Rare midyear rate hike could be coming for SC Dominion customers in deal with regulators

Dominion Energy customers in South Carolina could ring in the new year with a more hefty power bill if an agreement with regulators is approved as expected this month.

The energy company reached an agreement with state regulators that would give Dominion the unusual ability to temporarily increase its rates less than a year after S.C. regulators set the rates the company would have charged for a full year.

Nanette Edwards, the executive director of the S.C. Office of Regulatory Staff, said this was only the second time she could remember a utility wanting to boost its rates midyear, so soon after regulators agreed to a set utility rate for the year.

“To try to do it in the middle of that is very unusual,” Edwards said.

But after completing that annual process last spring, Dominion in August requested South Carolina allow it to raise its rates before its next review period. The company cited sharp increases in the price of natural gas partly associated with the Russian invasion of Ukraine and global shifts away from Russian natural gas.

The requested change would have raised prices for residential customers by 13.9%, or $18.55 a month, based on a customer who uses 1,000 kilowatt hours per month, according to the S.C. Office of Regulatory Staff. That same change would amount to a 16.8% rise on commercial customers and 26.7% rise for industrial customers, as spelled out in Dominion’s request for approval for the rate increase.

After regulators intervened, the two sides agreed last week to a compromise proposal that will go before the S.C. Public Service Commission for approval. The agreement would give Dominion a smaller increase of 5.8% on residential customers, or about $7.74 a month per customer.

Edwards said prices for natural gas have dropped considerably since Dominion made its request in June, and while she acknowledges projections at the time would have spooked energy executives, she believes the challenges for acquiring the necessary fuel reserves are now much more manageable.

“They were looking at commodity prices going up up up, but they’ve been pulled back on some,” Edwards said. Prices through the next few months are expected to remain stable, she said, “if China remains in lockdown, if we have a mild winter... but nobody has a crystal ball.”

If approved by the Public Service Commission, the new rates for Dominion customers will go into effect in January and last through April, by which time Dominion’s regular rate review will be completed.

“Recognizing the challenges economic pressures have placed on everyone, and considering natural gas prices have lessened over the past several months, Dominion Energy is pleased that we have reached an agreement with all parties in the best interest of our customers by reducing the immediate impact of the fuel increase,” said Dominion spokesperson Rhonda O’Banion. “We encourage customers to contact us if they need payment assistance.”

The new rate would raise prices for Dominion’s industrial customers by 11%, which the state’s businesses see as a reprieve from the nearly 27% bump previously being considered, said attorney Scott Elliott. Elliott represents the S.C. Energy Users Committee, a group of manufacturers such as BMW, Boeing and Michelin that argues against utility rate hikes on the state’s industries.

“There’s no question markets shot up like a bottle rocket, and Dominion’s entitled to recover their costs of fuel,” Elliott said. “But I’ve got to give (state regulators) credit here, they went out and hired an expert in the field of forecasting fuel costs... The ORS expert’s testimony was things are bad, but they’re not as dire as they were.”

The Coastal Conservation League was one of several consumer and environmental groups to sign on to the numbers behind the latest measure, although Eddy Moore, the league’s senior energy program director, said the swings in the natural gas market should motivate utilities to develop more renewable sources of energy going forward, such as solar.

“What it’s really doing is delaying the discussion until the fuel price hike that will happen in the spring,” Moore said, referring to the next rate-setting cycle. “It’s not reducing customer costs, it’s kicking the costs down the road.”