Dominion Virginia Power's proposed fuel rate increases likely will affect the University beginning in early 2004, and officials are not enthusiastic about the rate hike, according to Cheryl Gomez, director of utilities for Facilities Management.
"We're not looking forward to it," Gomez said.
Though she could not provide any specific figures or estimates on how the rate hike would affect the University's electric bill, Gomez said it is possible that any increases could be absorbed by the University and not passed on to students.
Gomez attributed this to the fact that the demand for electricity was lower than normal this past summer. The University pays for electricity at the rate when demand is at its peak, she said.
Exactly how the rate increase would affect students and faculty living off-Grounds is unclear.
The University electric bill is part of a five-year state contract with Dominion, Gomez said.
Dominion representatives reached a tentative settlement with state officials regarding the statewide increase in fuel rates, Dominion spokesperson David Botkins said.
The Oct. 10 settlement placed Dominion one step closer to raising fuel rates by 3.4 percent for residences beginning in January 2004. The typical household using 1,000 kilowatt-hours monthly would see its bill rise from $82.51 to $85.29.
The increase is an attempt by Dominion to recoup $386 million over the next three-and-a-half years, Botkins said. In an official statement, Dominion attributed the spike to higher natural gas and coal prices and higher-than-usual electric usage last winter.
"This settlement allows [Dominion] to recoup costs associated with skyrocketing fuel prices, while minimizing the impact on consumers," said Thomas F. Farrell, III, president and CEO of Dominion Energy, which operates the company's power stations.
Dominion's original filing on July 1 called for an increase of 8.7 percent for residences and 17.7 percent for businesses. The company initially asked for the increase to recover nearly $442 million in higher fuel costs over a period of one year.
The company also suggested that the increases could be implemented over a period of two years, with 5.6 percent rate increases for residential customers and 11.5 percent rate increases for businesses.
The original filing was the biggest such request for a rise in fuel rates since the 1970s energy crisis, according to State Corporation Commission spokesperson Ken Schrad.
The settlement with the SCC and Attorney General Jerry Kilgore's Office of Consumer Counsel knocked that original request down to $386 million and lengthened the recovery time to three-and-a-half years.
Passed by the General Assembly in 1999, the Virginia Electric Utility Restructuring Act aimed to increase competition in the consumer electricity supply business, Schrad said.
The Act divided electric bills in to two parts: the base rate, frozen at 1999 levels through July 2007, and a fuel rate, which covers the cost of fuels used to generate electricity, including coal, natural gas, oil and nuclear power. The fuel rate can be adjusted annually by the SCC.
According to Gomez, estimates as to how the rate increase would affect the University's financial burden could be available in one to two weeks.
Dominion representatives downplayed the rate increases as small compared to the rates paid in other states.
"Virginia pays historically low rates compared to the rest of the country," Botkins said.
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