Dominion Seeks To Increase Profits Through SCC Triennial Review

An audit of Dominion Energy’s expenses and earnings is now underway, as the State Corporation Commission begins its triennial review process. The energy company has asked the SCC — the regulatory agency tasked with overseeing public utilities and other state business and economic interests — to consider increasing the profits it’s allowed to earn. 

In 2007, after nearly a decade of deregulation of Virginia’s energy suppliers, the General Assembly passed the Electric Utility Regulation Act, which, among other things, directed the SCC to review utility rates and earnings every two years. Amendments to the law in 2018 modified this evaluation to occur every three years, establishing the process of the triennial reviews that we have today.

The triennial review consists of an evaluation of how much a utility has earned compared to how much it is permitted to earn. Once the utility’s profit has been evaluated, the SCC then determines whether or not the base rates customers pay to the utility should be modified. 

This is where earnings collars come into play. Virginia law allows utilities to keep a bonus profit of 0.7% above or below the profit margin limit set by the SCC; this is known as an earnings collar. With Dominion’s current approved profit margin set at 9.2%, the base rate customers pay won’t be changed unless Dominion’s recent profits have been less than 8.5% or more than 9.9%. 

In an application filed initiating the triennial review, Dominion asked the SCC to increase its profit margin from the current 9.2% to 10.8%. With the earnings collar in place, this would decrease the likelihood of customer rates being lowered during future triennial reviews. 

At the same time, it would also increase energy costs for over five million Virginians, Dominion’s customers. Energy bills in Virginia are currently the sixth highest in the country, and can become so high that they’re considered unaffordable for 75% of Virginian households based on federal energy burden standards. 

In 2019, Dominion requested that the SCC raise its profit margin to 10.75%, but that request was denied. 

A number of bills that aimed to reform the SCC’s rate review process and prevent utilities from overturning passed the House of Delegates in 2021 only to be quietly defeated in the Senate Commerce and Labor Committee. 

It will take some time before Virginians will learn whether or not the SCC will modify Dominion’s profit margins and base rates; the SCC will release the findings of its triennial review by the end of this November.