Ignore the ROE Decision. Dominion Gets It All.

Crying All The Way To The Bank

By Steve Haner

After a long, expensive and contentious legal battle producing a huge case record, the State Corporation Commission left Dominion Energy Virginia’s authorized profit margin unchanged Thursday.  The return on equity figure did not go higher, as the utility demanded, and did not go lower, as just about everybody else involved in case demanded.

The SCC order is here.

You will see report after report in news media now that the authorized return is 9.2%, such as this one. This is wrong. The authorized return, because of Virginia’s uniquely pro-stockholder state law, is really 9.9%. The law allows the utility to keep 100 percent of the first 70 basis points of excess profit above the stated allowed profit.  With the large amounts involved over multiple years, that extra 70 basis points is real money out of your pockets.

And once the profits exceed even that level, the utility still keeps part of it, with the ratepayer potentially getting refunds of 70 percent and the utility keeping 30 percent. If you see any signs of distress on the part of the utility executives that its demand for 10.75% (really 11.45%) was refused, understand they are crying on their way to the bank. The last SCC report showed the real profit well above that ROE now with no signs of abating.

The profit margin is stated as return on equity (ROE) because it is based on the shareholder equity invested in the various capital assets producing electricity. Dominion was arguing, with a straight face, it needed 10.75% (really 11.45%) to get anybody to buy its stock. In this low-interest rate environment, there is no rational basis for that, and the commission’s opinion spends a fair amount of space dismantling it.

In part the utility remains unfazed by no change in its ROE because, thanks to the Ratepayer Bill Transformation Act of 2018, ratepayers won’t even get back that paltry 70% of the excess above 70 basis points.  The company may keep it all, as long as it uses those ratepayer-provided dollars on various investments smiled upon by the General Assembly. The argument over ROE of 9.2% versus 10.75% was really just an argument about which of Dominion’s pockets would hold your money going forward.  You will never see it back either way.  Continue reading

Rent Seeking, Runaway Higher Ed Costs, and the Middle-Class Squeeze

Source: “Update on Higher Education Affordability”

by James A. Bacon

I don’t know what’s going to happen to Tony Maggio, a fiscal analyst with the House Appropriations Committee since 2001, when Democrats take control of the General Assembly. I wouldn’t be surprised if the new leadership finds his analysis, such as the graph above, to be highly inconvenient.

That graph shows the history of tuition & fees at Virginia’s public four-year institutions for undergraduate, in-state (I/S) students. It is inconvenient because it clearly shows how cuts to state support for higher education account for only a small portion of the increasing unaffordability of higher education. As such, the analysis undermines the argument — that cuts to state support are mainly to blame for higher college costs — advanced by a favorite Democratic Party constituency.

The graph appears in a PowerPoint presentation, “Update on Higher Education Affordability,” that Maggio made during the House Appropriations Committee retreat earlier this week.  That PowerPoint also shows how higher-ed spending, not cuts in state support, is driving the cost increases. Continue reading

Rent Seeking, Runaway Medical Costs, and the Middle-Class Squeeze

Source: The Commonwealth Fund

by James A. Bacon

Mirroring national trends, Virginia healthcare markets are severely out of whack. The main difference is that here in the Old Dominion, they’re even more out of whack than they are for the country as a whole. In 2018, total out-of-pocket medical insurance costs for Virginia employees (employee contribution to premiums + deductible) amounted to $8,143 — 10.2% more than the national average.

That’s on top of what employers pay. According to the latest data compiled by the Commonwealth Fund, employers on average contribute $6,635 for single coverage and $19, 512 for family coverage. Add up the employer and employee share, and the cost of family coverage is equivalent to about $13.30 per hour in earnings for a full-time employee.

These costs have rapidly outpaced the general cost of living. As a percentage of median income, out-of-pocket costs have increased from 6.9% of median income to 10.7%.

