Regulators reject Dominion push to increase profits; ‘Customers won today.’

Dominion Energy's downtown Richmond building. (Ned Oliver/Virginia Mercury)
Dominion Energy, Virginia's largest electric utility and a major U.S. energy company, is headquartered in Richmond. (Ned Oliver/Virginia Mercury)

State regulators denied Dominion’s request to increase the profits its shareholders can collect, saying in an order issued Thursday the proposal is neither reasonable nor consistent with the public interest.

The investor-owned utility had asked the State Corporation Commission to increase its allowable rate of return on equity from 9.2 percent to 10.75 percent.

As we reported in July: 

Return on equity, in its most basic sense, is the profit that shareholders receive for investing in a company. The higher the rate of the return, the more that shareholders are paid. In the private market, these rates fluctuate freely depending on how a business is doing.

For monopoly electric utilities, however, returns on equity are capped in recognition of the fact that customers — ratepayers — are “captive”: they generally cannot choose to get their electricity from another source if they are dissatisfied with their supplier.

Dominion had argued the increase “reasonably represents the return required to invest in a company with a risk profile comparable to” its own. A host of opponents argued against the proposal, ranging from Walmart to the U.S. Navy, which called the proposal “excessive and unwarranted.”

The commissioners ultimately ruled that the current rate is “supported by the record, is fair and reasonable to the Company within the meaning of the Code, permits the attraction of capital on reasonable terms, fairly compensates investors for the risks assumed, enables the Company to maintain its financial integrity, is consistent with the public interest, and satisfies all applicable statutory and constitutional standards.”

Opponents of the increase cheered the decision as a win for consumers that will save Virginia customers $147 million a year.

“Dominion’s customers won today,” Brennan Gilmore, the executive director of Clean Virginia, which advocates for increased oversight of the utility, said in a statement.

Mercury reporter Ned Oliver contributed to this blog post.