Bacon Bits: Taxaginia, SCC Approvals, Blue VA

The Taxaginia Total:  $1.7 Billion in 2020

The four taxes I wrote about in “Taxaginia” last month could reach a combined fiscal impact of $1.7 billion by about 2020.  In preparation for a talk (which I will not get to give today after all), I did a bit more digging and some additional information has since come out.

The $611 million estimate for the state income tax hike resulting from conformity to federal tax changes is a Northam Administration estimate, known since summer.

The legislative money committee retreats last month produced a firmer estimate for the provider assessments (a.k.a. taxes) on private hospitals, with $719 million tagged as the revenue haul for 2020.  (Don’t you wish you could develop a futures market on these estimates?  That’s not going to hold.)

The Virginia Department of Taxation is now using $165 million as its projection of additional revenue once Virginia revises its sales and use tax to comply with the Wayfair decision and demand more tax collection by online merchants selling and shipping into the state.

The estimate on the carbon tax that will be imposed when Virginia joins the Regional Greenhouse Gas Initiative (RGGI) is a year old and is likely being revised as a new iteration of the regulation is considered. I’m using the number of $203 million, the upper range from last year’s Department of Planning and Budget estimate.

Under the newest version of the proposed regulation, electricity producers burning fossil fuels will need to pay for permission to emit 28 million metric tons of CO2, and the price per ton can only be estimated until the auction process gets underway.  As it stands now, the plan is that all the money the utilities pay for their carbon rights will be returned to ratepayers somehow and not spike rates, but that mechanism is unclear. 

Nobody Fights The Energizer Bunny

Not all the proposals Dominion Energy Virginia makes spark controversy. Proposed guidelines on planned pilot programs for utility-sized storage batteries have now cleared the State Corporation Commission.  No objections were raised, no pile of testimony accumulated, and only a few tweaks were made to the original language.

One provision in the massive 2018 electricity regulation revision authorized Dominion to install up to 30 megawatts of storage, and Appalachian Power up to ten megawatts.

Another New Option for Customers Who Want Renewable

Also uncontroversial, but far more complicated, is a new choice offered to large electricity customers, the so-called Schedule RG tariff.  This is a way for a Dominion Energy Virginia customer to buy exactly the kind of renewable power desired, but still remain under the umbrella of Dominion’s existing monopoly.

Attorney Will Reisinger of the Richmond firm GreenHurlocker has written about the SCC’s approval of the new tariff on that firm’s blog.  Limited to 50 large customers, it is designed to prevent any costs being borne by non-participating customers, in contrast to a recent solar project.

Reisinger represented Mid-Atlantic Renewable Energy in the case, and other participants included Wal-Mart Stores and Sam’s East, Inc., possible customers for the new rate schedule.  Your correspondent admits he has not plowed through the record but relies on Reisinger.

“Finally, it is important to note that Schedule RG was not approved under Va. Code § 56-577 A 5 and would not constitute a 100% renewable energy tariff under this statutory provision,” Reisinger wrote.  “As we explained in our Regulatory Guide, this Code section authorizes any Virginia customer to purchase electricity “provided 100% from renewable energy” from non-utility suppliers, so long as the customer’s incumbent electric utility does not offer an SCC-approved tariff for 100% renewable energy.

 “Therefore, if Dominion received approval to offer a 100% renewable energy tariff pursuant to Va. Code § 56-577 A 5, Dominion customers would lose their existing rights to shop for such energy.

“Currently, no Virginia utility offers an SCC-approved 100% renewable energy tariff. Dominion and Appalachian Power have both applied for approval to offer such tariffs, which thus far have been rejected.”  

So that one chink in the utility monopoly remains.

And Finally, A Stunning Endorsement for Bacon’s Rebellion!

The following excerpt is from no less than Blue Virginia!  It was part of a piece where Jim Bacon was attacked for being a damnable climate-denier, of course, and the Richmond Times-Dispatch was roundly condemned for hiring him, but it also included this:

Let’s be clear: Bacon’s Rebellion material is sometimes entertaining and, in some of the material, has a form of wonkiness that can be attractive/engaging for policy nerds. On its best days, it can provides (sic) valuable windows and thinking about policy interests with enough substance that can enable thoughtful engagement.

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10 responses to “Bacon Bits: Taxaginia, SCC Approvals, Blue VA”

  1. LarrytheG Avatar

    Pretty “meaty” bits this morning!

    I’m having more ignorance issues and was hoping you could help.

    Two things .

