Category Archives: Consumer protection

Consumer protection

Fix the Virginia Department of Health

Credit: PBS Healthcare Management

by James C. Sherlock

Governor Youngkin and his new administration have an opportunity to fix crucial problems in the Department of Health that have been festering for decades.

The issues:

  • How can Virginia regulate effectively its state-created healthcare monopolies?
  • In a directly related matter, how can we fix the failures, famously demonstrated during COVID, of the Virginia Department of Health (VDH) in its other missions ?

The power of Virginia’s Certificate of Public Need (COPN) to control the business of healthcare in Virginia was the original sin.  Giving that power to the Department of Health made it worse.

From that point VDH was the agent of its own corruption. Never charged by the General Assembly to create regional monopolies in its administration of Virginia’s Certificate of Public Need (COPN) law, VDH did so anyway.

Actions have consequences.

Now those regional healthcare monopolies are each the largest private business in their regions, have achieved political dominance in Richmond, and effectively control VDH. Continue reading

Virginia’s Greens Need an Epiphany

Green Party leader and German Economy and Climate Minister and Vice Chancellor Robert Habeck

by James C. Sherlock

Headlines from the war in Ukraine have raised exponentially the interest in natural gas and the extreme price volatility caused by supply constraints.

It is perhaps useful to understand the uses of natural gas, the prices Virginians pay relative to West Virginians, the decline of production in Virginia, and the costs and risks of supply constraints by the actions of green energy absolutists.

Not the enthusiasts, but the come-hell-or-high-water absolutists, who get way out in front of the thoughtful left. In Europe, greens let slip the dogs of war.

Putin thought Europe, with its far too early and thoughtless response to green pressure, too dependent upon Russian energy to oppose him.  He proved wrong, but now both free Europeans and Russians will suffer. Ukrainians and Russians are dying for that miscalculation.

Virginia greens need to reconsider the value of natural gas and the risks of insufficient supply. And, like the German Green Party this week, get over their opposition to gas until real renewable alternatives at the scale of the economy are, well, real.

Continue reading

VCEA Added Costs Exceed $2,000 per Household?

Center of the American Experiment estimate of the cost per megawatt hour of different forms of electricity generation. The red section it adds to renewables is the cost of battery backup. Click for larger view.

by Steve Haner

First published this morning by the Thomas Jefferson Institute for Public Policy.

By 2050 Virginia’s transition to wind and solar power under the Virginia Clean Economy Act (VCEA) could add almost $200 a month on average to a residential electric bill. Previous estimates of the consumer cost of dumping all fossil fuels from power generation have focused on the next ten years or so, but a new analysis looks beyond that to the actual deadline for the completed conversion.

Commercial and industrial customers would see comparable explosions in cost. These projections are far higher than those prepared by our own State Corporation Commission for two reasons: the SCC estimates do not cover the later years when the utilities must reach full compliance, and therefore do not include all the coming new investments into the late 2030s and 2040s.

The Center of the American Experiment in Minnesota, which has looked at similar proposals around the country, estimates that Virginia energy ratepayers of all classes will need to pay out an extra $203 billion over two and a half decades, close to half of it the utility profit margin on the massive new solar, wind, battery and related transmission facilities.

The Virginia General Assembly is currently considering either repealing or amending the 2020 VCEA, which dictated that Virginia’s major electric utilities must eventually stop using coal, natural gas or other fuels that emit carbon dioxide. Continue reading

State Interest in the Operating Efficiency of Virginia’s Nonprofit Hospitals

Courtesy AP

by James C. Sherlock

Virginia’s nonprofit hospital systems are partially funded with taxpayer money, pay no taxes, and are protected from competition by the state.  

The state, having provided all of those advantages, needs to make sure its citizens reap as much benefit from them as the hospitals do.

Yesterday I wrote that the state has an obligation to regulate the regional monopoly systems it has created to ensure that their prices are kept within reasonable bounds.

One way to do that is by controlling their allowable operating margins.  

That in turn requires the government to see to it that they are operated efficiently. It must ensure that their operating margins, which are operating income divided operating revenue, reflect best practices in controlling operating expenses.  

Optimized operating efficiency has been shown to improve medical performance as well. Continue reading

COPN’s Regional Monopolies Helped Boost Virginia Hospitals’ Operating Margins to more than 3x National Median in 2020

by James C. Sherlock

Virginians have been assured forever by the hospital lobby that the non-profit regional monopolies established and protected by COPN nearly everywhere but Richmond:

  • are benign public servants with a charitable mission;
  • certainly don’t drive up costs;
  • that competition does not matter;
  • that the State Medical Facilities Plan on which COPN is based, like government 5-year industrial plans everywhere, is both well- managed and prescient; and
  • that limiting capacity is the key to cost containment. (It turned out that limiting capacity was also the key to hospitals being overwhelmed by COVID. Clearly disaster preparedness is not among COPN criteria.)

Well. The median operating margin for Virginia’s 106 hospitals in 2020, the latest year for which data are available, was 9.2%. Nationally, that margin was 2.7%.

