Will the General Assembly unshackle the SCC so it can grant refunds or lower rates?
By Steve Haner
As the energy whirlwind continues to spin at the General Assembly, changing the landscape the way a twister changes a trailer park, one proposal that should be a boon to Dominion Energy Virginia ratepayers passed a notable hurdle late Tuesday night.
House Bill 1132, the chance for legislators to repent and make amends for earlier sins against their constituents, cleared the House Labor and Commerce energy issues subcommittee on a 6-4 vote, following a long and instructive debate. Two versions of the bill were introduced, one by Powhatan Republican Lee Ware and the other by Norfolk Democrat Jay Jones. It was the Jones version that passed, but Ware was also at the podium sharing credit.
The subcommittee meeting, which ran until about midnight again, included many party-line votes, but this one had Democrat Steve Heretick of Portsmouth siding with Dominion along with several Republicans, while Ware joined the rest of the Democrats in support of the bill. “Nay” was the wrong vote on this one. Very wrong. As wrong as the votes which enriched Dominion in 2014, 2015 and 2018.
As previously discussed, the bill will allow the State Corporation Commission to review and adjust Dominion’s rates and profits in 2021 without the handcuffs, leg irons, blindfolds and barbed wire fences previous General Assemblies have built into various laws to injure consumer rights and protect utility profits. It will use the traditional rate-making rules the State Corporation Commission applies to other companies, and most other states’ regulators use for their monopoly power companies (who also thrive, by the way).
There is so much going on in the energy arena, and so much of it is likely to change before adjournment, that a general assessment must await the final outcomes. Clean energy advocates are winning the vast majority of their battles, and they are often using the same tactics they learned from the utility. Their bills, too, are studded with the magic words “in the public interest” and other restrictions on SCC oversight. As with taxes, seek not consistency.
In fact, the argument has been made that the coming wave of additional costs as Virginia rushes toward renewable power – especially with the proposed offshore wind project – should be preceded by this effort to get the base rates at the utility, and its profit margin, lowered and set correctly. Once that is done, and Dominion customers perhaps can enjoy some long overdue refunds, the rates can start to rise again as the New Green Virginia Utopia forms.
The Jones and Ware bill faces the full Labor and Commerce Committee tomorrow afternoon, and also on that consequential docket will be the proposal to mandate SCC approval of that $8 billion offshore wind project, a previous Bacon’s Rebellion topic. The House and Senate need to finish work on their own bills by Tuesday, so they can all “crossover” to the other body.
In seeking to derail the change in regulatory method, Dominion argued Tuesday that it has been operating and making major investments under the rules set in the 2007 regulatory revision, and various tweaks to it since. In particular it claimed this would undo the benefits of the Ratepayer Bill Transformation Act of 2018, which allowed it to take excess profit dollars and spend them on capital projects blessed by the General Assembly, rather than use them for customer refunds. Yes, this bill would do that.
But supporters pushed back on the idea this bill would end further investments in renewable energy or grid improvements. Nothing in the bill changes the standards by which the SCC would review such projects, and nothing prevents the utility from fully recovering its costs with a fair profit, noted Will Cleveland of the Southern Environmental Law Center, a prime mover on this effort.
What it does do is bypass the Rube Goldberg formula Dominion sold to the Assembly in 2007 to make sure the SCC had to give it what can be called a Lake Wobegon profit margin, “always above average,” like the children in that fictional village. Uncounted hundreds of thousands of dollars have been spent in numerous rate cases just on dueling experts to game that formula.
This bill, the effort to impose massively excessive costs and risk on ratepayers for offshore wind, and the various green energy schemes all have far to go before the Governor sees them for signature. Apparently, the overall goal now is a 100% carbon neutral economy by 2045, but carbon neutral is a very different thing than carbon free. That game is all about offsets, which can be a simple as planting some trees or buying LED light bulbs.
If the SCC does do a proper regulatory review on Dominion’s finances in 2021 that will be a major victory. But this crowd is just like the old crowd, and to get what it wants it will be sending major bills to ratepayers for years to come, and ordering the SCC to make you pay.
