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Dominion Energy North Carolina agrees to further reduce proposed rate increase

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Dominion Energy North Carolina agrees to further reduce proposed rate increase

Dominion Energy North Carolina has agreed to lower its proposed revenue requirement by at least $13.5 million in a partial settlement agreement reached with the public staff of the North Carolina Utilities Commission.

The Dominion Energy Inc. subsidiary, known legally as Virginia Electric and Power Co., and the public staff still differ on the total proposed revenue requirement related to the recovery of the company's coal combustion residuals costs, among the unresolved issues.

Dominion Energy North Carolina and the public staff agreed on a 9.75% return on equity with a capital structure of 52% equity and 48% long-term debt, according to the agreement filed Sept. 17 with the North Carolina Utilities Commission. Dominion also agreed to reduce its recently revised $24.9 million base rate increase by another $13.5 million.

The public staff argues that the proposed revenue requirement should be lowered by an additional $7.2 million to reflect a final approved nonfuel base revenue requirement increase of about $4.2 million.

Dominion said it believes the revenue requirement should not be reduced further, but the utility noted that it "would not object to a further reduction of $2.8 million" if the commission found this to be in the best interest of customers. This possible reduction would lower the final revenue requirement to an increase of about $8.6 million.

The entities said they have resolved their dispute over certain wet-to-dry coal ash conversion costs at the Chesterfield power station by including those costs in the proposed revenue requirement. However, the inclusion of these costs in base rates is subject to the resolution of a similar dispute in Virginia and may be subject to refund or amortization as a regulatory liability.

The staff and Dominion have not resolved their dispute over the appropriate mechanism for recovery of all previously-incurred coal ash costs, "specifically the recovery amortization period and return during the amortization period."

The staff continues to favor "equitable sharing" of these costs and amortization over a 19-year period with the unamortized balance excluded from rate base, Dominion wrote in testimony filed with the commission. The company said this results in the additional $7.2 million reduction in the revenue requirement proposed by the public staff.

Dominion now supports a five-year amortization of these costs versus its previously proposed three-year recovery period, which the utility said would lower the revenue requirement by an additional $2.8 million.

(NCUC dockets E-22, Sub 562 and E-22, Sub 566)