Bacon Bits: Rider U Screws U Know Who

Now that the State Corporation Commission has finally approved Dominion Energy Virginia’s Rider U, mandated by the General Assembly to force us all to pay for underground lines serving just a few customers, let me explain how perfectly this scheme put the company ahead of its customers.  (For case details, the Richmond Times-Dispatch has this good story, picking up some themes from an earlier Bacon’s Rebellion post.)

Set aside discussions of the “Strategic Underground Program” because the merits do not matter for this illustration.  Start with the information that Rider U is a stand-alone line item on your bill, a financial silo on Dominion’s books, with a guarantee that the utility will recover in full the cost of construction with a profit margin over time.  No risk to the shareholders.

Any benefit to the customers, and there will be some certainly, shows up as reduced maintenance and repair costs and fewer interruptions.  Those maintenance and repair costs are covered by the main portion of your bill, the base rates, outside the Rider U silo.   Say it’s a one-to-one ratio, and the $70 million spent putting lines underground saves $70 million over five years in repair costs.  The fewer interruptions also add base rate revenue outside the silo.

The company and its shareholders pocket all that money, too.  Because the base rates are frozen, and the SCC is prohibited by various bad General Assembly decisions to reduce those base rates, or to give customer refunds, the company and its shareholders keep the savings on repairs.  The profit margin on base rates just jumped.

A profit margin with no risk on the construction program, and the ability to keep 100 percent of the operating savings because your base price cannot go down.  This is just one of the rate adjustment clauses, or RACs, which works this way.  It is genius, you have to admit.   The General Assembly could have ordered that the savings be credited back under Rider U, not base rates, but somehow that failed to happen.

The First Hundred Billion Is the Hard Part

Just four years ago Governor Terry McAuliffe signed a $99.7 billion state budget.  The proposed spending plan dropped before the General Assembly by Governor Ralph Northam Tuesday is $123.2 billion, just under 24 percent larger after four years.  It’s 17 percent larger than the budget McAuliffe signed two years ago.

In fact, it’s up almost $6 billion in just six months. Remember, it wasn’t until June that the 2018 General Assembly finally reached a compromise budget signed by Northam.  And that $117.3 billion budget included the expansion of the Medicaid program, so this is growth since then.

“My budget amendments include additional dollars to pay for our current Medicaid programs,” Northam told legislators Tuesday, “which did not experience the savings expected in the previous budget (emphasis added).”  Wait, didn’t we hear for five years in a row that expanding Medicaid would save the Commonwealth money?

The official summaries and speeches mention net additional spending of $2.1 billion in this budget, but that’s only the state-tax funded general fund portion.  There is also the non-general fund. When state universities raise tuition and fees, when the lottery sucks in extra suckers on a major lotto prize, when the federal government matches the Medicaid growth with its own money, those dollars are also part of this growing state budget.

Them That’s Got, Shall Get

Speaking of the Richmond Times-Dispatch, columnist Jeff Shapiro has weighed in on the story about lieutenant governor Bill Bolling and his new job at James Madison University.  He sought to tar former U.S. Senator Paul Trible, the current president of Christopher Newport University, with the same brush.

But reading his column brings up several key points.  Paul Trible became the president of Christopher Newport University after a formal search process.  There actually was a job with a job description, it was open, and other candidates were vetted before Trible became the focus of the search.  Had Bolling been treated like any other candidate seeking an established position, it wouldn’t have been much of a story.

If there is a Christopher Newport email paper trail as embarrassing as the one turned up at James Madison University, Shapiro didn’t mention it, and Shapiro would have if he could have.  Instead he rubbed salt in a few old political wounds, in his usual helpful way.

Yes, proposed legislation that requires a “cooling off period” before former board members could be hired for top university jobs would have also prohibited Trible’s appointment.  Despite Trible’s success in that role over the past three decades, the bill still has merits.  One year might be long enough.

The Trible, Bolling and countless other stories all tell the same basic truth – who you know can trump what you know or what you can do.  The Bible tells us that.  Billie Holiday and David Clayton Thomas sang about that.  And with that email paper trail, Bolling and JMU told the story again.  God bless the child that’s got his own.

