The State Corporation Commission (SCC) has rejected Walmart’s request for permission to leave the utility systems of Dominion Energy Virginia (Dominion) and Appalachian Power Company (APCo) to obtain electric power supply for its retail stores throughout Virginia from third-party suppliers.
The Commission found that if Walmart, a large-demand customer, left the utilities’ systems, the remaining Dominion and APCo customers who do not have the legal right to leave and seek lower rates would be harmed by the resulting shifting of costs to captive customers. Such captives represent the vast majority of both utilities’ customers and include residential and small businesses.
Based on the record developed in this case, if Walmart’s request to leave was granted, the costs shifted to remaining captive customers is estimated at $65 million for Dominion customers and $4 million for APCo customers over the next 10 years. The loss of Walmart’s demand would cause, for remaining customers, a net increase in other costs, including rate adjustment clauses and base rates, and a possible decrease in rate refunds otherwise due to customers.
The Commission also considered Walmart’s application in the context of the past ten years of rising rates for captive customers of Dominion and APCo. Over this time, the monthly bills for APCo residential customers have increased by $48, or 73 percent, and for Dominion residential customers by $26, or 29 percent. And, the Commission noted the likelihood of future rate increases stating, “Additional bill increases are expected as utilities incur new costs under the mandates of Senate Bill 966.”
Enacted by the 2018 session of the Virginia General Assembly, Senate Bill 966 also contained a provision that automatically granted certain large-demand customers of Dominion the right to a two percent rate cut, a rate cut that was not available to residential and small-business customers, and that will result in cost-shifting to small-demand customers.
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The Commission said, “In conclusion, given the context of a decade of rising rates and the likelihood of even higher rates in the future, we do not find it consistent with the public interest for captive customers who do not have the legal ability to obtain lower rates – predominantly residential and small business – to suffer from the cost-shifting identified [in this case] by enabling a large-demand customer to seek its power supply elsewhere…”
A provision of Virginia law mandates that a single customer with more than five megawatts of demand can leave the utility system and purchase power from a third-party vendor. Another provision of law allows, subject to the Commission’s discretion, an applicant such as Walmart to aggregate the demand from many retail stores to reach the threshold. Walmart had applied under this provision, and the Commission used its legal discretion to deny Walmart’s petition.