Electricity Rates Are Escalating and the Reason is Plain to See: It's the Green Energy Virtue Signaling and Subsidies!

Doug Sheridan has taken a close look at electricity rates and here is some of what he has recently observed:

The FT writes [that] one of America’s biggest utilities has proposed raising consumer bills by 14% next year to cover costs linked to soaring electricity demand and inflation. Dominion Energy—with 3.6mn customers in Virginia, North Carolina and South Carolina—said the rising cost of labor, materials and upgrades to the grid was to blame.

It follows similar requests to regulators by other US utilities, including Con Edison, which in Feb proposed increasing electric bills in NYC by 11.4% next year. Utilities are boosting spending on power generation and networks required to bolster the aging electricity grid and to supply data centers and critical AI technologies…

Dominion’s proposed rate increases would apply to utility customers in Virginia, where the company’s largest customer base resides. The state is also the site of Loudoun County, home to the largest concentration of data centers in the world, with 200 data centers in operation and more than 114 scheduled to be built. “What’s undeniable is that data center growth in Virginia is not slowing down. In fact, it’s accelerating,” Robert Blue, Dominion’s CEO, said.

The utility has almost doubled its data center customer demand since July, with 40GW in contracted demand with data centers as of Dec 2024. Dominion’s planned price increase will require approval from Virginia’s State Corporation Commission, an independent state agency with regulatory authority over utilities.

A typical monthly bill for a Dominion customer is $140, according to the company, which is proposing to increase the base rate by 6.1% or $8.51 per month in 2026 and by an additional $2 per month in 2027. On top of that rise, it plans to increase a monthly fuel charge for a typical customer by $10.92 from July 1.

In total, average monthly bills would rise by about 14% from Jan 1. Dominion also wants high energy users, such as data centers, to make 14-year commitments to pay for their requested power—even if they use less energy than anticipated.

A recent Bank of America report found that US utility payments were rising much higher than overall inflation. The bank found that in Jan, utility payments were up 6% year on year, 3.5 percentage points higher than the rise in the price of energy services in the CPI and 3 percentage points higher than the annual inflation rate.

Our Take: Grid conditions require Dominion Energy to increase prices for the first time in more than 30 years to ensure reliable service. Think about that… and what it might signify is in store for other parts of the US grid.

I, too, have a take on these facts. It is fascinating that the two examples cited, namely Con Edison and Dominion, both illustrate the role "green energy” has had in raising electricity prices.

Con Edison, for example, has a sordid record of repeatedly caving to New York politicians pursuing ludicrous climate policies. They've never fought back effectively on behalf of their customers because, of course, rate increases only benefit the utility. Yes, they’ve periodically stated the obvious, but whenever Cuomo or Hochul have insisted they trash natural gas and push heat pumps and otherwise push the phony energy transition they’ve obliged with a “how far would you like to go” response regardless of the threats to energy security.

Dominion, the second example, is a green energy corporatist extraordinaire. It has been feeding at the government trough whenever possible and seems determined to pursue an offshore wind project despite Trump orders to the contrary. The reason? Well, I asked Grok just how much Dominion might be getting in subsidies:

Dominion Energy's Coastal Virginia Offshore Wind (CVOW) project, a 2.6-GW offshore wind farm, benefits from federal subsidies, but exact figures for subsidies received are not directly stated in available sources. However, we can infer the potential subsidy amount based on the project’s cost, federal tax incentives, and industry-standard support mechanisms.

The CVOW project has a total estimated cost of $10.7 billion as of February 2025, up from an initial $9.8 billion due to increased network upgrade and onshore interconnection costs. The primary federal subsidy for offshore wind projects like CVOW comes from the Inflation Reduction Act (IRA), which offers a 30% Investment Tax Credit (ITC) for offshore wind components for projects starting construction before 2026. Additionally, projects can qualify for stackable 10% bonus credits—potentially totaling 40%—if they meet criteria like using domestic steel, locating in fossil-fuel-dependent communities, or supporting low-income areas.

Applying this to CVOW’s cost:

• A 30% ITC on $10.7 billion equates to approximately $3.21 billion.

• If Dominion qualifies for the full 40% (30% base + 10% bonus), the subsidy could reach $4.28 billion.

These tax credits directly reduce Dominion’s tax liability, effectively acting as a subsidy by offsetting a significant portion of the project’s capital cost. The IRA’s tax credits are noted as a key factor in mitigating Dominion’s financial risk, especially since they locked in commodity prices before inflation surged in 2023…

In summary, Dominion Energy likely receives between $3.21 billion and $4.28 billion in federal tax credit subsidies for the CVOW project, based on the 30–40% ITC applied to the $10.7 billion project cost. This estimate aligns with industry norms for offshore wind projects but lacks confirmation of bonus credit eligibility, as specific details on domestic sourcing or community benefits for CVOW are not provided.

Yes, Dominion is sucking up our money like there’s no tomorrow. Moreover, these are only the capital costs as offshore wind is incredibly inefficient. This is because it destroys the efficiency of baseload energy, thereby driving up net costs to consumers in a major way. Add those costs to the others imposed on taxpayers, and pretty soon you're talking real money. It's not the data centers, in other words, but the subsidies, the mandates, and the green energy virtue signaling that are raising electricity rates.

#ConEdison #Renewables #GreenEnergy #Dominion #Subsidies #Electricity #ElectricityRates