Dominion fuel cost securitizations obscure the real cost of gas generation for consumers
Key Takeaways:
The Virginia State Corporation Commission (SCC) has approved a securitization plan allowing Dominion Energy to collect unrecovered fuel costs from the previous year over seven years instead of the conventional 12 months.
The plan approved by the SCC will allow Dominion to securitize $922.1 million in fuel costs that the utility did not recover through its regular billing process from June 2025 to July 2026.
The SCC is allowing Dominion to securitize large under-recovery deferral balances caused by volatile natural gas prices for the second time since 2023.
A more rapid build-out of renewable energy resources, dispatchable battery storage, energy efficiency, and demand side management (DSM) measures could reduce the need for such huge securitizations.
October 14, 2026 (IEEFA) – The Virginia State Corporation Commission (SCC) has approved a securitization plan allowing Dominion Energy to collect unrecovered fuel costs from the previous year over seven years instead of the conventional 12 months. According to the latest briefing note from the Institute for Energy Economics and Financial Analysis (IEEFA), these pay-over-time measures hide the true cost for consumers of fossil-fuel power generation—particularly of gas-fired plants.
This is the second time since 2023 that the SCC is allowing Dominion to securitize large under- recovery deferral balances caused by volatile natural gas prices. The approved plan will allow the company to securitize $922.1 million in fuel costs that it did not recover through its regular billing process from June 2025 to July 2026. That money will now be collected through a non-bypassable charge on its Virginia customers’ bills over the next seven years, which means even new customers will have to pay for it.
IEEFA finds that gas price volatility plays a key role in determining how much Dominion pays for its fuel each year. The volatility was a key factor behind the utility’s push for its 2023 and 2026 securitization plans.
“With securitization, these charges will now persist for years, and there is no guarantee that additional fuel price volatility will not lead to further under-recoveries in the coming years, prompting more rounds of securitization,” said Dennis Wamsted, IEEFA energy finance analyst and author of the briefing note.
As difficult as a conventional 12-month recovery process would be, spreading the costs over time simply hides the real costs of Dominion’s gas-dependent generation capacity, which it plans to build out even more. Instead, a more rapid buildout of renewable energy resources, dispatchable battery storage, energy efficiency, and demand side management (DSM) measures could help blunt the severity of those price spikes.
The 2023 and 2026 securitization initiatives underscore how the costliness of gas-fired power. Dominion needs to slow its pell-mell rush to gas and consider renewable energy options, which would benefit consumers and help the utility comply with the state’s goals to phase out fossil fuels.
