Is your electricity bill keeping you in the dark?

A seemingly simple question came across my desk a few weeks ago: What does Dominion Energy Virginia charge residents per kilowatt-hour (kWh)? Given how frequently I write about Dominion, I was embarrassed not to have a quick answer. In my own defense, though, Dominion makes it hard to find out. And when you do find out, the answer is, it depends. 

Examine a recent bill, and you will see the number of kilowatt-hours you used in the preceding month, a confusing list of charges and the dollar amount that you owe. You can do the math to figure out what you paid this month per kilowatt-hour, but that’s more of a snapshot than the whole picture.

 A Fairfax resident’s Mar. 6, 2023 Dominion Energy electricity bill. (Ivy Main/The Virginia Mercury)

I asked colleagues to send me their utility bills to see what people were actually paying, and I got out my calculator. Everyone’s rate was different, and the more electricity they used, the less they paid per kWh. Even after I removed state and local taxes from the equation, rates ranged from a low of 12.2 cents per kWh for a home that used 2930 kWh in February, to a high of 17.3 cents for a home that, thanks to solar panels, drew just 179 kWh from the grid in the same time period. 

As that solar home shows, the flat rate of the basic customer charge skews the average price higher. That basic charge is currently $6.58 per month, according to Dominion’s residential rate schedule, but you won’t see it on your bill. 

The rate schedule reveals other information your bill doesn’t tell you, and that’s where the real impact lies: you pay less per kWh, in both generation and distribution charges, for the electricity you use in excess of 800 kilowatts per month from October through May. From June to September, you pay less in distribution charges for every kilowatt over 800, but more in generation charges.

You’re also charged a single rate year-round for transmission, which is different from distribution. Plus, every kilowatt-hour is subject to a list of riders – “charges applied to certain rate schedules to recover various costs associated with Dominion Energy’s electric operations and electricity production,” according to Dominion – and non-bypassable charges. The rate schedule doesn’t identify these charges, but the bill does, albeit with no explanation for how the amounts are determined. Your bill also lists fuel as a separate charge under Electricity Supply, though fuel does not appear in the rate schedule. 

Still with me? No? All of this must make sense to the State Corporation Commission, which approved the rate schedule, but it is thoroughly opaque to customers. 

The sufficiently dogged can find a worksheet on Dominion’s website that breaks out all these costs. If you plug in the month and a number of kWh you used, it will calculate a bill. You still need to do the math yourself to arrive at the price per kWh, but you can then play with numbers to see how usage affects rates. 

Doing that confirms what I saw in my colleagues’ bills. Assuming 1,000 kWh, the number Dominion uses to represent the “typical” customer, the price works out to 14 cents in winter.  Change that to a frugal 500 kWh and you get 15 cents. Raise it to 2,000 kWh, and it goes down to about 13 cents. 

When challenged about this in the past, Dominion justified its buy-more, pay-less winter rate structure by arguing it was needed to make bills affordable for customers with electric heating, whose use can double or triple in the wintertime. The company didn’t mention that it also benefits wealthier people with large homes, and decreases the incentive for customers to conserve energy.

It also turns out that large homes do well in summer, too. According to the worksheet, a customer using 1,000 kWh in June would pay 14.6 cents per kWh. For 2,000 kWh, it rises slightly to 14.7 cents. The customer who uses only 500 kWh pays the highest rate, at 15 cents. Energy efficiency, alas, is not rewarded. 

So Dominion’s bills aren’t just confusing, they mask a perverse incentive in the rate structure that rewards people who use more electricity. This year’s utility legislation changes a lot of things, but it doesn’t require greater clarity in billing,  nor does it fix that upside-down incentive.

All utility bills are not equal

This perverse incentive is shared by some other Virginia utilities, though not all, and not all hide the ball the way Dominion does. Appalachian Power’s website shows it charges a single rate no matter how much you use. There’s neither a price break nor a penalty for higher consumption. The website provides two examples, for customers using 1,000 and 2,000 kWh, respectively. This makes it easy to calculate what you’re paying per kWh (about 16.5 cents), though you won’t find that number on either the website or the bills themselves. But neither the bill nor APCo’s website mentions the existence or amount of the basic customer charge, which can only be inferred from the website examples.

I also looked at February bills sent me by customers of Northern Virginia Electric Cooperative (NOVEC) and Rappahannock Electric Cooperative (REC). In both cases the bills were easy to understand. They identify the flat monthly charge, though in both cases the charge is unfortunately more than twice as high as Dominion’s. The bills also list the rates applicable per kWh for generation, transmission and distribution. Both utilities give a year-round volume discount on the distribution charge for higher levels of usage, another regrettable feature. However, REC’s SCC filing shows it imposes a higher electricity supply charge in summer for monthly usage over 800 kWh. I could not find current information about NOVEC’s rates online; I hope its customers have better access. 

