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Keeping energy affordable matters just as much as keeping it reliable. To do that, Dominion Energy pursues a three-part strategy: making smart investments, maximizing the efficiency of our operations, and offering generous assistance programs. In addition, the company’s economic-development efforts, whose primary objective lies elsewhere, also make energy more affordable by raising living standards.
We work hard to make our operations as efficient as possible. Such efforts, along with sound management in general — Dominion Energy has been named to the Management Top 250 by The Wall Street Journal — have helped keep our rates low. For example, in terms of both residential and industrial rates, Dominion Energy Virginia continues to be one of the most affordable providers of electricity in the country.
Dominion Energy has maintained low energy rates for many years, and has actually improved on them over time. In July 2008, Dominion Energy Virginia’s typical residential bill was $107.20 per month. As of November 2018, the typical monthly bill was $114.42. Over the course of 10 years, the typical monthly bill for a Dominion Energy Virginia customer has increased just 6.7 percent. That represents an annual average increase of less than 0.7 percent, which is much lower than the rate of inflation.
The same trend holds true for industrial rates. In July 2008, Dominion Energy Virginia’s average industrial rate was 6.2 cents/kWh. It is now 5.9 cents/kWh. The average rate has dropped by about 5 percent over the decade. Comparatively, the Bureau of Labor Statistics’ consumer price index shows prices have risen 15 percent from 2008 to 2018.
The 2018 Grid Transformation and Security Act will improve electric affordability even further. The act returns $200 million in bill credits to customers, and $125 million in annual rate cuts due to tax relief. The 2.1 million smart meters slated for installation in homes and businesses, in conjunction with a new customer-information platform, will give Dominion Energy Virginia customers more information and the new customer information platform will provide tools to better manage their energy use and bills.
The natural gas side of our business has achieved similar excellent results. Dominion Energy Utah currently has the 14th-lowest rates out of the 48 contiguous states, and our operations in Ohio and West Virginia follow closely behind:
Dominion Energy's residential rates are among the lowest in the continental U.S.
Dominion’s team helped bring to fruition more than $2.7 billion in corporate facility investments supporting 3,615 new jobs.
Affordability depends on two variables: the price of a good or service, and the financial resources of the purchaser. In addition to all that Dominion Energy does to keep its rates reasonable, the company also plays an active role in economic development, which raises overall living standards. Higher living standards improve the purchasing power of our customers. And this makes all goods and services — not just energy — more affordable for the communities that we serve.
Dominion Energy Virginia’s low rates not only benefit our customers directly, they also provide Virginia with a competitive advantage in attracting new business to the commonwealth. So does our company’s dedicated economic-development team, which has grown from three people to five. As Site Selection magazine put it in 2015, “Dominion’s team helped bring to fruition more than $2.7 billion in corporate facility investments supporting 3,615 new jobs” during the preceding year. That record ensured our company a place on the magazine’s “Top Utilities.”
Our infrastructure investments — whether in support of electric utility service or the natural gas grid — also contribute to overall prosperity. As Dennis Martire, Vice President and Mid-Atlantic Regional Manager for the Laborers International Union of North America, put it with regard to the Atlantic Coast Pipeline, “This is the biggest job-creating project we’ve seen in our region for many decades. This is a once-in-a-generation opportunity to rebuild our region’s infrastructure and bring back the middle-class jobs that have disappeared from so many of our communities.” Steve White, Director of Affiliated Construction Trades, agreed: “Hundreds of local construction workers will benefit from the good-paying jobs and benefits.”
The ACP’s benefits extend beyond jobs. A study by ICF International found that operation of the pipeline would save Virginia electric customers alone an average of $236 million annually from 2019-2038, and $7 million annually for natural-gas customers during the same period. By providing a reliable and steady supply of energy to shortage-affected areas of Hampton Roads, the ACP will help attract major industrial projects, thereby increasing demand for labor — and raising average wages — even more.
Analyses of other Dominion Energy assets have produced similar results. A 2017 study by the Nuclear Energy Institute of our Millstone Power Station in New London, Connecticut, found that “Millstone generates $2.6 billion in annual economic output for all of New England. This includes almost $1.3 billion for Connecticut and more than $1.3 billion for the other states in New England.” The study estimated that Millstone supports more than 12,000 jobs, “both through its operations and through lower electricity prices,” and that the plant contributes roughly $40 million in state and local taxes.
Another independent report, by Analysis Group, an economic and financial consultancy, estimated that Millstone’s continued operation “saves the average Connecticut residential electricity customer over $500 through 2030.” A third report, by Chmura Economics & Analytics, concluded that Millstone “is responsible for approximately $1.55 billion in annual economic impact in the state of Connecticut, supporting approximately 3,974 jobs annually in the state.”
The natural gas distribution system in the southern part of Utah serves one of the fastest-growing counties in the nation. The current infrastructure will need to be enhanced to meet the resultant additional demand. To that end, the company has determined it will need to construct a 6.3-mile, 12-inch pipeline through the north end of Salt Lake City. It also will need to build a 24-mile, 20-inch pipeline reinforcement between a gate station and a high-pressure regulator station in St. George. We plan to begin construction in 2020. The projects will contribute to the region’s economic growth and overall prosperity. Likewise, we intend to use any excess capacity to serve remote communities, which will provide substantial support for economic development in those areas.