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14 responses to “Bacon Bits: Rider U Screws U Know Who

  1. re: ” Wait, didn’t we hear for five years in a row that expanding Medicaid would save the Commonwealth money?”

    well… this is simply inaccurate and conflation. Not sure if Steve truly does not understand it or does but just sees the increased numbers and budget impacts.

    There are actually TWO MediAids:

    1. – the one that has been around since 1965 – more than 50 years and has never covered abled-bodied adults whether they worked or not but often DOES cover parents of kids if they work but still have very low incomes.

    The cost of that program is 50-50 with the State paying half.

    2. – The MedicAid EXPANSION created in 2010 (part of Obamacare) covers working people and others like prisoners who were not eligible for the original Medicaid but also do not make enough money to afford ObamaCare. That program is 90-10 with Virgina picking up the 10.

    The claim that the Expansion pays for itself is correct because it covers things the state was already paying for – like prisons and uncompensated charity care and a Hospital tax pays for the rest.

    So the MedicAid that is costing MORE is the ORIGINAL Medicaid and the primary reason is that people who have been eligible previously but did not know it – found out they actually were and signed up

    It’s called the “woodwork effect” and you can google it or read this link:

    https://www.richmond.com/news/virginia/government-politics/general-assembly/va-faces-nearly-billion-in-rising-medicaid-costs-through-next/article_7fc0c9d9-edc3-5155-81d1-c2b5a2019810.html

    “…. the unanticipated costs of the “woodwork effect” — people who suddenly realize they are already eligible for Medicaid benefits.

    Since July 1, more than 50,000 people have enrolled in the program under existing eligibility requirements, including about 11,000 parents with extremely low incomes.”

    One area that Virginia CHOOSES voluntarily to pay a lot more in Medicaid than the law requires them to – and it’s at their option – is nursing homes for folks who have assets including homes and land…

    ” Resource Limit for Long-Term Care in Virginia
    To qualify for Medicaid in Virginia, you must have no more than $2,000 in resources. Resources are assets like money and property. Some property does not count toward the resource limit; for instance, in Virginia, one car is exempt, and household goods are exempt.

    The state follows complicated rules to decide whether your house is exempt or not. If you are living in your home, it is exempt. If you have land surrounding your home that is worth more than $5,000, that land is counted as a resource if you qualified for Medicaid by meeting the 300% FPL limit. If you qualified by meeting the 80% FPL limit, then your home and all surrounding land is exempt.

    If you need Medicaid for long-term care, then you cannot have more than $543,000 in equity in your home in 2014. In addition, your home is only an exempt resource for the first six months that you are in an institution. If your spouse, dependent child, disabled adult child, or disabled parent continues to live there, then your home is exempt indefinitely. If your income is below 80% FPL, your home can also remain exempt after six months if you intend to return to it or if selling it would cause undue hardship to a co-owner.” (from NOLO.com)

    I realize some tax hawks don’t care much about details but they do matter if we actually want to see where cost-effective cuts might be possible.

    but this is one area where reforms and cuts are possible because right now taxpayers are essentially paying for some to keep their assets for their families while others have saved enough for retirement and long-term care responsibily themselves.

  2. Rider U Screws U Know Who –

    Good reporting. There is an obvious flaw in enabling legislation when a public utility is caught between serving its ratepayers and its shareholders. And when those sorts decisions are regulated and overseen by political bodies, instead of administrative ones. In my view, public utilities should remain public utilities serving one master, the public interests, here the ratepayers, not private interests seeking commercial advantage in the marketplace, via political action.

    I suspect, we got off track with the Reagan administrations, its deregulation of airports, banks, S&Ls, utilities, roads, and much else. All these functions, including electricity, are too central and critical to the public interests to be effectively run by private corporate interests. We never seem to learn this lesson. Excessive deregulation, the take over of public functions by private interests, it has been the driving cause behind all of our recent recessions. Last time it was the failure of the banking and financial system. And it’s the primary reason why so much private money is involved in our political process today. It breeds crony capitalism, which ultimately leads to failure of institutions critical to the public interests . It’s also the reason the DC region is by far the wealthiest region in United States today.

