RICHMOND — The State Corporation Commission has set four rate riders that Dominion Virginia Power customers will pay beginning April 1, 2011. Two are designed to recover costs associated with the construction of new power plants. The other two recover costs associated with previously approved efficiency and conservation programs, including residential and commercial lighting programs.

The estimated net effect of the surcharges, identified as “Riders C1, C2, R, and S,” means a typical residential customer will pay an additional $1.06 per month, resulting in a total surcharge for all riders of $5.55 per month. The surcharges are reviewed annually and re-set, as necessary.

“Rider R” was established a year ago and allows recovery of, on a timely and current basis, the costs of financing construction of the Bear Garden natural gas-fired power plant in Buckingham County. The total “Rider R” surcharge will generate approximately $78.2 million in revenue over 12 months.

“Rider S” was established two years ago to allow recovery of the costs of financing construction of a new coal-fired power plant in Wise County. The total “Rider S” surcharge will generate approximately $199.2 million in revenue over 12 months.

“Riders C1 and C2” were established a year ago to recover costs associated with four efficiency and conservation programs [demand side management]. The total “Riders C1 and C2” surcharges will generate approximately $18.3 million in revenue over 12 months. In denying the company’s request to recover alleged lost revenues that result from the use of more efficient compact fluorescent light (CFL) bulbs, the Commission expressed concern with the method used by the company to measure and verify the benefits of such a program.

The Commission said, “…any methodology [for determining energy conservation] must still meet a sufficient level of rigor and credibility before customers can be burdened with higher rates to compensate the company for alleged lost revenue. Such rigor is especially important given that customers are being asked to pay higher rates because of the CFL program, regardless of whether they participate in such program.”

These surcharges do not appear directly on the bill. Instead, they are components of the total bill. For a residential customer using 1,000 kilowatt-hours of electricity, “Rider R” is increasing the typical monthly bill by approximately 30 cents, “Rider “S” by approximately 93 cents, and Riders C1 and C2 decrease the typical bill by approximately 17 cents.

Under Virginia law, utilities may request rate surcharges for, among other things, environmental and reliability costs, conservation programs, renewable energy programs, and generation facilities. These rate surcharges are separate from a utility’s base rates and fuel rates.

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Case number PUE-2010-00054 – Rider S surcharge
Case number PUE-2010-00055 – Rider R surcharge
Case number PUE-2010-00084 – Riders C1 & C2 surcharge