Front Porch Blog

Old Dominion Power rate proposal would harm Southwest Virginia communities

woman testifies at public hearing

Appalachian Voices New Economy Program Manager Chelsea Barnes testifies at a public hearing about Old Dominion Power’s request for a separate rate increase in May 2019. Photo by Sara Lamb

In July, the utility Old Dominion Power filed a proposal to increase rates for Southwest Virginia communities — to the tune of $28.93 per month for average residential customers.

This rate increase is one of the highest proposed by any investor-owned utility in the country in the past year, and the second-highest proposed increase for the average residential customer (1). This — from a utility that serves two of Virginia’s four economically-distressed counties in an area where between 17.6 percent and 28.2 percent of residents live in poverty, and from a utility that offers no energy efficiency programs to its Virginia customers, and powers 99 percent of its operations with expensive and dangerous fossil fuels.

Tell the State Corporation Commission to deny Old Dominion Power’s harmful proposal!

Click here to submit a public comment, and be sure to reference docket PUR-2019-00060. Click here to register to attend the hearing in Norton on October 2!

This proposed increase would exacerbate the high electricity burden of Southwest Virginians. Electricity burden is the percentage amount of household income that is spent on electricity costs. While the average electricity burden for households across the United States is 2.7 percent, and a 6 percent electricity burden is considered “affordable,” the electricity burden in parts of ODP’s Southwest Virginia territory is nearly 12 percent. This increase proposed by ODP will skyrocket our region’s electricity burden, making power bills unaffordable for many or most of our community members.

To make the proposal worse, Old Dominion Power is proposing to increase residential fixed charges from $12 per month to $16.13 per month. This means that as a customer, you would be less able to lower your electricity bills through efficiency, solar installations, or behavioral changes, because no matter how much electricity you use, and no matter how much electricity you save or produce yourself, you will still have to pay at least $16.13 per month.

High fixed charges disproportionately burden low-energy users and low-income ratepayers because they reduce customers’ ability to control their energy bills. When a utility such as ODP increases these fixed charges, many families who are already struggling could end up having to choose between necessities like food and medicine and paying their electric bills. These high fixed charges proposed by ODP are specifically designed to discourage energy efficiency and renewable energy investments by ODP’s customers and protect the utility’s profits. Rates like these that incorporate high fixed charges on all customers’ bills penalize customers that use less electricity and undermine consumers’ ability to control the cost of their utility service. This is because bills will increase by a much higher percentage for customers living in small apartments and homes than for those living in larger, more energy-intensive homes, and customers can’t reduce their fixed charges by using less electricity.

In addition, ODP is proposing significant increases to commercial customers’ demand charges, which are charges based on the maximum amount of electricity a customer uses at any one point during the month. Without special monitoring equipment and/or technology to help these customers control when during the day or month their equipment uses electricity, it becomes impossible for commercial customers to control their monthly electricity bills. These rate changes also make energy efficiency and solar investments less cost-effective, and make our region less attractive to new businesses.

And ODP has no plans to combat these increasing costs, or help customers manage their electricity bills.

solar panels on roof

The Big Stone Gap office of the Virginia Department of Mines, Minerals and Energy installed solar panels this summer that will supply nearly half of the office’s energy. Such projects will be more difficult to finance if Old Dominion Power’s proposed rate increase is passed.

If implemented, this new rate structure will stifle investments in solar energy underway in the region by Dickenson, Lee, Scott, Wise, and Russell Counties, the City of Norton, and the Town of St. Paul (2). Solar is one of the fast-growing industries in the country and creates well-paying jobs, and is a tool our local governments are using to attract new businesses to the region and boost our local economy. ODP’s new rate proposal would effectively eliminate the possibility of solar energy development for rural communities in its Southwest Virginia territory.

Utilities across the country are all facing changing economic factors as technologies evolve and shift. While ODP certainly must be able to recover its costs, electricity service remains a basic necessity that customers in Southwest Virginia need, and the utility’s profits cannot be the only factor considered when designing a rate structure that will impact 30,000 customers in a struggling region of Virginia.

Early next year, the State Corporation Commission will determine whether to approve this rate increase request or modify the proposed rates, based on the feedback it receives in the coming months. Instead of approving this request, ODP and the commission must consider other rate design options and implement energy programs that can help the utility recover its necessary costs, while ensuring equitable, fair rates and promoting economic development and environmental benefits. Our region’s future depends on our ability to adapt to changes while protecting our communities — and we can’t allow a harmful, backwards proposal like this to move forward.

ODP’s Virginia customers are few and spread out, so it’s crucial that ODP ratepayers band together to defeat this proposal. If you have friends and family who would be affected by this rate change, please share this blog post!

Tell the State Corporation Commission to deny Old Dominion Power’s harmful proposal!

Click here to submit a public comment, and be sure to reference docket PUR-2019-00060. Click here to register to attend the hearing in Norton on October 2!

10-02-2019 UPDATE: The new residential fixed cost was originally quoted as $16.11, this bas been amended to $16.13 to match ODP’s reported rate increase of $4.13 per month.

Additional sources:
1. ODP’s proposal of increasing the average customer bills by $28.93 puts ODP behind only Indiana Michigan Power’s proposal – See EQ Research Q2 2019 GRC Update, July 17, 2019. Table 2.

A committed advocate for clean energy policy, education and outreach, Chelsea is our Director of Government Affairs and Strategy based in our Norton, Va., office. When she is not advancing renewable energy, you can likely find her enjoying one of Southwest Virginia's many scenic trails.


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