Out-of-control medical insurance costs constitute a crisis for Virginia’s middle class. While the public policy debate in Richmond has focused almost exclusively on how to extend insurance coverage to the poor and working poor in the form of Medicaid expansion and Obamacare, nothing more than lip service has been given to the crisis for people who pay their own way. Continue reading

Virginia Likely to Impose Excessive Minimum Wage

Beneficiaries… or victims… of a $15 minimum wage?

by Hans Bader

It doesn’t make sense to ban jobs that pay a living wage, just because an employer can’t afford to pay a still higher wage. But that is what a $15 minimum wage does in regions where living costs and wages are low. There are cheap regions to live in where $11 an hour supports a decent lifestyle. If someone can afford decent food, clothing, and housing on $11 an hour, and their employer can’t afford to pay them more than $12 an hour, it is pointless and cruel to ban their job just because it pays less than $15 per hour.

But that is what a $15 minimum wage does. It bans jobs that pay less than $15 per hour, regardless of whether an individual employer and worker have a good reason for a lower hourly wage.

Virginia is now poised to join seven other left-leaning states, such as New Jersey, in imposing a $15 minimum wage. The incoming majority leader of the state senate, Richard Saslaw, D-Springfield, has introduced a bill to increase the state’s minimum wage to $15 by 2025, and then adjust it for inflation in future years. Every Democrat in the state senate has already voted for a similar bill in the past, and Democrats took control of Virginia’s legislature this November. Continue reading

The Rank Hypocrisy of Rural Gun Sanctuaries

by Peter Galuszka

When Donald Trump ran for president on a platform of virulent xenophobia, one of the rallying cries he favored was the idea that liberal-minded localities were forming “sanctuary cities” and would not cooperate with federal immigration officials on the prowl for undocumented aliens.

Right-wing Virginia politicians, notably Corey A. Stewart, who led anti-foreign hate raids when he was Chairman of the Board of Supervisors of Prince William County, locked onto the idea with a vengeance. Listed as “sanctuary” cities were places like Virginia Beach and Richmond.

The problem was that they were no such cities or counties. True, short-funded police departments tended to stick to their real work – enforcing local and state laws as they should – but there were no formal pronouncements of “sanctuary cities.”

So, it is indeed ironic that the anti-control mob is creating a series of so-called “sanctuary” cities and counties where authorities will refuse to enforce gun control laws. So far, the counties of Appomattox, Campbell, Carroll, Charlotte, Patrick and Pittsylvania have declared themselves ‘Second Amendment Sanctuaries,” reports the Washington Post. Continue reading

Metro in the Age of Crazy

by James A. Bacon

The chronic problems of the Washington metro system can’t be blamed entirely upon its dysfunctional, multi-state governance system or even the poor choices of its governing board. Any realistic appraisal of the Metro must take into account the fact that the country is increasingly populated by friggin’ lunatics!

The Metro board came up with the idea of selling off the naming rights to Metro stations. Most recently, the board waived its existing naming rules in order to finalize a deal with a “Fortune Global 500 company” to rename the soon-to-open Innovation Center station (near the Center for Innovative Technology building) to a name selected by the unnamed corporation. Now members of the Fairfax County Board of Supervisors are in a snit that the county wasn’t consulted.

People, get a grip. As WTOP states succinctly, “Metro hopes station naming rights deals could help offset losses from ridership declines to help keep the budget in line without more significant fare increases.”

Speaking of significant fare increases… fare jumping in the Washington Metro is already a significant problem, accounting for $29 million in losses.  That could well get worse, depending on whether local riders heed calls for an international transit fare strike. Proclaims the “It’s Going Down” website: Continue reading

Appalachia’s Job Growth Challenge


by James A. Bacon

Employment growth in Virginia’s Appalachian region since 2002 has been the weakest of all five states in the Central Appalachian region, according to data contained in a recent Appalachian Regional Commission (ARC) report, “Industrial Make-up of the Appalachian Region: Employment and Earnings, 2002-2017.”.

Making matters worse, job growth in Central Appalachia was the worst in all of Appalachia, which was half that of the United States as a whole.

The growth gap between Virginia on the one hand and Tennessee and North Carolina on the other has been particularly marked, the gap between Virginia on the one hand and West Virginia and Kentucky not quite as bad.