Being able to understand your electric bill matters. Virginia’s average residential rates increased 20% between December 2021 and December 2022, according to the U.S. Energy Information Agency, mostly due to last year’s spike in the price of methane gas and coal. Even before last year, our bills were higher than those in most other states. 

Consumers have an array of options to help them lower their energy costs, including new federal and state programs and incentives for weatherization, energy efficient appliances and renewable energy. But customers who are confused about what they currently pay are less likely to act.

For the same reason, utility rate structures should incentivize customers to take steps that conserve energy. Lower rates for using more electricity undercut the value of investments in energy efficiency. 

If utilities want to help their customers, they can start by sending the right message.

This article was originally published in the Virginia Mercury on March 16, 2023.

4 thoughts on “Is your electricity bill keeping you in the dark?

  1. I’ve tracked what we’ve received from Dominion and what we’ve generated from solar since 2011.

    I take about $9 from the bull for BS and it looks like we average 14 cents per kWh. At least that’s what I use.

    Solar has provided a steady 62% of our electricity since installation.

  2. *** I also looked at February bills sent me by customers of Northern Virginia Electric Cooperative (NOVEC) and Rappahannock Electric Cooperative (REC). In both cases the bills were easy to understand. They identify the flat monthly charge, though in both cases the charge is unfortunately more than twice as high as Dominion’s. ***

    I’m a REC member. Dividing our miles of line by our number of customers, we have 1/2 mile of line per customer. That means many more trees to fall on the line per customer and higher expenses to trim those trees and fix the lines.

    Thanks for the link to the Dominion billing spreadsheet. I typed in my 810 kWh and 30 days (my billing period is the second half of February, first half of March). The Dominion distribution charge is $27.97 generation: $43.23, transmission $10.46, fuel: $28.66, non-bypassable: $6.04, etc plus tax adds up to $118.14.

    REC charged me distribution: $52.21 which includes the $14.70 flat fee access charge, transmission/generation: $73.54 which includes a couple extra dollars for cooperative sunshare, for a total with tax of $130.02

    Even subtracting the cooperative sunshare and half of the access charge we still pay more than Dominion customers. I believe this is because Old Dominion, the non-profit wholesale supplier owned by my coop, of which I am part owner, charges more for wholesale electricity and it gets charged more by large suppliers like Dominion.

    Thanks for this article. I think it’s worth looking into some more. I don’t necessarily agree that higher amounts of electricity should cost more but there should be incentives for saving energy beyond the (not) simple rate structure. For example I am paid $7 a month in June through September to allow REC to turn off my AC for short periods of time to save on peak power costs. That won’t save much electricity since my AC electricity comsumption will end up being about the same, just shifted. But such programs could also incentivize conservation without being inconvenient or intrusive (and remaining voluntary).

    Particularly with further penetration of solar we should have incentives to use more electricity when it is generated in the neighborhood by solar. Apple has new software that allows customers to choose to charge their phones when the generation is determined to be more renewable (above some threshold presumably). While phone charging is not a large use of electricity the concept could be extended to larger appliances to enable small time shifts in power use that can add up to larger shifts in the demand curve to reduce the need for peaking power and better match up with renewable supplies. Incentives for conservation or more use of renewable can leverage the smart grid (e.g. my AC unit control extended to other appliances).

    *** When challenged about this in the past, Dominion justified its buy-more, pay-less winter rate structure by arguing it was needed to make bills affordable for customers with electric heating, whose use can double or triple in the wintertime ***

    There are a lot of manufactured and other homes in my county with only baseboard electric heat. Some also have propane but that can be more expensive. Heat is critically important. We should always keep this in mind, particularly when the rates are based on monthly use which can go up a lot in winter.

    • I was reluctant to go into the difference in prices between utilities because there are a lot more considerations at work. As you mention, rural areas require more wire, and those costs get socialized across all customers even when actual costs of service vary. I believe the coops are recovering excess fossil fuel costs over a shorter period of time than are the IOUs, so rates are higher in the short run but will come back down sooner (assuming methane gas and coal prices don’t spike again). Their supplier ODEC isn’t moving to lower cost renewables very fast, and that will hurt coop customers. So there is a lot to unpack on rates.

  3. I recently got a smart meter installed and I was interested to see if time-of-use rates would benefit me. But the rate schedules and billing structure made this difficult to determine. I thought maybe I was missing something. But you are deep in the weeds on this all this, and it looks like the billing structure is just complicated.

    The bottom line is time-of-use rates won’t change consumer behaviour. Which is a shame, because that’s an easy way to get more value from our shared investments (power plants, distribution infrastructure) without raising anyones bill.

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