Your Money Ain’t No Good Here, Dems Tell Utilities

Antipathy toward Virginia’s electric power companies is entering the realm of electoral politics. More than 50 Democratic candidates running for the Virginia House of Delegates have signed a pledge saying that they will “never” accept campaign contributions from Dominion Virginia Power or Appalachian Power, reports Graham Moomaw with the Richmond Times-Dispatch.

The pledge was circulated by Activate Virginia, a progressive Political Action Committee dedicated to electing more Democrats to the House of Representatives, calling for a “principled stand” against the fossil-fuel industry to prevent “environmental catastrophe,” Moomaw writes. Activate Virginia did not circulate the petition to House of Delegates incumbents, most of who have already accepted campaign contributions from electric utilities.

According to the Virginia Public Access Project, Dominion has donated $767,000 to political candidates in 2016-2017, while Appalachian Power has contributed $278,000.

The Activate Virginia initiative threatens to drive a wedge in the Democratic Party between those who place environmental priorities foremost and those who seek a balance between environmental and economic-development considerations. Lieutenant Governor Ralph Northam, viewed as the establishment Democratic candidate, has accepted Dominion money. Rival Tom Perriello has called upon him to reject further donations, saying that Virginia’s next governor “must aggressively promote clean, renewable energy.”

Although Republican gubernatorial candidate Corey Stewart has been highly critical of Dominion Virginia Power’s plans to dispose of coal ash, Dominion and Apco are less toxic to Republican sensibilities. Cutting CO2 emissions isn’t a priority for Republicans, who tend to be skeptical of the idea that global warming presents a crisis for human health and prosperity.

A confluence of factors has caused the surge in anti-utility sentiment.

First is a shift in fuel mix from coal to other energy sources that has prompted utilities to re-engineer their electric transmission systems and natural gas delivery systems. The result has been a wave of major new or upgraded infrastructure projects, both electric transmission lines and natural gas pipelines, which are visually intrusive and potentially environmentally disruptive.

Second is the relatively slow pace in Virginia of adopting renewable energy, especially solar. Under the current regulatory structure, Dominion and Apco have no incentive to cooperate with independent companies seeking to build solar projects and sell electricity directly to consumers. Instead of seeking regulatory reforms to alter the incentives — a formidable undertaking — environmentalists have taken to attacking Dominion and Apco for pursuing their self interest.

Third is the unexpected emergence of coal ash disposal as a major environmental issue. No one anticipated this two years ago when the Environmental Protection Agency enacted regulations to close coal ash pits in order to prevent spills into public waterways. The debate over how best to dispose of the ash — whether to bury in place or to convey millions of tons to lined landfills — has become enormously contentious.

Fourth is a regulatory freeze in base electric rates, negotiated in a legislative deal two years ago in response to the Obama administration’s Clean Power Plan. The Trump administration likely will seek to scuttle the plan, which would render the need for a rate freeze moot. Critics contend that the freeze has allowed Dominion and Apco to lock hundreds of millions of dollars of excess profits in place; the utilities deny the charges.

Because these conflicts are complex and deep-rooted with no easy resolution, they will persist for years. Indeed, multi-billion dollar decisions over the future of nuclear power in Virginia could add a new element to the debate. Popular agitation over electric-utility policies could well intensify, and utility campaign contributions, now dispensed without regard to political party, could well become a partisan litmus test.

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7 responses to “Your Money Ain’t No Good Here, Dems Tell Utilities

  1. I do not think the utilities should be singled out regarding contributions, although they are disproportionately high contributors. Neither should it be a partisan issue. We should limit all of the political contributions to small individual limits and remove the PAC’s. I wonder what sort of government we would get if it was not paid for by special interests?

    This is especially true at the federal level. Big Pharma has more Congressional lobbyists than we have have Congressmen. Pharma’s political contributions are twice that of the next highest (oil & gas) and four times higher than the third highest (Financial).

    I don’t know how this can be done when we rely on incumbents to vote on the change and it is most decidedly against their interest to do so. We could do it by a citizen’s ballot initiative, but I don’t think they are allowed in Virginia.

  2. The most troublesome contributions to me are public sector labor union (as opposed to private sector labor union) contributions to people who are responsible for setting the contributors’ wages, benefits and working conditions. That is a complete conflict of interest. And if we could regulate, I’d also prohibit contributions across state lines.

  3. Reminds me of the Grover Norquist tax pledge, but at least Norquist was brave enough to sign up actual sitting legislators. The problem with this petition is, there is no observable problem for many Virginia residents: we are getting cheap electric and greatly reduced CO2/pollution as natural gas replaces coal. So liberals are trying to stir up *any* fossil fuel use as “deplorable”, but sorry, I still do not see banning of fossil fuels as a template for success for Virginia or America.

    Really need to focus more on social issues, where it could be scary what a repub GA could stick us with, given lack of vetos from McA-types. Clean energy is happening automatically almost. If the left insists on going down this divisive, extreme path on energy, then they risk losing support from those of us in the middle (yet again, like Hillary lost it).

  4. All the GOP has to do to keep their majorities is not screw up cuz the Dems
    are in total disarray… the Dems are grandstanding with the “no money from Dom” schtick

    having said that – the GOP continues to harbor a harsh ideological core that is to the right of what most folks want and the GOP seems itching to overplay their hand and slim down their numbers where there are viable candidates running against them.

    Dominion’s goal is no different than the public sector unions that TMT frets about… except Dom has 10 times more money to get want they want which is a monopoly with a investor-satisfying rate of return.

    Dominion is trying to fend off solar as long as they can, shift the coal ash issue to others , and get more diversified with their pipeline… business. 20 years from now Dominion may well be a very different kind of company.