  3. re: ” The General Assembly could have ordered that the savings be credited back under Rider U, not base rates, but somehow that failed to happen.”

    Do you mean like the other stuff like requiring rebates of excess profits and tax rebates “failed to happen also”?

    There appears to be a double standard in the “reporting” in that Northam is being castigated for not “giving back” the conformity tax but it “failed to happen” with Dominion…

    hmmmm…

    and Northam is proposing to spend it on things that will benefit taxpayers and the stuff that “failed to happen” goes directly to shareholders.

    I would argue that the General Assembly guys have forced taxpayers to subsidize Dominion’s shareholders… not once or twice.. but frequently and often… even as they wail about the terrible taxes that harm their constituents.

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  4. There are two dirty secrets in Virginia. The first is that the supposedly conservative downstate Republicans aren’t conservative at all. They’re all for a Democratic Socialist style wealth transfer so long as the wealth gets transferred into their districts (and their pockets). The Rt 81 expansion effort is a case in point. Isn’t a “user pays” approach to using tolls to fund the road construction a conservative thought? Not to the so-called conservative Republican politicians whose districts border Rt 81. They want mo’ money, mo’ money, mo’ money from everybody in the state. Heaven forbid that the independent hill people from that area actually pay for their own road improvements. The second dirty secret is that the supposedly anti-corporate liberal Democrats from NoVa are the first to howl like ruptured coyotes when anybody suggests that maybe Dominion not be allowed to make infinite “contributions” to the state politicians who are supposed to oversee the regulation os that three headed monster. While it was a blue dog NoVa Democrat (Chap Petersen) who proposed legislation to make it illegal for Dominion to make political contributions it was pseudo-liberal NoVa pocket stuffers who led the opposition to Petersen’s bill.

    As for Northam – he’s off to a very good start at being the worst Virginia governor in memory. He can’t find enough new ways to expand the state government and shovel ever more money down a rathole. Funny thing … I’ve never seen Northam and Bernie Sanders at the same time. Coincidence? I think not.

    • “While it was a blue dog NoVa Democrat (Chap Petersen) who proposed legislation to make it illegal for Dominion to make political contributions it was pseudo-liberal NoVa pocket stuffers who led the opposition to Petersen’s bill.”

      I did not know that. Good for Chap Petersen.

      My definition of “Dark Money” is any large campaign donation (say over $100) paid to any elected state official by a person or entity who does business with state, or who seeks to lobby or influence the State. The fact it’s disclosed publicly as to amount over $100 and payee does not remove it from my definition of Dark Money. Another words, what is today is perfectly legal in Virginia, I think should be outlawed.

      Unlimited contributions are madness by whoever made. I cannot image why anyone should be allowed the contribute to any political campaign in a amount over a grand or two. What could the purpose of such a contribution beyond that amount be, other than to influence the payee? None I can divine.

      And when you start privatizing public functions, handing out favors and jobs to private persons and entities,these contributions can breed nothing but corruption of the political process.

  5. How about getting real tough on campaign contributions? Make it illegal to accept any campaign contribution from anyone who does not reside in the same “district” as the person running for office. For state delegate, no campaign contributions from anyone who resides outside the district, etc. can be accepted. County or city boundaries restrict contributions. For statewide offices, no one other than residents of Virginia can contribute. It’s really the candidates cannot accept.

    Ban bundling and PACs altogether. No PAC contributions from businesses, unions or nonprofits. No contributions from anyone who is not a live human being.

    • I think all those ideas TMT mentions are excellent. Now we are talking! Get all this filthy money that is ruining good government out of the process, and turn it back over to the American people.

      • Chap Petersen tried to reform campaign finance in 2017 and 2018. His 2018 bill was passed by indefinitely in Privileges and Elections. The vote was 12 – 2. Only Deeds and Chase wanted to bring it to a full vote.

