Costco Wholesale Corp. just joined the club of big national retailers that won’t get to shop for a new supplier of electricity for its stores in Virginia.
The State Corporation Commission rejected Costco’s bid to aggregate its power demand for 27 stores in Virginia so it can arrange for someone other than Dominion Energy Virginia to supply electricity to the company’s retail operations in the state.
In an order issued Thursday, the SCC found, just as it had in late February for Walmart and Sam’s Club stores, that allowing Costco to shop for another power supplier would shift costs to residential and small-business customers of Dominion that don’t have the option under current Virginia law.
In ruling that the request would not be in the public interest, the SCC expressed sympathy for Costco’s concerns about increasing electricity costs because state law allows Dominion to increase rates through individual clauses while allowing the utility to earn more than its approved profit without lowering base rates or giving money back to customers.
But the commission concluded, “Specifically, if Costco believes that the current statutory structure for setting vertically-integrated electric utility rates results in unreasonable or unnecessarily high rates, its potential for recourse may be found though the legislative process.”
However, the SCC said the state law enacted in 2007 to reregulate electric rates after a failed attempt at deregulation gives the commission clear discretion to decide whether proposals to aggregate power demand serve the public interest or potentially harm monopoly utility customers.
In Costco’s case, the commission estimated the harm at less than $1.6 million a year in higher rates for remaining utility customers to pay the giant retailer’s share of the fixed costs for running Dominion’s power generation and distribution systems.
But it noted those costs likely would rise as ratepayers pay for a range of costly investments in technological upgrades to the power grid, burying expensive power lines, expanding renewable energy and conservation programs that the General Assembly and Gov. Ralph Northam found to be in the public interest in a Dominion-sponsored state law that took effect last year.
“The commission will not allow small customers who cannot escape this structure, predominantly small businesses and residential customers, to be further burdened by the identified cost-shifting that will occur if larger customers like Costco choose to seek better deals for themselves outside of Dominion’s system,” the SCC said.
Costco could not be reached for comment, but Dominion welcomed the SCC decision.
“We’re pleased the commission ruled to protect the needs of all customers we serve,” said Dominion spokesman Rayhan Daudani. “We remain focused on offering a great value for our customers, large and small, as we transform the grid and expand our clean-energy options.”