    I have zero doubt SOLAR is going to run amok at some point… once the tripping point has been reached…

  5. Thought you all might find this article about the immediate past history of VA utility regs …

    “In essence, the 2007 law was designed to give Virginia electric utilities financial incentives to increase generating capacity to meet future needs. That could protect utilities from having to buy electricity at then crazily climbing rates in wholesale markets.

    The new law hit consumers hard in their wallets. According to the SCC, the monthly bill for a typical Appalachian Power residential customer using 1,000 kilowatts of electricity jumped from $66.61 in July 2007 to $103.57 in July 2010 — an increase of 56 percent over three years.

    And the power companies were shooting for even more. The SCC’s biennial reviews from 2009 to 2015 resulted in the commission ordering Dominion to pay $824 million in refunds and credits to its customers, said Ken Schrad, the SCC’s spokesman. The commission ordered Appalachian Power to pay $5.8 million in the same time frame.

    This is where things stood until 2015 when the General Assembly, again at the urging of Dominion and Appalachian, passed a controversial law billed as a “rate freeze.” Consumer advocates and a minority of lawmakers screamed “scam” and “fraud” and other unkind terms, but that didn’t stop the law’s enactment.

    It was sponsored by Sen. Frank Wagner, R-Virginia Beach, who is now seeking the GOP nomination for governor.

    The law froze “base rates” on electric bills, which make up about half of a typical consumer’s monthly bill. For Appalachian Power customers, the freeze would last through 2020; for Dominion customers, through 2022.

    It also halted the SCC’s biennial reviews of the utilities’ profits. As a result, the commission can’t order any refunds — like the $830 million it ordered over the period from 2009 to 2015. Dominion and Appalachian can keep 100 percent of any excess profits they take in. That’s why consumer advocates were so upset.

    “I call it a refund freeze,” Sen. Chap Petersen told me Thursday.

    When the SCC considered the effect in 2015, here’s what Commissioner James Dimitri said about it: “If base rates are fixed at current levels for at least the next seven years, earnings over and above [Dominion’s] cost of service and a fair return have the potential to reach well over a $1 billion, at customer expense.”

    The power companies argued the freeze was necessary because they faced uncertain futures under the Obama administration’s Clean Power Plan. They said the plan could impose huge costs that would otherwise end up being passed on to electric customers.

    Then in November, Donald Trump was elected president. He promised to ditch the Clean Power Plan. On March 28, he took the first step, with an executive order to overhaul it. That could very well absolve the utilities from all the potential costs they used as justification for the 2015 law.

    Anticipating such a move, Petersen sponsored a bill in the 2017 session to repeal the 2015 law. The General Assembly wanted nothing to do with it. Lawmakers killed the measure within 72 hours of its introduction.

    “Dominion wanted to kill it as soon as possible,” Petersen said. The utility usually gets its way – it’s by far the biggest corporate campaign contributor to Virginia lawmakers.

    Cuccinelli is involved, pro bono, on behalf of the Virginia Poverty Law Center, which has filed a brief in a lawsuit that seeks to overturn the law as unconstitutional. The Virginia Supreme Court is slated to hear arguments on that Friday, said Jay Speer, the center’s executive director.

    Stay tuned.”

    • Casey’s article also says this, which is wrong:

      “Back in 1997, the SCC annually reviewed each company’s revenues. If one or both was found to be earning profits over the authorized percentage, the commission had the power to order 100 percent of the excess refunded to consumers.”

      If either company had, through good management or, more likely, good fortune in the form of favorable weather, earned in excess of its authorized return, the company got to keep those profits. But what the Commission could do in that case is what Casey says next:

      “The SCC also had the power to order reductions in electric rates, if it appeared that excess profits would continue.”

      The Commission could order rate decreases so the excess profits would not recur. It could examine the ongoing costs of capital and reduce the so-called profit margin, in actuality the permitted return on equity, into a reasonable range. Recall the sky high interest rates of the 1980s? Those left many utilities with authorized return rates of 15% or higher. Regulators around the country conducted proceedings to bring those authorized returns more in line with reality.

      The Commission could look at areas of known declining costs, as when the corporate tax rate was reduced from 36% to 34% in the late 90s and adjust prospective rates to account for the tax dollars no longer needed to be collected.

      The Commission could look at declining payroll costs as automation reduced employee levels. How long has it been since you’ve seen an actual meter reader? When utility employees performed functions for an unregulated affiliate of the utility, the Commission could insist that an appropriate portion of that employee’s time be paid by shareholders, not customers.

      These are all things the Commission now cannot do under the law otherwise pretty accurately depicted by Casey’s article.

  6. I’ve got nothing but downside adding my two cents, but what the hell…

    The first thought I had was were they going to eschew any money from Martians, because challengers or newbies have about the same chance of getting money from Mars as from a major corporate donor that is smart with its money. They give to incumbents, mainly incumbents on the right committees. So they are making a virtue out of their poverty. I did note they said never, never, never but yeah, sure, I believe that…They win, they get in a tight spot, and they will find a work around.

    The second thought I had is that the donor in question, unlike many politically active companies, also gives large amounts of money to both political parties and to both political caucuses so total purity is going to leave those campaigns missing out on some normal campaign services. Call me when they refuse to take advantage of the party’s bulk mail permit or phone bank….

    I also in my head linked this post with the earlier one dealing with the handful of major individual donors to one particular candidate for governor. Big Money is Big Money and if you believe it corrupts (and there is good reason to think that, trust me) then it doesn’t really matter where it comes from. Years ago I used to hate the idea of campaign finance limits, but then for seven years of my life my salary came from political donations. Duh. Older and wiser me things such a discussion would be of value in Virginia now….

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