Virginians paid over $1.5 billion more for hospital visits than they would have if our hospitals had cumulatively posted a 3% operating margin, which has been at or near the national median  for years. Continue reading

HB 646 on Nursing Home Staffing Misses the Mark – So Does Its Fiscal Impact Statement

Courtesy NPR

by James C. Sherlock

There is a bill, HB 646, Nursing homes; standards of care and staff requirements, regulations in the General Assembly.

I support its intent.

As written it specifies minimum hours of direct care services for each
resident per 24-hour period.

In actuality, numbers of personnel required to provide the services depend upon the physical health of the patient population of each home. Specific numbers in the current bill also make the law vulnerable to changes in Centers for Medicare & Medicaid Services (CMS) policy. Such specificity is neither necessary nor, I suggest, appropriate.

  • The law can be amended to leverage existing federal monitoring of staffing to make it much easier to administer, less vulnerable to federal policy changes and tailored to the needs of the patients of each nursing home;
  • The amendment that I recommend will also enable the fiscal impact statement to be far more precise and far lower.

These goals can be achieved with an amended bill. Continue reading

Bill Creates, Protects Right to Natural Gas Service

Pending Termination

by Steve Haner

Efforts to repeal or amend the Virginia Clean Economy Act are not the only bills pending at this 2022 General Assembly to mount a bit of defense against The War on Fossil Fuels.

If the City of Richmond decides in the future to close its municipal natural gas utility, a step its governing body endorsed in concept last year, it would first need to seek a buyer for the operation under legislation just filed.

Call it the Right to Natural Gas Bill, or “We Are Not San Francisco” legislation, in honor of the California city and region where the movement to prohibit natural gas use in buildings and even restaurant kitchens is growing.

Proposed House Bill 1257, introduced by Delegate Terry Kilgore, R-Gate City, calls for three years’ notice to customers of any such effort at a shut down, and a fire-sale auction of the assets to private owners if a negotiated transfer is not worked out. It would also prohibit local ordinances that restrict the use of natural gas in new or existing businesses and prevent existing municipal gas suppliers from denying new connections they could otherwise support.

Non-utility gas providers, usually of propane or similar products not provided by a formal utility, would enjoy similar protections if this bill passes and is signed. Continue reading

Were Herring’s Last Actions as AG Racist?

by James A. Bacon

Attorney General Mark Herring wound up his last day in office today with an announcement that he is holding three more gas stations “accountable” for alleged price gouging during the Colonial Pipeline emergency in the spring of 2021, bringing the total to six enforcement actions.

As I noted in a previous post, it seemed to be a curious coincidence that of the  4,000 or so gas stations in Virginia (a decade-old figure), the three that had been charged in November for jacking up prices during the gasoline shortage stemming from the Colonial Pipeline shutdown all had Asian proprietors. It turns out that the latest three enforcement actions target Asian proprietors, too. Here’s the list of all six (business name — proprietor name):

  • 7HC — Eltam Salem
  • Tahir and Sons LLC — Tahir Mahmoud
  • RIR Mart Exxon (Saly Inc.) — Balwinder Singh
  • Shivoham Inc. — Hemali Patel
  • George Mason LLC — Philip Chung
  • Shriji Maharaj LLC — Nashib Patel

No other gas stations owners have been fined for the Colonial Pipeline crisis. Not. One. White. Gas. Station. Owner.

There are two ways to look at this anomaly. Continue reading

Medical Facility State Inspector Shortfalls An Urgent Matter for the Governor and General Assembly

by James C. Sherlock

Virginians are blessed to have a person running the Department of Health Office of Licensure and Inspection (OLC) who may be the best public servant in the Commonwealth. She desperately needs help to do the work she is assigned in order to protect us.

Kim Beazley, the Director of that Office, has been quoted at length by me before. On November 30th, 2020 I published Ms. Beazley’s response to a series of FOIA requests to get an update on a 2017 Office of the State Inspector General report that found major shortfalls in the staffing levels of the OLC.

Ms. Beazley’s answers showed that nothing had changed in three years.

The shortfalls were based upon laws and budgets that purposely reduced the authorized staff significantly below that sufficient to meet its statutory inspection requirements. Continue reading

Should Choice of Supplier Extend to Natural Gas?

Artist rendering from the Chickahominy Power LLC website.

by Steve Haner

Should there be retail choice for natural gas? The developers of a proposed natural gas-fired merchant electricity plant are testing the waters with a proposal to bypass their local monopoly supplier by building their own one-customer pipeline to another source.

In the electricity arena, this is an old issue as large industrial or commercial uses have agitated for the right to seek lower-cost competitive suppliers to Dominion Energy Virginia or Appalachian Power Company. The battle has raged at the General Assembly and in front of the State Corporation Commission.

Under state law a large-enough customer can opt out of the monopoly power company under certain conditions. Similar mega-customers exist in the natural gas arena, but there is no comparable provision in state code allowing them to choose alternative gas suppliers.

The proposed Chickahominy Power LLC plant in Charles City County, which will also be ready to burn hydrogen to produce electricity if and when hydrogen is available for that, has many certificates and permits it needs from the state. The war on fossil fuels crowd did its best to block the permits but has failed, so far.

