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July 1, 2026, to June 30, 2028, VEPGA Contract Overview
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o In addition, the VEPGA Negotiating Team was successful in delaying, for one
year, over half of the $96 million increase, with base rates will increase by $42
million as of 7/1/2026, with an incremental increase of $12 million on
7/1/2027 (resulting in a total base rate increase of $54 million compared to
current base rates in the contract year starting on 7/1/2027).
• Fuel:
o The largest component of VEPGA’s total increase is associated with fuel
costs. In January of this year, Dominion initially proposed a $105.7 million
(111%) increase in fuel revenues for the 2026-2027 rate year.
o Fuel costs are primarily driven by market forces beyond the control of either
VEPGA or Dominion. Dominion fuel costs are a “pass through” to customers
with no profits and are therefore not subject to negotiation.
o To make matters worse, by May 2026, VEPGA’s under-recovered fuel balance
increased much more than what Dominion forecasted in early January. This
was primarily due to the extremely cold weather during the month of January.
o The negotiating team recognized the need to mitigate rate shock to its
members. The parties were able to negotiate for an increase of only $92
million in the 2026-2027 contract year, with Dominion agreeing to defer over
$54 million in fuel costs to the 2027-2028 contract year with no carrying
costs being applied, which is a significant accommodation on Dominion’s
part.
o More details about the cost increases in the energy sector are described in
the Energy Markets Summary section below.
• Rate Design: This contract also made incremental adjustments that were agreed to
in concept during the last contract negotiation process to better align rates to the
cost of providing service to individual rate schedules. As a s resulting the
streetlighting rates received larger than average increases, which were necessary to
avoid cost shifting between rate schedules. In this regard, it should be noted that,
even with these changes, streetlighting rates are still being charged rates below their
full “cost of service. ”
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