Shocking: Consumers sign up for higher rates
"Want to save money on your electric bill?" That's the question Dominion Virginia Power asked in a mailing in December, and tens of thousands of customers replied, "Well, duh."
In all, 87,000 Virginians signed up for Dominion's pilot program to open the now-deregulated state to a competitive electric market, but so far no one's saving big bucks on their electric bill.
One resident interested in signing up called a Dominion number 888-667-3000– to find out what her cost would be under the pilot program. Her current annual average price per kilowatt hour is 4.19 cents. Under the pilot program, her rate would average 5.08 cents.
"So I thought, why sign up on a pilot program that would be so much higher?" asks the source, who requested anonymity because she feared Dominion might cut off her power.
A Hook reporter called for Dominion's "price-to-compare" and got similar numbers: A current annual rate of 4.25 cents per kwh would jump to 5.14 cents per kwh on the pilot program.
Dominion claims it's a good thing if your price-to-compare is higher than your current electric rate. Huh?
"We knew this was going to be the trickiest thing to explain to the consumer," says Dominion price-to-compare expert Mary Edwards.
The utility offers charts that show how electric rates are broken down. There's the cost of the energy itself, there's the cost of delivery, and then there's this number called the competitive transaction charge– a fee the law allows Dominion to charge to pay for capital investment.
And the CTC may be one reason out-of-state utilities are not clamoring to supply Virginia customers.
"Dominion was going to cut that charge in half for the pilot program," say State Corporation Commission spokesman Andy Farmer.
So while consumers would pay the same delivery cost for energy, a lower CTC allows another supplier to come in lower with a lower price for the energy itself.
"This CTC has kept suppliers out," says Edwards. "There hasn't been enough gap for them to come in and make a profit."
Critics contend the reason suppliers aren't trying to move into Virginia is that prices here are already low.
"The national players have higher costs," says Irene Leach of the watchdog group Virginia Citizen's Consumer Council. "We've done a good job in the regulated market... There are not any new providers who want to come to Virginia."
Leach, who opposes deregulation, asks, "As consumers, do we want to pay more simply to have competition?" As for Dominion's pilot program, she thinks there's no way consumers will get lower energy prices.
"Consumers ought to be skeptical about what's going on here. If they realize they're not saving money, show that to House members," she urges. The General Assembly passed legislation deregulating energy in 1999.
Local activist Kay Peaslee did not sign up for the pilot program. "My attitude toward deregulation is very negative," she says, pointing to what happened in California. "I think it's a terrible mistake. Right now we have good rates. Why fix it if it ain't broke?"
Dominion's Edwards says that Dominion has decided to delay the program. But she insists that despite the delayed start, the potential to save under the pilot program is there. "We're doing everything to make sure people who selected that will have the ability to save," she says.
Only, it looks like it's going to take a little while.
Dominion is also test marketing a new product in Virginia: plumbing services.
For $2.75 a month, customers can opt for a warranty program. "People like them," says Dan Donovan from Dominion's products and services division in Pennsylvania. "They get peace of mind for two reasons: They won't have a large expenditure, and we supply a contractor to do the work."
Dominion likes the warranty business, too. While only home plumbing, water lines, and in-home electrical repair services are available in Virginia, in Ohio and Pennsylvania, where Dominion is known as a gas company, it warrants gas and sewer line repairs as well, which can add up to pricey repairs if you have to dig up the yard.
And the energy company is looking to expand its warranty services further. "We have a list of eight or nine," says Donovan, mentioning identity theft protection.
What about mowing the grass or shoveling snow? Donovan laughs, and notes that the company has done some brainstorming with college kids for ideas of services it can provide.
So who knows, maybe one day paying your deregulated electric bill will cover all home maintenance, too– at a competitive rate, of course.