Dominion Energy South Carolina, South Carolina Office of Regulatory Staff, Intervenors File Comprehensive Settlement of General Electric Rate Case for Approval by Public Service Commission of South Carolina

Rhea-AI Summary

Dominion Energy South Carolina (DESC) has submitted a comprehensive settlement agreement for its pending general electric rate case to the Public Service Commission of South Carolina (PSC). If approved, the settlement would result in a net 1% increase in residential electric rates compared to rates at the time of the original request in March. The agreement includes a $7.5 million one-time bill credit and a $3 million increase in energy efficiency funds over five years. DESC has added about 40,000 new customers since 2019 and invested $1.6 billion in its electric system. The settlement supports an authorized return on equity of 9.94%, a regulatory capital structure of 52.51% equity and 47.49% debt, and a revenue increase of $219 million. DESC and intervening parties, including several regulatory and consumer groups, will present the settlement to the PSC at a hearing on July 15. The final decision is expected after a thorough review.

Positive

• Net 1% increase in residential electric rates compared to original request.
• One-time $7.5 million bill credit for residential and small service customers.
• $3 million increase in energy efficiency funds over five years.
• Addition of approximately 40,000 new electric customers since 2019.
• Investment of $1.6 billion in electric system for reliability and clean energy.
• Authorized return on equity of 9.94% and regulatory capital structure of 52.51% equity and 47.49% debt.
• Revenue increase of $219 million, 28% less than the original $303 million request.

Negative

• None.

Insights

Financial Analyst

The settlement filed by Dominion Energy South Carolina regarding the general electric rate case presents a noteworthy shift for its residential customers, highlighting a net 1% increase in electric rates. This modest increase, coupled with the significant customer benefits, indicates a balanced approach to absorbing the $1.6 billion investment costs incurred over the past four years. Notably, the proposed rate change is relatively minimal and incorporates a $7.5 million bill credit and an additional $3 million in energy efficiency funds, which may mitigate customer concerns about the rate hike. Moreover, the regulatory capital structure of 52.51% equity and 47.49% debt along with an authorized return on equity of 9.94% suggests a sound financial footing for Dominion Energy South Carolina. Retail investors should be pleased to see no change in the existing financial guidance, ensuring stability in the company's projections.

In the short term, this settlement is expected to provide positive cash flow for DESC, helping cover the increased operational and capital costs without significantly burdening customers. In the long term, it will likely ensure DESC continues to deliver reliable and affordable power, fostering customer loyalty and regulatory goodwill. Potential investors should consider the financial stability and customer-focused approach of this settlement as a positive indicator of the company’s operational strategy.

Market Research Analyst

The settlement's impact on Dominion Energy South Carolina's market positioning is intriguing. By maintaining residential rates below the national average and implementing energy efficiency programs, DESC is enhancing its reputation for providing cost-effective and sustainable energy solutions. The involvement of various stakeholders, including consumer advocates and environmental groups (e.g., Southern Alliance for Clean Energy and Coastal Conservation League), suggests broad support for the settlement, which can translate into stronger community relations and consumer trust. The inclusion of significant entities like the U.S. Department of Defense and Walmart further underscores the settlement’s comprehensive stakeholder engagement.

For investors, the commitment to energy efficiency and stability in rates can be seen as a strategic move to bolster DESC's competitive edge in the energy sector, particularly in a state like South Carolina with growing energy demand. Over time, these initiatives could potentially attract more customers and reduce operational costs, leading to improved profit margins and market share.

Legal Expert

The structured regulatory framework of this settlement presents a favorable outcome for Dominion Energy South Carolina. The PSC's role in reviewing and approving the settlement ensures transparency and legal compliance, reducing the risk of future litigation. The comprehensive engagement with intervening parties, including regulatory staff and consumer advocacy groups, signifies a proactive stance in addressing diverse stakeholder concerns.

For retail investors, the legal robustness of this settlement mitigates regulatory risk, ensuring the continuity of operations and investments. By securing a balance between revenue increases and customer benefits, DESC is likely to maintain a harmonious relationship with regulators and customers, fostering a stable and predictable regulatory environment conducive to long-term investment.