        Here are the pocket stuffers who voted to kill Petersen’s bill:

        Vogel
        Howell
        Edwards
        Reeves
        Ebbin
        Chafin
        DeSteph
        Ruff
        Cosgrove
        Dance
        Spruill
        Peake

        The typical coalition of limousine liberals and faux conservatives. They all come up for election in 2019. I think it’s important that outlets like BaconsRebellion remember who voted against this common sense campaign finance reform.

    • Not sure how many of TMTs proposals would withstand a court challenge, but I wouldn’t disagree that money (along with gerrymandering) has fundamentally distorting our political system to the point where it isn’t functioning properly. If you take another frequent topic on this board, healthcare, I would argue that money from vested interests has dramatically decreased competition and raised costs.

      • It’s remarkable how all of us (myself included) just assume that all this filthy money flushing around the political system has to be this way, when in fact it does not. Given recent events in Va., perhaps more lights will go on in more peoples’ heads.

  6. It would keep Hollywood money in California.

  7. Well I agree with DJ about the socialists in RoVa.. they sit in the GA basically to make sure the NoVa cash cow continues to be “milkable”.

    And he’s totally correct about I-81. They have a problem and they want someone else to deal with it… typical for RoVa.

    And I agree also with respect to those that receive Dom money both GOP and DEM but it’s the GOP that bleats the loudest about taxes while the Dems see the taxes as paying for needed things. No such thing when it comes to not requiring Dom to refund the excess profits and other money they owe Virginians. It’s one thing to tax for MedicAid – it’s quite another to tax to enrich Dom shareholders.

    Now Northam. So here’s the question in terms of support of his policies which include taxes. How do folks in NoVa and other “blue” Virginia feel about him?

    hmm…

    ” State of things: Virginians are very optimistic.Optimism about the direction of the Commonwealth (Q1) is as high as it has been since the Wason Center began polling in 2007, with 64% of registered voters saying things in Virginiaare moving in the right direction. By contrast, 35% say things in the country are heading in the right direction (Q2), almost exactly where it was inJanuary 2018.VotersgiveGovernor Ralph Northamhigh marks after nearly 11 months in office(Q4),with 59%saying they approve of the job heis doing, including 32% of Republicans, while 24% overall say they disapprove.”

    now I wonder who the 24% are? Do you think they are NoVa Dems? 😉

    Oh wait.. take a look at this:

    “Provide a fully refundable tax credit to low and moderate-income Virginians regardless of how much they pay in state income taxes”

    NoVa: Favor : 63% Oppose 31%

    Good Lord – that’s the same number that approve of Northam!

    Now.. I have to say – I would have thought that – that particular issue would
    split the vote but geeze… 2/3 of NoVa support it !!! just not DJ and TMT and a couple others.!

    So what does all this mean? Well.. it means that folks that live in urban areas are pretty much “blue” in their politics… no shock there…

    and as NoVa and other urban areas in Va become places where the jobs are – Virginia is fated to become yet another state infested by those dratted Coastal Elites!

    😉

    • Northam’s foolishness won’t be apparent until sometime in the future. He’s a typical tax and spend Democrat who expands government and establishes an almost endless array of new government programs. Eventually the economy sputters, the state can’t afford the expanded programs, politicians refuse to raise the taxes even further and debt is increased or pensions go unfunded. The road to fiscal hell is paved with good intentions. Ask New Jersey or Illinois.

      You know how you get a politician like Donald Trump elected? Keep electing people like Terry McAuliffe and Ralph Northam until the inevitable backlash finally occurs.

  8. A higher percentage of Northern Virginians (67%), in the same poll, said give a tax cut to everybody. When forced to choose between a tax cut for everybody and a tax cut for “low and middle” they did prefer that, but you would be surprised what income Northern Virginians consider “middle income.”

    https://www.baconsrebellion.com/wp/to-get-useful-answers-ask-correct-questions/

    That poll did not test what the Governor has really done, which is to spend every dime on state programs. On that point, watch this space…..A hefty chunk of Northern Virginians (and others) thought that was peachy (but far from a majority.)

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