It also has a wholesale market for the 1,650 megawatts of electricity it will produce, and in general the expansion of merchant generation not built and controlled by the monopoly utilities is considered an economic boon. The 2020 Clean Energy Economy Act, among many other things, will require the use of more purchased power agreements by the utilities.

What Chickahominy lacks at this point is an agreement with Virginia Natural Gas, service which might require a new 24-mile connection. This was to be one of two such plants in Charles City served by a planned expansion of the VNG pipeline in Virginia, but that project was mobbed by environmental opposition and abandoned by the utility last year. Continue reading

McAuliffe Promise to Accelerate VCEA Schedule Will Accelerate VCEA Consumer Bill Increases

2020 SCC staff projection of monthly residential bill increases by 2030 for Dominion Energy Virginia customers, mainly tied to a rapid retreat from fossil fuels.

by Steve Haner

When a State Corporation Commission staff analysis warned last year of $808 annual increases in Dominion Energy Virginia residential bills by 2030, that 58% increase was based on the existing deadlines set for Dominion’s conversion away from using fossil fuels.

Change the deadlines, change the cost. Shorten the deadlines by half, as Democratic gubernatorial nominee Terry McAuliffe is promising to do, and 2030 electricity costs will grow even higher.  Continue reading

Virginia’s Self-Inflicted Nursing Home Crisis – Part 3 – McAuliffe & Herring

by James C. Sherlock

In the first two parts of this series, I wrote about the shortage of state inspectors for nursing homes in the Virginia Department of Health Office of Licensure and Certification (OLC)  and the continuing danger it poses to Virginia patients.

The problem, unfortunately, is much wider than just nursing homes.  So is the scandal.

That same office inspects every type of medical facility including home care agencies as well as managed care plans. Except it cannot meet the statutory requirements because it does not have sufficient personnel or money. And it have been telling the world about it for years.

Terence Richard McAuliffe was the 72nd governor of Virginia from 2014 to 2018. Mark Herring has been Attorney General since 2014.

We will trace below that they can reasonably be called the founding fathers of overdue inspections of medical facilities in Virginia.

VDH has been short of health inspectors since McAuliffe and Herring took office and still is .

Both of them know it. And they know that lack of inspections demonstrably causes unnecessary suffering and death.

Continue reading

Virginia’s Self-Inflicted Nursing Home Crisis — Part 2, the Business

by James C. Sherlock

Nursing homes are businesses.

Seventy percent of those in Virginia are for profit. They are run not by doctors but registered nurses with physicians on call. 

Nursing facilities very widely in size in Virginia, from the 300-bed Mulberry Creek Nursing and Rehab center in Martinsville to facilities of less than 30 beds, especially the long-term care units of a few mostly rural hospitals.

They include facilities designated as skilled nursing facilities (SNF), often post-op care and rehabilitation, and others designated as long-term-care nursing facilities (NF). Most nursing homes in Virginia have facilities and certified beds for each.

Insurer mix and staffing costs are keys to profitability.

Many of these businesses are worth what they get paid, but many are not. Continue reading

SCC Staff: Dominion Should Refund $312M, Cut Rates, Due to $1.14B Excess Profits

SCC Staff summary showing how $1.14 billion in Dominion Energy Virginia excess profits get whittled down to only a possible $312 million refund.  Step one, not shown, is the law allows the company to keep the first 70 basis points of excess profit no questions asked.  Click for larger view.

by Steve Haner

Customers of Dominion Energy Virginia are due a refund of $312 million and the company’s future base rates should be reduced by another $50 million annually, the utility accounting staff at the State Corporation Commission concluded in testimony filed September 17.

Patrick W. Carr, deputy director of the division of utility accounting and finance, was joined in filing testimony by ten other members of that staff, but he provided the baseline result in his opening summary.

In the staff’s opinion, Dominion earned $1.143 billion of profit in excess of its allowed 9.2% return on equity during the four year period it reviewed, 2017 through 2020. The company will vigorously dispute those claims in rebuttal testimony, it is safe to predict.

The State Corporation Commission is entering the key phase of its so-called “triennial review,” which in Dominion’s case covers an extra year because that is what it asked of the Virginia General Assembly, and the Assembly seldom declines DEV’s requests. This is the first full audit of the company’s finances since 2015, which covered the two prior years of 2013 and 2014. Continue reading

Richmond Wants to Kill Its Gas Utility, Also Ending Service in Henrico, Chesterfield

Pending Termination

by Steve Haner

BE IT FURTHER RESOLVED: That the (Richmond) Council hereby commits to working with the City’s Administration on an equitable plan to phase out reliance on gas and shift to accelerated investment in City-owned renewable energy and hereby recognizes that the continued operation of the City’s gas utility is an obstacle to the City’s goal of Net-Zero emissions in accordance Resolution No. 2020-R024, adopted June 8, 2020.

Translation:  The Richmond Gas Works, a municipal owned public service utility, is targeted for closure.   Council sees its continued operation as “an obstacle.”  The 117,600 customers (as of 2018) will need to run their lives and businesses without natural gas.  Those customers are not confined to the city itself but are also located in Henrico and Chesterfield counties.  Continue reading