Va utility to return $400M in rates

RICHMOND, Va. (AP) - Virginia's largest electric utility agreed to a proposed settlement Thursday to return nearly $400 million to customers and reduce monthly electric bills.

The settlement, subject to regulatory approval, would reduce by $5, to $103.83, the typical monthly residential bill from Dominion Virginia Power. The company sought a base rate increase that would have raised a monthly bill to $116.27.

The settlement provides that Dominion return to ratepayers at least $268 million in what the state describes as excess 2008 earnings and $129 million in fuel revenues.

Under terms of the agreement, customers would realize a return of the $268 million through a one-time credit and monthly bill adjustments of $56 through 2010. The $129 million would be reflected in credits on customers' bills.

Customers would also get a refund of approximately $21 million per month that they have paid under an interim rate increase approved on Sept. 1.

Dominion Virginia Power had asked the State Corporation Commission for a $250 million rate increase and other rate adjustments. The utility has 2.3 million customers.

The rate case is the first under a new Virginia law governing electric utilities.

The proposed settlement reflects a lower rate of return for Dominion, as negotiated with the Virginia attorney general's office. The company had sought a 14 percent rate of return, but lowered it to 11.9 percent.

Like most public utilities, Dominion is entitled to a reasonable rate of return for its stockholders.

"In these difficult economic times, we believe the interests of Virginia's consumers are best served by the return of their hard-earned dollars, and avoidance of rate adjustment increases now," Attorney General Bill Mims said in a statement.