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Virginia Electric Rates: Low/Moderate Now But Heading Higher

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James A. Bacon
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Average electricity rates in rates in Virginia were 20th lowest in the nation in 2019, according to a survey based on U.S. Energy Information Administration data by the American Legislative Exchange Council. The average price per kilowatt hour was 9.52 cents.

But Virginians could lose their moderate electricity rates in the future as it joins the Regional Greenhouse Gas Initiative  (RGGI) and moves towards the goal of a 100% renewable electric grid by 2050, emulating policies of the Northeastern states with among the highest electric rates in the country.

The 16 states with the highest electricity rates all have Renewable Portfolio Standards (RPS) in place, says the report. (The study lists Virginia as not having  RPS, or renewable energy mandates, currently in place, but it does have the 100% zero-carbon goal.)

Membership in RGGI, a cap-and-trade system designed to drive out fossil fuel energy sources, also pushes rates higher. Virginia is scheduled to join the regional initiative in 2021. The State Corporation Commission expects that to add $6 billion in costs to Dominion Energy ratepayers.

Electric rates are only one piece of the energy puzzle. Another metric worth comparing is the total size of the electric bill. Electric bills vary not only by rates but by climatic conditions, use of alternative fuels like home heating oil and natural gas, and the effectiveness of energy efficiency measures. ALEC does not address those factors.

Likewise, as we have seen from the Big Freeze in Texas and the wild fires in California, reliability is a huge issue. Electric rates tell us nothing about how resilient an electric system is in the face of natural disasters and extreme weather events, nor how long it will take to restore power to customers.

Broadly speaking, however, there is a tradeoff between electric rates, reliability and environmental sustainability. Virginia has chosen to prioritize sustainability. As Virginia adopts policies similar to the Northeastern states, it is not unreasonable to expect electric rates to move toward Northeastern levels. Here are the average 2019 rates per kilowatt hour for those states:

New Jersey — 13.42
Maine — 14.04
New York — 14.34
Vermont — 15.36
New Hampshire — 17.15
Massachusetts — 18.4
Rhode Island — 18.49
Connecticut — 18.66

As for reliability, a lot of people make a lot of claims. Time will tell.

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24 responses to “Virginia Electric Rates: Low/Moderate Now But Heading Higher”

  1. Baconator with extra cheese Avatar
    Baconator with extra cheese

    I heard green energy will literally save us billions and we can’t afford not to do it!

    1. Stephen Haner Avatar
      Stephen Haner

      Too cheap to meter, right? 🙂

    2. Stephen Haner Avatar
      Stephen Haner

      Too cheap to meter, right? 🙂

  2. samaparicio Avatar
    samaparicio

    Broadly speaking, however, there is a tradeoff between electric rates, reliability and environmental sustainability.

    If we control for reliability, one cannot really state that there is a tradeoff between rates and sustainability unless they also ignore the environmental costs of energy production from carbon-producing sources.

    Once we factor that cost (as an accrued liability perhaps), it becomes much closer to a game we play where we either pay the sustainability costs now or let the liability grow for a future generation to pay later.

    This is especially true as the costs of renewables converge towards the cost of fossil fuel-produced energy.

    1. Thomas Hadwin Avatar
      Thomas Hadwin

      Renewables are already cheaper than fossil fuel-produced energy. Dominion has admitted that in their planning documents. The utilities want to own most of the renewables to boost their profits.

      They could easily procure the energy through a Power Purchase Agreement with private developers at a much lower cost to customers. But this would reduce profits and dividends to shareholders.

      Utilities in Virginia believe it is their right to own and control renewable generation. Many other states disagree. Most customers are unaware of how much this policy is costing them. Many environmental groups just want more renewables regardless of added costs for utility profits.

      We can have lower costs, financially healthy utilities, and cleaner energy, if we just did things a bit differently in Virginia. Utilities are supposed to be Public Service Companies. That is how they obtained the monopoly. Today it is about maximizing profits, not providing reliable service at the lowest reasonable cost.

    2. LarrytheG Avatar
      LarrytheG

      Now, don’t be talking that kind of trash to Conservative types… it rankles them…. ;-0

    3. Thomas Hadwin Avatar
      Thomas Hadwin

      Renewables are already cheaper than fossil fuel-produced energy. Dominion has admitted that in their planning documents. The utilities want to own most of the renewables to boost their profits.

