ACP Cost Bill Passes House With Bipartisan Vote

Five House Democrats joined 35 House Republicans in voting against the legislation reinforcing the State Corporation Commission’s authority to decide just how much captive electricity customers must pay once the Atlantic Coast Pipeline is supplying Dominion Energy Virginia generators.

Delegate Lee Ware’s House Bill 1718 passed Tuesday with 57 positive votes, 42 from Democrats and 15 from Republicans, including Ware. The bill now moves to the Senate Commerce and Labor Committee, which has proven a challenging environment for bills Dominion does not want. 

The presence of the entire Dominion lobbying team in the Capitol Tuesday was a sign of a full court press on the bill, as was the emergence of a new argument that it might cause natural gas shortages.

Delegate S. Chris Jones of Suffolk, chairman of the House Appropriations Committee, made the key floor speech against the bill.  In recent sessions Jones, one of four delegates with reportable levels of Dominion stock according to the most recent report, has abstained on many of the previous regulatory matters.  Not this time.  “My concern is the bill would not allow fuel diversity,” Jones said, raising concerns not mentioned in the earlier committee debates.

He spoke as if the bill would prevent construction of the pipeline at all or would prevent its use to serve industrial or residential customers in Hampton Roads, leading to supply bottlenecks in cold weather.  How that might be was never explained, given the bill involves only the price paid for transportation of gas to regulated power plants in Virginia.   That is at most a percentage of the pipeline’s capacity.

In fact, should the SCC prevent Dominion from using ACP natural gas in its power plants, that might create more supply for industrial or residential uses along the route.  But fears about constrained supply in Hampton Roads were being fed by Dominion, to the point that Ware needed to rebut them during his own floor comments.  Three of the five Democrats voting no represent parts of Hampton Roads.

An equally specious argument came from House Commerce and Labor Committee Chairman Terry Kilgore, who complained that the bill did not expand but instead limited the SCC’s scope of review.

It adds three specific issues the SCC must address before granting the utility the cost recovery it seeks:  At the time the decision to contract for gas from the pipeline was made, did the utility need the gas? Were other alternative sources considered and weighed? Did the utility decide on a reasonable basis that the contract was the lowest cost long term option for supplying natural gas?

They are especially important because both the pipeline and utility are owned by the same corporate parent, so this is hardly an arms-length transaction.  Nothing in the bill rules out other concerns.

Only once the pipeline is finished and used to transport gas to Dominion power plants will the SCC review the price that Dominion wants to pass along to its customers for their share of the construction costs and profits. The cost will be part of future fuel factor charges. Dominion lobbyists argued in committee the  SCC has enough existing authority and the bill is unnecessary.

Before the vote Ware noted, as he had in committee, that both current Attorney General Mark Herring and former AG Ken Cuccinelli back the bill. In committee Tea Party and environmental activists stood in the same line to speak in favor.

For the record, here are the nays. The names of the Democrats are in bold.
NAYS–Austin, Bell, Richard P., Bell, Robert B., Bloxom, Brewer, Byron, Campbell, J.L., Campbell, R.R., Cole, Davis, Edmunds, Fariss, Garrett, Gilbert, Head, Helsel, Hodges, Hugo, Ingram, James, Jones, S.C., Kilgore, Knight, Lindsey, Marshall, McNamara, McQuinn, Morefield, O’Quinn, Orrock, Pillion, Poindexter, Ransone, Robinson, Rush, Stolle, Tyler, Watts, Yancey, Mr. Speaker–40.

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5 responses to “ACP Cost Bill Passes House With Bipartisan Vote

  1. re: ” How that might be was never explained, “… well that’s EASY to explain – it’s clearly one of the lobbyist talking points!

    I’ve NEVER had a problem for a for-profit company to expand markets. It’s the pure essence of American capitalism that benefits many!

    But THIS is Crony Capitalism with legislated regulatory malpractice.

  2. Va ruled by Dominion lobbyists.

  3. I don’t think the fuel diversity argument can be dismissed so easily — although whether the advantage of fuel diversity outweighs the cost of the ACP is a question that remains outstanding. It sounds from Steve’s reporting that the legislators on Dominion’s side did not do a very good job of articulating the fuel-diversity argument. As I understand it, here are the advantages:

    – The ACP taps a section of the Marcellus shale basin that other pipelines do not, providing an alternative source of natural gas and giving Dominion more flexibility in buying gas at lower prices.

    – The ACP would provide additional capacity in the event something like a hurricane or other catastrophe blocked natural gas supplies coming up from the Gulf of Mexico.

    — The ACP would provide additional capacity in extreme weather events like the Polar Vortex (which brushed by Virginia last week, apparently without incident), when the price of gas can shoot incredibly high. (I will be interested to see an analysis of how the energy system responded to the Polar Vortex.)

    – The ACP would increase the natural gas supply to Hampton Roads, which no one seriously denies has gas supply constraints.

    I think those are reasons to give the ACP serious consideration. What the SCC would have to weigh is whether those advantages outweigh the cost incurred by Dominion’s electric generation division to guarantee the gas-supply delivery. As Tom Hadwin has frequently argued, there were other ways that Dominion could have bolstered its gas supplies to Virginia. Is Tom right? I don’t know. Only the SCC has the resources to reach an informed conclusion.

  4. The fuel diversity red herring is crap. What is interesting is that Dominion is now behaving like this bill actually is a threat to the pipeline. That is also crap. But it is threat to their ability to charge an excessive price for using it, underwritten by captive ratepayers. If at the end of this we are paying a market-base price, comparable to alternatives, that’s a good outcome.

    I have consistently defended the pipeline as meeting a need, mainly because it did have that spur to Hampton Roads. Is Dominion now admitting that the answer to those questions is no, no, no? Are you? Call me when the stock price starts to drop….

  5. Here I go again … The need for energy in Hampton Roads which is right next door to the 2,000 MWs of Dominion’s offshore wind lease area and is where that generated electricity will come ashore. And that is just one lease area. There are more designated blocks to be leased off in the future.

    Then we have the fact that Virginia has not valued efficiency as a way to reduce demand. Tom has said that all of Virginia’s nuclear output “could be replaced by a long-term program of energy efficiency saving about 100 MWs per year. This is about average annual energy efficiency savings of major utilities throughout the nation,”
    The saving would also be equal to about 1/3rd of Dominion ‘s total current energy generation.

    And then we have the fact that the SCC has finally acknowledged that Dominion has inflated demand levels, something many of us have said for several years. Me, I don’t want to spend over $7Billion for a back-up fuel that is most probably not needed, especially when we have better alternatives. Those alternatives will leave a lot of gas we use today for any potential future industrial uses.

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