(The Center Square) – Virginia regulators approved bond financing Tuesday allowing Dominion Energy to spread recovery of about $932 million in deferred fuel costs and upfront financing expenses over roughly seven years.

The State Corporation Commission authorized bond financing covering about $922 million in fuel costs Dominion has incurred but has not yet collected from customers, plus an estimated $9.8 million in upfront financing expenses.

Customers would repay the amount borrowed, interest and ongoing financing costs through a separate charge based on electricity use. The initial charge and interest rates will depend on the final bond terms.

In a companion order, the commission approved a fuel rate equal to about $37.65 monthly for a residential customer using 1,000 kilowatt-hours. That rate has been in effect on an interim basis since July 1 and excludes separate fuel bond charges and other bill costs.

Orphe Divounguy, chief economist of Quantitative Research Group and former economist at Zillow, said spreading repayment over time can help households manage their bills.

“Customers used the power, Dominion incurred the fuel costs, and those costs still have to be recovered. Securitization changes the timing,” Divounguy told The Center Square. “Instead of putting a large increase onto bills relatively quickly, it spreads repayment over time.

“For a household living paycheck to paycheck, smoothing a large bill increase into smaller monthly payments can matter even if it doesn’t reduce the underlying cost.”

Divounguy said customers would pay interest and other financing expenses on top of the fuel costs, but the relevant comparison is with what they would have paid under the traditional recovery method.

“The final interest rate isn’t known yet because the bonds haven’t been sold. That’s the number to watch,” he said.

Southern Environmental Law Center senior attorney Grayson Holmes criticized Dominion’s continued recovery of fuel expenses from customers.

“Dominion’s constant need to pass these fuel costs on to customers is not sustainable,” Holmes said in a statement.

The center, which represented Appalachian Voices, said the commission did not adopt the fuel cost-sharing measures the groups sought this year. Regulators instead directed Dominion to evaluate cost-sharing options in its next fuel application.

The new bond charge would generally apply to existing and future retail customers, with exceptions specified in the financing order. It would remain until the bonds and related financing costs are paid in full.

Divounguy said someone moving into Dominion’s service territory in future years could help repay fuel costs incurred before they became a customer.

Dominion retains discretion over whether and when to issue the bonds and must submit the final financing terms and initial customer charge to the commission before issuance.

The Center Square was unsuccessful prior to publication getting comment from Dominion.