      They could easily procure the energy through a Power Purchase Agreement with private developers at a much lower cost to customers. But this would reduce profits and dividends to shareholders.

      Utilities in Virginia believe it is their right to own and control renewable generation. Many other states disagree. Most customers are unaware of how much this policy is costing them. Many environmental groups just want more renewables regardless of added costs for utility profits.

      We can have lower costs, financially healthy utilities, and cleaner energy, if we just did things a bit differently in Virginia. Utilities are supposed to be Public Service Companies. That is how they obtained the monopoly. Today it is about maximizing profits, not providing reliable service at the lowest reasonable cost.

      1. LarrytheG Avatar
        LarrytheG

        Yes. Then the anti-renewable folks claim that wind is more expensive and will harm ratepayers.

        When the issue is really not renewables at all.

        1. Stephen Haner Avatar
          Stephen Haner

          There are operating costs and all-in costs, which need to include capital, transmission and retirement. Even so, yes, all-in renewables are getting more and more reasonable (not off shore wind.) Assume a “social cost of carbon” and you put a huge thumb on the scale, which I do reject. If you include that, I’m going to start raising issues about the mining and labor abuses behind the battery industry, and insist you admit how much coal is burned making silicone for solar panels. The real accounting gets messy fast.

          1. LarrytheG Avatar
            LarrytheG

            If you’re advocating an apples-to-apples comparison to other forms, I’m on board but the ones I have seen show renewables are competitive.

            If you want to ALSO included externalities, again – apples to apples for all and renewables are still probably going to come out on top.

            we had just fossil fuels and nukes.

            All sources have impacts – mining / extraction for fossil fuels coal and gas as well as nukes.

            I don’t think you’re gonna be able to prove that renewables have bigger impacts and cost more anyhow, it just seems to be a distraction never brought up before but only now after renewables have come online.

            Renewables are just additional ways to provide power, why is there such antipathy against them anyhow?

  3. LarrytheG Avatar
    LarrytheG

    There are electric RATES and then there are actual electric BILLs per state and they are not the same!

    https://www.eia.gov/todayinenergy/images/2018.02.13/chart2.png

    1. DJRippert Avatar
      DJRippert

      Sure. Hot weather = high usage for air conditioning I assume. So, a northeastern state might find it easier to accommodate high rates because average usage is lower while a southern state would seriously hurt its citizens with high electricity rates.

      Where do you believe this leaves Virginia?

      1. Stephen Haner Avatar
        Stephen Haner

        “Electric bills” is a useless measure, when in so many states the use of heating oil and/or natural gas is far more widespread than in Virginia. Somebody should be tracking total household energy expenditures. Frankly it would need to include motor fuels, as the people with long commutes put more of their money into that.

        And that 9.52 cent figure is the composite, residential and industrial, etc. The residential rate in the table for VA was over 12 cents per kWh.

      2. Stephen Haner Avatar
        Stephen Haner

        “Electric bills” is a useless measure, when in so many states the use of heating oil and/or natural gas is far more widespread than in Virginia. Somebody should be tracking total household energy expenditures. Frankly it would need to include motor fuels, as the people with long commutes put more of their money into that.

        And that 9.52 cent figure is the composite, residential and industrial, etc. The residential rate in the table for VA was over 12 cents per kWh.

      3. energyNOW_Fan Avatar
        energyNOW_Fan

        It’s the winter heating .
        The other RGGI states use natural gas and oil for the home heating in winter, that’s why it is easier for them than us to be carbon free in the elec generation side (also with elec imports eg; from Canada).

        We Virginia are more heat pump/electric hot water dependent, is why we have among the highest elec bills. We already use much more electric than average, is why Dominion is so profitable here.

    2. CJBova Avatar
      CJBova

      Things have changed in California since 2016! PG&E ‘s rate increase in 2018 depended on usage. Rates went up 6.4% in 2019, and 8% in 2020 to help pay for the wildfires their equipment started, and they raised them another 4.6% in March 2021.

