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Consumer Cost Estimates Rise Higher for Green Economy

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Customer cost projections for compliance with the Virginia Clean Economy Act have increased again from the first such estimates made in 2020. The bill for 1,000 kilowatt hours of electricity from Dominion Energy Virginia to power a home for a month may rise almost $100, or 83%, by 2035.  

Dominion residential customers were already paying $288 (21%) more per year for 1,000 kilowatt hours per month by December 2022, compared to May 2020, just before VCEA became law. That will cost another $547 annually by 2030 and $878 more by 2035. Cost projections are even higher for commercial and industrial customers. 

After all the hyped discussion coming out of the 2023 General Assembly that regulatory changes it made will “lower electricity bills,” it is important to face reality. Ignore claims from any incumbents who say they voted to “lower bills.”  VCEA compliance is still going to be very expensive, and nothing just passed changes any of that.  

The most recent figures are very similar and slightly higher than those reported in 2020.  They were filed last year by the utility as part of the annual VCEA compliance plan, outlining its planned conversion from fossil fuel generation to massive amounts of wind and solar power over the next two decades.  

The baseline comparison is $116.18 per 1,000 kwh for May 2020.  The predictions above use a calculation method preferred by the State Corporation Commission staff, which projected that bill would be $185.81monthly at the end of 2030 and $213.36 by the end of 2035. Not all of that is directly tied to VCEA compliance, but most of it is.  

Dominion prefers another calculation method with some more favorable assumptions, but even the company sees those bills rising to $165.64 by 2030 and $177.48 by 2035. That is still $61 a month ($736 per year, 53%) more than the pre-VCEA electricity cost.  

The figures were included in the filing Dominion made for additional solar and storage facilities needed to comply with VCEA. That case is about to wrap up. They are also contained in the integrated resource plan it filed with the SCC in 2022, which is summarized on the company’s webpage.  

Dominion Remains Worried About Reliability

This is also all based on the future development plan preferred by the company, designated Plan B in both documents, which complies with the VCEA but does not retire the company’s natural gas generation as rapidly as many environmental advocates are demanding. Other alternatives mapped out retire them more rapidly. In the application the company repeats a warning mantra that one day will turn into an “I told you so”: 

… if other states pursue the same clean energy future as the Company resulting in significant volumes of intermittent resources with the same operational profiles as the Company’s, the Company may not be able to fill any deficits in specific hours with market purchases.

In other words, soon it won’t be possible to import power from other states which have coal and natural gas power to share when our solar or wind are offline:  They will have closed theirs too. Such imports have soared in Virginia since passage of the VCEA and since Virginia began imposing a carbon tax on its own native fossil fuel generators.  

One additional caveat is that the financial impact of the recent federal changes in renewable energy incentives is still unclear.  Federal subsidies or tax preferences could lower the future bills, but it is important to remember that those costs are ultimately paid instead by taxpayers rather than ratepayers (and Virginians are both). Quite a bit of key guidance on the new legislation is still pending at the U.S. Department of the Treasury.  Things should be clearer for the next update. 

The various cost projections are found in Attachment11, starting on page 51 of this document. This report focuses on Dominion’s Plan B, with its residentialcosts compiled on page 67.  That is the VCEA compliant plan that keeps natural gas in play as long as possible. 

That page is where you see, for example, that the total bill for that 1,000 kwh residential user had already climbed to $140.21 by December of 2022, a 21% increase since May 2020.  

Another Offshore Wind Farm is Included

The new generation assets in that Plan B include the second phase of offshore wind, with the utility expecting the additional turbines off Virginia Beach to be operational by about 2033 (six years after the firstproject.) The net cost of offshore wind to that consumer is projected to rise from $3.42 per month this coming December to $22.87 by December 2035.

Since all this was published in late 2022, other proposed wind projects off the east coast of the United States have complained of major price pressures on their construction plans, with similar projects in Europe also claiming they need more money to operate. Whether Dominion has adjusted its estimate for the cost of Phase 2 is not discussed.  

Rider CE, the rate adjustment clause covering the solar farms at the heart of the current application for additional solar resources, is projected to rise from $2.97 per month this coming December to $20.65 by December 2035. A new rate adjustment clause is expected to be created to cover the various power purchase agreements, again mainly for solar, needed to meet VCEA. 

A key thing to remember is both the wind and solar cost projections are “net” and include assumed values of “benefits” to customers for avoided fuel costs and the avoided need to purchase renewable energy certificates or to make capacity payments. You can see them on the spreadsheet as negative numbers, reducing the bottom line cost.  If those assumptions do not pan out, the monthly cost to consumers will rise. 

Dominion’s Plan B adds a cost projection line for small modular nuclear reactors but enters zeros across the board indicating there is no real plan to go that route soon, not in Plan B.  

Projections like these not only can change but willchange. This is a planning tool at best.  Costs could be lower, but that is not what you should plan for. 

Steve Haner is Senior Fellow with the Thomas Jefferson Institute for Public Policy.  He may be reached at

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