Earnings growth in Appalachia also has severely lagged that of the United States as a whole — 17.5% compared to 27.3%. Continue reading

The Issue of Guardianship and the Contribution of a Newspaper

Ora Lomax with a picture of her husband, William, who was committed to a nursing home against her wishes. Photo credit: Richmond Times Dispatch

On Sunday, the Richmond Times-Dispatch ran a remarkable article. It was remarkable both in the amount of space the newspaper dedicated to it, 5½ whole pages, and its subject, guardianship, a subject about which little is known by the public, but that could affect anyone.

The publishing of this series of articles illustrates the continuing value of newspapers. The RTD invested a lot of resources into this story. It was a year-long investigation in which staff combed through the records of hundreds of guardianship cases originating in the Richmond circuit courts. They examined all the public documents related to those cases. They created a database with all the relevant data from those cases. They also looked at some guardianship cases filed in Henrico and Norfolk circuit courts to see how such cases were handled in different jurisdictions. They interviewed dozens of people and attended guardianship hearings. No other media for the general public could, or would, dedicate this amount of resources to a single topic. Continue reading

Virginia Judges, 1; Artificial Intelligence, 0

by James A. Bacon

It sounded like such a good idea: Develop a criminal-sentencing algorithm to help judges identify felons least likely to reoffend and either give them shorter jail sentences or divert them to probation or substance-abuse treatment programs. Virginia created just such an algorithm in 2001. Minimizing the subjective element in sentencing, it was thought, might even reduce sentencing disparities between the races.

The results didn’t turn out entirely like people hoped. In a deep dive into the data, Megan T. Stevenson, a George Mason University professor,  and Jennifer L. Doleac, of Texas A&M, authors of, “Algorithmic Risk Assessment in the Hands of Humans,” found that the Virginia algorithm does influence outcomes: Defendants with higher risk scores got longer sentences and defendants with lower risk scores got shorter sentences. However, they found “no robust evidence that this reshuffling led to a decline in recidivism.”

While they found no evidence of an increase in racial disparities statewide, the authors did find that among the judges most likely to factor the risk scores into their sentencing decisions, there was a “relative increase in sentences.” Continue reading

Go West, Young Man, and Get a Concealed Carry Permit

Percentage of the population with a concealed carry permit in 2019. Source: Virginia Public Access Project

The farther west in Virginia you go, the more likely it is that the guy standing next to you carries a concealed-carry permit. What would really be interesting is to see the correlation between the percentage of concealed permits and number of crimes committed with firearms.

— JAB

Northam Appointee Opposes DEV’s Green Tariff

Virginia City Hybrid Energy Center in St. Paul, which burns both coal and wood biomass. It is the centerpiece of Dominion’s proposed 100% renewable service, infuriating environmental opponents. Dominion photo.

By Steve Haner

Is Governor Ralph Northam now on both sides of the electricity retail choice issue? Having sent a strong signal weeks ago that he would oppose 2020 legislation creating competition for all customers, his administration has now intervened in a regulatory dispute asking to protect competitive choice for 100% renewable electricity. You are only free to choose if you choose green?

In order to stop other companies from selling so-called 100% renewable electricity in the Dominion Energy Virginia territory, the utility needs its own version of this shell game approved by the State Corporation Commission. The next hurdle in that long road is a hearing at the SCC Thursday.

When we visited this saga in August, Dominion’s application for what it calls Rider TRG had been filed but few of the likely opponents had responded. A long list of complaints about the idea is now part of the case record, including objections from the Northam Administration filed Friday in the name of the Department of Mines, Minerals and Energy.

Continue reading

Chesapeake Bay Foundation Embraces Social Justice Advocacy


I have long respected the Chesapeake Bay Foundation for its role as an advocate for the Chesapeake Bay. It has always stuck close to its nonpartisan, non-ideological mission, and it has enjoyed a high degree of credibility across the political spectrum. Until now.