Dominion Energy Ohio's pipeline infrastructure provides a critical link in the transportation and delivery of shale production, which spurs economic growth. The access to abundant natural gas supplies also benefits our residential customers in Ohio, who currently have the lowest rates in the state. Additionally, natural gas power generation continues to grow, with nearly 2,400 megawatts fueled by natural gas delivered by our Ohio pipelines. Our Ohio and West Virginia systems have invested more than $1.4 billion to replace more than 1,600 miles of pipe, maintaining this critical infrastructure for customers while providing construction jobs across both states.
Of course, the most affordable energy is the energy you never use. Energy conservation and efficiency are important, so we have put a variety of programs in place to enhance them. In some cases, we actually pay customers to consume less energy.
Our conservation and efficiency programs include:
- Smart Cooling Rewards, through which homeowners receive a $40 bill credit annually for cycling their air conditioning on high-use days;
- The Income and Age-Qualifying Home Improvement program, which provides in-home energy assessments and energy-saving products such as lightbulbs, shower heads, faucet aerators, and insulation at no cost to the customer;
- The Small Business Improvement Program, which provides energy assessments and recommendations for greater efficiency;
- The Non-Residential Prescriptive Program, which offers rebates to Dominion Energy business customers for energy-efficiency improvements;
- The Non-Residential Distributed Generation program, which pays customers to reduce their electricity consumption by using on-site backup generators during periods of peak demand;
- ThermWise, which provides energy consultation and related services (for more, see below); and
- Home Performance with EnergyStar, which provides energy-efficiency upgrades at no cost to the customer (for more, see below).
Additional programs will be developed under the aegis of Virginia’s Grid Transformation and Security Act, which requires Dominion Energy to propose at least $870 million in energy-efficiency programs through 2028.
In Utah, we are supporting changes to that state’s Sustainable Transportation & Energy Plan (STEP) to encourage the use of RNG and other sustainability initiatives involving natural gas. A primary objective will be to improve Utah’s air quality in the heavily populated area known as the Wasatch Front. This option will include supporting the conversion of wood-burning stoves to natural gas as a cleaner alternative to help reduce air pollution.
Unfortunately, low utility rates and a strong economy are not always enough to compensate for the curveballs that life can throw at our customers. For those hit by sudden financial hardship, we offer a variety of energy-assistance programs to see them through until they can get back on their feet. For example, Dominion Energy West Virginia partnered with Dollar Energy through the local Salvation Army and with the West Virginia Office of Economic Opportunity weatherization program, contributing more than $125,000 to assist income-eligible customers. Through an array of larger programs, Dominion Energy operating companies provide substantial support to the communities that we serve.
There When You Need Us
Through the Grid Transformation and Security Act, EnergyShare continues to expand to meet the needs of its customers. A special Hardship Fund was established in July 2018 to help pay electric heating or cooling bills of Dominion Energy customers facing extreme circumstances.
Ms. T endured constant high electric bills stemming from the lack of needed home repairs. She also was dealing with her own multiple illnesses, a disabled adult child and only a hot plate to cook their meals. With her limited income from Social Security, numerous obligations and a mound of pride, Ms. T felt overwhelmed — until she learned about EnergyShare.
Through EnergyShare, Ms. T received home weatherization help, and her entire electric account balance was cleared. With the financial assistance and home repairs, today she is back on her feet.
EnergyShare began in 1982 to help those in need pay their electricity and natural-gas heating bills. Since then, the program has helped more than 820,000 families and individuals and weatherized 22,000 homes. Today, more than 100 employees work as energy-efficiency trainers to speak at schools, professional organizations, and other community venues. It became a year-round program in 2008 when it began paying summer electricity bills as well.
Virginia law expanded EnergyShare in 2015, and the commonwealth’s 2018 Grid Transformation and Security Act expanded it further. Dominion Energy Virginia has committed $130 million from 2018-2028 to help customers in need. For the first time, financial energy assistance and energy efficiency upgrades such as LED lights, attic insulation, and efficient shower heads and faucet aerators have been linked, creating sustainable relief on customers’ energy bills. The additional funding also has enabled programs specifically aimed at helping the elderly, military veterans, and persons living with disabilities.
In 2018, EnergyShare contributed $12 million in assistance and helped more than 29,000 households in Virginia, Ohio and North Carolina. In its 36 years, the program’s cumulative donations have reached $116 million.
In Ohio, EnergyShare offers gas assistance to help customers with their heating bills once government assistance has run out. Ohio EnergyShare partners with the Salvation Army to review requests and determine eligibility. If the request is approved, the energy supplier bill is paid directly, at no cost to the customer.
Ohio’s EnergyShare has raised nearly $7.2 million, helping about 79,000 people in its first 17 years. During the 2017-18 heating season, nearly 4,000 people in 1,651 households received a total $373,000 in EnergyShare assistance.
