ENVIRONMENTAL CENTS: Time to Change our Electric Rates?
We should revise the regulations for energy companies in Virginia to ensure that charges always increase with usage, and that larger users are paying their share.
By Bruce Saller
COLUMNIST
Dominion Virginia has had the same residential and small commercial rate structure (not rates) for years. It was based on high summer demand when air conditioners were running, with much lower usage during the other seasons.
The gap between summer and winter demand is declining due to the transition from oil and gas furnaces to heat pumps, and the use of more efficient air conditioners. As demand increases, electricity is provided by generators with the lowest operating costs.
The US Energy Information Administration has published average costs for the various types of generation. Here are the operating costs (in cents per Kilo-Watt Hour) for the four largest types used in Virginia:
(Newer Combined-Cycle [CC] Gas Turbines use excess heat to run a steam generator, achieving efficiencies between 50-60%. Older turbines do not use this heat and have efficiencies around 33% so they use ~67% more gas.)
About half of Virginia’s electricity is generated by natural gas, but I cannot find a further breakdown between CC and non-CC generation. Dominion’s information on power plants shows they have 4,448 Mega-Watts (MW) of CC turbines and 2,392 MW of non-CC turbines. So, about one-third of their gas generation has the highest operating cost. Here is a chart of Virginia’s 2024 monthly generation by fuel type:
Other includes Wood, Hydro, Petroleum and Coal.
The summer months still have the highest generation, but January and February are not far behind, and we can surmise that some of their gas generation was from non-CC turbines. The current Dominion Energy Residential and Small Business (< 30 KW demand) schedules have different rates (cents per KWH) based on the month and usage (rates include generation and transmission):
So, the rate for higher usage during Oct-May is less than the initial rate. This makes no sense for the winter months when the additional generation is being provided by the most expensive sources. I also don’t believe that the rate for higher usage should ever be less than the initial rate since we need to reward people who conserve energy.
The rate schedules for medium and large businesses have flat seasonal rates for each KWH, plus demand charges based on the amount of power (Kilo Watts) they needed during the year.
We should revise the regulations for energy companies in Virginia to ensure that charges always increase with usage, and that larger users are paying their share.
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