Are Your Buildings On The “Right” Dominion Energy Rate?

Dominion’s commercial energy rates are difficult to understand, and even more challenging to map back to your building’s energy consumption patterns. Are you sure your buildings are on the “right”rate?

For commercial real estate property managers operating within Dominion Energy’s utility service territory, understanding the intricacies of energy rates can significantly impact operational costs and budgeting. Did you know that shifting your building over to a more optimal rate—that better aligns with your building’s unique energy consumption patterns—can reduce energy bills by up to 10% (and potentially more)?

Dominion Energy’s rate structures are complex and multifaceted, encompassing various charges and pricing schemes tailored to different customer segments. If you’re unaware of how your rate is calculated, or your options to change it—you could be spending tens of thousands more in unnecessary monthly energy costs. 

In this post, we break down these rate structures, and provide guidance on how to get on the “right” rate for your building.

How are Dominion’s Rates Calculated?

Dominion’s rate calculations involve a complex interplay of 1) flat monthly customer charges, 2) use charges based on energy consumption, 3) demand charges.

Let’s take a look:

1. Flat Monthly Use Charges

Monthly use charges typically make up 10% of your rate, and cover the basic generation, transmission, and fuel costs associated with providing electricity to your building (in addition to various taxes and surcharges). These are typically standardized and not modifiable.

2. Use Charges

Use charges can take different forms, including flat rates applied uniformly across usage, or tiered structures where the cost per kWh varies depending on the level of consumption. These charges are where there’s a significant opportunity to better align rate options to how and when your building consumes energy—and save. More on this below.

3. Demand Charges and Seasonal Variations

Dominion’s rate structures also include demand charges based on the maximum power demand registered during specified periods. These demand charges can be tiered, vary by season, or apply solely to on-peak periods. Typically, demand rates are higher during summer months and peak hours, when the grid is more strained.

For small customers, Dominion schedules generally do not impose demand charges. However, intermediate and large customers face a spectrum of demand charges depending on their chosen rate schedule. Understanding these nuances is crucial for optimizing cost-saving strategies.

How Your Rate Could Be Optimized 

For customers with demand greater than 30kW, Dominion offers different rate schedules. Intermediate customers with demand ranging up to 500kW can opt for flat monthly customer charges plus use charges, while large customers with demand exceeding 500kW can choose between standard rates and Schedule 10. 

One notable feature of Dominion’s rate schedules is the inclusion of time-of-use (TOU) periods, primarily applicable to larger customers (or optional for smaller ones). These TOU periods, comprising on- and off-peak hours, significantly influence pricing. Electricity during on-peak hours can be 1.5 to 2 times more expensive than during off-peak hours, which can wreak havoc on monthly bills if left unmanaged. 

Alternatively, there’s another rate option (called “Schedule 10”) that introduces a “peak day” mechanism aimed at incentivizing load shifting away from designated peak days. The classification of days into A, B, or C categories dictates pricing variations, with peak days (A days, up to 28 per year) experiencing electrical supply costs that are ten times higher than regular days (B days). Notably, A days predominantly occur during summer months and never fall on weekends, while C days (at least 60 days per year), offering discounted rates, are more prevalent during shoulder months. 

Now, these ratios may sound complex and cause customers to shy away from these optional, higher-uncertainty schedules, but for some buildings this is where we see significant savings.

So what do customers need to know?

1. Intermediate customers can choose between an optional TOU rate schedule where electricity is priced differently during on/off peak hours, and the default rate (which does not have this feature). 
2. Large customers can choose between the default TOU rate and an optional Schedule 10 with a combined TOU/peak day pricing mechanism.
3. Building use patterns relative to the TOU periods will determine which option is best, and it may not necessarily be the same choice for each building.

Navigating Dominion energy’s rate structures is challenging: it requires an understanding of a) each rate’s rules in some detail, b) solid awareness of demand charge dynamics, and c) the ability to map both back to your building’s usage patterns. Yet based on a pending settlement, Dominion’s base rates are likely to remain stable for the next two years—so choosing the right rate schedule for your buildings now will secure immediate, lasting savings.

We’re here to help. Our energy analysts will dig into these factors for you as part of a complimentary rate audit to see what rate options make sense, and help you get on the most cost-effective one for your building. Contact us below to request a free rate audit today.