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Senator warns that bill will tilt scales in favor of Dominion Energy

Posted at 5:52 PM, Mar 07, 2018
and last updated 2018-03-07 17:52:35-05

RICHMOND — As the General Assembly begins to wind down, a key opponent to legislation involving Dominion Energy is continuing to warn that a bill that has reached the governor’s desk will tilt the scales in the utility’s favor.

Sen. Chap Petersen, D-Fairfax, said the legislation may limit the State Corporation Commission’s regulatory power over utilities — and give Dominion Energy and Appalachian Power “a license to overcharge customers for the foreseeable future.”

The legislation consists of two nearly identical bills: SB 966, sponsored by Sen. Frank Wagner, R-Virginia Beach, and HB 1558, sponsored by Del. Terry Kilgore, R-Scott County. With amendments, each bill has grown to 29 pages. The bill’s summary alone is more than 1,850 words. A typical bill’s summary in the Legislative Information System is less than 100 words.

The provisions in the latest version that are raising the most eyebrows concern how much profit state-approved monopolies, such as Dominion Energy and Appalachian Power, may earn.

“Typically, the SCC is charged with making sure that rates are not more than is necessary to recover costs plus an allowable return on equity, which is usually 10 percent above costs,” Petersen said. “Normally, Dominion would give refunds based on that excess. This bill would take away that jurisdiction.”

For example, if Dominion made $1.2 billion in revenue in one year, and the company’s expenses were $1 billion, Dominion would have $200 million in profit. Previously, customers would have received a percentage refund for those “over-earnings.”

Under HB 1558, Dominion could keep all over-earnings provided it spends the money on designated projects — such as the Grid Transformation Project, a potentially multibillion-dollar project that includes burying power lines — as well as on investments in renewable energy, such as solar power or wind farms, according to Petersen.

The bill includes some complexities, however. Under the legislation, for example, the SCC would still have the power to review the Grid Transformation Project but would not be allowed to reject Dominion’s proposal, according to Steve Haner, a lobbyist for the Virginia Poverty Law Center.

“Dominion basically has written the law in such a way that it will never have to pay refunds, and it will never have to lower its rates,” Petersen said. “That’s why I called them out on it.”

Rayhan Daudani, senior communications specialist at Dominion, said many of these worries are unfounded.

“Environmental groups, like the League of Conservation Voters and the Natural Resources Defense Council, as well as the governor’s office, all agree that this bill is good for Virginians, for the environment and for our customers,” Daudani said.

Haner said the Virginia Poverty Law Center, a nonprofit organization that advocates for low-income Virginians, is neutral toward the bill. However, personally he said he thinks the bill may not do what it says.

“It does not really return us to regulation. It leaves the SCC bound up with some very strict accounting rules and gives the utility ways to manipulate its profit margins and manipulate its spending so it will never be found to be excessive. It’ll never be ordered to refunds. It’ll never be ordered to cut its rates,” Haner said. “They’re directed to spend a certain way based on a bill they wrote.”

Dominion’s influence in the General Assembly is well known, according to Corrina Beall, the legislative and political director of the Sierra Club’s Virginia chapter.

“Dominion is always the gorilla in the room. They are tremendously effective within the building, and their influence within the General Assembly cannot be overstated,” Beall said. “They are the No. 1 corporate campaign contributor to elected officials in the state of Virginia.”

However, Petersen said he believes the tides may be changing in the General Assembly, with Dominion receiving pushback from both Democrats and Republicans.

“This is the first time in my history that Dominion really got a lot of pushback from a diverse array of people, in terms of their agenda,” Petersen said. “Whether or not that will continue over the next couple years — new candidates will push back on Dominion and demand more consumer rights and more accountability, and less sort of a blank check — that remains to be seen. That’ll take three or four years to play out.”

SB 966 initially passed the Senate, 26-13, on Feb 9. The House then passed a substitute bill, 65-30, on Feb. 26. The Senate then agreed to the House substitute, 26-14, on Feb. 28. Now, the governor is expected to act on the bill by midnight Friday.

HB 1558 was approved by the House of Delegates on a vote of 63-35 on Feb. 13. A modified version of the bill then passed the Senate, 27-13, on Thursday. The measure is now back before the House.

Del. Mark Levine, D-Alexandria, had mixed feelings about HB 1558 but voted for it last month. In an email to constituents, he called it an “imperfect (but greatly improved) bill better for Virginia consumers and the environment than current law.”

The current law, adopted by the General Assembly in 2015, froze Dominion’s electric rates because the company said it faced uncertain costs of complying with the Obama administration’s Clean Power Plan, which sought to reduce carbon dioxide emissions from coal-burning power plants. However, the courts and the Donald Trump administration have since blocked the plan’s implementation.

SB 966 and HB 1558 would lift the rate freeze and allow state officials to see if Dominion is making excessive profits — and, if so, order the company to reduce its rates. That is one reason Gov. Ralph Northam has said he supports the legislation.

Northam said he brought together various groups to help craft a compromise on the issue — one that would “give Virginians as much of their money back as possible, restore oversight to ensure that utility companies do not overcharge ratepayers for power, and make Virginia a leader in clean energy and electrical grid modernization.”

However, Petersen fears that the bill won’t do that, and that it will prevent state regulators from doing their job.

“We took away from the State Corporation Commission their very skill set, which is evaluating the utilities and making sure that rates are fair and customers are not overcharged,” Petersen said.

By Scott Malone/Capital News Service
Capital News Service is a flagship program of VCU’s Robertson School of Media and Culture. Students participating in the program provide state government coverage for Virginia’s community newspapers and other media outlets, under the supervision of Associate Professor Jeff South.