Virginia regulators approve Dominion’s fuel cost recovery, securitization

Virginia regulators have approved a rate increase for Dominion Energy customers tied to fuel costs. The State Corporation Commission signed off on Dominion recovering $2.691 billion in projected fuel costs for 2026 and 2027, plus about $65.8 million in costs the utility underrecovered from 2024-2025. For a typical residential customer, this means a $7.97 increase on the fuel portion of the monthly bill.

The commission also approved "securitization," a financing method where Dominion issues bonds to cover about $922 million in underrecovered fuel costs from 2025-2026, then pays them back gradually with interest. This approach adds $2.26 to a typical monthly bill, spread over seven years. Regulators say this is cheaper in the short term than the alternative: without securitization, bills would have jumped by $21.79 instead. But commission staff warned that stretching out payments with interest ultimately costs customers more, and that Dominion has now sought this kind of financing twice since 2023, with the earlier debt still not paid off.

Dominion blamed the cost increases on extreme cold around Winter Storm Fern in January and February, which drove up demand and the price of power purchased from the regional grid operator, PJM. Environmental groups argued the real problem is Dominion's continued reliance on volatile fossil fuels, and pushed for new cost-sharing rules that would make the utility bear more of the risk when fuel costs spike. A new state law taking aim at this issue took effect in July and will apply to next year's rate case.