Last week, the CFB issued a statement supporting the Environmental Justice for All Act, sponsored by Rep. Donald McEachin, D-Virginia, and Rep. Raul Grijalva, D-Arizona, which would “protect minority and low-income communities that disproportionately suffer health risks from pollution.”

Said Chesapeake Bay Foundation Federal Executive Director Jason Rano:

Everyone has a right to clean water and air, no matter who you are or where you live. Congressmen McEachin and Grijalva are taking important steps towards meaningful action on environmental justice. This will protect our most vulnerable communities from pollution and ensure healthier local rivers and the Chesapeake Bay.

The CFB has taken a huge step from science-driven environmental advocacy to ideologically-driven social-justice advocacy. Huge mistake. Disastrous mistake.  McEachin’s proposed legislation is riddled with questionable leftist suppositions. With this endorsement, the CFB has squandered its credibility with half the population. What a shame.

— JAB

Getting Serious about Flooding

Click image to enlarge. Source: Governor’s Office

by James A. Bacon

Everybody talks about the weather, as the old saying goes, but nobody does anything about it. Well, here in Virginia, people are getting serious about one aspect of the weather — flooding.

Last week Governor Ralph Northam issued an executive order, the Virginia Flood Risk Management Standard, to encourage the “smart and resilient construction of state buildings.” Based on sea-level rise projections developed by the National Oceanic and Atmospheric Administration, the new standard requires state-owned buildings constructed after 2021 to be built at elevations that will protect them from flooding.

“Flooding remains the most common and costliest natural disaster in Virginia and in the United States, and our state government is getting prepared. These standards will protect taxpayers by establishing critical protections for new state-owned property,” Northam said in a press release.

Meanwhile, the City of Virginia Beach is grappling with the reality that it needs an extra $20 million a year to improve its stormwater infrastructure. Continue reading

Bringing Addicted Babies into the World Should Be a Crime

by James A. Bacon

When social breakdown, a drug epidemic and failed government institutions converge, this is what you get: babies like Charlee Ford (seen at left) born with opioids and marijuana in her system and diagnosed with cerebral palsy. After birth, her lungs failed for nine minutes before doctors revived her. In her short, tortured lifetime, she suffered from severe seizures. She died at an age of four months.

Graphic credit: Roanoke Times

The surging use and abuse of opioids and other illegal drugs such as methamphetamines is associated with a horrifying increase in the number of Virginia babies born addicted to drugs. Worse, these babies are usually born into totally dysfunctional families. Mothers and fathers are themselves are likely to be substance abusers, which puts the babies at high risk of abuse and neglect. Meanwhile, child protective services in Virginia are uneven in quality — some local programs, one might say, are as bureaucratically dysfunctional as the families they serve.

The Roanoke Times tells the tragic story here.  The focus is on Rockbridge County in the Shenandoah Valley. But similar stories can be found all around the state. It’s a long story but worth the investment in time.

Bacon’s bottom line: Maybe the Roanoke Times article hit me harder today than it would have previously because this weekend I visited my month-old grandson for the first time and cradled the tiny, helpless little creature in my arms. He is a lucky one, blessed by two loving, hyper-conscientious parents who will take very good care of him. Many babies are not so fortunate. Charlee’s story prompts several thoughts…. Continue reading

No Surprise Here

Speaker-designate Eileen Filler-Corn, Fairfax. Photo credit: CNN

by Dick Hall-Sizemore

Both the RTD and Washington Post today reported on the new Speaker-to-be’s first committee chair appointments. (This is one of the real powers of the Speaker of the House of Delegates.  He/she gets to make all committee appointments, including the chair of each committee.)  The Post was a little more muted, but from the RTD’s headline, “3 members of  Va. black caucus to lead House panels”, one would have thought the appointments were a surprise and part of a Democratic plan to give special perks to the black caucus. The chairman of the black caucus even weighed in by praising the “historic appointments.”

What would have been surprising would have been not appointing those members to the chairmanships.  Each one is the Democratic delegate with the most seniority currently on the committee.  So far, the new Speaker-to-be (herself certainly far from what a traditional Speaker has been) is going with tradition.