    3. CJBova Avatar
      CJBova

      Things have changed in California since 2016! PG&E ‘s rate increase in 2018 depended on usage. Rates went up 6.4% in 2019, and 8% in 2020 to help pay for the wildfires their equipment started, and they raised them another 4.6% in March 2021.

  4. CJBova Avatar
    CJBova

    Dominion was running radio ads boasting about how low their rates are a few weeks ago. No mention of how much they’ll go up when the offshore wind expenses mount up and the ordinary ratepayer has to cover the bills for limits on low income ratepayers or those who fell behind and whose bills were forgiven. Steve Haner -Sept., 2020)

    1. Stephen Haner Avatar
      Stephen Haner

      The first stage of the 2021 Dominion rate case is filed down at the SCC. It calls me like the sirens on those Mediterranean rocks torturing Odysseus. If I untie the ropes and start to read the files and take notes, I may not come up for air at all….

      But that is why Dom was running those radio ads, tainting the jury as that case starts. Ha, fooled them, I haven’t opened fire yet….

  5. Thomas Hadwin Avatar
    Thomas Hadwin

    Using the ALEC data as the basis for this discussion is very misleading. The study aggregates commercial and industrial rates with residential charges, which greatly skews the comparison. Comparing residential rates, which are calculated in a similar way in each state, is the only way to make an apples-to-apples comparison between states.

    In 2020, the residential rates in Virginia were 12.28 cents/kWh (about 12 cents for Dominion customers). This put Virginia in the middle of the pack (24th lowest out of 50). We are higher than all of the states that surround us.

    Commercial and industrial rates in Virginia are among the lowest, but are only about half of the bill. Demand charges make up the rest. Not all states handle it the same way. Comparisons between states based solely on “rates” does not tell the whole picture.

    RGGI charges do not affect “rates”, but might affect your total bill. RGGI costs will probably be handled as part of the fuel charges. As renewables provide a greater share of total generation, fossil-fired units will run less often, lowering fuel costs. We will have to see what the net effect on fuel costs will be.

    Jim, you are right about higher rates coming our way, but not because of renewables. The cost of generation from renewable sources will actually be less than the conventional units. The higher rates will come from allowing Dominion to put renewables in the ratebase.

    1. Stephen Haner Avatar
      Stephen Haner

      So far, Tom, it appears the RGGI charge will be a new RAC and not collected through the fuel charge or any other environmental RAC. Need to revisit that case file…

      “The higher rates will come from allowing Dominion to put renewables in the ratebase.” Well, no, not buying that one, Tom. They are just as likely to be financed by their own RACs, just like the gas plants and Virginia City were, which keeps them out of the ratebase. Either way, the company gets its capital back with a healthy profit.

      1. Thomas Hadwin Avatar
        Thomas Hadwin

        I don’t see how the RGGI charges can be recovered via a RAC. They will vary by quarter both by how much each allowance will cost at auction and by how many allowances must be purchased to cover the emissions which will depend on how much each emitting unit is expected to run during the next auction period.

        A RAC is a specific ratebase determined by a capital expenditure, a depreciation schedule and a rate of return. Then a revenue recovery is established to repay that amount.

        There is no reason that a monopoly that is guaranteed a profit should be allowed to out-compete private developers for projects that the private developers can execute less expensively. The private developers will build the projects for Dominion and then Dominion will add a significant profit for no added benefit.

        The utility provides no advantage in the construction of renewable projects, just added costs to customers.

        1. Stephen Haner Avatar
          Stephen Haner

          Welcome to VA, owned and operated by….

      2. Thomas Hadwin Avatar
        Thomas Hadwin

        I don’t see how the RGGI charges can be recovered via a RAC. They will vary by quarter both by how much each allowance will cost at auction and by how many allowances must be purchased to cover the emissions which will depend on how much each emitting unit is expected to run during the next auction period.

        A RAC is a specific ratebase determined by a capital expenditure, a depreciation schedule and a rate of return. Then a revenue recovery is established to repay that amount.

        There is no reason that a monopoly that is guaranteed a profit should be allowed to out-compete private developers for projects that the private developers can execute less expensively. The private developers will build the projects for Dominion and then Dominion will add a significant profit for no added benefit.

        The utility provides no advantage in the construction of renewable projects, just added costs to customers.

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