Spanberger Asks Virginia Regulators to Reject Dominion-NextEra Merger Without 6-Year Base Rate Freeze

Virginia's governor has put a price tag on her support for the biggest utility deal in the country. Gov. Abigail Spanberger, a Democrat, filed expert testimony with the State Corporation Commission (SCC) on Monday, urging regulators to reject the NextEra Energy takeover of Dominion Energy unless the companies freeze base electricity rates for six years.

Six years equals three rate case cycles. Spanberger campaigned on lowering the cost of living, and she told reporters on a press call Tuesday that the deal "is not nearly good enough" for Virginians.

What the governor wants

The filing asks for four main things:

• A six-year freeze on Virginians' base residential rates.
• Monthly bill credits of $29 for four years, roughly triple what the companies have offered.
• A shift in Dominion's capital structure from 48% debt to 60% debt, which would lower the company's rate of return.
• Enforceable penalties for any violation of the companies' commitments, including labor and workforce pledges.

The testimony comes from Richard McCann, an environmental consultant with M.Cubed. He also called for a "probability of dispatch" method of allocating costs, better disconnection policies, and added energy efficiency and clean energy commitments.

"Unless these additional commitments are substantially addressed or alternative solutions are identified, the Commission should reject the joint petition," McCann wrote.

Spanberger said the freeze would not trap customers in a higher price if costs fall. "In the event that rates would otherwise be going down, there could be a review by the SCC that would ... revisit that pricing if it's going down," she said.

The deal on the table

Dominion, based in Richmond, and NextEra announced the merger in May. NextEra would acquire Dominion for nearly $67 billion in equity. The companies say the combination would create the world's largest regulated electric utility by market capitalization, and they expect it to close 12 to 18 months after the announcement.

They have argued the deal would allow a more cost-effective buildout of Virginia's grid to serve surging demand from large data centers.

The companies' opening offer was $10 a month in bill credits for two years. As pushback grew, including from Lt. Gov. Ghazala Hashmi, they extended the credits to four years and added clean energy assurances in line with the Virginia Clean Economy Act. The companies put the shareholder-funded credits at $2.25 billion across customers in Virginia, North Carolina and South Carolina.

Virginia's average residential rate is 17.55 cents per kilowatt-hour, below the national average of 18.31 cents, according to the U.S. Energy Information Administration.

Opposition is not limited to the governor

The governor is not alone. Virginia's attorney general and SCC staff have also filed testimony opposing the deal unless their proposed terms are accepted. The review has drawn pushback from other state officials and local communities.

Dominion and NextEra responded with a joint statement. "As expected in a proceeding of this size and significance, today's testimony reflects a wide range of viewpoints and interests," the companies said. They did not say whether they would accept a freeze or the larger credits.

Spanberger called her own conditions "aggressive, but also quite realistic." She said they are what the deal would need to deliver the benefits the companies have promised. "Any proposed merger involving Virginia's primary state-regulated utility must benefit families, small businesses, and Virginia's workforce, not just the shareholders of these multi-billion-dollar corporations," she said in a statement.

What comes next

The commissioners are not close to a decision. Spanberger acknowledged Tuesday that they are "still a ways away" from deciding whether to approve the merger.

The SCC will weigh the competing testimony from the governor's office, the attorney general, its own staff and the companies. The companies have said they expect the deal to close 12 to 18 months after the May announcement. Whether Dominion and NextEra will meet any part of the governor's six-year demand is the open question.