Dive Brief:

• Dominion Virginia Power has offered incentives, including changes to its fuel costs, in exchange for the state's lawmakers signing off on a rate freeze until 2020.
• The utility said a freeze on rates is necessary in advance of carbon regulations which could cause some coal plants to be shuttered and costs to rise, but consumer groups and industrial customers say current rates are too high.
• The bill cleared a legislative hurdle last week when it was approved by a specially formed senate subcommittee, The Virginia Gazette reported. The proposed change would cut about 5% from residential bills beginning in the spring

Dive Insight:

A Virginia Senate subcommittee heard testimony last week regarding Dominion's proposed rate freeze, which would lock in base rates for five years while also prohibiting state regulators from having oversight over those rates.

According to the utility, EPA mandates set to go into effect this summer are likely to drive up electricity rates, potentially shuttering coal facilities, and there is uncertainty over which mandates will stand in the face of several court cases. Without the freeze, Dominion Vice President Daniel Weekley told lawmakers "we could be asking ratepayers to pay for these plants three times," according to The Virginia Gazette.

The measure, proposed by State Sen. Frank Wagner (R), "bars the State Corporation Commission from conducting a biennial review of the rates, terms, and conditions for any service of Dominion Virginia Power for the eight test periods beginning January 1, 2013, and ending December 31, 2020," according to a summary of the bill.

Consumer advocates worry that rates are already too high, and so the utility has offered changes in exchange for support of the freeze. A five-year hold on rate changes means shareholders rather than consumers would pay for constructing new plants or purchasing needed power, Weekley told the subcommittee.