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RICHMOND, Va. - Dominion Energy Virginia (NYSE: D), a utility giant with a market capitalization of $47.77B and a defensive beta of 0.58, has put forth a proposal to the Virginia State Corporation Commission (SCC) for new base and fuel rate adjustments intended to support its commitment to providing reliable and sustainable energy to its customers. According to InvestingPro analysis, the company currently appears overvalued based on its Fair Value estimates. The proposed rate changes, which would be the first base rate increase since 1992, reflect the rising costs of labor, materials, equipment, and the need for grid enhancements to accommodate customer growth.
The company has suggested base rate hikes of $8.51 per month in 2026 and an additional $2.00 per month in 2027 for a typical residential customer. These increases come as a response to significant inflationary pressures and are part of Dominion Energy’s efforts to maintain service reliability and manage customer needs expansion. The company maintains a strong dividend yield of 4.76% and has consistently paid dividends for 43 consecutive years, as highlighted by InvestingPro, which offers additional insights through its comprehensive Pro Research Report.
Ed Baine, President of Utility Operations at Dominion Energy Virginia, emphasized the company’s dedication to providing value and reliable service, noting that they deliver uninterrupted power 99.9% of the time outside of major storms. Aware of the financial strain that inflation may cause, Baine highlighted the Energy Share program, which offers bill assistance and free home energy efficiency upgrades to help customers save money.
To address rate stability, Dominion Energy proposes shifting power capacity costs from the base rate to the annual fuel rate. These costs, determined by PJM, the regional electric grid operator, are influenced by the rising demand for power and are not profit-generating for the company. The proposed changes include a $10.92 monthly fuel rate increase for a typical residential customer, effective July 1, 2025, which also accounts for the expiration of a previous fuel credit.
Furthermore, the proposal introduces a new rate class for high energy users such as data centers, requiring them to commit to a 14-year payment plan for their power requirements, ensuring they cover the full cost of their service and safeguarding other customers from potential stranded costs. With annual revenues of $14.46B and a P/E ratio of 23, Dominion Energy’s financial metrics reflect its position as a major utility player. InvestingPro subscribers can access detailed financial health scores and additional ProTips to better understand the company’s investment potential.
Dominion Energy, headquartered in Richmond, Virginia, serves approximately 3.6 million homes and businesses with regulated electricity across Virginia, North Carolina, and South Carolina, and provides regulated natural gas service to 500,000 customers in South Carolina. The company is a leader in regulated offshore wind and solar power and is the largest producer of carbon-free electricity in New England.
The proposed rate adjustments are subject to approval by the SCC. This information is based on a press release statement from Dominion Energy.
In other recent news, Dominion Energy reported its fourth-quarter 2024 earnings, which fell short of expectations. The company announced an earnings per share (EPS) of $0.58, missing the forecasted $0.62, while revenue came in at $3.4 billion, below the anticipated $3.86 billion. In a strategic financial move, Dominion Energy has also entered into an underwriting agreement to issue $1.5 billion in senior notes, divided into two series with different maturity dates. Additionally, the company has set up an at-the-market stock offering program to potentially raise up to $1.2 billion through the sale of its common stock. The program includes forward sale agreements with several financial institutions, allowing flexibility in raising capital. These recent developments reflect Dominion Energy’s efforts to manage its financial strategy and market activity. The company has also reaffirmed its commitment to achieving 5-7% annual earnings growth through 2029.
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