    1. – what the heck is a “tariff” in practical terms on my own electric bill. Why are there different kinds of tariffs instead of just a list of prices for electricity?

    2.- When Amazon and others contract to buy renewable power – they’re still essentially using grid power and aren’t they paying for their use of grid power like anyone would no matter the separate transaction to “buy” renewable power? Doesn’t Dominion charge them the going rate for electricity no matter what they’ve done as a separate transaction for renewable power? How does that harm other ratepayers?

    1. Steve Haner Avatar
      Steve Haner

      So there is some background on Q1 – a tariff is a rate schedule, and residential, commercial, industrial customers all pay off different tariffs. There are economies of scale, other considerations in setting different rates for different classes. Schedule RG is a new addition to that list.

      For Q2 you can read through that SCC case record. The goal of rate design is usually to avoid cross-subsidization between classes, to avoid having industrial customers subsidize residential, or vice versa. This is PhD level CPA stuff and I’m not going there.

    2. TooManyTaxes Avatar

      A tariff is a document filed with a regulatory agency that sets out the prices, terms and conditions for service. But it is more than that, it is the law. In order to prevent utilities from charging different rates to similarly situated customers or otherwise discriminating among customers, the court have developed the filed rate doctrine making it illegal to charge a customer any price not set forth in a tariff. A tariff binds both the utility and the customer.

      1. LarrytheG Avatar

        So basically it’s a price list for customers, right? So why are there so many and there are more being requested?

        we talk a lot here about “transparency”. What kind of “transparency” is there with respect to Dominion electricity rates if we don’t have one simple price list for everyone to see? Why do we need so many “tariffs” that when you read them are more like gumbo soup than anything understandable to the average person much less how such tariffs actually related to a simple price list for commercial, industrial, and residential?

        I doubt seriously if one person in a thousand understands how electricity is priced in Virginia… despite all the supposed “public” process and comments; it’s primarily a game of inside baseball with only certain folks who really understand and those folks are lawyers and other specialized staff and players.

        Steve certainly understands from the lobby-side but a lot of what he relates here is – to me – no disrespect at all – gobblygook…

        Why do we talk about “tariffs” if most of us really donj’t understand what they are and how they actually work in a practical sense?

        For instance, on the Facebook issue. Why do they need a special tariff if Facebook is going to be connected to the grid like any other company? Why would they be charged a different rate rather than them doing like Amazon did – i.e. connect to the grid, pay for grid electricity -then separately buy “renewable” power from PJM/3rd party folks to meet their commitment for “offset” power?

        Seems like if BR is going to meet it’s “wonk” label along with it’s incessant whining about “transparency” – it ought to be breaking this stuff down into practical terms that folks can understand and then be able to actually make genuine informed comments on!!!!

  2. LarrytheG Avatar

    but on the issue of companies buying “renewable” power that are also using power from the grid. Aren’t they getting billed by Dominion for whatever power they use from the grid – no matter what 3rd party arrangement they had to purchase “offset” renewable power?

    Aren’t they, in effect paying for grid power plus an additional amount for the “offset”? Dominion is not charging them less than others, right?

  3. Steve Haner Avatar
    Steve Haner

    Larry, it would have to be much clearer to qualify as gobbledygook…..:)
    Engineers, lawyers, economists and politicians all have had a hand in developing this system! You raise good questions, which some other regulars are probably better qualified to try to address.

  4. Wow BV is being nicer to BR than it is to Gov RN.
    Speaking of the Gov, on WTOP he said Va. revenues were up more than expected in October, so he has some money to play with even before the unannounced state income tax increase (better known as Virginia’s approach to “conforming” to the Federal tax laws).

  5. Yep, no one understands Dominion pricing, medical billing, and higher education cost accounting. But we don’t need to worry because all these areas are A-OK.

  6. TooManyTaxes Avatar

    If Virginia weren’t such a corrupt, crony capitalist state, the Congressional Delegation would go to the FTC and request it to review & comment on the state energy law provisions as they affect competition. But it’s more worried about the presence of Donald Trump in the White House and the desire to bring in more illegal immigrants to assure future votes.

  7. […] Opponents complain that the price is so high few or none would pay it.  But if the service was approved and offered, by law the competitive window closed anyway.  Lower cost options, or options using other more-favored sources of energy, were shut out.  The same complaints were leveled in debate over a renewable tariff for large industrial customers of Dominion, which was allowed but was deemed to be an experimental tariff, so it didn’t close the door to competition. (More on that here.) […]

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