The Bulletin

Costco alleged Dominion customers are getting ‘a raw deal.’ Regulators tell them to take it to the legislature

By: - May 30, 2019 3:28 pm

(Wikimedia Commons)

State energy regulators denied Costco permission to shop for electricity on the open market, telling the warehouse club in a filing Thursday that if it thinks it’s getting overcharged by Dominion Energy that it needs to make that case to state lawmakers.

“If Costco believes that the current statutory structure … results in unreasonable or unnecessarily high rates, its potential for recourse may be found through the legislative process,” the State Corporation Commission ruled.

Costco is one of eight major corporations to seek approval to buy energy outside of Dominion’s regulated monopoly. Under existing law, certain large customers with demand exceeding 5 megawatts are automatically entitled to shop for power on the open market. If they don’t meet that threshold they can petition the commission for permission to aggregate demand across their properties — in Costco’s case, 27 retail stores around the state.

Costco testified in the case that “Dominion’s overcharging and overearning are what makes Dominion so attractive to investors and so unattractive to customers.”

As they did in response to an earlier petition by Walmart, regulators denied their request on the grounds that freeing them from Dominion’s monopoly would lead to higher energy costs for everyone else.

“This commission will not allow small customers who cannot escape this structure, predominantly small businesses and residential customers, to be further burdened by the identified cost-shifting that will occur if larger customers like Costco choose to seek better deals for themselves outside of Dominion’s system,” they wrote in the order.

Dominion estimated that if Costco were allowed to shop for electricity on the open market, their captive customers would be left to shoulder $1.57 million in additional cost.

Costco disputed that assertion. They also argued in filings that their departure would be a good thing for captive customers since it would send a signal to Dominion that “customers are getting a raw deal as costs pile up.”

“To the extent that Dominion heeds this price signal by putting the brakes on the piling on of rate adjustment clauses, you could argue that the Costco petition and the other aggregation petitions will help put a downward pressure on costs, thereby helping the remaining customers.”

Similar petitions filed by Harris Teeter, Target, Kroger, Safeway and Cox Communications are still pending.

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Ned Oliver
Ned Oliver

Ned, a Lexington native, has been a fulltime journalist since 2008, beginning at The News-Gazette in Lexington, and including stints at the Berkshire Eagle, in Berkshire County, Mass., and the Times-Dispatch and Style Weekly in Richmond. He is a graduate of Bard College at Simon’s Rock, in Great Barrington, Mass. He was named Virginia's outstanding journalist for 2020 by the Virginia Press Association.