• Compared to rates at time of original request in March and offset by fuel cost reduction and other factors, settlement's rate request would represent net 1% increase for residential customer's electric rate
• Significant proposed customer benefits include bill credit, additional energy efficiency funds
• No change to Dominion Energy's existing financial guidance

CAYCE, S.C., July 12, 2024 /PRNewswire/ -- Dominion Energy South Carolina, Inc. (DESC), a wholly owned subsidiary of Dominion Energy, Inc. (NYSE: D), together with other parties of record, today submitted a comprehensive settlement agreement in DESC's pending general electric rate case for approval by the Public Service Commission of South Carolina (PSC).  The settlement includes all parties signing on or not opposing.  The requested rate increase to base rates is the first in nearly four years.  Since 2019, DESC has added approximately 40,000 new electric customers to its system and invested $1.6 billion in its electric system to provide reliable, affordable and increasingly clean energy to power its customers every day.

DESC and intervening parties will present the settlement to the PSC at a hearing scheduled to begin July 15.  After a thorough review, DESC expects the PSC to make the final decision and adjust rates as appropriate.  If approved by the PSC, the proposed settlement would allow DESC to recover some of the rising costs of investments needed to keep its plants running, systems reliable and grid secure while also listening to concerns of customers and other stakeholders.

Key components of the proposed settlement, which requires PSC approval, provide significant customer benefits:

• Starting Sept. 1, the bill of a typical residential customer using 1,000 kilowatt-hours of electricity per month would be approximately $148 – a level that ensures residential rates remain below the national average. Compared to rates at the time of the original request in March and offset by the fuel cost reduction and other factors, the settlement's rate request would represent a net 1.0% increase for a residential customer's electric rate.
• A one-time bill credit of $7.5 million funded by shareholders would be applied this year for residential and small general service customers.
• The Neighborhood Energy Efficiency Program budget would increase by $3 million in shareholder funds over five years beginning in 2025.

The proposed settlement also supports:

• An authorized return on common equity of 9.94%.
• A regulatory capital structure of 52.51% equity and 47.49% debt.
• A revenue increase of $219 million, representing about 28% less than the original request of $303 million in March.

There is no change to Dominion Energy's existing financial guidance.

Intervening parties have engaged with DESC for several months to reach the settlement agreement. They include the South Carolina Office of Regulatory Staff, the South Carolina Department of Consumer Affairs, South Carolina Energy Users Committee, Frank Knapp, Jr., Southern Alliance for Clean Energy, Coastal Conservation League, CMC Steel, Walmart, the U.S. Department of Defense and all other federal executive agencies.

About Dominion Energy

More than 4.5 million customers in 13 states energize their homes and businesses with electricity or natural gas from Dominion Energy (NYSE: D), headquartered in Richmond, Va. The company is committed to providing reliable, affordable, and increasingly clean energy every day and to achieving Net Zero emissions by 2050. Please visit DominionEnergy.com to learn more.

 

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SOURCE Dominion Energy

FAQ

What is the impact of the Dominion Energy settlement on residential electric rates?

The settlement would result in a net 1% increase in residential electric rates compared to the original request in March.

When will the Public Service Commission of South Carolina review the Dominion Energy settlement?

The PSC will review the settlement at a hearing scheduled to begin on July 15.

How many new electric customers has Dominion Energy added since 2019?

Dominion Energy has added approximately 40,000 new electric customers since 2019.

What is the value of the one-time bill credit included in the Dominion Energy settlement?

The one-time bill credit is valued at $7.5 million and will be applied for residential and small general service customers.

What is the increase in energy efficiency funds proposed by Dominion Energy?

The energy efficiency funds will increase by $3 million over five years beginning in 2025.

What is the authorized return on equity proposed in the Dominion Energy settlement?

The authorized return on equity proposed is 9.94%.

What is the proposed regulatory capital structure in the Dominion Energy settlement?

The proposed regulatory capital structure is 52.51% equity and 47.49% debt.

How much is the revenue increase in the Dominion Energy settlement?

The revenue increase proposed in the settlement is $219 million, which is about 28% less than the original request of $303 million in March.