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Dominion (D) Unit's Rate Cut Benefits Virginia Customers
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Dominion Energy’s (D - Free Report) unit Dominion Energy Virginia has announced a rate reduction, offering relief for residential and non-residential customers. Effective Jul 1, the average monthly rate for residential customers, who use an average of about 1,000 kilowatt-hours of electricity per month, will decrease by nearly $14.
This rate reduction is made possible by the bipartisan legislation passed in the 2023 Virginia General Assembly, which eliminated $7 in monthly charges. The law also allowed Dominion Energy Virginia to seek regulatory approval to spread fuel costs over a multi-year period, which lowers the monthly fuel charge by an additional $7.
The reduction in monthly utility bills is a welcome change as it directly reduces the financial burden on consumers, providing immediate relief and increasing disposable income. Moreover, lower rates contribute to energy affordability, ensuring that residents and businesses can access essential services without straining their budgets.
Over the past 15 years, Dominion Energy Virginia has consistently maintained stable residential rates, keeping them 20% below national and 39% below regional averages. Despite stable rates, Dominion Energy's unit has been delivering reliable, affordable and increasingly clean energy to its customers.
Rate Cuts by Utilities
We are familiar with rate increase filing by utilities, but rate cut is not a rare phenomenon. Utilities do apply to the commission asking for approval for rate decline, which benefits its customers.
The utilities do not profit from fuel costs, so when the fuel prices fall, the utility rate declines. In addition to fuel costs, implementation of cost efficiency measures, long-term investment made in infrastructure and usage of new technologies, modern equipment and machinery reduces operating and maintenance expenses for the utilities, which enables them to lower rates for customers.
The reduction of rates also benefits the utilities. This allows the companies to retain and attract new customers, which expands demand and revenues. Other utilities are also making applications for rate declines.
NextEra Energy’s (NEE - Free Report) unit Florida Power and Light Company (“FPL”) received state regulators’ approval to decrease fuel costs beginning in July. After the approval, an average 1,000 kWh residential customer bill will now be $8 less in July than in April. Depending on the rate class, business client bills will decline between 2% and 5% in July from the present rates.
Price Performance
Over the past month, shares of Dominion have gained 0.1% compared with the industry’s 0.2% rally.
Some better-ranked utilities in the same industry are Avista Corp. (AVA - Free Report) and NiSource Inc. (NI - Free Report) , each carrying a Zacks Rank #2 (Buy) at present.
Avista’s long-term (three to five years) earnings growth rate is pegged at 6.3%. The Zacks Consensus Estimate for 2023 earnings per share indicates a year-over-year increase of 9.4%.
NiSource’s long-term earnings growth rate is pegged at 7%. The Zacks Consensus Estimate for 2023 earnings per share indicates a year-over-year increase of 8.8%.
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Dominion (D) Unit's Rate Cut Benefits Virginia Customers
Dominion Energy’s (D - Free Report) unit Dominion Energy Virginia has announced a rate reduction, offering relief for residential and non-residential customers. Effective Jul 1, the average monthly rate for residential customers, who use an average of about 1,000 kilowatt-hours of electricity per month, will decrease by nearly $14.
This rate reduction is made possible by the bipartisan legislation passed in the 2023 Virginia General Assembly, which eliminated $7 in monthly charges. The law also allowed Dominion Energy Virginia to seek regulatory approval to spread fuel costs over a multi-year period, which lowers the monthly fuel charge by an additional $7.
The reduction in monthly utility bills is a welcome change as it directly reduces the financial burden on consumers, providing immediate relief and increasing disposable income. Moreover, lower rates contribute to energy affordability, ensuring that residents and businesses can access essential services without straining their budgets.
Over the past 15 years, Dominion Energy Virginia has consistently maintained stable residential rates, keeping them 20% below national and 39% below regional averages. Despite stable rates, Dominion Energy's unit has been delivering reliable, affordable and increasingly clean energy to its customers.
Rate Cuts by Utilities
We are familiar with rate increase filing by utilities, but rate cut is not a rare phenomenon. Utilities do apply to the commission asking for approval for rate decline, which benefits its customers.
The utilities do not profit from fuel costs, so when the fuel prices fall, the utility rate declines. In addition to fuel costs, implementation of cost efficiency measures, long-term investment made in infrastructure and usage of new technologies, modern equipment and machinery reduces operating and maintenance expenses for the utilities, which enables them to lower rates for customers.
The reduction of rates also benefits the utilities. This allows the companies to retain and attract new customers, which expands demand and revenues. Other utilities are also making applications for rate declines.
NextEra Energy’s (NEE - Free Report) unit Florida Power and Light Company (“FPL”) received state regulators’ approval to decrease fuel costs beginning in July. After the approval, an average 1,000 kWh residential customer bill will now be $8 less in July than in April. Depending on the rate class, business client bills will decline between 2% and 5% in July from the present rates.
Price Performance
Over the past month, shares of Dominion have gained 0.1% compared with the industry’s 0.2% rally.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
Dominion Energy currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked utilities in the same industry are Avista Corp. (AVA - Free Report) and NiSource Inc. (NI - Free Report) , each carrying a Zacks Rank #2 (Buy) at present.
Avista’s long-term (three to five years) earnings growth rate is pegged at 6.3%. The Zacks Consensus Estimate for 2023 earnings per share indicates a year-over-year increase of 9.4%.
NiSource’s long-term earnings growth rate is pegged at 7%. The Zacks Consensus Estimate for 2023 earnings per share indicates a year-over-year increase of 8.8%.