Virginia's State Corporation Commission approved Dominion Energy's request to issue bonds for approximately $922 million in fuel costs the utility failed to recover during the 2025 and 2026 rate years, according to a ruling published last month. The decision authorizes the utility to spread those shortfalls over seven years through a financing mechanism known as securitization, avoiding a sharp spike in customer bills. At the same time, regulators cleared Dominion to collect $2.691 billion in anticipated fuel expenses for 2026 and 2027, along with roughly $65.8 million in costs not recovered from the 2024 to 2025 period.
The securitization prevents a $21.79 jump in typical residential monthly bills, instead producing a $7.97 increase tied to the fuel factor and an additional $2.26 charge for bond repayment. However, the bond approach will ultimately cost more than immediate collection because interest accumulates over the seven-year recovery window, customer advocates noted. Katherine Farmer, energy market strategic advisor at Dominion, testified that purchased power expenses climbed 28% for the 2026–2027 rate years. The commission's own analysis found that the fuel factor charge for a typical residential customer will reach $43.59, up from $20.45 during the 2021 fuel year. This marks the second time in three years Dominion has sought securitization for fuel shortfalls; regulators in 2023 authorized bonds for about $1 billion in deferred fuel costs that Dominion attributed to global disruptions including the Ukraine War.
Dominion blamed Winter Storm Fern, which hit between Jan. 23 and Feb. 2, for unexpected fuel cost increases. Scott Gaskill, vice president of regulatory affairs, said the company agreed fuel expenses "are becoming more volatile and more difficult to forecast," but argued events "could not be easily forecasted." Carol Myers, deputy director in the commission's Division of Utility Accounting and Finance, took a sharper stance. "The repeated securitizations of deferred fuel costs on an ongoing basis is untenable," Myers stated. She warned that customers face a "pancaking" effect because the 2023 bonds haven't been paid off yet, adding, "I don't think we can keep doing this."
Regulators heard testimony that cold temperatures before and after the storm drove up demand, forcing Dominion to buy more electricity from the PJM grid at elevated prices. Myers' analysis concluded that tightening supply and demand across PJM has "likely put upward pressure on power prices and significant upward pressure on the Company's purchased power expenses, which is only further exacerbated during periods of extreme weather." Environmental groups, including the Southern Environmental Law Center representing Appalachian Voices and the Sierra Club, argued fuel price swings stemmed from uneconomical coal generation choices, the Iran War, and rising natural gas prices linked to liquefied natural gas exports. They pushed for greater renewable energy adoption and cost-sharing rules that would require Dominion to absorb a portion of fuel overruns as an incentive to control expenses.
A new law signed by Gov. Abigail Spanberger took effect July 1, requiring closer scrutiny of the cost-effectiveness of Dominion's fuel choices in next year's fuel factor proceeding. Grayson Holmes, a staff attorney for the SELC, said, "As the General Assembly has indicated, the Commission can and should be considering ways to reduce the burden on customers, like fuel cost-sharing mechanisms." Environmental advocates say they'll continue pressing regulators to shield customers from the risks tied to Dominion's reliance on fossil fuels with volatile pricing.