result of federal tax reform and the sprawling, contentious overhaul of utility regulation that the General Assembly passed this year.
Within 30 days of July 1, Appalachian, which has 500,000 customers in Virginia, must reduce rates by $50 million, and Dominion must cut rates by $125 million. Those cuts are due to federal tax reform enacted last year, which must be passed along to utility customers.
“The July rate reduction is the first step to pass the corporate tax savings to customers,” the commission said in a statement Monday. “Further submissions by the two utilities will be made in 2019 to make certain the tax savings are properly calculated and reflected in rates as of April 1, 2019.”
The commission did not say how much a typical residential customer refund will be.
Dominion successfully pushed through Virginia’s new “reinvestment model” of regulation, which allows the utilities to keep profits above their authorized rate of return as long as they spend the money on grid upgrades, renewable energy and other eligible projects.
As part of negotiations on the legislation, Senate Bill 966, which Gov. Ralph Northam signed, Dominion agreed to cough up an additional $133 million for a one-time, voluntary bill credit for its 2.5 million customers no later than 30 days after July 1. The company also agreed to another $67 million credit no later than 30 days after Jan. 1, 2019.
The commission found last year that the so-called 2015 rate freeze had allowed Dominion — and, to a lesser extent, Appalachian — to pile up big profits on the base rates that make up the largest portion of a customer’s bill.
The commission said last year that Dominion could have overearned by as much $426 million in 2016 alone, though, because of how refunds were calculated under the former regulatory regime, not all of that would be due back to customers.