Virginia Lawmakers Explore 'Performance-Based Regulation' to Lower Utility Bills

Proposed legislation aims to tie utility profits to performance, not spending, in order to cut costs and improve service

Published on Feb. 24, 2026

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Virginia lawmakers are advancing legislation that could lay the groundwork for future bills aimed at pushing major utilities to lower costs, reduce outages, and improve customer service through a model known as 'Performance Based Regulation.' The bills would direct the State Corporation Commission to establish a study group to determine how to implement regulatory changes designed to reduce utility bills, including evaluating ways to tie utility profits to meeting certain performance goals rather than just rewarding spending.

Why it matters

The current regulatory model is seen as providing an incentive for utilities to spend more, as their profits are tied to the amount they invest. Performance-based regulation aims to flip that incentive, rewarding utilities for meeting targets around lowering costs, reducing outages, and improving service for customers.

The details

The proposed legislation would direct the State Corporation Commission to study how to implement a performance-based regulatory model, including potentially tying a utility's return on equity to how well it meets goals set by the commission. Examples of performance metrics could include evaluating homes for air leaks, addressing frequent power outage areas, and folding certain rider charges into the base rate to increase scrutiny. The bills also ask the commission to consider a cost-sharing structure between ratepayers and utility shareholders for certain pass-through expenses like fuel costs and renewable energy credits.

  • In 2024, lawmakers passed legislation directing the SCC to study how performance-based regulation could be implemented in Virginia.
  • The SCC report on performance-based regulation was released in 2025.

The players

Sen. Scott Surovell

A Democratic state senator from Fairfax who sponsored one of the bills.

Del. Rip Sullivan

A Democratic state delegate from Fairfax who sponsored one of the bills.

Dominion Energy

A major utility company in Virginia that would be impacted by the proposed regulatory changes.

Appalachian Power Company

Another major utility company in Virginia that would be impacted by the proposed regulatory changes.

State Corporation Commission

The regulatory body in Virginia that oversees utility companies and would be tasked with implementing any performance-based regulation model.

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What they’re saying

“There's a sort of an unfortunate incentive built into the current process where, in a way, spending more money is good for Dominion's bottom line. So let's make spending less money good for their bottom line.”

— Del. Rip Sullivan (The Mercury)

“I've got no problem with Dominion making money, but let's create incentives that would have them make money in different ways and in ways that would lower ratepayers bills.”

— Del. Rip Sullivan (The Mercury)

“It's a lot easier to plug the holes in homes and businesses that are keeping our squirrels warm than it is to build a new generation. It's by far cheaper. But the utility doesn't get the profit benefit out of that, for the most part.”

— Sen. Scott Surovell (The Mercury)

What’s next

The bills set different deadlines for when the requested reports would be delivered to the General Assembly, a discrepancy that would need to be resolved before final passage. Any follow-up legislation would likely be considered in one to two years during future legislative sessions.

The takeaway

The push for performance-based regulation in Virginia highlights a broader shift in how states are rethinking the traditional utility business model, seeking to align utility profits with customer interests and policy goals around lowering costs, improving reliability, and advancing clean energy.