ThermWise is an energy-efficiency program in our Western-state operations which reminds customers that “If you conserve, you can save.” ThermWise provides customers visits by experts to design in-home energy conservation plans. Customers who need them receive, free of charge, energy-saving tools such as household pipe insulation and low-flow shower heads. ThermWise provides cash rebates to customers who install energy-efficient appliances or make weatherization improvements such as insulation, new windows and duct sealing.
The program has conducted more than 2,200 weatherization inspections and provided more than 27,000 home energy plans. In 2017, ThermWise granted more than $22 million in incentives for installation of high-efficiency natural-gas equipment and home improvements, saving nearly 900,000 dekatherms (Dth) — the equivalent of annual natural gas consumption by roughly 11,000 residential homes.
ThermWise provides funds for extensive home retrofits and furnace and duct replacements for low-income customers in Utah and Idaho. These funds, administered by the states’ low-income assistance agencies, have totaled more than $5 million in the 12-year history of the program. As of the end of 2017, cumulative natural gas savings from ThermWise total 6.7 million Dth — equivalent to the annual consumption of roughly 84,000 residential homes. A total of $212 million in incentives has been paid to Dominion Energy customers.
More than 70,000 customers participated in the ThermWise programs in 2018 and achieved natural gas savings of greater than 950,000 Dth. Over $23 million was spent for energy efficiency programs. The natural gas savings were equivalent to more than 50,000 tons of CO2 avoided in 2018.
Home Performance with EnergyStar
In Ohio, Home Performance with Energy Star (HPwES) provides home assessments that include diagnostic and safety testing, the installation of free energy-efficiency products such as high-efficiency shower heads and pipe wrap, and rebates worth up to $1,250 for additional energy-saving home improvements such as insulation, duct sealing, and natural gas furnaces and water heaters. The cost to the customers is $50 plus an additional $50 if they opt to have a Nest Thermostat installed.
In 2018, HPwES outlays to help customers topped $3.1 million. The program arranged for 4,372 assessments, and 2,785 rebates worth more than $1 million. In addition, at the beginning of 2018 we added a new, higher rebate for high-efficiency furnaces. From 2016 through 2018, HPwES performed nearly 9,000 assessments and provided rebates of more than $1.9 million.
Dominion Energy Ohio’s Housewarming Program, which offers help to low-income customers, has a $6.5 million annual budget. Through a third-party vendor, the Housewarming Program provides health and safety inspections on furnaces, boilers, space heaters, hot water tanks, stoves and other appliances. Home improvements, including weatherization, follow. The average cost to weatherize a home is approximately $4,000; however, there is no cost to the customer. The third-party vendor accesses multiple assistance programs available to the customer to ensure that all recommended improvements can be made.
In 2018, the Housewarming Program made 1,547 home assessments and spent more than $5.8 million helping customers. Since 2015, Housewarming has weatherized more than 7,000 residences at a total cost of $28.6 million.
We are determined to build on the momentum of these well-established programs to help our customers reduce their own environmental impacts. We have begun installing smart thermostats in low-income homes. We have partnered with Habitat for Humanity to build net-zero homes using natural gas. The company also has committed to increase the customer savings realized through energy efficiency programs by 5 percent from 2018 to 2019, and plans to increase the annual savings that its customers achieve from energy efficiency endeavors by 50 percent by 2025 (against a 2017 baseline).
Affordability: Outside Factors
While Dominion Energy takes appropriate measures to keep energy costs down for our customers, some major industry-wide influences have become significant factors in the affordability equation, and lie beyond our control.
We already alluded to one component: the household incomes of our customers, who reside in 18 states from one end of the country to the other. Such geographic diversity leads to markedly different financial conditions. Even within a single state, economic factors — the unemployment rate, prevailing wages, housing costs, taxation levels, and so on — can vary widely by region. The price per kilowatt-hour of electricity, or cubic foot of natural gas, that one customer finds easily affordable might seem daunting to another.
Other economic developments can affect our company’s side of the equation. For instance:
- Tariffs that drive up the price of raw materials or intermediate components (such as steel or solar panels) can make building and operating energy infrastructure more expensive.
- Fuel cost fluctuations can have a direct effect on energy prices.
- Market demand — driven by changes in the weather, consumer preferences, and other variables — can push prices up or down.
- Innovation (e.g., the advent of directional drilling and hydraulic fracturing) can reshape the energy market.
- State lawmakers and public utility regulators influence, and often prescribe, utility rates.
- National climate policy (or lack thereof) can steer regulation of, and decisions about, carbon and other emissions.
- Changes in tax policy, and the cost of regulatory compliance, also increase or decrease the aggregate cost of doing business.
- Geopolitics can have profound effects on global energy markets.
With so many factors beyond our control, Dominion Energy’s leadership finds it prudent to diversify the company’s operations. For decades, we have pursued an “all of the above” strategy to ensure the sustainability of service to the communities that depend on us for reliable, affordable energy. That strategy continues to serve well. A diversified business, with a diverse generation mix, can more easily absorb — and cushion customers against — external developments that might otherwise force our costs up sharply.