Virginia electricity will increase but will not show up on bills until the end of next year

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It might sound strange that electricity in Virginia will increase during times of extreme weather conditions, but homeowners will not get a bill for it until the end of next year. How can that be?

Dominion Energy's explanation

The regional electric grid that supplies power to Virginia during extreme weather announced a 1,400% increase in some electric costs. Officials at Dominion Energy explained to customers why they would not see an increase in their bills until the end of next year.

Dominion purchases electricity from a separate wholesale market at auction prices. These prices are set for future periods to give third-party power producers an idea of their potential profits. The auction price for 2025-26 was recently set at $269.20.

The costs to customers

Dominion, on its investor earnings call last week, said that the utility shouldn’t be impacted too much by the capacity market increase because those purchases only account for about 1% of current customer bills.

Besides, Dominion assured customers that their bills will not change because current rates are locked in until the end of 2025.

Steven D. Ridge, executive vice president and chief financial officer, explained that Dominion sells the power it produces into the wholesale market.

Therefore, current rates, which on average are about $128 for a residential customer, are locked in until Dominion undergoes another rate review next year. That means Dominion will bear any increased capacity market cost until rates change at the end of 2025.