As energy prices continue to skyrocket across the United States, Virginia's largest utility sought permission to recoup nearly $1 billion in fuel costs by spreading it across customer bills for the next 10 years.
If approved, advocates say the move could soften the immediate impact on customer's electricity prices. However, critics point out that it would leave households to pay for Dominion Energy's fuel costs long after the price spike has faded.
Here's what to know
According to the Virginia Mercury, Dominion asked Virginia's State Corporation Commission for permission to pass $922 million in unexpected fuel costs along to ratepayers. In recent years, Dominion has underestimated its fuel costs to the tune of billions of dollars.
Dominion said that higher than expected prices were driven by winter weather, rising natural gas prices, and increasing power demand across the region.
Dominion's "actual fuel and purchased power expenses rose dramatically from approximately $1.7 billion in 2020 to $4.4 billion in 2025, an increase of $2.7 billion, or 152%, over a five-year period," according to the SCC, as the Mercury reported.
Under state rules, because Dominion does not add a surcharge to its fuel costs, it is allowed to pass those expenses along to consumers.
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Rather than charge ratepayers for the $922 million over the course of one year, Dominion proposed using bonds to pay for the additional fuel costs. This would allow ratepayers to pay back the amount over the course of 10 years but with interest.
Dominion argued that spreading the cost out would keep the average residential charge at about $8 a month, rather than roughly $21 if the full amount were recovered in a single year.
Opponents of the plan criticized the proposal, saying it amounted to Dominion taking out a loan that ratepayers will be paying back for years to come.
Grayson Holmes of Appalachian Voices compared the plan to "taking on a mortgage," according to the Mercury. "Unfortunately, this is not a new thing," he added.
More background
For advocates such as Homes, one of the most troubling aspects of Dominion's proposal is that it fits a pattern.
According to Holmes, Dominion has missed its fuel-cost projections by $1 billion or more in three different years. Additionally, Dominion has used the pay-over-time approach before, with the utility securitizing roughly $1 billion in fuel expenses as recently as 2023, the Mercury noted.
These increases have come as many households cope with higher housing, grocery, and transportation costs.
Explaining why its projected fuel expenses have consistently been billions of dollars short of actual costs, Dominion said that it faces two major sources of volatility: natural gas prices and the cost of purchasing electricity from PJM Interconnection, the regional grid operator.
Carol Myers, an SCC staff member, pointed to another possible problem: Dominion may not have fully accounted for fast-rising load growth in Virginia.
"Staff believes that the company's purchased power expense forecasts did not fully capture these changing dynamics, contributing to the significant under-recovery balances the company has experienced recently," Myers stated, per the Mercury.
Experts have attributed much of the rising demand for electricity to the rapid expansion of data centers in the state.
"It does seem like a good chunk of it is data center load, and the fact that load is increasing so much relative to the company's generation fleet," Homes told the Mercury. "But it also does look like volatile gas prices, and susceptibility to extreme weather does all play a role in it."
What's being done?
SCC commissioners have not yet decided how Dominion should recover the nearly $1 billion in additional fuel costs. Staff did not back any particular repayment method and left that decision to the commissioners, according to the Mercury.
Even so, consumer advocates and lawmakers are calling for a closer look at why the utility ended up in this situation again.
"It would be good to look into these questions of why a winter storm can cause that much of a spike," Holmes said, according to the Mercury.
State Del. Irene Shin urged commissioners to evaluate Dominion's planning and purchasing choices. She pointed to a new Virginia law, which took effect July 1, that instructs the SCC to consider how efficiently utilities manage their fuel purchases.
Looking ahead, SCC staff said Dominion should more thoroughly explain what is driving the recurring problem. The commission recommended that the utility provide the "root cause analysis of the growing power purchase quantities and high prices" in its next fuel factor case along with "potential solutions to minimize weather-driven fuel factor under-recoveries going forward."
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